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.
These are the real facts. Mr. Firestone became CFO of Advanced Energy Industries in August 2006. He left, under circumstances which appear to us to be not of his own choosing, in August 2010. During that time the stock price climbed to a high of $25.68 in May 2007, dropped to a low of $5.49 in March 2009, recovered to the $17.00 range as Mr. Firestone was leaving. Even assuming Mr. Firestone was responsible for these gyrations, is this a turnaround specialist?It’s All About Trust As much as this contest is about the failures of the current Board, it is also about trust.
- Can you trust a Board that has failed you in the past to work for you in the future?
- Can you trust a Board that says it has a turnaround plan when it feeds you distortions and half-truths?
- Can you trust a Board to implement an acquisition strategy when it has been unable to profitably operate Qualstar’s legacy Tape Library business?
- Can you trust a Board that tells you that BKF poses a risk to your investment, when BKF is proposing to return cash to shareholders in order to take risk off the table?
Please vote your GOLD proxy card and support the BKF slate.DO NOT return a WHITE proxy card or any other card sent to you on behalf of the current Board. If you have any questions, please contact our proxy advisors— PHOENIX ADVISORY PARTNERS 110 Wall Street 27th Floor New York, NY 10005 Call Toll Free: (877) 478-5038 Banks And Brokers Call Collect: (212) 493-3910 We look forward to your support. BKF Capital Group, Inc. Greg S. Heller Senior Vice President About BKF Capital Group Inc. BKF Capital Group Inc. (OTCQB - "BKFG") is a publicly traded company focused on arranging a merger, acquisition, business combination or other arrangement with both public and private companies with unique value opportunities and/or acquiring a controlling position in such companies through equity purchases or debt financings. For additional information please visit: www.bkfcapital.com.