This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

BKF Capital Issues Open Letter To Qualstar Shareholders

BKF Capital Group, Inc. (BKFG) today released an open letter to shareholders of Qualstar Corporation (NASDAQ—QBAK) in advance of a Special Meeting of Shareholders on June 20, 2012 to remove and replace the Qualstar Board. In the letter, BKF accuses Qualstar of stalling on the production of accounting records, which BKF believes are relevant to shareholder assessment of the performance of the Board in advance of the Special Meeting, and questions whether the Qualstar Board is trying to hide information from shareholders. BKF also challenges the Board’s characterization of the new CEO that it selected, who has never served in a chief executive capacity, as a “turnaround specialist.”

The full text of the letter follows.

June 13, 2012

Dear Fellow Qualstar Shareholders:

The Special Meeting of Shareholders to remove and replace the Board of Qualstar Corporation will be held on June 20, 2012. If you have not already done so, please promptly return your GOLD proxy card to vote FOR the proposals of BKF Capital Group, Inc. to remove and replace the Board , so that the BKF slate of nominees may begin to return value to shareholders.

It would seem that the current Board members have already given shareholders sufficient reasons to remove them from office — the destruction of the Company’s share value, the decline in operating performance, the outsized compensation of the new CEO, the distortions and half-truths regarding the BKF slate. But this Board keeps adding more.

Stalling on BKF’s Demand to Inspect Accounting Books and Records

BKF exercised its right under California law to demand inspection of Qualstar's accounting books and records, including the following items:

  • compensation and expense reimbursement to directors and officers;
  • payments for aircraft owned by directors and officers;
  • legal services performed by the law firm of one of the directors;
  • investment advice paid for by the Company; and
  • executive recruitment and compensation consultants.

Qualstar has stalled in the production of these accounting records. BKF asked for these materials because we believed they are relevant to the shareholder’ assessment of the performance of the Board in advance of the Special Meeting. Qualstar’s legal counsel (who is also a director of the Company) refused to provide the records on a timely basis and threatened that it would take longer for BKF to obtain a court ordered inspection of these documents than waiting for Qualstar to comply. Because the Board is dragging its feet in the production of these materials, we have to ask: Does the Board have something to hide? Is there financial information or payments to management that the Board does not want shareholders to know with sufficient time to affect the vote at the Special Meeting?

Mr. Firestone, the Purported Turnaround Specialist

On June 12 th, the Company issued a press release announcing, “Turnaround Specialist Engaged Full Time To Grow Qualstar Investment.” And just who is this “turnaround specialist?” Board member Lawrence Firestone, whom BKF is seeking to remove. Now, when we think of someone as a turnaround specialist, we think of a CEO type or a Chief Restructuring Officer, someone who runs the show and call the shots, not a CFO who keeps the books. Mr. Firestone’s primary experience, and all his experience in the last 12 years has been as a CFO — he has not in fact been at the helm of any turnaround situation. But if you really want to appreciate how this Board is trying to mislead you, consider this statement in the release:

[Mr. Firestone g]rew Advanced Energy Industries from a market capitalization of $500 million to over $1.1 billion in two years.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,551.61 -11.69 -0.07%
S&P 500 1,933.17 +2.50 0.13%
NASDAQ 4,370.3030 +0.53 0.01%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs