What changed in this filing

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Item 9A. Controls and Procedures

2024-06-28 compared with 2023-06-06 · 94 added, 33 removed, 165 unchanged (43% of the section changed)

4 unchanged sentences

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under Exchange Act as of the end of the period covered by this Annual Report on Form 10-K.

Based on this evaluation, our chief executive officer and chief financial officer concluded that, as of March 31, 2023, our disclosure controls and procedures were effective at the reasonable assurance level.

Our management, with the participation of our chief executive officer and chief financial officer, has evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under Exchange Act as of each of the fiscal quarters ended March 31, 2024, December 31, 2023 and September 30, 2023.

Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were not effective due to material weaknesses in internal control over financial reporting described below.

Notwithstanding the identified material weaknesses, management, including our chief executive officer and chief financial officer have determined, based on the procedures performed, that the Consolidated Financial Statements included in this Annual Report on Form 10-K fairly represent in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, for the periods presented in accordance with U.S.

generally accepted accounting principles.

Management's Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.

Our management, with the participation of our principal executive and principal financial officers, evaluated the effectiveness of our internal control over financial reporting using the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013) .

Based on this assessment, management concluded

that Quantum Corporation maintained effective internal control over financial reporting as of the end of the period covered by this Annual Report.

Armanino LLP, our independent registered public accounting firm, has issued an attestation report on our internal control over financial reporting, and this attestation report appears in Item 8.

Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our internal control over financial reporting using the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013) .

Based on this assessment, management concluded that the Company’s internal control over financial reporting was not effective as of March 31, 2024 due to the material weaknesses described below.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis.

The Company identified a material weakness in its internal control over financial reporting related to the Company’s accounting practices and procedures for the application of standalone selling price under Accounting Standards Codification Topic 606 Revenue from Contracts with Customers (“Topic 606”).

Specifically, the Company did not have adequate controls in place to conclude on the application of standalone selling price consistent with the generally accepted application of the guidance in Topic 606.

The absence of adequate controls with respect to the application of standalone selling price impacted the accuracy of the Company’s revenue allocations in (i) for the fiscal years ended March 31, 2024, March 31, 2023 and March 31, 2022, and (ii) for each of the first three quarters in such fiscal years.

Additionally, the Company identified a material weakness in its internal control over financial reporting related to the Company’s accounting practices and procedures for warrant agreements under Accounting Standards Codification Topic 815 Contracts in Entity's Own Equity (“Topic 815”).

Specifically, the Company did not have adequate controls

in place to accurately evaluate and classify warrants consistent with Topic 815.

The absence of adequate controls with respect to the classification of warrants resulted in warrants being classified as equity and not as liability, impacted the accuracy of the Company’s presentation in (i) for the fiscal years ended March 31, 2024, March 31, 2023 and March 31, 2022, and (ii) for each of the first three quarters in such fiscal years.

Further, the Company identified a material weakness in its internal control over financial reporting as effective controls were not maintained over the accuracy of the inputs in the sales order entry process.

Specifically, the Company did not sufficiently execute controls over the review of data inputs in the sales order entry process to ensure accuracy of the price, quantity, and related customer data.

The control deficiency did not result in a misstatement;

however, this control deficiency could result in a misstatement of revenue that would result in a material misstatement to the annual or interim consolidated financial statements for the fiscal year ended March 31, 2024 that would not be prevented or detected.

Remediation Plan

The Company is implementing enhancements to its internal controls to remediate the identified material weaknesses in its internal control over financial reporting related to the Company’s accounting practices and procedures.

Specifically, the Company plans to:

• Review and update significant relevant accounting policies, procedures and controls.

• Provide additional training to individuals involved in the assessments for these topics.

• Engage with external third parties to assist with assessments for these topics, where necessary.

The Company is committed to maintaining a strong internal control environment and believes these remediation efforts will represent significant improvements in its controls over the control environment.

These steps will take time to be fully implemented and confirmed to be effective and sustainable.

Additional controls may also be required over time.

While the Company believes that these efforts will improve its internal control over financial reporting, the Company will not be able to conclude whether the steps the Company is taking will remediate the material weakness in internal control over financial reporting until a sufficient period of time has passed to allow management to test the design and operational effectiveness of the new and enhanced controls.

Until the remediation steps set forth above are fully implemented and tested, the material weaknesses described above will continue to exist.

Changes in Internal Controls over Financial Reporting

There were no changes in our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in connection with the evaluation of our internal control performed during the fiscal quarter ended March 31, 2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

There were no changes in our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in connection with the evaluation of our internal control performed during the fiscal quarter ended March 31, 2024, except for commencing implementation of the remediation plan described above, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

OTHER INFORMATION

(b) Trading Plans.

During each of the fiscal quarters ended March 31, 2024, December 31, 2023 and September 30, 2023, no director or officer adopted or terminated any contract, instruction, or written plan for the purchase or sale of securities of the Company pursuant to Rule 10b5-1(c) or any non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K).

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

6 unchanged sentences

EXECUTIVE COMPENSATION

The information required by Item 11 is incorporated by reference from the sections entitled “Corporate Governance—Non-Employee Director Compensation,” “Compensation Discussion and Analysis,” “Fiscal 2023 Compensation Tables,” “Report of the Leadership and Compensation Committee of the Board of Directors” and “Corporate Governance—Non-Employee Director Compensation—Compensation Committee Interlocks and Insider Participation” in our definitive Proxy Statement for our 2023 annual stockholders’ meeting.

The information required by Item 11 is incorporated by reference from the sections entitled “Corporate Governance—Non-Employee Director Compensation,” “Compensation Discussion and Analysis,” “Fiscal 2024 Compensation Tables,” “Board Committee Reports and Related Information— Compensation Committee Report” and “Corporate Governance—Non-Employee Director Compensation—Compensation Committee Interlocks and Insider Participation ” in our definitive Proxy Statement for our 2024 annual stockholders’ meeting.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

1 unchanged sentence

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by Item 13 is incorporated by reference from the section entitled “Board of Directors and Committees—Board Meetings and Independence,” and “Related Party Transactions” in our definitive Proxy Statement for our 2023 annual stockholders’ meeting.

The information required by Item 13 is incorporated by reference from the section entitled “Board of Directors and Committees—Board Meetings and Independence,” and “Board Committee Reports and Related Information—Related Party Transactions” in our definitive Proxy Statement for our 2024 annual stockholders’ meeting.

PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by Item 14 is incorporated by reference from the section entitled “Audit and Audit-Related Fees” in our definitive Proxy Statement for our 2023 annual stockholders’ meeting.

The information required by Item 14 is incorporated by reference from the section entitled “Board Committee Reports and Related Information—Independent Registered Public Accounting Firm” in our definitive Proxy Statement for our 2024 annual stockholders’ meeting.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

11 unchanged sentences

3.1 Amended and Restated Certificate of Incorporation of the Company, as amended through August 19, 2022

10-K 06/06/23 3.1

3.2 Amended and Restated Bylaws of the Company, as amended through February 8, 2016

4.1 Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934

10-K 06/06/23 4.1

4.2 Certificate of Designation of Rights, Preferences and Privileges of Series B Junior Participating Preferred Stock

17 unchanged sentences

8-K 06/17/20 4.5

4.10 Amendment No.

1 and Joinder to Amended and Restated Registration Rights Agreement, dated as of June 1, 2023, between the Company, OC II FIE V LP, Blue Torch Credit Opportunities Fund I LP, BTC Holdings SC Fund LLC and CO Finance LVS XVII LLC

8-K 06/06/23 4.2

4.11 Registration Rights Agreement dated December 12, 2020 by and between the Company and the securityholders of Square Box Systems Limited

8-K 12/14/20 4.1

4.12 Warrant to Purchase Common Stock, dated June 1, 2023, Warrant No.

2023-2, issued to OC III LVS XL LP

8-K 06/06/23 4.1

10.1 Lease Agreement dated February 6, 2006 by and between the Company and CS/Federal Drive AB LLC (For Building A)

8 unchanged sentences

10-Q 11/06/15 10.2

Incorporated by Reference

Number Exhibit Description Form Filing Date Exhibit Filed or Furnished Herewith

10.6# Offer Letter dated May 1, 2017 by and between the Company and Marc Rothman

6 unchanged sentences

8-K 06/27/18 10.2

10.10 Amended and Restated Revolving Credit and Security Agreement dated December 27, 2018 by and among the Company, Quantum LTO, the lenders party thereto, and PNC Bank, National Association

10.10 Amended and Restated Revolving Credit and Security Agreement dated December 27, 2018 by and among the Company, Quantum LTO Holdings , LLC, the borrowers and guarantors party thereto, the lenders party thereto, and PNC Bank, National Association

8-K 12/28/18 10.2

10.11 First Amendment dated April 3, 2020 to Amended and Restated Revolving Credit and Security Agreement dated December 27, 2018 by and among the Company, Quantum LTO Holdings, LLC, the lenders from time to time party thereto, and PNC Bank, National Association

10.11 First Amendment dated April 3, 2020 to Amended and Restated Revolving Credit and Security Agreement dated December 27, 2018 by and among the Company, Quantum LTO Holdings, LLC, the borrowers and guarantors party thereto, the lenders party thereto, and PNC Bank, National Association

8-K 04/06/20 10.2

10.12 Second Amendment dated April 11, 2020 to the Amended and Restated Revolving Credit and Security Agreement dated December 27, 2018 by and among the Company, Quantum LTO Holdings, LLC, the lenders from time to time party thereto, and PNC Bank, National Association

10.12 Second Amendment dated April 11, 2020 to the Amended and Restated Revolving Credit and Security Agreement dated December 27, 2018 by and among the Company, Quantum LTO Holdings, LLC, the borrowers and guarantors party thereto, the lenders party thereto, and PNC Bank, National Association

8-K 04/16/20 10.3

10.13 Third Amendment dated June 16, 2020 to Amended and Restated Revolving Credit and Security Agreement dated December 27, 2018 by and among the Company, Quantum LTO Holdings, LLC, the lenders party thereto, and PNC Bank, National Association

10.13 Third Amendment dated June 16, 2020 to Amended and Restated Revolving Credit and Security Agreement dated December 27, 2018 by and among the Company, Quantum LTO Holdings, LLC, the borrowers and guarantors party thereto, the lenders party thereto, and PNC Bank, National Association

8-K 06/17/20 10.2

10.14 Fourth Amendment dated December 10, 2020 to Amended and Restated Revolving Credit and Security Agreement dated December 27, 2018 by and among the Company, Quantum LTO Holdings, LLC, the lenders party thereto, and PNC Bank, National Association

10.14 Fourth Amendment dated December 10, 2020 to Amended and Restated Revolving Credit and Security Agreement dated December 27, 2018 by and among the Company, Quantum LTO Holdings, LLC, the borrowers and guarantors party thereto, the lenders party thereto, and PNC Bank, National Association

8-K 12/14/20 10.2

10.15 Fifth Amendment dated February 5, 2021 to Amended and Restated Revolving Credit and Security Agreement dated December 27, 2018 by and among the Company, Quantum LTO Holdings, LLC, the lenders party thereto, and PNC Bank, National Association

10.15 Fifth Amendment dated February 5, 2021 to Amended and Restated Revolving Credit and Security Agreement dated December 27, 2018 by and among the Company, Quantum LTO Holdings, LLC, the borrowers and guarantors party thereto, the lenders party thereto, and PNC Bank, National Association

10-K 06/08/22 10.30

5 unchanged sentences

8-K 03/17/22 10.3

10.19 Ninth Amendment dated April 25, 2022 to Amended and Restated Revolving Credit and Security Agreement dated December 27, 2018 by and among the Company, Quantum LTO Holdings, LLC, Square Box Systems Limited, the lenders party thereto, and PNC Bank, National Association

10.19 Ninth Amendment dated April 25, 2022 to Amended and Restated Revolving Credit and Security Agreement dated December 27, 2018 by and among the Company, Quantum LTO Holdings, LLC, Square Box Systems Limited, the borrowers and guarantors party thereto, the lenders party thereto, and PNC Bank, National Association

8-K 04/27/22 10.1

10.20 Tenth Amendment dated June 1, 2023 to Amended and Restated Revolving Credit and Security Agreement dated December 27, 2018 by and among the Company, Quantum LTO Holdings, LLC, Square Box Systems Limited, the borrowers and guarantors party thereto, the lenders party thereto, and PNC Bank, National Association

8-K 06/06/23 10.2

10.21 Waiver dated November 13, 2023 to Amended and Restated Revolving Credit and Security Agreement dated December 27, 2018 by and among the Company, Quantum LTO Holdings, LLC, Square Box Systems Limited, the borrowers and guarantors party thereto, the lenders party thereto, and PNC Bank National Association

8-K 11/13/23 10.2

Incorporated by Reference

Number Exhibit Description Form Filing Date Exhibit Filed or Furnished Herewith

10.22 Eleventh Amendment and Waiver dated February 14, 2024 to Amended and Restated Revolving Credit and Security Agreement dated December 27, 2018 by and among the Company, Quantum LTO Holdings, LLC, Square Box Systems Limited, the borrowers and guarantors party thereto, the lenders party thereto, and PNC Bank National Association

8-K 02/20/24 10.2

10.23 Twelfth Amendment dated March 22, 2024 to Amended and Restated Revolving Credit and Security Agreement dated December 27, 2018 by and among the Company, Quantum LTO Holdings, LLC, Square Box Systems Limited, the borrowers and guarantors party thereto, the lenders party thereto, and PNC Bank National Association

8-K 03/25/24 10.2

10.24 Stipulation and Agreement of Settlement entered into on April 11, 2019

14 unchanged sentences

10-K 06/24/20 10.6

10.28# Quantum Corporation Employee Stock Purchase Plan Agreement, as amended and restated on November 13, 2019

8-K 11/18/19 10.2

10.32# Quantum Corporation 2023 Long-Term Incentive Plan Agreement

10.33# Quantum Corporation Employee Stock Purchase Plan Agreement, as amended and restated on July 25, 2023

10.34# 2021 Inducement Plan

2 unchanged sentences

1 to 2021 Inducement Plan

10.31# Offer Letter dated December 16, 2019 by and between the Company and Rebecca Jacoby

10-Q 1/29/2020 10.1

10.32 Term Loan Credit and Security Agreement dated August 5, 2021 by and among the Company, Quantum LTO, Square Box Systems Limited, the lenders party thereto, and Blue Torch Finance LLC

10-K 06/06/23 10.30

10.33 First Amendment dated September 30, 2021 to Term Loan Credit and Security Agreement dated August 5, 2021 by and among the Company, Quantum LTO Holdings, LLC, the borrowers and guarantors party thereto, the lenders party thereto, and Blue Torch Finance LLC

10.36 Term Loan Credit and Security Agreement dated August 5, 2021 by and among the Company, the borrowers and guarantors party thereto, the lenders party thereto, and Blue Torch Finance LLC

8-K 08/05/21 10.1

10.34 Second Amendment dated March 15, 2022 to Term Loan Credit and Security Agreement dated August 5, 2021 by and among the Company, Quantum LTO Holdings, LLC, the borrowers and guarantors party thereto, the lenders party thereto, and Blue Torch Finance LLC

10.37 First Amendment dated September 30, 2021 to Term Loan Credit and Security Agreement dated August 5, 2021 by and among the Company, Quantum LTO Holdings, LLC, Square Box Systems Limited, the borrowers and guarantors party thereto, the lenders party thereto, and Blue Torch Finance LLC

8-K 10/06/21 10.2

10.35 Third Amendment dated April 25, 2022 to Term Loan Credit and Security Agreement dated August 5, 2021 by and among the Company, Quantum LTO Holdings, LLC, Square Box Systems Limited, the lenders party thereto, and Blue Torch Finance LLC

10.38 Second Amendment dated March 15, 2022 to Term Loan Credit and Security Agreement dated August 5, 2021 by and among the Company, Quantum LTO Holdings, LLC, Square Box Systems Limited, the borrowers and guarantors party thereto, the lenders party thereto, and Blue Torch Finance LLC

8-K 03/17/22 10.2

10.36 Investment Commitment Agreement dated March 16, 2022 by and among the Company, Neuberger Berman Investment Advisers LLC, OC II FIE V LP, OC III LVS XI LP, BRF Investments, LLC, B.

Riley Securities, Inc., and BRC Partners Opportunity Fund, LP.

10.39 Third Amendment dated April 25, 2022 to Term Loan Credit and Security Agreement dated August 5, 2021 by and among the Company, Quantum LTO Holdings, LLC, Square Box Systems Limited , the borrowers and guarantors party thereto, the lenders party thereto, and Blue Torch Finance LLC

8-K 04/27/22 10.2

10.40 Fourth Amendment dated June 1, 2023 to Term Loan Credit and Security Agreement dated August 5, 2021 by and among the Company, Quantum LTO Holdings, LLC, Square Box Systems Limited, the borrowers and guarantors party thereto, the lenders party thereto, and Blue Torch Finance LLC.

8-K 06/06/23 10.1

10.41 Waiver dated November 10, 2023 to Term Loan Credit and Security Agreement dated August 5, 2021 by and among the Company, Quantum LTO Holdings, LLC, Square Box Systems Limited, the borrowers and guarantors party thereto, the lenders party thereto, and Blue Torch Finance LLC.

8-K 11/13/23 10.1

10.42 Fifth Amendment and Waiver dated February 14, 2024 to Term Loan Credit and Security Agreement dated August 5, 2021 by and among the Company, Quantum LTO Holdings, LLC, the borrowers and guarantors party thereto, the lenders party thereto, and Blue Torch Finance LLC.

8-K 02/20/24 10.1

10.43 Sixth Amendment dated March 22, 2024 to Term Loan Credit and Security Agreement dated August 5, 2021 by and among the Company, Quantum LTO Holdings, LLC, the borrowers and guarantors party thereto, the lenders party thereto, and Blue Torch Finance LLC

8-K 03/25/24 10.1

10.44# Director Offer Letter dated September 16, 2022 by and between the Company and Don Jaworski

8-K 09/28/22 10.1

Incorporated by Reference

Number Exhibit Description Form Filing Date Exhibit Filed or Furnished Herewith

10.45# Director Offer Letter dated September 16, 2022 by and between the Company and Hugues Meyrath

5 unchanged sentences

8-K 01/11/23 10.3

10.48# Offer Letter dated June 5, 2023 by and between the Company and Laura Nash

8-K 06/06/23 10.3

10.49# Offer Letter dated November 9, 2023 by and between the Company and Henk Jan Spanjaard

16.1 Letter from Armanino LLP dated July 27, 2023.

8-K 07/27/23 16.1

16.2 Letter from Armanino LLP dated August 21, 2023

8-K 08/21/23 16.1

21.1 List of Subsidiaries

10-K 06/24/20 21.1

23.1 Consent of Grant Thornton LLP

23.2 Consent of Armanino, LLP

23 unchanged sentences

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints James Lerner and Kenneth Gianella, jointly and severally, his attorneys-in-fact, each with the power of substitution, for him in any and all capacities, to sign any amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange mission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons in the capacities on June 6, 2023.

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints James J.

Lerner, Kenneth P.

Gianella and Brian E.

Cabrera, jointly and severally, his attorneys-in-fact, each with the power of substitution, for him in any and all capacities, to sign any amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange mission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons in the capacities on June 28, 2024.

Signature Title

4 unchanged sentences

Gianella (Principal Financial Officer)

/s/ Lewis Moorehead Chief Accounting Officer

Lewis Moorehead (Principal Accounting Officer)

/s/ Rebecca J.

Jacoby Director

/s/ Laura Nash Chief Accounting Officer

Laura Nash (Principal Accounting Officer)

Arden Director

/s/ Donald Jaworski Director

9 unchanged sentences

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.

What changed 10-K

Item 9A. Controls and Procedures