Before investing in any of our securities, you should carefully consider the risks and uncertainties described below, together with all other information in this Annual Report.
−Removed: The risks and uncertainties described below could materially and adversely affect our business, operating results, financial condition, liquidity, or competitive position, and consequently, the value of our securities.
−Removed: The material adverse effects include, but are not limited to, our potential inability to grow our revenue or market share at the pace that they have grown historically or at all, our revenue, market share, stock price, and market capitalization fluctuating on a quarterly and annual basis, our history of losses continuing or our failure to become profitable, our inability to achieve the revenue and net income (loss) guidance that we provide, and the risk of harm to our reputation and brand.
−Removed: Risks Related to Our Supply Chain and Sales Strategy
−Removed: Cost increases, supply disruptions, or raw material shortages, including single source components, could harm our business.
−Removed: We have and may continue to experience cost increases or sustained supply interruptions in raw materials and components necessary for our products.
−Removed: We also have and may continue to experience increased freight charges and reduced capacity from our freight forwarders.
−Removed: Any such increases or interruptions could materially negatively impact our business, prospects, financial condition and operating results, including delays in manufacturing and shipments of our products and canceled orders.
+Added: The risks and uncertainties described below could materially and adversely affect our business, operating results, revenue, financial condition, liquidity, market share or competitive position, and consequently, the value of our securities.
+Added: Risks Related to Our Supply Chain, Customers and Sales Strategy
+Added: Cost increases, supply disruptions, or raw material shortages, including in single source components, could harm our business.
+Added: We have and may continue to experience cost increases or supply interruptions in raw materials and components necessary for our products, as well as increased freight charges and reduced capacity from our freight forwarders.
+Added: Any such increases or interruptions could materially negatively impact our business, prospects, financial condition and operating results, including delays in manufacturing and shipments of our products and in some cases, result in canceled orders.
While we have implemented price increases intended to offset rising costs, we cannot provide assurance that these increases will have the desired effects on our business model in the expected timeframe.
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Sole source of product supply
−Removed: In many cases, our business partners may be the sole source of supply for the products or parts they manufacture, or the services they provide to us, and we may not have executed long-term purchase agreements with these partners.
+Added: In many cases, our business partners are the sole source of supply for the products or parts they manufacture, or the services they provide to us, and we do not have executed long-term purchase agreements with these partners.
Our reliance on a limited number of suppliers and the lack of any guaranteed sources of supply exposes us to several risks, including:
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• increasing import and export duties and value-added taxes, or trade regulation changes that could erode our profit margins or delay or restrict our ability to transport our products;
−Removed: • war, military conflict, and geo-political unrest may affect our engineering and support teams outside the U.S.
+Added: • war, military conflict, and geopolitical unrest, including the war between Russia and Ukraine, may affect our engineering and support teams outside the U.S.
and their ability to perform as well as our sales and services delivery with sanctioned entities and countries;
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• difficulties attracting and recruiting employees and wage inflation in highly competitive markets;
−Removed: • political instability, military, social and infrastructure risks, especially in emerging or developing economies, including the war between Russia and Ukraine;
+Added: • political instability, military, social and infrastructure risks, especially in emerging or developing economies;
• political or nationalist sentiment impacting global trade, including the willingness of non-U.S.
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• natural disasters, including earthquakes, flooding, typhoons and tsunamis;
−Removed: • pandemics and epidemics, including the impact of COVID-19, and varying and potentially inconsistent governmental restrictions on the operation of businesses, travel and other restrictions.
+Added: • pandemics and epidemics, and varying and potentially inconsistent governmental restrictions on the operation of businesses, travel and other restrictions.
Any or all of these risks could have a material adverse effect on our business.
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We may also incur financial losses for product returns from partners or for the failure or refusal of distributors to pay obligations owed to us.
−Removed: Either scenario could result in fewer of our products
−Removed: being available to the affected market segments, reduced levels of customer satisfaction and increased expenses, which could in turn have a material and adverse impact on our business, results of operations and financial condition.
+Added: Either scenario could result in fewer of our products being available to the affected market segments, reduced levels of customer satisfaction and increased expenses, which could in turn have a material and adverse impact on our business, results of operations and financial condition.
A certain percentage of our sales are to a few customers, some of which are also competitors, and these customers generally have no minimum or long-term purchase commitments.
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These cycles may make it difficult for us to predict when, or if, future sales will occur.
−Removed: During the fiscal years ended March 31, 2022 and March 31, 2021, no single customer represented 10% or more of our total revenue.
−Removed: However, a significant reduction in orders from, or a loss of, one or more large customers would have a material adverse effect on our operating results.
+Added: During the fiscal year ended March 31, 2023 we had one Hyperscale customer represent 10% or more of our total revenue versus the prior fiscal year, March 31, 2022, when we had no single customer represent 10% or more of our total revenue.
+Added: If this customer or any other large customers should significantly decrease or stop purchasing our solutions we would see a significant reduction in revenue that may result in a material adverse effect on our operating results.
federal government is an important customer, and our business may be materially and adversely harmed by changes in government purchasing activity.
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federal government, temporary shutdowns of the U.S.
−Removed: federal government, or changes in its procurement processes or criteria could decrease our sales to the federal government and could materially and adversely affect our operating results.
+Added: federal government, or changes in its procurement processes or criteria could decrease our sales to the federal government and materially and adversely affect our operating results.
In addition, changes in government certification requirements applicable to our products could impact our ability to see to U.S.
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We continue to face risks related to inflation, economic uncertainty, and slow economic growth.
−Removed: Uncertainty about economic conditions, particularly due to the ongoing COVID-19 pandemic, pose risks as businesses may further reduce or postpone spending in response to reduced budgets, tightening of credit markets, increases in inflation and interest rates, negative financial news, and declines in income or asset values which could adversely affect our business, financial condition and operating results.
+Added: Uncertainty about economic conditions pose risks as businesses may further reduce or postpone spending in response to reduced budgets, tightening of credit markets, increases in inflation and interest rates, negative financial news, and declines in income or asset values which could adversely affect our business, financial condition and operating results.
Recent inflationary increases have driven up the prices at which we are able to purchase necessary components, products, and services, as well as the cost of contract labor.
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In addition, our ability to access capital markets may be restricted or result in unfavorable financing terms, impacting our ability to react to changing economic and business conditions and could also materially and adversely affect our ability to sustain our operations at their current levels.
−Removed: Our stock price has experienced significant volatility in the recent past, and continued volatility may cause our common stock trading price to remain volatile or decline.
−Removed: Our stock price has been extremely volatile in the recent past.
−Removed: For example, the closing price of our common stock between January 3, 2022 and June 3, 2022 ranged from $1.56 to $5.64.
+Added: Our stock price has experienced significant volatility in the past, and continued volatility may cause our common stock trading price to remain volatile or decline.
+Added: Our stock price has been extremely volatile in the past.
The trading price of our common stock may continue to fluctuate in response to a number of events and factors, many of which may be beyond our control, such as:
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• changes in our capital structure, including incurring new debt, issuing additional debt or equity to the public, and issuing common stock upon exercise of our outstanding warrants or subscribing to our recent rights offering;
−Removed: • large or sudden purchases or sales of stock by existing or new investors;
+Added: • large or sudden purchases or sales of stock by investors;
• changes in interest and exchange rates;
• a continued widespread decline in the U.S.
−Removed: or global economy as a result of the continued impact of COVID-19, supply chain constraints, or other factors;
+Added: or global economy as a result of the impact of COVID-19, supply chain constraints, or other factors;
• fluctuations in the stock market in general and market prices for technology companies in particular;
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We may be unable to attract and retain key talent necessary to effectively meet our business objectives.
−Removed: The market for skilled engineering, sales, and administrative talent is very competitive and recently we are seeing delays in recruiting and hiring timeframes.
+Added: The market for skilled engineering, sales, and administrative talent is competitive and we have seen delays in recruiting and hiring timeframes.
We believe our ability to recruit and hire new talent, and retain existing key personnel, may be negatively impacted by prior and ongoing fluctuations in our operating results, stock price, and ability to offer competitive benefits and total compensation programs.
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• restructuring actions or unexpected costs;
−Removed: • foreign exchange fluctuations.
+Added: • foreign currency exchange fluctuations.
Our operating results depend on continuing and increasing market acceptance of our existing products and on new product introductions, which may be unsuccessful, in which case our business, financial condition and results of operations may be materially and adversely affected.
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Our future operating results depend in part on continued market acceptance and use of tape products;
−Removed: in the past, decreases in the market have materially and adversely impacted our business, financial condition and operating results.
+Added: in the past, decreases in the tape products market have materially and adversely impacted our business, financial condition and operating results.
We currently derive significant revenue from products that incorporate some form of tape technology, and we expect to continue to do so in the next several years.
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Disk, solid-state, and flash storage products, as well as various software solutions and alternative technologies have eroded the demand for tape products.
−Removed: We expect that, over time, many of our tape customers could migrate toward these other products and solutions and their proportionate contribution to our revenue will increase in the future.
−Removed: While we are making targeted investments in software, disk backup systems, and other alternative technologies, these markets are characterized by rapid innovation, evolving customer demands, and strong competition, including competition with companies who are also significant customers.
+Added: We expect that, over time, many of our tape customers could migrate toward
+Added: these other products and solutions and their proportionate contribution to our revenue will increase in the future.
+Added: While we are making targeted investments in software, disk backup and flash storage systems, and other alternative technologies, these markets are characterized by rapid innovation, evolving customer demands, and strong competition, including competition with companies who are also significant customers.
If we are not successful in our efforts, we may not be able to attract or retain customers, and our business, financial condition and results of operations could be materially and adversely affected.
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• the relative growth in units of newer device products, since the associated media cartridges for newer products typically sell at higher prices compared with the media cartridges associated with older products;
−Removed: • The media consumption habits and rates of end users and pattern of device retirements;
+Added: • media consumption habits and rates of end users and pattern of device retirements;
• the level of channel inventories;
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The steps we have taken may not reduce our cost structure to a level appropriate in relation to our future sales and therefore, these cost reductions may be insufficient to achieve profitability.
−Removed: In the last several years, we have recorded significant restructuring charges and made cash payments to reduce our cost of sales and operating expenses to respond to adverse economic and industry conditions, to execute strategic management decisions, and to rationalize our operations following acquisitions.
+Added: In the last several years, we have recorded significant restructuring charges and made cash payments to reduce our cost of sales and operating expenses to respond to adverse economic and industry conditions, to execute
+Added: strategic management decisions, and to rationalize our operations following acquisitions.
These restructuring plans may result in decreases to our revenues or adversely affect our ability to grow our business in the future.
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If these estimates and assumptions are incorrect, if we experience delays, or if other unforeseen events occur, our business, financial condition, and operating results could be adversely affected.
−Removed: From time to time we have made acquisitions.
−Removed: The failure to successfully integrate future acquisitions could harm our business, financial condition, and operating results.
+Added: The failure to successfully integrate future acquired businesses, products or technologies could harm our business, financial condition, and operating results.
As a part of our business strategy, we have in the past and may make acquisitions in the future.
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• the cost associated with the acquisition, including restructuring actions, which may require cash payments that, if large enough, could materially and adversely affect our liquidity.
−Removed: A cybersecurity breach of our internal infrastructure or our products could adversely affect our ability to conduct our business, harm our reputation, expose us to significant liability, or otherwise damage our financial results.
+Added: A cybersecurity breach could adversely affect our ability to conduct our business, harm our reputation, expose us to significant liability, or otherwise damage our financial results.
We maintain sensitive data related to our employees, strategic partners, and customers, including personally identifiable information, intellectual property, and proprietary business information on our own systems.
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It is critical to our business that our employees’, strategic partners’ and customers’ sensitive information remains and is perceived as secure.
−Removed: While we employ sophisticated security measures in our own environment and our product features, we may face internal and external threats including unauthorized access, ransomware attacks, security breaches, and other system disruptions.
+Added: While we employ sophisticated security measures in our own environment and our product features, we may face internal and external threats including unauthorized access, ransomware attacks,
+Added: security breaches, and other system disruptions.
A cybersecurity breach of our own IT infrastructure or products sold to our customers could result in unauthorized access to, loss of, or unauthorized disclosure of such information and expose us to litigation, indemnity obligations, government investigations, and other possible liabilities.
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A breach could also expose us to increased costs from remediation, disruption of operations, or increased cybersecurity protection costs that may have a material adverse effect on our business.
−Removed: Although we maintain cybersecurity liability insurance, our insurance may not cover potential claims of these types or may not be adequate to indemnify us for inability that may be imposed.
+Added: Although we maintain cybersecurity liability insurance, our insurance may not cover all or any portion of claims of these types or may not be adequate to indemnify us for inability that may be imposed.
Any imposition or liability or litigation costs that are not covered by insurance could harm our business.
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Any imposition of liability or litigation costs that are not covered by insurance or could harm our business.
−Removed: Competition is intensifying in the data storage and protection market as a result of competitors introducing products based on new technology standards and merger and acquisition activity, which could materially and adversely affect our business, financial condition, and operating results.
+Added: Competition is intense in the data storage and protection market in which we operate.
Our competitors in the data storage and protection market are aggressively trying to advance and develop new technologies and products to compete against us.
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As a result of competition and new technology standards, our sales or gross margins could decline, which could materially and adversely affect our business, financial condition, and operating results.
−Removed: Some of those competitors, are much larger, financially stronger, and have more diverse product offerings, and aggressively compete based on their reputations and greater size.
+Added: Some of those competitors are much larger and financially stronger, have more diverse product offerings, and aggressively compete based on their reputations and greater size.
Technological developments, industry consolidation, and storage market competition over the years have resulted in decreased prices and increased commoditization for tape device and automation products and our other product offerings.
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We license certain of our software under “open source” licenses.
−Removed: Because of the characteristics of opensource software licenses, it may be relatively easy for competitors, some of whom have greater resources than we have, to enter our markets and compete with us.
+Added: Because of the characteristics of opensource software licenses, it may be relatively easy for competitors, some of whom have greater
+Added: resources than we have, to enter our markets and compete with us.
In addition, our failure to comply with the terms of open source licenses could have a material adverse effect on our competitive position and financial results.
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While we maintain a rigorous corporate ethics and compliance program, we may be subject to increased regulatory scrutiny, significant monetary fines or penalties, suspension of business opportunities, loss of jurisdictional operating rights, and increased litigation and investigation costs as a result of any failure to comply with those requirements.
−Removed: If we identify that we have fallen out of compliance, we may proactively take corrective actions, including the filing of voluntary self-disclosure statements with applicable agencies, which could cause us to incur additional expenses and subject
−Removed: us to penalties and other consequences that could adversely affect our business, financial condition, and operating results.
+Added: If we identify that we have fallen out of compliance, we may proactively take corrective actions, including the filing of voluntary self-disclosure statements with applicable agencies, which could cause us to incur additional expenses and subject us to penalties and other consequences that could adversely affect our business, financial condition, and operating results.
Our supply and distribution models may be reliant upon the actions of our third-party business partners and we may also be exposed to potential liability resulting from their violation of these or other compliance requirements.
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General Risk Factors
−Removed: We face risks related to health epidemics, including the COVID-19 pandemic, which could have a material adverse effect on our business and results of operations.
+Added: We face risks related to health epidemics which could have a material adverse effect on our business and results of operations.
We face various risks related to public health issues, including epidemics, pandemics, and other outbreaks, including the COVID-19 pandemic.
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dollars, operating expenses would also be lower in these circumstances.
−Removed: The competitive price of our products relative to others could also be negatively impacted by changes in the rate at which a foreign currency is exchanged for U.S.
+Added: The competitive price of our products relative to others could also be negatively impacted by changes in the rate at which a foreign
+Added: currency is exchanged for U.S.
Such fluctuations in currency exchange rates could materially and adversely affect our business, financial condition and results of operations.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.