Qualstar: Fiscal 3Q14 Financial Results

(in US$ million)	3Q13	3Q14	9 mo. 13	9 mo. 14
Revenues	3.0	2.6	9.8	8.2
*Growth*		-13%		*-16%*
Net income (loss)	(3.3)	(2.2)	(6.9)	(5.0)

Qualstar Corporation reported financial results for its third fiscal quarter ended March 31, 2014.

Results for the Three Months Ended March 31, 2014 vs. 2013

Revenue decreased 13.2% to $2.6 million from $3.0 million
GAAP gross margin decreased 37.3% to -7.8% from 29.5%
Non-GAAP gross margin was 43%
Total operating expenses decreased 39.7% to $2.0 million from $3.3 million, excluding restructuring expenses
Restructuring expenses decreased to $0 from $913,000
Net loss was $2.2 million or ($.18) per basic and diluted share vs $3.3 million or ($.27) per basic and diluted share, a 34% decrease in losses
Non-GAAP net loss was $467,000 or ($.04) per basic and diluted share

Results for the Nine Months Ended March 31, 2014 vs. 2013

Revenues decreased 16.1% to $8.2 million from $9.8 million
Gross margin decreased 10% to 21.6% from 31.6%
Non-GAAP gross margin was 42.4% for the nine months ended March 31, 2014
Total operating expenses decreased 12.5% to $6.7 million from $7.7 million, excluding restructuring expenses
Restructuring expenses decreased 98.9% to $26,000 from $2.3 million
Net loss was $4.9 million or ($.40) per basic and diluted share vs $6.9 million or ($.56) per basic and diluted share, a 28.5% decrease in losses
Non-GAAP net loss was $2.3 million or ($.19) per basic and diluted share

Cash, cash equivalents and marketable securities were $7.7 million at March 31, 2014, down $6.1 million from $13.8 million at June 30, 2013. The decrease in cash is primarily due to repurchasing inventory back in-house from our previously outsourced manufacturing contractor, severance due to reduction of headcount and operating losses.

“Qualstar has attained significant reductions in operating expenses as we continue to streamline our processes – including bringing manufacturing back under our own direction to improve speed of delivery and quality. By balancing the aggressive moves to reduce costs and investment in expanding our product portfolio to target new, growing markets, we are well-positioned to realize growth as a company,” stated Steven N. Bronson, CEO.

“Our strategy remains focused on driving improved performance that will keep us leaders of storage solutions,” stated Bronson.