Item 8. Financial Statements and Supplementary Data
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID: 248 )
50
Consolidated Balance Sheets
52
Consolidated Statements of Operations and Comprehensive Loss
53
Consolidated Statements of Cash Flows
54
Consolidated Statements of Stockholders’ Deficit
55
Index to Notes to Consolidated Financial Statements
56
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Shareholders
Quantum Corporation
Opinion on the financial statements
We have audited the accompanying consolidated balance sheets of Quantum Corporation (a Delaware corporation) and subsidiaries (the “Company”) as of March 31, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, changes in stockholders’ deficit, and cash flows for each of the two years in the period ended March 31, 2025, and the related notes (collectively referred to as the consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended March 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
Going concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company believes it will be in violation of the net leverage coverage covenant for the quarter ended September 30, 2025. The Company’s plan which is also described in Note 1, contemplates the Company negotiating waivers to these covenants and is evaluating strategies to restructure or refinance the existing term debt. If the Company is unable to obtain additional
waivers, the term debt will become immediately due, and additional liquidity will be required to satisfy the obligations. The Company’s ability to achieve the foregoing elements of its business, which may be necessary to permit the realization of assets and satisfaction of liabilities in the ordinary course of business, is uncertain and raises substantial doubt about its ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical audit matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Determination of Standalone Selling Price
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As described further in Note 1 to the consolidated financial statements, the Company’s contracts with customers often include multiple performance obligations. The transaction price of each contract is allocated to individual performance obligations based upon relative stand-alone selling price (“SSP”). The SSP of performance obligations is determined based on observable prices at which the Company separately sells the products and services or alternative methods. If the SSP is not directly observable, the Company will estimate the SSP considering historical and current selling prices, internal discounting practices, and competitor information for similar products/services, which can require significant judgment and are subject to change based on continuous reevaluation. We identified the determination of the SSP of performance obligations as a critical audit matter.
The principal considerations for our assessment that the determination of the SSP of performance obligations represents a critical audit matter are the high degree of auditor judgment and an increased extent of effort related to evaluating SSP due to the absence of directly observable data which requires the Company to make subjective assumptions used to estimate the SSP for each performance obligation.
Our audit procedures related to the determination of the SSP of performance obligations included the following primary procedures, among others:
• We evaluated the appropriateness of the overall methodology used by management to develop the estimates, including considering whether the methodology maximized the use of observable outputs.
• We tested management’s process by evaluating key assumptions for performance obligations that do not include directly observable sales or for performance obligations that do not include sufficient directly observable sales. Specifically, we:
◦ considered the consistency with external market and competitor margin data for products and services
◦ determined the appropriateness of the categorization and classification of products and services
◦ recalculated and validated the inputs used in management’s calculations, including selling prices and discounts. Since the inputs were derived from multiple sources and were dependent on the type of revenue for each performance obligation, our audit procedures needed to be tailored accordingly.
◦ tested the completeness and accuracy of management’s calculations of estimated selling prices, including the allocation between products and services
/s/ GRANT THORNTON LLP
We have served as the Company's auditor since 2023.
Bellevue, Washington
August 26, 2025
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QUANTUM CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
March 31,
2025 2024
Assets
Current assets:
Cash and cash equivalents $ 16,464 $ 25,692
Restricted cash 139 168
Accounts receivable, net of allowance for credit losses of $ 99 and $ 22 , respectively
52,502 67,788
Manufacturing inventories 20,336 17,753
Service parts inventories 2,098 9,783
Prepaid expenses 2,738 2,186
Other current assets 8,529 8,414
Total current assets 102,806 131,784
Property and equipment, net 11,378 12,028
Intangible assets, net 281 1,669
Goodwill 12,969 12,969
Right-of-use assets, net 8,580 9,425
Other long-term assets 19,388 19,740
Total assets $ 155,402 $ 187,615
Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable $ 31,463 $ 26,087
Accrued compensation 9,214 18,214
Deferred revenue, current portion 75,076 78,511
Accrued restructuring charges 786 —
Term debt
96,486 82,496
Revolving credit facility 26,600 26,604
Warrant liabilities — 4,046
Other accrued liabilities 17,982 13,986
Total current liabilities 257,607 249,944
Deferred revenue, net of current portion 38,847 38,176
Operating lease liabilities 8,934 9,621
Other long-term liabilities 14,380 11,372
Total liabilities 319,768 309,113
Commitments and Contingencies (Note 10)
Stockholders’ deficit
Preferred stock:
Preferred stock, 20,000 shares authorized; no shares issued as of March 31, 2025 and 2024, respectively
— —
Common stock:
Common stock, $ 0.01 par value; 225,000 shares authorized; 6,962 and 4,792 shares issued and outstanding at March 31, 2025 and 2024, respectively
70 48
Additional paid-in capital 779,645 708,027
Accumulated deficit ( 942,471 ) ( 827,380 )
Accumulated other comprehensive loss ( 1,610 ) ( 2,193 )
Total stockholders' deficit ( 164,366 ) ( 121,498 )
Total liabilities and stockholders' deficit $ 155,402 $ 187,615
The accompanying notes are an integral part of these consolidated financial statements.
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QUANTUM CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except per share amounts)
Year Ended March 31,
2025 2024
Revenue
Product $ 154,182 $ 174,879
Service and subscription 110,658 126,590
Royalty 9,218 10,131
Total revenue 274,058 311,600
Cost of revenue
Product 119,730 136,419
Service and subscription 44,496 50,292
Total cost of revenue 164,226 186,711
Gross profit 109,832 124,889
Operating expenses
Sales and marketing 52,320 60,893
General and administrative 63,961 51,547
Research and development 31,141 38,046
Restructuring charges 4,090 3,280
Total operating expenses 151,512 153,766
Loss from operations ( 41,680 ) ( 28,877 )
Other expense, net
( 710 ) ( 1,746 )
Interest expense ( 23,607 ) ( 15,089 )
Change in fair value of warrant liability ( 45,270 ) 5,137
Loss on debt extinguishment, net ( 3,003 ) —
Net loss before income taxes
( 114,270 ) ( 40,575 )
Income tax provision 821 711
Net loss
$ ( 115,091 ) $ ( 41,286 )
Net loss per share - basic and diluted
$ ( 22.35 ) $ ( 8.68 )
Weighted average shares - basic and diluted 5,150 4,754
Net loss
$ ( 115,091 ) $ ( 41,286 )
Foreign currency translation adjustments, net 583 ( 612 )
Total comprehensive loss
$ ( 114,508 ) $ ( 41,898 )
The accompanying notes are an integral part of these consolidated financial statements.
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QUANTUM CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Year Ended March 31,
2025 2024
Operating activities
Net loss $ ( 115,091 ) $ ( 41,286 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 5,598 9,313
Amortization of debt issuance costs 5,475 2,735
Non-cash lease expense
1,606 1,453
Paid-in-kind interest 5,179 2,314
Provision for manufacturing and service inventories 4,877 6,490
Stock-based compensation 2,828 4,721
Change in fair value of warrant liabilities 45,270 ( 3,943 )
Non-cash loss on debt extinguishment 3,003 —
Other non-cash 93 990
Changes in assets and liabilities, net of effect of acquisitions:
Accounts receivable 15,209 4,846
Manufacturing inventories ( 5,879 ) ( 1,396 )
Service parts inventories 6,680 11,852
Accounts payable 6,154 ( 11,193 )
Prepaid expenses ( 552 ) 1,971
Operating lease liabilities
( 1,490 ) ( 1,536 )
Deferred revenue ( 2,764 ) 1,386
Accrued restructuring charges 786 —
Accrued compensation ( 9,000 ) 2,504
Other assets 2,110 ( 2,198 )
Other liabilities 6,295 821
Net cash used in operating activities
( 23,613 ) ( 10,156 )
Investing activities
Purchases of property and equipment ( 4,947 ) ( 5,869 )
Net cash used in investing activities
( 4,947 ) ( 5,869 )
Financing activities
Borrowings of long-term debt, net of debt issuance costs 25,000 12,541
Repayments of long-term debt ( 19,129 ) ( 5,747 )
Borrowings of credit facility 416,418 421,623
Repayments of credit facility ( 418,811 ) ( 412,704 )
Proceeds from shares issued related to the SEPA, net 15,828 —
Net cash provided by financing activities 19,306 15,713
Effect of exchange rate changes on cash and cash equivalents ( 3 ) ( 3 )
Net change in cash, cash equivalents, and restricted cash ( 9,257 ) ( 315 )
Cash, cash equivalents, and restricted cash at beginning of period 25,860 26,175
Cash, cash equivalents, and restricted cash at end of period $ 16,603 $ 25,860
Supplemental disclosure of cash flow information
Cash paid for interest $ 11,927 $ 12,314
Cash paid for income taxes, net of refunds $ 1,814 $ 1,776
Non-cash transactions
Purchases of property and equipment included in accounts payable $ 850 $ 661
Right-of-use assets obtained in exchange for new lease liabilities $ 678 $ 594
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the statement of cash flows:
Cash and cash equivalents $ 16,464 $ 25,692
Restricted cash, current 139 168
Total cash, cash equivalents and restricted cash at the end of period $ 16,603 $ 25,860
The accompanying notes are an integral part of these consolidated financial statements.
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QUANTUM CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
(in thousands)
Common Stock Additional
Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders' Deficit
Shares Amount
March 31, 2023 4,678 $ 47 $ 703,259 $ ( 786,094 ) $ ( 1,581 ) $ ( 84,369 )
Net loss — — — ( 41,286 ) — ( 41,286 )
Foreign currency translation adjustments, net of income taxes — — — — ( 612 ) ( 612 )
Shares issued under employee incentive plans, net 114 1 ( 1 ) — — —
Warrants issued related to long-term debt — — 49 — — 49
Stock-based compensation — — 4,720 — — 4,720
March 31, 2024 4,792 $ 48 $ 708,027 $ ( 827,380 ) $ ( 2,193 ) $ ( 121,498 )
Net loss — ( 115,091 ) ( 115,091 )
Foreign currency translation adjustments, net of income taxes — — — — 583 583
Shares issued under employee incentive plans, net 157 2 ( 2 ) — — —
Warrants exercised related to long-term debt
856 9 52,975 — — 52,984
Shares issued related to the SEPA, net
1,157 11 15,817 — — 15,828
Stock-based compensation — — 2,828 — — 2,828
March 31, 2025 6,962 $ 70 $ 779,645 $ ( 942,471 ) $ ( 1,610 ) $ ( 164,366 )
The accompanying notes are an integral part of these consolidated financial statements.
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INDEX TO NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Note 1: Description of Business and Significant Accounting Policies
56
Note 2: Revenue
65
Note 3: Balance Sheet Information
66
Note 4: Debt
68
Note 5: Leases
71
Note 6: Restructuring Charges
72
Note 7: Common Stock
72
Note 8: Net Loss Per Share
77
Note 9: Income Taxes
78
Note 10: Commitments and Contingencies
80
Note 11: Fair Value of Financial Instruments
81
Note 12:
Segment Information
81
Note 13:
Subsequent Events
83
Note 14:
Restatement of Unaudited Quarterly Financial Statements
84
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Description of Business
Quantum Corporation, together with its consolidated subsidiaries (“Quantum” or the “Company”), stores and manages digital video and other forms of unstructured data, providing streaming performance for video and rich media applications, along with low-cost, long-term storage systems for data protection and archiving. The Company helps customers around the world capture, create and share digital data and preserve and protect it for decades. The Company’s software-defined, hyperconverged storage solutions span from non-violate memory express (“NVMe”), to solid state drives, (“SSD”), hard disk drives, (“HDD”), tape and the cloud and are tied together leveraging a single namespace view of the entire data environment. The Company works closely with a broad network of distributors, value-added resellers (“VARs”), direct marketing resellers (“DMRs”), original equipment manufacturers (“OEMs”) and other suppliers to meet customers’ evolving needs.
Basis of Presentation
The consolidated financial statements and accompanying notes have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). All intercompany balances and transactions have been eliminated. The Company reviews subsidiaries and affiliates, as well as other entities, to determine if they should be considered variable interest entities (“VIE”), and whether it should change the consolidation determinations based on changes in their characteristics. The Company considers an entity a VIE if its equity investors own an interest therein that lacks the characteristics of a controlling financial interest or if such investors do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support or if the entity is structured with non-substantive voting interests. To determine whether or not the entity is consolidated with the Company’s results, the Company also evaluates which interests are variable interests in the VIE and which party is the primary beneficiary of the VIE.
Reverse Stock Split
On August 15, 2024, the Company's stockholders approved an amendment to the Company's Amended and Restated Certificate of Incorporation to effect a reverse stock split of the issued shares of the Company’s common stock, par value $ .01 per share (“Common Stock”), at a ratio ranging from 1 share-for-5 shares up to a ratio of 1-for-20 shares, with the exact ratio, if any, to be selected by the board of directors (the “Board”) and set forth in a
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public announcement. On August 15, 2024, the Board approved a 1-for-20 reverse stock split (the “Reverse Stock Split”) of the Common Stock. The Reverse Stock Split became effective as of August 26, 2024 at 4:01 p.m., Eastern Time (the “Effective Time”). At the Effective Time, every twenty issued shares of Common Stock were automatically reclassified into one issued share of Common Stock, with any fractional shares resulting from the Reverse Stock Split rounded up to the nearest whole share. The number of outstanding shares of common stock was reduced from approximately 95.9 million shares to approximately 4.8 million shares.
All share and per share amounts for Common Stock in these consolidated financial statements and notes thereto have been retroactively adjusted for all periods presented to give effect to the Reverse Stock Split.
Going Concern
These consolidated financial statements have been prepared in accordance with GAAP assuming the Company will continue as a going concern. The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business. However, substantial doubt about the Company’s ability to continue as a going concern exists.
The Company believes it will be in violation of the net leverage covenant under the Term Loan for the quarter ended September 30, 2025. Additionally, under the terms of the Term Loan, the Company is required to use certain proceeds of the SEPA to pay down the Term Loan. The Company is currently negotiating waivers to these covenants and is evaluating strategies to restructure or refinance the existing term debt. On August 13, 2025, the Company terminated the PNC Credit Facility. If the Company is unable to obtain additional waivers, the term debt will become immediately due, and additional liquidity will be required to satisfy the obligations. Due to the fact that a violation of the debt covenants results in the debt becoming currently payable, the long-term portion of the term debt and PNC Credit Facility have been classified as a current liability in the accompanying consolidated balance sheet as of March 31, 2025. See Note 4: Debt for additional information related to the Company’s credit agreements.
The consolidated financial statements do not include any adjustments to the carrying amounts and classification of assets, liabilities, and reported expenses that may be necessary if the Company were unable to continue as a going concern. Our credit facilities are collateralized by a pledge of all our assets.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and accompanying notes. Actual results could differ from these estimates and assumptions due to risks and uncertainties. Such estimates include, but are not limited to, the determination of standalone selling price for revenue arrangements with multiple performance obligations, inventory adjustments, useful lives of intangible assets and property and equipment, stock-based compensation, fair value of warrants, and provision for income taxes including related reserves. Management bases its estimates on historical experience and on various other assumptions which management believes to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.
Cash and Cash Equivalents
The Company has cash deposits and cash equivalents deposited in or managed by major financial institutions. Cash equivalents include all highly liquid investment instruments with an original maturity of three months or less and consist primarily of money market accounts. At times the related amounts are in excess of amounts insured by the Federal Deposit Insurance Corporation. The Company has not experienced any losses with these financial institutions and does not believe such balances are exposed to significant credit risk.
Restricted Cash
Restricted cash is comprised of bank guarantees and similar required minimum balances that serve as cash collateral in connection with various items including insurance requirements, value added taxes, ongoing tax audits and leases in certain countries.
Accounts Receivable and Allowance for Credit Losses
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Accounts receivable are recorded at the invoiced amount, and stated at realizable value, net of an allowance for credit losses. The Company maintains an allowance for credit losses for estimated losses based on historical experience and expected collectability of outstanding accounts receivable. The Company performs ongoing credit evaluations of its customers’ financial condition, and for the majority of its customers require no collateral. For customers that do not meet the Company’s credit standards, the Company may require a form of collateral, such as cash deposits or letters of credit, prior to the completion of a transaction. These credit evaluations require significant judgment and are based on multiple sources of information. The Company analyzes such factors as its historical bad debt experience, industry and geographic concentrations of credit risk, current economic trends and changes in customer payment terms. The Company will write-off customer balances in full to the reserve when it has determined that the balance is not recoverable. Changes in the allowance for credit losses are recorded in general and administrative expenses.
Fair Value of Financial Instruments
The carrying value of our financial instruments, excluding debt and warrants, approximates fair value.
Manufacturing Inventories
Manufacturing inventory is recorded at the lower of cost or net realizable value, with cost being determined on a first-in, first-out (“FIFO”) basis. Costs include material, direct labor, and an allocation of overhead in the case of work in process. Adjustments to reduce the cost of manufacturing inventory to its net realizable value, if required, are made for estimated excess, obsolete or impaired balances. Factors influencing these adjustments include declines in demand, rapid technological changes, product life cycle and development plans, component cost trends, product pricing, physical deterioration and quality issues. Revisions to these adjustments would be required if these factors differ from the Company’s estimates.
Service Parts Inventories
Service parts inventories are recorded at the lower of cost or net realizable value, with cost being determined on a FIFO basis. The Company carries service parts because it generally provides product warranty for one to three years and earns revenue by providing enhanced and extended warranty and repair services during and beyond this warranty period. Service parts inventories consist of both component parts, which are primarily used to repair defective units, and finished units, which are provided for customer use permanently or on a temporary basis while the defective unit is being repaired. The Company records adjustments to reduce the carrying value of service parts inventory to its net realizable value and disposes of parts with no use and a net realizable value of zero. Factors influencing these adjustments include product life cycles, end of service life plans and volume of enhanced or extended warranty service contracts. Estimates of net realizable value involve significant estimates and judgments about the future, and revisions would be required if these factors differ from the Company’s estimates.
Property and Equipment
Property and equipment are carried at cost, less accumulated depreciation and amortization, computed on a straight-line basis over the estimated useful lives of the assets as follows:
Machinery and equipment 3 to 5 years
Computer equipment 3 to 5 years
Other software 3 years
Furniture and fixtures 5 years
Other office equipment 5 years
Leasehold improvements Shorter of useful life or life of lease
When assets are retired or otherwise disposed of, the related costs and accumulated depreciation are removed from the balance sheet and any resulting gain or loss is reflected in the consolidated statements of operations and comprehensive loss in the period realized.
The Company evaluates the recoverability of the carrying amount of its property and equipment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be fully recoverable. A potential impairment charge is evaluated when the undiscounted expected cash flows derived from an asset group are less than its carrying amount. Impairment losses, if applicable, are measured as the amount by which the carrying value of an asset group exceeds its fair value and are recognized in operating results. Judgment is used
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when applying these impairment rules to determine the timing of impairment testing, the undiscounted cash flows used to assess impairments and the fair value of the asset group.
In fiscal 2022, we entered into a new lease in Centennial, Colorado and we incurred material leasehold improvements which are being amortized over the term of the lease. At the time of inception, this term was 15.5 years and as at March 31, 2025 there are 12.4 years remaining.
Goodwill
Goodwill represents the excess of the purchase price consideration over the estimated fair value of the tangible and intangible assets acquired and liabilities assumed in a business combination. Goodwill is evaluated for impairment annually in the third quarter of the Company's fiscal year as a single reporting unit, and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. The Company may elect to qualitatively assess whether it is more likely than not that the fair value of its reporting unit is less than its carrying value. If the Company opts not to qualitatively assess, a quantitative goodwill impairment test is performed. The quantitative test compares its reporting unit's carrying amount, including goodwill, to its fair value calculated based on its enterprise value. If the carrying amount exceeds its fair value, an impairment loss is recognized for the excess. The Company did not recognize any impairment of goodwill in any of the periods presented in the consolidated financial statements.
Purchased Intangible Assets
Purchased intangible assets with finite lives are stated at cost, net of accumulated amortization. The Company amortizes its intangible assets on a straight-line basis over an estimated useful life of two to four years .
Impairment of Long-Lived Assets
The Company reviews its long-lived asset group, including property and equipment and finite-lived intangible assets, for impairment annually, or whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. The Company measures the recoverability of this asset group by comparing the carrying amounts to the future undiscounted cash flows the asset group is expected to generate. If the total of the future undiscounted cash flows is less than the carrying amount of an asset group, the Company records an impairment charge for the amount by which the carrying amount of the asset group exceeds its fair market value.
Operating Leases
The Company determines if an arrangement contains a lease at inception. Lease liabilities are recognized at the present value of the future lease payments at commencement date. The interest rate implicit in the Company's operating leases are not readily determinable, and therefore an incremental borrowing rate is estimated to determine the present value of future payments. The estimated incremental borrowing rate factors in a hypothetical interest rate on a collateralized basis with similar terms, payments, and economic environments. The operating lease right-of-use ("ROU") asset is determined based on the lease liability initially established and reduced for any prepaid lease payments and any lease incentives. The Company accounts for the lease and non-lease components of operating lease contract consideration as a single lease component.
Certain of the operating lease agreements contain rent concession, rent escalation, and option to renew provisions. Rent concession and rent escalation provisions are considered in determining the lease cost. Lease cost is recognized on a straight-line basis over the lease term commencing on the date the Company has the right to use the leased property. The Company generally uses the base, non-cancelable, lease term when recognizing the lease assets and liabilities, unless it is reasonably certain that an extension or termination option will be exercised.
Certain operating leases require the Company to pay taxes, insurance, maintenance, and other operating expenses associated with the leased asset. Such amounts are not included in the measurement of the lease liability to the extent they are variable in nature. These variable lease costs are recognized as a variable lease expense when incurred.
In addition, certain operating lease agreements contain tenant improvement allowances from the Company's landlords. These allowances are accounted for as lease incentives and reduce its ROU asset and lease cost over the lease term.
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The Company has applied the practical expedient for short-term leases which have a lease term of less than twelve months and do not include an option to purchase the underlying asset that is reasonably certain to be exercised, the Company recognizes rent expense in the consolidated statements of operations and comprehensive loss on a straight-line basis over the lease term and record variable lease payments as incurred.
Revenue Recognition
The Company generates revenue from three main sources: (1) product, (2) service and subscription, and (3) royalties. Sales tax collected on sales is netted against government remittances and thus, recorded on a net basis. The Company's performance obligations are satisfied at a point in time or over time as stand ready obligations. The majority of revenue is recognized at a point in time when products are accepted or based upon shipping terms when control transfers.
Product Revenue
The Company's product revenue is comprised of multiple storage solution hardware and software offerings targeted towards consumer and enterprise customers. Revenue from product sales is recognized at the point in time when the customer takes control of the product. If there are significant post-delivery obligations, the related revenue is deferred until such obligations are fulfilled. Revenue from contracts with customer acceptance criteria are recognized upon end user acceptance.
Service and Subscription Revenue
Service and subscription revenue consists of four components: (a) post-contract customer support agreements,
(b) software subscriptions, (c) installation, and (d) consulting & training.
Customers have the option to choose between different levels of hardware and software support. The Company's support plans include various stand-ready obligations such as technical assistance hot-lines, replacement parts maintenance, and remote monitoring that are delivered whenever called upon by its customers. Support plans provide additional services and assurance outside the scope of the Company's primary product warranties. Revenue from support plans is recognized ratably over the contractual term of the service contract as this aligns with delivery to the customer.
The Company also sells software subscriptions that include term licenses which are recognized as revenue when the license is delivered to the customer and related customer support which is recognized ratably over the service period.
The Company offers installation services on all its products. Customers can opt to either have Quantum or a Quantum-approved third-party service provider install its products. Installation services are typically completed within a short period of time and revenue from these services are recognized at the point when installation is complete.
A majority of the Company's consulting and training revenue does not take significant time to complete therefore these obligations are satisfied over time as each day is completed.
Royalty Revenue
The Company licenses certain intellectual property to third party manufacturers which gives the manufacturers rights to intellectual property including the right to either manufacture or include the intellectual property in their products for resale. Licensees pay the Company a per-unit royalty for sales of their products that incorporate its intellectual property. On a periodic and timely basis, the licensees provide the Company with reports containing units sold to end users subject to the royalties. The reports substantiate that the performance obligation has been satisfied therefore revenue is recognized based on the reports or when amounts can be reasonably estimated.
Deferred Revenue
Deferred revenue primarily consists of amounts that have been invoiced, which are typically with net 45-day payment terms, but have not yet been recognized as revenue and performance obligations pertaining to service and
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subscription contracts. The current portion of deferred revenue represents the amounts that are expected to be recognized as revenue within one year of the consolidated balance sheet dates.
Significant Judgments
The Company generally enters into contracts with customers to provide storage solutions to meet their individual needs. Most of the Company’s contracts contain multiple goods and services designed to meet each customer's unique storage needs. Contracts with multiple goods and services have multiple distinct performance obligations as the promise to transfer hardware, installation services, and support services are capable of being distinct and provide economic benefit to customers on their own.
Stand-alone selling price
For contracts with multiple performance obligations, the Company allocates the transaction price to each performance obligation based on the relative standalone selling price (“SSP”) of the good or service underlying each performance obligation. The SSP represents the amount for which the Company would sell the good or service to a customer on a standalone basis (i.e., not sold as a bundle with any other products or services). Where SSP may not be directly observable (e.g., the performance obligation is not sold separately), the Company maximized the use of observable inputs by using information including historical and current selling prices, internal discounting practices, competitor information for similar customers and similar products/services, and other observable inputs.
Variable consideration
Product revenue includes multiple types of variable consideration, such as rebates, returns, or stock rotations. All contracts with variable consideration require payment upon satisfaction of the performance obligation typically with net 45-day payment terms. The Company does not include significant financing components in its contracts. The Company constrains estimates of variable consideration to amounts that are not expected to result in a significant revenue reversal in the future, primarily based on the expected value of consideration to be returned to the customer under the specific terms of the underlying programs.
The expected value method is used to estimate the consideration expected to be returned to the customer. The Company uses historical data and current trends to drive the estimates. The Company records a reduction to revenue to account for these programs. For inventory returns, the Company initially measures this asset at the carrying amount of the inventory, less any expected costs to recover the goods including potential decreases in the value of the returned goods.
Costs of Obtaining Contracts with Customers
The Company’s primary cost to obtain contracts is sales commissions earned by sales representatives. These costs are incremental and expected to be recovered indirectly through the margin inherent within the contract. A large portion of the Company’s contracts are completed within a one-year performance period, and for contracts with a specified term of one year or less, the Company has elected to apply a practical expedient available in Topic 340-40: Other Assets and Deferred Costs – Contracts with Customers , which allows the Company to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the Company would otherwise have recognized is one year or less.
Sales commissions earned on contracts exceeding one year qualify for capitalization after application of the practical expedient. The duration of these contracts ranges from 1 - 7 years. Total capitalized costs were $ 2.3 million, $ 2.7 million and $ 2.0 million for fiscal 2025, 2024 and 2023, respectively. Total amortization of capitalized costs of obtaining revenue contracts were $ 1.3 million, $ 0.9 million and $ 0.5 million for fiscal 2025, 2024 and 2023, respectively. These costs are recognized straight line over the associated sales contract term.
Cost of Service and Subscription Revenue
The Company classifies expenses as service cost of revenue by estimating the portion of its total cost of revenue that relates to providing field support to its customers under contract. These estimates are based upon a variety of factors, including the nature of the support activity and the level of infrastructure required to support the activities from which it earns service and subscription revenue. In the event its service business changes, its estimates of cost of service and subscription revenue may be impacted.
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Research and Development Costs
Expenditures relating to the development of new products and processes are expensed as incurred. These costs include expenditures for employee compensation, materials used in the development effort, other internal costs, as well as expenditures for third party professional services. The Company has determined that technological feasibility for its software products is reached shortly before the products are released to manufacturing. Costs incurred after technological feasibility is established have not been material. The Company expenses software-related research and development costs as incurred.
Internal-use Software Costs
The Company capitalizes costs incurred to implement software solely for its internal use, including (i) hosted applications used to deliver the Company's support services, and (ii) certain implementation costs incurred in a hosting arrangement that is a service contract when the preliminary project stage is complete, management with the relevant authority authorizes and commits to the funding of the software project, and it is probable the project will be completed and used to perform the intended function.
Software implementation costs are capitalized to either other current assets or other long-term assets on the Company's consolidated balance sheet and amortized over 10 years starting when the software is ready for its intended use. Software implementation costs capitalized were $ 1.0 million and $ 5.0 million in fiscal 2025 and 2024, respectively. Related amortization expense for software implementation costs was $ 1.8 million and $ 0.1 million during fiscal 2025 and 2024, respectively.
Advertising Expense
Advertising expense is recorded as incurred and was $ 2.0 million and $ 2.5 million in fiscal 2025 and 2024, respectively.
Shipping and Handling Fees
Shipping and handling fees are included in cost of revenue as incurred and were $ 6.8 million and $ 9.7 million in fiscal 2025 and 2024, respectively.
Restructuring Reserves
Restructuring reserves include charges related to the realignment and restructuring of the Company’s business operations. These charges represent judgments and estimates of the Company’s costs of severance, closure and consolidation of facilities and settlement of contractual obligations under its operating leases, including sublease rental rates, asset write-offs and other related costs. The Company reassesses the reserve requirements to complete each individual plan under the restructuring programs at the end of each reporting period. If these estimates change in the future or actual results differ from the Company’s estimates, additional charges may be required. See Note 6: Restructuring Charges for more information.
Foreign Currency Translation
The Company's international operations generally use their local currency as their functional currency. Assets and liabilities are translated at exchange rates in effect at the balance sheet date. Income and expense accounts are translated at the average monthly exchange rates during the year. Resulting translation adjustments are reported as a component of other comprehensive loss and recorded in accumulated other comprehensive loss in the accompanying consolidated balance sheets.
Warrant Accounting
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance ASC Topic 480 , Distinguishing Liabilities from Equity (“Topic 480”) and ASC Topic 815, Derivatives and Hedging (“Topic 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to Topic 480, meet the definition of a liability pursuant to Topic 480, and whether the warrants meet all of the requirements for equity classification under Topic 815, including whether the warrants are indexed to the Company’s own common shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment,
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is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance or modification. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s consolidated statement of operations. All Lender Warrants were exercised as of March 31, 2025.
Income Taxes
The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes, in which deferred tax asset and liabilities are recognized based on differences between the financial reporting carrying values of assets and liabilities and the tax basis of those assets and liabilities, measured at the enacted tax rates expected to apply to taxable income in the years in which those tax assets or liabilities are expected to be realized or settled.
A valuation allowance is provided if the Company believes it is more likely than not that all or some portion of the deferred tax asset will not be realized. An increase or decrease in the valuation allowance, if any, that results from a change in circumstances, and which causes a change in the Company’s judgment about the realizability of the related deferred tax asset, is included in the tax provision.
The Company assesses whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial statements. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized in the consolidated financial statements from such a position is measured as the largest amount of benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. The Company reevaluates these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances and changes in tax law. The Company recognizes penalties and tax-related interest expense as a component of income tax expense in the consolidated statements of operations.
Asset Retirement Obligations
The Company records an asset retirement obligation for the fair value of legal obligations associated with the retirement of tangible long-lived assets and a corresponding increase in the carrying amount of the related asset in the period in which the obligation is incurred. In periods subsequent to initial measurement, the Company recognizes changes in the liability resulting from the passage of time and revisions to either the timing or the amount of the original estimate. Over time, the liability is accreted to its present value and the capitalized cost is depreciated over the estimated useful life of the asset. The Company’s obligations relate primarily to certain legal obligations to remediate leased property on which certain assets are located.
Warranty Expense
The Company warranties its products against certain defects and the terms range from one to three years . The Company provides for the estimated costs of fulfilling its obligations under hardware warranties at the time the related revenue is recognized. The Company estimates the provision based on historical and projected product failure rates, historical and projected repair costs, and knowledge of specific product failures (if any). The Company regularly reassess its estimates to determine the adequacy of the recorded warranty liability and adjusts the provision, as necessary.
Debt Issuance Costs
Debt issuance costs for the PNC Credit Facility are capitalized and amortized over the term of the underlying agreements on a straight-line basis. Amortization of these debt issuance costs is included in interest expense while the unamortized debt issuance cost balance is included in other current assets or other assets. Debt issuance costs for the Term Loans are recorded as a reduction to the carrying amount and are amortized over their terms using the effective interest method. Amortization of these debt issuance costs is included in interest expense.
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Stock-Based Compensation
The Company classifies stock-based awards granted in exchange for services as either equity awards or liability awards. The classification of an award as either an equity award or a liability award is generally based upon cash settlement options. Equity awards are measured based on the fair value of the award at the grant date. Liability awards are re-measured to fair value each reporting period. The Company recognizes stock-based compensation on a straight-line basis over the award’s requisite service period, which is generally the vesting period of the award, less actual forfeitures. No compensation expense is recognized for awards for which participants do not render the requisite services. For equity and liability awards earned based on performance or upon occurrence of a contingent event, when and if the awards will be earned is estimated. If an award is not considered probable of being earned, no amount of stock-based compensation is recognized. If the award is deemed probable of being earned, related compensation expense is recorded over the estimated service period. To the extent the estimate of awards considered probable of being earned changes, the amount of stock-based compensation recognized will also change. We account for forfeitures as they occur for all stock-based awards.
Concentration of Credit Risk
The Company sells products to customers in a wide variety of industries on a worldwide basis. In countries or industries where the Company is exposed to material credit risk, the Company may require collateral, including cash deposits and letters of credit, prior to the completion of a transaction. The Company does not believe it has significant credit risk beyond that provided for in the consolidated financial statements in the ordinary course of business.
In fiscal 2025 and 2024, no customer represented more than 10% of the Company's total revenue.
No customer comprised over 10% of accounts receivable as of March 31, 2025. One customer comprised approximately 23 % of accounts receivable as of March 31, 2024.
If the Company is unable to obtain adequate quantities of the inventory needed to sell its products, the Company could face cost increases or delays or discontinuations in product shipments, which could have a material adverse effect on the Company’s results of operations. In many cases, the Company’s chosen vendor may be the sole source of supply for the products or parts they manufacture, or services they provide, for the Company. Some of the products the Company purchases from these sources are proprietary or complex in nature, and therefore cannot be readily or easily replaced by alternative sources.
Segment Reporting
The Company’s chief operating decision-maker ("CODM") is its Chief Executive Officer who makes resource allocation decisions and assesses performance based on financial information presented on a consolidated basis. The CODM reviews and utilizes consolidated financial information, including revenue, gross profit, operating income and net income as reported on the consolidated statements of operations, to assess performance and allocate resources to support strategic priorities. Consolidated net loss is our segment's primary measure of profit or loss. The measure of segment assets is reported on the consolidated balance sheets as total consolidated assets. There are no segment managers who are held accountable by the CODM, or anyone else, for operations, operating results, and planning for levels or components below the consolidated unit level. Accordingly, the Company has one reportable segment and operates in three geographic regions: (a) Americas; (b) Europe, Middle East, and Africa (“EMEA”); and (c) Asia Pacific (“APAC”). See Note 12: Segment Information for more information.
Defined Contribution Plan
The Company sponsors a qualified 401(k) retirement plan for its U.S. employees. The plan covers substantially all employees who have attained the age of 18. Participants may voluntarily contribute to the plan up to the maximum limits established by Internal Revenue Service regulations. For the years ended March 31, 2025 and 2024, the Company incurred $ 0.3 million and $ 1.4 million in matching contributions, respectively. The Company suspended its program of matching contributions under the 401(k) retirement plan as of July 2024.
Recently Adopted Accounting Pronouncement
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In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , which requires disclosure of incremental segment information on an annual and interim basis. We adopted this standard for our annual period beginning fiscal year 2025 on a retrospective basis to all periods presented. The adoption of this standard did not result in a significant change to our consolidated financial statement disclosures.
Recent Accounting Pronouncement Not Yet Adopted
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which requires greater disaggregation of tax information in rate reconciliation and income taxes paid by jurisdiction. ASU 2023-09 will be effective for our fiscal year beginning April 1, 2025, with early adoption permitted. We are currently evaluating the impact of this standard on our financial statement disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income -
Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which
requires additional disclosures of specific expense categories included within each expense caption presented on
the Statements of Operations. The new standard can be applied on either a fully retrospective or prospective basis.
ASU 2024-03 will be effective for our fiscal year beginning April 1, 2027, and interim periods within our fiscal year
beginning April 1, 2028, with early adoption permitted. We are currently evaluating the impact of this new standard
on our financial statement disclosures.
NOTE 2: REVENUE
Contract Balances
The following table presents the Company’s contract liabilities and certain information related to this balance as of March 31, 2025 (in thousands):
March 31, 2025 March 31, 2024 March 31, 2023
Accounts receivable, net
$ 52,502 $ 67,788 $ 72,464
Deferred revenue $ 113,923 $ 116,687 $ 115,302
Revenue recognized in the period from amounts included in contract liabilities at the beginning of the period $ 74,048 $ 76,304 $ 83,113
Remaining Performance Obligations
Total remaining performance obligations (“RPO”) which is contracted but not recognized revenue was $ 138.0 million as of March 31, 2025. RPO consists of both deferred revenue and non-cancelable amounts that are expected to be invoiced and recognized as revenue in future periods and excludes variable consideration related to sales-based royalties.
Remaining performance obligations consisted of the following (in thousands):
Current Non-Current Total
As of March 31, 2025 $ 97,013 $ 41,010 $ 138,023
Deferred revenue primarily consists of amounts invoiced and paid but not recognized as revenue including performance obligations pertaining to subscription services. The table below reflects our deferred revenue as of March 31, 2025 (in thousands):
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Deferred revenue by period
(in thousands) Total 1 year or less 1 – 3 Years 3 year or greater
Service revenue $ 94,462 $ 65,498 $ 23,342 $ 5,622
Subscription revenue 19,461 9,578 7,918 1,965
Total $ 113,923 $ 75,076 $ 31,260 $ 7,587
NOTE 3: BALANCE SHEET INFORMATION
Certain significant amounts included in the Company's consolidated balance sheets consist of the following (in thousands):
Manufacturing inventories March 31,
2025 2024
Manufactured finished goods $ 10,471 $ 7,074
Work in progress 380 769
Raw materials 9,485 9,910
Total manufacturing inventories $ 20,336 $ 17,753
Service inventories March 31,
2025 2024
Finished goods $ 1,189 $ 3,660
Component parts 909 6,123
Total service inventories $ 2,098 $ 9,783
Property and equipment, net March 31,
2025 2024
Machinery and equipment, and software $ 47,385 $ 49,095
Leasehold improvements 13,529 12,473
Furniture and fixtures 1,095 1,109
62,009 62,677
Less: accumulated depreciation ( 50,631 ) ( 50,649 )
Total property, plant and equipment, net $ 11,378 $ 12,028
Depreciation expense for property and equipment was $ 4.2 million and $ 6.0 million for the years ended March 31, 2025 and 2024, respectively.
Intangibles, net March 31, 2025 March 31, 2024
Gross Accumulated Amortization Net Gross Accumulated Amortization Net
Developed technology $ 9,013 $ ( 9,013 ) $ — $ 9,013 $ ( 8,550 ) $ 463
Customer lists 4,398 ( 4,117 ) 281 4,398 ( 3,192 ) 1,206
Intangible assets, net $ 13,411 $ ( 13,130 ) $ 281 $ 13,411 $ ( 11,742 ) $ 1,669
Intangible assets amortization expense was $ 1.4 million and $ 3.3 million for the years ended March 31, 2025 and 2024, respectively. As of March 31, 2025, the remaining weighted-average amortization period for definite-lived intangible assets was approximately 0.3 years. The Company recorded amortization of developed technology in cost of product revenue, and customer lists in sales and marketing expenses in the consolidated statements of operations.
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As of March 31, 2025, the future expected amortization expense for intangible assets is as follows (in thousands):
Fiscal year ending Estimated future amortization expense
Fiscal year 2026 $ 281
Total $ 281
Goodwill Amount
Balance at March 31, 2024 $ 12,969
Goodwill acquired —
Balance at March 31, 2025
$ 12,969
Other long-term assets March 31,
2025 2024
Capitalized SaaS implementation costs for internal use $ 13,910 $ 15,349
Capitalized debt costs 2,871 1,923
Contract cost asset
1,144 1,477
Other 1,463 991
Total other long-term assets $ 19,388 $ 19,740
Other accrued liabilities March 31,
2025 2024
Accrued expenses
$ 7,558 $ 4,251
Asset retirement obligation
3,497 2,069
Accrued income taxes
528 1,044
Accrued warranty
1,032 1,545
Accrued interest
350 524
Lease liability 856 1,256
Other
4,161 3,297
Total other accrued liabilities $ 17,982 $ 13,986
The following table details the change in the accrued warranty balance (in thousands):
Year Ended March 31,
2025 2024
Balance as of April 1 $ 1,545 $ 2,094
Current period accruals 2,333 2,563
Adjustments to prior estimates 46 ( 141 )
Charges incurred ( 2,735 ) ( 2,971 )
Reclassification to long-term warranty
( 157 ) $ —
Balance as of March 31 $ 1,032 $ 1,545
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NOTE 4: DEBT
The following table summarizes the Company's borrowing as of the dates presented (in thousands):
Year Ended March 31,
2025 2024
Term Loan $ 102,507 $ 87,942
PNC Credit Facility 26,600 26,604
Less: current portion ( 123,086 ) ( 109,100 )
Less unamortized debt issuance costs (1)
( 6,021 ) ( 5,446 )
Long-term debt, net $ — $ —
(1) The unamortized debt issuance costs related to the Term Loan are presented as a reduction of the carrying amount of the corresponding debt balance on the accompanying consolidated balance sheets. Unamortized debt issuance costs related to the PNC Credit Facility are presented within other assets on the accompanying consolidated balance sheets.
On August 5, 2021, the Company entered into a senior secured term loan (as amended, the “2021 Term Loan”), maturing on August 5, 2026. The Company also has a revolving credit facility agreement with PNC Bank (as amended, the “PNC Credit Facility” and together with the Term Loan (as defined below), the “Credit Agreements”) maturing on August 5, 2026 and providing for borrowings up to a maximum principal amount of the lesser of: (a) $ 40.0 million or (b) the amount of the borrowing base, as defined in the PNC Credit Facility agreement.
On June 1, 2023, the Company entered into amendments to the Credit Agreements (the “June 2023 Amendment”) which, among other things, provided an advance of $ 15.0 million in additional term loan borrowings (as amended, the “2023 Term Loan” and, together with the 2021 Term Loan, the "Term Loan") and incurred $ 0.9 million in original issuance discount and origination fees which have been recorded as a reduction to the carrying amount of the 2023 Term Loan and amortized to interest expense over the loan term. The terms of the 2023 Term Loan are substantially similar to the terms of the 2021 Term Loan, including in relation to maturity and security, except that, among other things, (a) the Applicable Margin (i) for any 2023 Term Loan designated an “ABR Loan” is 9.00 % per annum and (ii) for any 2023 Term Loan designated as a “SOFR Loan” is 10.00 % per annum, (b) accrued interest on the 2023 Term Loan is payable in kind ("PIK"), and is capitalized and added to the principal amount of the 2023 Term Loan at the end of each interest period applicable thereto, (c) the 2023 Term Loan does not amortize prior to the maturity date thereof, and (d) the 2023 Term Loan may not be prepaid prior to the payment in full of the existing term loans. In connection with the 2023 Term Loan, the Company issued warrants to purchase an aggregate of 0.06 million shares (the “June 2023 Warrants”) of the Common Stock, at an exercise price of $ 20.00 per share.
The June 2023 Amendment to the 2021 Term Loan was accounted for as a modification. The value of the June 2023 Warrants in addition to $ 0.7 million of fees paid to the lenders have been reflected as a reduction to the carrying amount of the Term Loan and amortized to interest expense over the remaining loan term. The Company incurred $ 0.9 million of legal and financial advisory fees which were included in general and administrated expenses in the condensed consolidated statement of operations and comprehensive loss. The June 2023 Amendment to the PNC Credit Facility was accounted for as a modification and $ 0.7 million in related fees and expenses were recorded to other assets and are amortized to interest expense over the remaining term of the agreement.
The June 2023 Amendment and the June 2023 Warrants were entered into with and issued to certain entities managed by Pacific Investment Management Company, LLC ("PIMCO") which is considered a related party due to the fact that Christopher D. Neumeyer is a member of the Company's Board of Directors and also an executive vice president and portfolio manager at PIMCO. The principal and PIK interest related to the June 2023 Amendment which totaled $ 17.3 million as of March 31, 2024 are payable at maturity.
On February 14, 2024, the Company entered into amendments to the Credit Agreements (“February 2024 Amendments”) which waived testing of the total net leverage ratio financial covenant for the fiscal quarter ended December 31, 2023. In connection with the amendment, the Company incurred fees related to the Term Loan that was paid-in-kind of $ 1.2 million and an amendment fee of $ 0.1 million that was paid in cash. As the February 2024 Amendments were accounted for as a modification, the fees were reflected as a reduction to the carrying amount of the Term Loan and are amortized to interest expense over the remaining loan term. In connection with the related PNC Credit Facility amendment, the Company incurred $ 0.2 million in fees and expenses.
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On March 22, 2024, the Company entered into further amendments to the Credit Agreements (the "March 2024 Amendments"). The March 2024 Amendments, among other things, (i) permit the sale of certain assets by the Company and (ii) require that certain proceeds from the sale of such assets be applied to partially prepay the outstanding term loans under the Term Loan credit facility. The Company did not incur any amendment fees related to the March 2024 Amendments and the financial terms of the Credit Agreements were not impacted.
During the quarter ended June 30, 2024, the Company prepaid $ 12.3 million of the Term Loan. In connection with this prepayment, the Company recorded a loss on debt extinguishment of $ 0.7 million related to the write-off of a portion of unamortized debt issuance costs.
On May 24, 2024, the Company entered into amendments to the Credit Agreements (the “May 2024 Amendments”) which, among other things, (i) waived compliance with the Company’s net leverage covenant as of March 31, 2024; and (ii) reduced the daily minimum liquidity covenant below $ 15.0 million until June 16, 2024 and waived any default that might arise as a result of the restatement of certain of the Company’s historical financial statements. In connection with the May 2024 Amendments, the Company issued to the Term Loan lenders warrants to purchase an aggregate of 100,000 shares of the Common Stock at a purchase price of $ 9.20 (the “May 2024 Warrants”). Additionally, in connection with the May 2024 Amendment to the Term Loan, the Company incurred an amendment fee that was paid-in-kind of $ 0.8 million and issued the May 2024 Warrants with a fair market value of $ 0.8 million. In connection with the May 2024 Amendment to the PNC Credit Facility Amendment, the Company incurred $ 0.5 million of fees and expenses paid to the lender.
The May 2024 Amendment to the Term Loan was accounted for as a modification. The value of the May 2024 Warrants, in addition to $ 0.8 million of amendment fees paid to the lenders, have been reflected as a reduction to the carrying amount of the Term Loan and amortized to interest expense over the remaining loan term. The May 2024 Amendment to the PNC Credit Facility was accounted for as a modification and the $ 0.5 million in related fees and expenses were recorded to other assets and are amortized to interest expense over the remaining term of the agreement.
On July 11, 2024, the Company entered into amendments to the Credit Agreements (the “July 2024 Amendments”) which, among other things, delayed the testing of the Company’s June 30, 2024 net leverage ratio financial covenant until July 31, 2024. In connection with the amendments, the Company issued the Term Loan lenders warrants to purchase an aggregate of 50,000 shares of the Common Stock at a purchase price of $ 8.20 (the “July 2024 Warrants”).
The July 2024 Amendments to the 2021 Term Loan were accounted for as a modification. The fair value of the July 2024 Warrants of $ 0.4 million is reflected as a reduction to the carrying amount of the 2021 Term Loan and amortized to interest expense over the remaining loan term. The July 2024 Amendments to the PNC Credit Facility were accounted for as a modification and the $ 0.1 million in related fees and expenses were recorded to other assets and are amortized to interest expense over the remaining term of the agreement.
On August 13, 2024, the Company entered into amendments to the Credit Agreements (the “August 2024 Amendments”) which, among other things, (i) waived compliance with the June 30, 2024 net leverage ratio financial covenant; (ii) waived any non-compliance with the minimum liquidity financial covenant through the date of the amendments; (iii) removed the fixed charges coverage ratio financial covenant until the fiscal quarter ending September 30, 2025; (iv) waived the testing requirement for the net leverage financial covenant for the fiscal quarter ending September 30, 2024; (v) replaced the net leverage financial covenant with a minimum EBITDA financial covenant for the fiscal quarters ending December 31, 2024 and March 31, 2025; (vi) reset the net leverage financial covenant requirements for the fiscal quarters ending June 30, 2025 and September 30, 2025; (vii) reduced the minimum liquidity covenant to $ 10 million through September 30, 2025; (viii) adjusted the applicable interest rates on the Term Loan and PNC Credit Facility; (ix) removed required 2021 Term Loan principal amortization until the fiscal quarter ending September 30, 2025; and (x) repriced certain Lender Warrants.
In connection with the August 2024 Amendments, the Company received a new senior secured delayed draw term loan facility with a borrowing capacity of up to $ 26.3 million ($ 25.0 million after original issuance discount) and a commitment period expiring on October 31, 2024 (each draw, an “August 2024 Term Loan”). The Company borrowed $ 10.5 million at closing (“Initial August 2024 Term Loan”). Borrowings under the August 2024 Term Loan have an August 5, 2026 maturity date, which aligns with the 2021 Term Loan. The principal is payable quarterly beginning September 30, 2025, at a rate per annum equal to 5 % of the original principal balance. The August 2024 Term Loan’s interest rate margin is (a) until March 31, 2025 (i) for any August 2024 Term Loan designated as a
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‘SOFR Loan’, 12.00 % per annum and (ii) for any August 2024 Term Loan designated an ‘ABR Loan’, 11.00 % per annum, in each case, with 6.00 % of such interest rate margin paid-in-kind, and (b) from April 1, 2025, (i) for any August 2024 Term Loan designated as a ‘SOFR Loan’, 14.00 % per annum, and (ii) for any August 2024 Term Loan designated an ‘ABR Loan’, 13.00 % per annum, in each case, with 8.00 % of such interest rate margin paid-in-kind. The August 2024 Term Loan also includes a multiple on invested capital payable to the August 2024 Term Loan lenders. Subsequently, the Company borrowed the remaining $ 15.8 million of the August 2024 Term Loan’s borrowing capacity before September 30, 2024.
Subsequent to the August 2024 Amendments, the 2021 Term Loan amortizes at 5.00 % per annum commencing on September 30, 2025. Subsequent to the August 2024 Amendments and (A) until March 31, 2025, loans under the 2021 Term Loan designated as (x) ABR Loans bear interest at a rate per annum equal to the “ABR Rate” (calculated as the greatest of (i) 1.75 %; (ii) the Federal funds rate plus 0.50 %; (iii) a secured overnight financing rate based rate (the “SOFR Rate”) based upon an interest period of one month plus 1.0 %; and (iv) the “Prime Rate” last quoted by the Wall Street Journal), plus an applicable margin of 8.75 %, and (y) SOFR Rate Loans bear interest at a rate per annum equal to the SOFR Rate plus an applicable margin of 9.75 %, in each case, with 3.75 % of such interest rate margin paid-in-kind, with two specified step-downs in such applicable margin upon the receipt by the Company of cash proceeds from certain specified capital raises, and (B) from and after April 1, 2025, loans under the 2021 Term Loan designated as (x) ABR Loans bear interest at a rate per annum equal to the ABR Rate, plus an applicable margin of 8.75 %, and (y) SOFR Rate Loans bear interest at a rate per annum equal to the SOFR Rate plus an applicable margin of 9.75 %, in each case, with 3.75 % of such applicable margin paid-in-kind, with a step-up of 1.00 % per annum (which shall be paid-in-kind) if the Company’s total net leverage ratio is greater than 4.00 x, and a step-down of 1.00 % per annum if the Company’s total net leverage ratio is less than 3.50 x (which shall reduce the paid-in-kind component of the applicable margin). The SOFR Rate is subject to a floor of 2.00 %. The Company can designate a loan as an ABR Rate Loan or SOFR Rate Loan in its discretion.
Subsequent to the August 2024 Amendments, PNC Credit Facility loans designated as (x) PNC SOFR Loans bear interest at a rate per annum equal to a SOFR based rate, plus an applicable margin of 4.75 %and (y) PNC Domestic Rate Loans and Swing Loans bear interest at a rate per annum equal to the greatest of (i) the base commercial lending rate of PNC Bank; (ii) the Overnight Bank Funding Rate plus 0.5 %; and (iii) the daily SOFR rate plus 1.0 %, plus an applicable margin of 3.75 %. The Company can designate a loan as a PNC SOFR Loan or PNC Domestic Rate Loan in its discretion.
In connection with the August 2024 Amendments, the Company issued warrants to purchase an aggregate of 380,510 shares of the Common Stock, at an exercise price of $ 6.20 per share (the “August 2024 Warrants”) and which had a fair value of $ 2.0 million.
The August 2024 Amendments to the 2021 Term Loan held by one lender was accounted for as a modification. The $ 1.2 million fair value of the August 2024 Warrants issued to this lender and the $ 0.5 million of PIK fees paid to this lender are reflected as a reduction to the carrying amount of their Term Loan and their initial delayed draw term loan and amortized to interest expense over the remaining loan terms. The August 2024 Amendments to the 2021 Term Loan held by another lender was accounted for as a debt extinguishment. The Company recorded a loss on debt extinguishment of $ 3.0 million related to the write-off of a portion of unamortized debt issuance costs and fees and expenses incurred with the August 2024 Amendments.
The August 2024 Amendments to the PNC Credit Facility were accounted for as a modification, and the $ 0.7 million in related fees and expenses were recorded to other assets and amortized to interest expense over the remaining term of the agreement.
On January 27, 2025, the Company entered into an amendment (the “January 2025 Term Loan Amendment”) to the Term Loan. The January 2025 Term Loan Amendment, among other things, (i) amends the minimum EBITDA covenant so that such covenant is not tested on December 31, 2024 or March 31, 2025, (ii) amends certain mandatory prepayment events, and (iii) waives certain events of default, in each case, as set forth in the January 2025 Term Loan Amendment.
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On January 27, 2025, the Company entered into an amendment (the “January 2025 Revolver Amendment”) to the PNC Credit Facility. The January 2025 Revolver Amendment, among other things, (i) amends the minimum EBITDA covenant so that such covenant is not tested on December 31, 2024 or March 31, 2025, (ii) amends certain mandatory prepayment events, and (iii) waives certain events of default, in each case, as set forth in the January 2025 Revolver Amendment.
As of March 31, 2025, the interest rate on the 2021 Term Loan, 2023 Term Loan, and 2024 Term Loans were 14.34 %, 14.59 % and 16.59 %, respectively. As of March 31, 2025, the interest rate on the PNC Credit Facility for Domestic Rate Loans and Swing Loans was 11.25 % and for PNC SOFR Loans was 9.17 %.
As of March 31, 2025, the PNC Credit Facility had a borrowing base of $ 27.0 million which includes a reduction of $ 0.7 million related to outstanding letters of credit issued on the Company's behalf. As of March 31, 2025, there was $ 0.4 million available to borrow under the PNC Credit Facility.
On January 27, 2025, the Company filed a registration statement on Form S-1 related to the resale, from time to time, of up to 2,302,733 shares of Common Stock in connection with the SEPA. The Registration Statement on Form S-1 was declared effective February 11, 2025.
NOTE 5: LEASES
Supplemental balance sheet information related to leases is as follows (in thousands):
Year Ended March 31,
Operating leases 2025 2024
Operating lease right-of-use assets $ 8,580 $ 9,425
Other current liabilities $ 856 $ 1,256
Operating lease liability 8,934 9,621
Total operating lease liabilities $ 9,790 $ 10,877
The components of lease expense were as follows (in thousands):
Year Ended March 31,
Lease expense 2025 2024
Operating lease expense $ 2,895 $ 3,007
Variable lease expense 263 291
Short-term lease expense 48 —
Total lease expense $ 3,206 $ 3,298
Maturity of Lease Liabilities Operating Leases
Fiscal year ending 2026
$ 2,346
2027 1,832
2028 1,597
2029 1,240
2030 1,241
Thereafter 10,855
Total lease payments $ 19,111
Less: Imputed interest ( 9,321 )
Present value of lease liabilities $ 9,790
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Lease Term and Discount Rate March 31,
2025 2024
Weighted average remaining operating lease term (years) 10.19 10.53
Weighted average discount rate for operating leases 12.59 % 12.64 %
Operating cash outflows related to operating leases totaled $ 2.8 million and $ 2.9 million for the fiscal years ended March 31, 2025 and March 31, 2024, respectively.
NOTE 6: RESTRUCTURING CHARGES
During fiscal years 2025 and 2024, the Company approved certain restructuring plans to improve operational efficiencies and rationalize its cost structure. All restructuring activities from 2024 fiscal year were completed by the fourth quarter of fiscal 2024. During fiscal year 2025, all employees were notified however due to local requirements, not all employees had left employment by the end of the fiscal year. No asset impairments occurred in fiscal year 2025 or in fiscal year 2024.
The following tables show the activity and the estimated timing of future payouts for accrued restructuring (in thousands):
Severance and
benefits
Balance as of March 31, 2023 $ —
Restructuring costs 3,280
Cash payments ( 3,280 )
Balance as of March 31, 2024 —
Restructuring costs 4,090
Cash payments ( 3,266 )
Other non-cash ( 38 )
Balance as of March 31, 2025 $ 786
NOTE 7: COMMON STOCK
In the fiscal year ended March 31, 2023, the Company’s stockholders approved an increase in its authorized shares of common stock from 125 million to 225 million.
Long-Term Incentive Plan
The Company maintains two stockholder-approved incentive plans, the 2012 Long-Term Incentive Plan (the "2012 Plan") and the 2023 Long-Term Incentive Plan (the “2023 LTIP”). The 2023 LTIP serves as the successor to the Company’s 2012 Plan and provides for grants of performance share units, restricted stock units and stock options. On August 15, 2024, the stockholders of the Company approved an additional 250,000 shares of Common Stock under the 2023 LTIP for future issuance.
Equity awards typically vest between one and three years . Stock options, performance shares and restricted stock grants to non-employee directors typically vest over one year . The term of each stock option under the 2023 Plan will not exceed seven years . Stock options, performance share units and restricted stock units granted under the 2023 Plan are subject to forfeiture if employment terminates.
The 2023 Plan has 0.7 million shares authorized for issuance of new shares, with 0.5 million performance shares and restricted shares outstanding, and 0.1 million shares available for future issuance under the Plan as of March 31, 2025.
2021 Inducement Plan
The Company's 2021 Inducement Plan (the "2021 Inducement Plan") became effective on February 1, 2021 and provides for issuance of inducement equity awards to individuals who were not previously an employee or non-
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employee director of the Company as an inducement material to such individual's entering into employment with the Company. The term of each stock option and restricted stock unit under the plan will not exceed seven years , and each award generally vests between two and three years .
On December 30, 2022 the Leadership and Compensation Committee of the Board of Directors approved an amendment to the 2021 Inducement Plan to increase the number of shares of common stock of the Company authorized for issuance thereunder from 38,500 to 0.1 million. There were 38,380 shares available for future issuance as of March 31, 2025.
The Company accounts for all forfeitures of stock-based awards when they occur.
Employee Stock Purchase Plan
The Company's has an Employee Stock Purchase Plan (the "ESPP") which enables eligible employees to purchase shares of its common stock at a discount. Purchases will be accomplished through participation in discrete offering periods. On each purchase date, eligible employees will purchase the Company's common stock at a price per share equal to 85 % of the lesser of (i) the fair market value of the Company's common stock on the first trading day of the offering period, and (ii) the fair market value of the Company's common stock on the purchase date.
The Company has reserved shares of common stock for future issuance under its ESPP as follows (in thousands):
March 31,
2025 2024
Shares available for issuance at beginning of period 4.4 4.4
Shares issued during the period 200 —
Total shares available for future issuance at end of period 204.4 4.4
Performance Stock Units
The Company granted 0 and 6,000 shares of performance share units with market conditions (“Market PSUs”) in fiscal 2025 and 2024, respectively. Market PSUs vest one to three years from the issuance date and become eligible for vesting based on the Company achieving certain stock price targets and are contingent upon continued service of the holder of the award during the vesting period. The estimated fair value of these Market PSUs is determined at the issuance date using a Monte Carlo simulation model.
Assumptions used in the Monte Carlo model to calculate fair values of market PSU’s during each fiscal period are as follows:
Weighted-Average 2025 2024
Discount period (years) n/a 3.00
Risk-free interest rate n/a 3.53 %
Stock price volatility n/a 80.50 %
Grant date fair value n/a $ 18.20
The Company granted 180,126 and 46,000 units of performance share units with financial performance conditions (“Performance PSUs”) in the fiscal years ended March 31, 2025 and 2024, respectively. Performance PSUs become eligible for vesting based on the Company achieving certain financial performance targets, and are contingent upon continued service of the holder of the award during the vesting period. Performance PSUs are valued at the market closing share price on the date of grant and compensation expense for Performance PSUs is recognized when it is probable that the performance conditions will be achieved. Compensation expense recognized related to Performance PSUs is reversed if the Company determines that it is no longer probable that the performance conditions will be achieved.
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The following table summarizes activity for Market PSUs and Performance PSUs for the year ended March 31, 2025 (shares in thousands) :
Shares Weighted-Average
Grant Date Fair Value per Share
Outstanding as of March 31, 2024 59 $ 18.59
Granted 180 $ 4.71
Vested ( 13 ) $ 28.90
Forfeited or cancelled ( 13 ) $ 8.82
Outstanding as of March 31, 2025 213 $ 6.87
As of March 31, 2025 , there was $ 0.8 million of unrecognized stock-based compensation related to Market PSUs and Performance PSUs, which is expected to be recognized over a weighted-average period of 1.5 years.
The total grant date fair value of shares vested during fiscal years ended March 31, 2025 and 2024 was $ 0.4 million and $ 1.0 million, respectively.
Restricted Stock Units
The Company granted 312,250 and 60,000 of service-based restricted stock units (“RSUs”) in the fiscal years ended March 31, 2025 and 2024, respectively, which generally vest ratably over a three-year service period. RSUs are valued at the market closing share price on the date of grant and compensation expense for RSUs is recognized ratably over the applicable vesting period.
The following table summarizes activity for restricted stock units for the year ended March 31, 2025 (shares in thousands) :
Shares Weighted-Average
Grant Date Fair Value per Share
Outstanding as of March 31, 2024
152 $ 41.06
Granted 312 $ 4.99
Vested ( 118 ) $ 31.98
Forfeited or cancelled ( 19 ) $ 17.39
Outstanding as of March 31, 2025
327 $ 11.32
The total grant date fair value of RSUs vested during fiscal years ended March 31, 2025 and 2024 was $ 3.8 million and $ 6.4 million, respectively.
As of March 31, 2025 , there was $ 1.5 million of total unrecognized stock-based compensation related to RSUs, which is expected to be recognized over a weighted-average period of 1.3 years.
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Compensation Expense
The following table details the Company's stock-based compensation expense (in thousands):
Year Ended March 31,
2025 2024
Cost of revenue $ 373 $ 774
Research and development 495 1,091
Sales and marketing 317 669
General and administrative 1,643 2,187
Total stock-based compensation $ 2,828 $ 4,721
Year Ended March 31,
2025 2024
Restricted stock units $ 2,515 $ 4,551
Performance share units 313 170
Total stock-based compensation $ 2,828 $ 4,721
Warrants
In connection with various debt refinancing and debt amendment activities, the Company issued warrants to purchase shares of the Company common stock (the "Lender Warrants"). As of March 31, 2024 there were Lender Warrants that were issued in December 2018 which were exercisable until December 27, 2028 (the "December 2018 Warrants), issued in June 2020 which were exercisable until June 16, 2030 (the "June 2020 Warrants") and issued in June 2023 which were exercisable until June 1, 2033 (the "June 2023 Warrants").
The exercise price and the number of shares underlying the Lender Warrants were subject to adjustment in the event of specified events, including dilutive issuances of equity instruments at a price lower than the exercise price of the respective warrants (the "Down Round Feature"), repricing of existing equity-linked instruments at a price lower than the exercise price of the respective warrants (the "Warrant Repricing Feature"), a subdivision or combination of the common stock, a reclassification of the common stock or specified dividend payments. Upon exercise, the aggregate exercise price was paid, at each warrant holder’s election, in cash or on a net issuance basis, based upon the fair market value of the common stock at the time of exercise. The Company's warrants also had a provision that determines the potential stock price used when applying the Black-Scholes valuation model to determine the settlement price of the warrants in Successor Major Transactions ("SMT"), as defined in the respective warrant agreements, which include a change in control or liquidation (the "Warrant Settlement Price Provision"). The Warrant Settlement Price Provision required the use of the greater of the closing price of the Company's common stock on the trading day immediately preceding the date on which an SMT is consummated, the closing market price of the Company's common stock following the first public announcement of an SMT or the closing market of the Company's common stock immediately preceding the announcement of an SMT. Because of these terms, equity classification was precluded, and these warrants were carried as liabilities at fair value.
The Company uses Level 2 inputs for its valuation methodology for the warrant liabilities as their fair values were determined by using the Black-Scholes model based on various assumptions. The assumptions used in calculating fair values of the Lender Warrants are as follows:
December 2018 Warrants June 2020 Warrants June 2023 Warrants
March 31, 2024:
Discount period (years) 4.7 years 6.2 years 9.2 years
Risk-free interest rate 4.19 % 4.16 % 4.16 %
Stock price volatility 87.00 % 86.00 % 81.00 %
Exercise price
$ 6.60 $ 6.00 $ 9.00
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The Company has adopted ASC 2017-11, Earnings per share (Topic 260) ; Distinguishing liabilities from equity (Topic 480); and Derivatives and hedging (Topic 718) ("ASC 2017-11") which provides guidance that the inclusion of certain anti-dilution provisions including down-round provisions in which the exercise price and number of shares underlying an equity-linked instrument are adjusted based on certain specified events does not preclude an instrument from being equity classified. The Company has concluded the Warrant Repricing Feature does not meet the definition of a down-round provision that would provide a scope exception allowing equity classification; therefore, the Company's warrants are required to be classified as liabilities. In addition, the Company has concluded that the use of the greater of three share price inputs to the Black-Scholes valuation model in the Warrant Settlement Price Provision precludes the warrants from being indexed to the Company's own common stock under Topic 815 therefore requiring the Company to classify the warrants as liabilities with changes in fair value being recognized in the Company’s consolidated statement of operations.
On December 30, 2024, 467,248 warrants were exercised in a cashless exercise whereby 61,270 shares with a value of $ 6.20 per share were used to settle the exercise price and the remaining 405,978 shares were issued to the warrant holders.
On January 3, 2025, certain PIMCO-managed entities exercised 677,905 warrants in a cashless exercise whereby 228,195 shares with a weighted-average value of $ 35.42 per share were used to settle the exercise price and the remaining 449,710 shares were issued to the warrant holders. As PIMCO was a related party, this transaction was reviewed and approved in accordance with the Company’s related party transaction policy.
The table below sets forth a summary of changes in the fair value of the Company’s Level 2 warrant liabilities for the years ended March 31, 2024 and March 31, 2025:
Balance at March 31, 2023 $ 7,989
Issuance of warrants 1,194
Change in fair value of warrant liabilities ( 5,137 )
Balance at March 31, 2024 $ 4,046
Issuance of warrants 3,157
Exercise of warrants ( 52,985 )
Repricing adjustment 512
Change in fair value of warrant liabilities 45,270
Balance at March 31, 2025 $ —
The Company had no outstanding Lender Warrants as at March 31, 2025. The following table summarizes the Company's outstanding Lender Warrants as at March 31, 2024 (in thousands, except exercise price):
December 2018 Warrants June 2020 Warrants June 2023 Warrants Total
March 31, 2024:
Exercise price $ 26.60 $ 55.40 $ 20.00
Number shares under warrant(s) 357 184 63 604
Fair value $ 2,320 $ 1,135 $ 591 $ 4,046
The Company also issued 2,500 warrants to purchase the Company's common stock in June 2020 and June 2023 to advisors of the Company at an exercise price of $ 60.00 and $ 20.00 , respectively (collectively the "Other Warrants"). The Company has concluded that the Other Warrants do not contain provisions that would require liability classification under Topic 480 or Topic 718 and have been equity classified.
Standby Equity Purchase Agreement
On January 25, 2025, the Company entered into a SEPA in which pursuant to and subject to its terms, the Company has the right, but not the obligation, to sell up to $ 200 million of Common Stock at any time during the three-year period following the date of the SEPA. On January 27, 2025, the Company filed a registration statement on Form S-1 in connection with the SEPA. The Registration Statement on Form S-1 was declared effective February 11, 2025.
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As of March 31, 2025, the Company has issued approximately 1.2 million shares of Common Stock under the SEPA for net proceeds of approximately $ 16.4 million.
Registration Rights Agreements
The Lender Warrants grant the holders certain registration rights for the shares of common stock issuable upon the exercise of the applicable warrants, including (a) the ability of a holder to request that the Company file a Form S-1 registration statement with respect to at least 40 % of the registrable securities held by such holder as of the issuance date of the applicable warrants; (b) the ability of a holder to request that the Company file a Form S-3 registration statement with respect to outstanding registrable securities if at any time the Company is eligible to use a Form S-3 registration statement; and (c) certain piggyback registration rights related to potential future equity offerings of the Company, subject to certain limitations.
NOTE 8: NET LOSS PER SHARE
Equity Instruments Outstanding
The Company has performance share units and restricted stock units granted under various stock incentive plans that, upon exercise and vesting, would increase shares outstanding.
The following table sets forth the computation of basic and diluted net loss (in thousands, except per share data):
Year Ended March 31,
2025 2024
Numerator:
Net loss used in basic and diluted earnings per share $ ( 115,091 ) $ ( 41,286 )
Denominator:
Weighted average common shares outstanding used in basic and diluted earnings per share 5,150 4,754
Net income loss per share - basic and diluted $ ( 22.35 ) $ ( 8.68 )
The dilutive impact related to shares of common stock from incentive plans and outstanding warrants is determined by applying the treasury stock method to the assumed vesting of outstanding performance share units and restricted stock units and the exercise of outstanding options and warrants. The dilutive impact related to shares of common stock from contingently issuable performance share units is determined by applying a two-step approach using both the contingently issuable share guidance and the treasury stock method.
The following weighted-average outstanding shares of common stock equivalents were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been anti-dilutive (in thousands):
Year Ended March 31,
2025 2024
Stock awards 127 17
Warrants 634 608
Total 761 625
The Company had outstanding market based restricted stock units as of March 31, 2025 that were eligible to vest into shares of common stock subject to the achievement of certain stock price targets in addition to a time-based vesting period. These contingently issuable shares are excluded from the computation of diluted earnings per share if, based on current period results, the shares would not be issuable if the end of the reporting period were the end of the contingency period. There were 186,616 shares of contingently issuable market-based restricted stock units that were excluded from the table above as the market conditions were not satisfied as of March 31, 2025.
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NOTE 9: INCOME TAXES
Pre-tax loss reflected in the consolidated statements of operations for the years ended March 31, 2025 and 2024 is as follows (in thousands):
Year Ended March 31,
2025 2024
U.S. $ ( 112,416 ) $ ( 40,555 )
Foreign ( 1,854 ) ( 20 )
Total $ ( 114,270 ) $ ( 40,575 )
Income tax provision consists of the following (in thousands):
Year Ended March 31,
2025 2024
Current tax expense
Federal $ — $ —
State 36 14
Foreign 741 919
Total current tax expense 777 933
Deferred tax expense
Federal 20 18
State 37 21
Foreign ( 13 ) ( 261 )
Total deferred tax expense (benefit) 44 ( 222 )
Income tax provision $ 821 $ 711
The income tax provision differs from the amount computed by applying the federal statutory rate of 21 % to loss before income taxes as follows (in thousands):
For the year ended March 31,
2025 2024
Expense (benefit) at the federal statutory rate $ ( 24,122 ) $ ( 8,507 )
Equity compensation 580 1,102
Permanent items 309 768
Foreign taxes 299 264
State income taxes 36 ( 860 )
Valuation allowance 13,907 6,313
Uncertain tax positions ( 6,672 ) ( 8,010 )
Expiration of attributes 8,427 10,901
Research and development credits ( 844 ) ( 1,169 )
Warrant fair value adjustments 9,507 ( 1,093 )
Other ( 606 ) 1,002
Income tax provision $ 821 $ 711
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Significant components of deferred tax assets and liabilities are as follows (in thousands):
As of March 31,
2025 2024
Deferred tax assets
Loss carryforwards $ 61,466 $ 54,280
Deferred revenue 25,895 27,431
Capitalized research and development 28,824 27,785
Tax credits 15,517 15,888
Disallowed interest 19,696 16,572
Other accruals and reserves not currently deductible for tax purposes 3,913 4,685
Lease obligations 2,016 2,269
Inventory 3,779 2,426
Acquired intangibles 1,285 1,344
Accrued warranty expense 277 365
Depreciation
1,755 —
Gross deferred tax assets 164,423 153,045
Valuation allowance ( 161,730 ) ( 147,674 )
Total deferred tax assets, net of valuation allowance $ 2,693 $ 5,371
Deferred tax liabilities
Depreciation $ — $ ( 2,038 )
Lease assets ( 1,711 ) ( 1,929 )
Other ( 277 ) ( 1,130 )
Total deferred tax liabilities ( 1,988 ) ( 5,097 )
Net deferred tax assets (liabilities) $ 705 $ 274
The valuation allowance increased by $ 14.1 million during the year ended March 31, 2025 and increased by $ 6.5 million during the year ended March 31, 2024, respectively.
A reconciliation of the gross unrecognized tax benefits is as follows (in thousands):
For the year ended March 31,
2025 2024
Beginning Balance $ 88,341 $ 96,343
Increase in balances related to tax positions in current period 1,558 2,229
Decrease in balances related to tax positions in prior period ( 12 ) ( 1,364 )
Decrease in balances due to lapse in statute of limitations ( 8,209 ) ( 8,867 )
Ending balance $ 81,678 $ 88,341
During fiscal 2025, excluding interest and penalties, there was a $( 6.7 ) million change in the Company's unrecognized tax benefits. Including interest and penalties, the total unrecognized tax benefit at March 31, 2025 was $ 82.9 million, of which $ 73.7 million, if recognized, would favorably affect the effective tax rate. At March 31, 2025, accrued interest and penalties totaled $ 1.2 million. The Company's practice is to recognize interest and penalties related to income tax matters in the income tax provision in the consolidated statements of operations. As of March 31, 2025, $ 75.7 million of unrecognized tax benefits were recorded as a contra deferred tax asset in other long-term assets in the consolidated balance sheets and $ 7.1 million (including interest and penalties) were included in other long-term liabilities in the consolidated balances sheets.
The Company files its tax returns as prescribed by the laws of the jurisdictions in which it operates. The Company's U.S. tax returns have been audited for years through 2002 by the Internal Revenue Service. In other major jurisdictions, the Company is generally open to examination for the most recent three to five fiscal years. During the
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next 12 months, it is reasonably possible that approximately $ 10.4 million of tax benefits, inclusive of interest and penalties, that are currently unrecognized could be recognized as a result of the expiration of applicable statutes of limitations. Upon recognition of the tax benefit related to the expiring statutes of limitation $ 9.5 million will be offset by the establishment of a related valuation allowance. The net tax benefit recognized in the income statement is estimated to be $ 0.9 million.
As of March 31, 2025, the Company had federal net operating loss and tax credit carryforwards of approximately $ 224.1 million and $ 43.3 million, respectively. The net operating loss and tax credit carryforwards expire in varying amounts in fiscal 2025 if not previously utilized, and $ 50.8 million are indefinite-lived net operating loss carryforwards. These carryforwards include $ 5.3 million of acquired net operating losses and $ 1.0 million of acquired credits, the utilization of which is subject to various limitations due to prior changes in ownership.
Certain changes in stock ownership could result in a limitation on the amount of both acquired and self generated net operating loss and tax credit carryovers that can be utilized each year. If the Company has previously undergone, or should it experience in the future, such a change in stock ownership, it could severely limit the usage of these carryover tax attributes against future income, resulting in additional tax charges.
Due to its history of net losses and the difficulty in predicting future results, Quantum believes that it cannot rely on projections of future taxable income to realize the deferred tax assets. Accordingly, it has established a full valuation allowance against its U.S. and certain foreign net deferred tax assets. Significant management judgment is required in determining the Company's deferred tax assets and liabilities and valuation allowances for purposes of assessing its ability to realize any future benefit from its net deferred tax assets. The Company intends to maintain this valuation allowance until sufficient positive evidence exists to support the reversal of the valuation allowance. The Company's income tax expense recorded in the future will be reduced to the extent that sufficient positive evidence materializes to support a reversal of, or decrease in, its valuation allowance.
NOTE 10: COMMITMENTS AND CONTINGENCIES
Commitments to Purchase Inventory
The Company uses contract manufacturers for its manufacturing operations. Under these arrangements, the contract manufacturer procures inventory to manufacture products based upon its forecast of customer demand. The Company has similar arrangements with certain other suppliers. The Company is responsible for the financial impact on the supplier or contract manufacturer of any reduction or product mix shift in the forecast relative to materials that the third party had already purchased under a prior forecast. Such a variance in forecasted demand could require a cash payment for inventory in excess of current customer demand or for costs of excess or obsolete inventory. As of March 31, 2025, the Company had issued non-cancelable commitments for $ 48.6 million to purchase inventory from its contract manufacturers and suppliers.
Litigation
On July 27, 2023, an electronics component distributor filed a lawsuit against Quantum, alleging breach of contract and breach of the covenant of good faith and fair dealing, seeking, among other things, monetary damages. On March 31, 2025, the Court found entirely in favor of Quantum and against the distributor. The Court entered judgment for Quantum on the same day. The deadline for the distributor to file an appeal has passed so that this matter is resolved in Quantum’ favor.
Leases
At the end of fiscal 2025, the Company had various non-cancelable operating leases for office facilities. Refer to Note 5: Leases for additional information regarding lease commitments.
Legal Proceedings
From time to time, we are a party to various legal proceedings and claims arising from the normal course of business activities. Based on current available information, we do not expect that the ultimate outcome of any currently pending unresolved matters, individually or in the aggregate, will have a material adverse effect on our results of operations, cash flows or financial position.
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NOTE 11: FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company follows the guidance in ASC 820, Fair Value Measurement for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period and non-financial assets and liabilities that are re-measured and reported at fair value at least annually. The Company has certain non-financial assets that are measured at fair value on a non-recurring basis when there is an indicator of impairment, and they are recorded at fair value only when an impairment is recognized. See Note 7: Common Stock for disclosure related to the Company's asset and liabilities that are revalued at fair value at each reporting period. These assets include property and equipment and amortizable intangible assets. The Company did not record impairments to any non-financial assets in the fiscal years ended March 31, 2025 and 2024.
The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
Level 1: Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2: Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
Level 3: Unobservable inputs based on management’s assessment of the assumptions that market participants would use in pricing the asset or liability.
Information related to the fair value of the Company's warrant liabilities which were determined utilizing Level 2 inputs to determine such fair value are included in Note 7: Common Stock . The following table represents the carrying value and total estimated fair value of the Company's Term Loan and PNC Credit Facility which have been determined utilizing level 2 inputs to determine fair value.
March 31,
2025 2024
Carrying Value Fair Value Carrying Value Fair Value
Term Loan $ 102,507 $ 91,576 $ 87,942 $ 75,143
PNC Credit Facility 26,600 24,755 26,604 24,743
The carrying amounts reported in the accompanying consolidated financial statements for cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued expenses and other current liabilities approximate their respective fair values because of the short-term nature of these accounts.
NOTE 12: SEGMENT INFORMATION
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Disaggregation of Revenue
The following table depicts the disaggregation of revenue by geographic areas and major product offerings and geographies and is consistent with how the Company evaluates its financial performance (in thousands):
Year Ended March 31,
2025 % 2024 %
Americas 1
Product revenue $ 82,772 $ 92,907
Service and subscription 59,277 71,317
Total revenue 142,049 52 % 164,224 53 %
EMEA
Product revenue 53,742 59,465
Service and subscription 40,818 47,372
Total revenue 94,560 35 % 106,837 34 %
APAC
Product revenue 17,668 22,507
Service and subscription 10,563 7,901
Total revenue 28,231 10 % 30,408 10 %
Consolidated
Product revenue 154,182 174,879
Service and subscription 110,658 126,590
Royalty 2
9,218 3 % 10,131 3 %
Total revenue $ 274,058 100 % $ 311,600 100 %
1 Revenue for Americas geographic region outside of the United States is not significant.
2 Royalty revenue is not allocable to geographic regions.
Revenue by Solution
Year Ended March 31,
2025 % 2024 %
Primary storage systems $ 58,127 21 % $ 53,525 17 %
Secondary storage systems 73,772 27 % 100,599 32 %
Device and media 34,352 13 % 33,477 11 %
Service 98,589 36 % 113,868 37 %
Royalty 9,218 3 % 10,131 3 %
Total revenue 1
$ 274,058 100 % $ 311,600 100 %
1 Subscription revenue of $ 12.1 million and $ 7.3 million allocated to Primary and Secondary storage systems for the fiscal years ended 2025 and 2024, respectively.
Net Loss
The following table shows reported segment revenue, segment profit or loss, and significant segment expenses were as follows: (in thousands):
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Year Ended March 31,
2025 2024
Total revenue
$ 274,058 $ 311,600
Total cost of revenue
164,226 186,711
Gross profit
109,832 124,889
Gross margin
40.1 % 40.1 %
Operating expenses
Salaries & fringe 1
80,882 94,871
Outside services 2
37,171 21,635
Infrastructure 3
10,783 15,295
Operational costs 4
9,874 8,985
Restructuring
4,090 3,280
Other segment items 5
8,712 9,700
Total operating expenses
151,512 153,766
Loss from operations
( 41,680 ) ( 28,877 )
Other expense, net
( 710 ) ( 1,746 )
Interest expense ( 23,607 ) ( 15,089 )
Change in fair value of warrant liability ( 45,270 ) 5,137
Loss on debt extinguishment, net ( 3,003 ) —
Net loss before income taxes
( 114,270 ) ( 40,575 )
Income tax provision 821 711
Net loss
$ ( 115,091 ) $ ( 41,286 )
1 Salaries & fringe includes spend on contractors.
2 Outside services includes contractor, recruiting and legal expenses.
3 Infrastructure includes property related expenses, including fixed and variable lease expense, telecommunications and depreciation.
4 Operational costs include due and subscriptions, computer expenses, office supplies and other miscellaneous items.
5 Other segment items includes travel related spend, marketing expense, taxes, fees and other miscellaneous items.
Long-lived assets
The following table summarizes property and equipment, net by geographic region (in thousands):
For the year ended March 31,
2025 2024
United States $ 11,160 $ 11,759
International 218 269
Total $ 11,378 $ 12,028
NOTE 13: SUBSEQUENT EVENTS
On April 2, 2025, certain entities affiliated with Blue Torch Finance, LLC (“Blue Torch”), fully assigned their rights and obligations in an aggregate amount of approximately $ 37.8 million in the 2021 Term Loan and $ 13.5 million in the August 2024 Term Loan, to Dialectic Technology SPV LLC ("Dialectic"). Effective April 3, 2025, John Fichthorn was appointed as a director of the Company. Mr. Fichthorn is the Managing Partner of Dialectic Capital Management, an investment advisor to Dialectic.
On April 18, 2025, the Company filed a registration statement on Form S-3 related to the resale, from time to time, of up to 17,550,626 shares of Common Stock in connection with the SEPA. The Registration Statement on Form S-3 was declared effective April 28, 2025.
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During the period from April 1, 2025 through July 31, 2025, the Company issued approximately 6.3 million shares of Common Stock under the SEPA for net proceeds of approximately $ 66.3 million.
On July 4, 2025, President Trump signed into law the legislation commonly referred to as the One Big Beautiful Bill Act (“OBBBA”). The OBBBA includes various provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others being implemented through 2027. While there is no impact to the Company's fiscal year 2025 consolidated financial statements, the Company is assessing its impact on the consolidated financial statements that would take effect beginning in the period in which the OBBBA was signed into law.
On August 13, 2025, the Company terminated the PNC Credit Facility. As of the date of termination, there were no amounts drawn under the PNC Credit Facility and the Company paid an exit fee of $ 1.2 million in connection with the termination.
On August 13, 2025, the Company obtained waivers to certain covenants including the net leverage covenant under the Term Loan for the quarter ended June 30, 2025. Additionally, the requirement to use certain proceeds of the SEPA to pay down the Term Loan was waived.
NOTE 14: RESTATEMENT OF UNAUDITED QUARTERLY FINANCIAL STATEMENTS
The unaudited condensed consolidated financial statements for three and nine-months ended December 31, 2024 are being restated for the following.
a. Service contract term - The Company identified that there were inconsistencies in the period used to recognize service and subscription revenue, which is deferred under Topic 606 and recognized ratably over the contractual term of the contract. The Company’s management reviewed and updated the periods over which revenue was being recognized to ensure consistent application for all service contracts invoiced in the fiscal year ended March 31, 2025 and the results have been applied to revenue.
b. Application of Topic 606 related to standalone selling price - The Company also determined that the standalone selling price that was being used for the fiscal year ended March 31, 2025 needed to be updated resulting in an adjustment to revenue. Standalone selling price has now been refreshed for all goods and services sold in a bundled contract under Topic 606, maximizing the use of observable inputs.
The following tables present the impact of the restatement for three and nine-months ended December 31, 2024:
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CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts, unaudited)
December 31, 2024
As previously report Restatement adjustments Reference As restated
Assets
Current assets:
Cash and cash equivalents $ 20,381 $ — $ 20,381
Restricted cash 222 — 222
Accounts receivable, net of allowance for credit losses of $ 99
61,373 — 61,373
Manufacturing inventories 18,861 — 18,861
Service parts inventories 1,884 — 1,884
Prepaid expenses 2,569 — 2,569
Other current assets 8,538 — 8,538
Total current assets 113,828 — — 113,828
Property and equipment, net 11,268 — 11,268
Goodwill 12,969 — 12,969
Intangible assets, net 509 — 509
Right-of-use assets 8,670 — 8,670
Other long-term assets 20,812 — 20,812
Total assets $ 168,056 — $ 168,056
Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable $ 34,704 — $ 34,704
Accrued compensation 11,702 — 11,702
Deferred revenue, current portion 69,916 ( 3,154 ) a, b
66,762
Term debt
98,609 — 98,609
Revolving credit facility 37,500 — 37,500
Warrant liabilities 34,005 — 34,005
Other accrued liabilities 19,108 — 19,108
Total current liabilities 305,544 ( 3,154 ) 302,390
Deferred revenue, net of current portion 35,350 4,721 a, b
40,071
Operating lease liabilities 9,067 — 9,067
Other long-term liabilities 13,150 — 13,150
Total liabilities 363,111 1,567 364,678
Commitments and contingencies
Stockholders' deficit
Preferred stock, 20,000 shares authorized; no shares issued and outstanding
— — —
Common stock, $ 0.01 par value; 225,000 shares authorized; 5,307 and 4,792 shares issued and outstanding
53 — 53
Additional paid-in capital 740,521 — 740,521
Accumulated deficit ( 933,160 ) ( 1,567 ) a, b
( 934,727 )
Accumulated other comprehensive loss ( 2,469 ) — ( 2,469 )
Total stockholders’ deficit ( 195,055 ) ( 1,567 ) ( 196,622 )
Total liabilities and stockholders’ deficit $ 168,056 — $ 168,056
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except per share amounts, unaudited)
FY 2025
Three Months Ended December 31
Nine Months Ended December 31
As previously report Adjustments Reference As restated As previously report Adjustments Reference As restated
Revenue:
Product $ 38,610 $ 24 b
$ 38,634 $ 116,389 $ 4,176 b
$ 120,565
Service and subscription 31,615 ( 3,891 ) a, b
27,724 90,383 ( 5,743 ) a, b
84,640
Royalty 2,326 — 2,326 7,592 — 7,592
Total revenue 72,551 ( 3,867 ) 68,684 214,364 ( 1,567 ) 212,797
Cost of revenue:
Product 30,922 — 30,922 93,251 — 93,251
Service and subscription 9,874 — 9,874 33,954 — 33,954
Total cost of revenue 40,796 — 40,796 127,205 — 127,205
Gross profit 31,755 ( 3,867 ) 27,888 87,159 ( 1,567 ) 85,592
Operating expenses:
Sales and marketing 12,448 — 12,448 39,321 — 39,321
General and administrative 14,142 — 14,142 49,186 — 49,186
Research and development 7,683 — 7,683 24,255 — 24,255
Restructuring charges 1,342 — 1,342 2,916 — 2,916
Total operating expenses 35,615 — 35,615 115,678 — 115,678
Loss from operations ( 3,860 ) ( 3,867 ) ( 7,727 ) ( 28,519 ) ( 1,567 ) ( 30,086 )
Other income (expense), net 967 — 967 ( 408 ) — ( 408 )
Interest expense ( 6,840 ) — ( 6,840 ) ( 16,761 ) — ( 16,761 )
Change in fair value of warrant liabilities ( 61,630 ) — ( 61,630 ) ( 56,414 ) — ( 56,414 )
Loss on debt extinguishment — — — ( 3,003 ) — ( 3,003 )
Net loss before income taxes ( 71,363 ) ( 3,867 ) ( 75,230 ) ( 105,105 ) ( 1,567 ) ( 106,672 )
Income tax provision 70 — 70 675 — 675
Net loss $ ( 71,433 ) $ ( 3,867 ) $ ( 75,300 ) $ ( 105,780 ) $ ( 1,567 ) $ ( 107,347 )
Net loss per share - basic and diluted
$ ( 14.56 ) $ ( 0.79 ) $ ( 15.35 ) $ ( 21.90 ) $ ( 0.32 ) $ ( 22.22 )
Weighted average shares - basic and diluted
4,907 — 4,907 4,831 — 4,831
Net loss $ ( 71,433 ) $ ( 3,867 ) $ ( 75,300 ) $ ( 105,780 ) $ ( 1,567 ) $ ( 107,347 )
Foreign currency translation adjustments, net ( 1,077 ) — ( 1,077 ) ( 276 ) — ( 276 )
Total comprehensive loss $ ( 72,510 ) $ ( 3,867 ) $ ( 76,377 ) $ ( 106,056 ) $ ( 1,567 ) $ ( 107,623 )
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
Nine Months Ended December 31, 2024
As previously reported Restatement adjustments Reference As restated
Operating activities
Net loss $ ( 105,780 ) $ ( 1,567 ) $ ( 107,347 )
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization 4,440 — 4,440
Amortization of debt issuance costs 3,704 — 3,704
Non-cash lease expense
1,342 — 1,342
Loss on debt extinguishment 3,003 — 3,003
Provision for product and service inventories 1,165 — 1,165
Stock-based compensation 2,376 — 2,376
Paid in kind interest 3,515 — 3,515
Change in fair value of warrant liabilities 56,408 — 56,408
Other non-cash ( 281 ) — ( 281 )
Changes in assets and liabilities: — —
Accounts receivable, net 6,337 — 6,337
Manufacturing inventories ( 2,347 ) — ( 2,347 )
Service parts inventories 7,972 — 7,972
Prepaid expenses ( 382 ) — ( 382 )
Operating lease liabilities
( 813 ) — ( 813 )
Accounts payable 9,406 — 9,406
Accrued compensation ( 6,512 ) — ( 6,512 )
Deferred revenue ( 11,421 ) 1,567 a, b
( 9,854 )
Other current assets 1,243 — 1,243
Other current liabilities 6,280 — 6,280
Net cash used in operating activities ( 20,345 ) — ( 20,345 )
Investing activities
Purchases of property and equipment ( 4,324 ) — ( 4,324 )
Net cash used in investing activities ( 4,324 ) — ( 4,324 )
Financing activities
Borrowings of long-term debt, net of debt issuance costs 25,000 — 25,000
Repayments of long-term debt ( 14,092 ) — ( 14,092 )
Borrowings of credit facility 311,135 — 311,135
Repayments of credit facility ( 302,628 ) — ( 302,628 )
Net cash provided by financing activities 19,415 — 19,415
Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 3 ) — ( 3 )
Net change in cash, cash equivalents and restricted cash ( 5,257 ) — ( 5,257 )
Cash, cash equivalents, and restricted cash at beginning of period 25,860 — 25,860
Cash, cash equivalents, and restricted cash at end of period $ 20,603 $ — $ 20,603
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the statement of cash flows:
Cash and cash equivalents 20,381 — 20,381
Restricted cash, current 222 — 222
Cash, cash equivalents and restricted cash at the end of period
$ 20,603 $ — $ 20,603
Supplemental disclosure of cash flow information
Cash paid for interest $ 8,841 $ — $ 8,841
Cash paid for income taxes, net $ 1,798 $ — $ 1,798
Non-cash transactions
Purchases of property and equipment included in accounts payable $ 88 $ — $ 88
Right-of-use assets obtained in exchange for new lease liabilities
$ 538 $ — $ 538
Paid-in-kind interest $ 3,515 $ — $ 3,515
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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
(in thousands, unaudited)
Common Stock Additional
Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders' Deficit
Three Months Ended Shares Amount
Balance, September 30, 2024, As Revised
4,792 $ 48 $ 709,667 $ ( 859,427 ) $ ( 1,392 ) $ ( 151,104 )
Net loss — — — ( 75,300 ) — ( 75,300 )
Foreign currency translation adjustments, net — — — — ( 1,077 ) ( 1,077 )
Shares issued under employee incentive plans, net 109 1 ( 1 ) — — —
Warrants exercised related to long-term debt
406 4 30,119 — — 30,123
Stock-based compensation — — 736 — — 736
Balance, December 31, 2024, As Restated
5,307 $ 53 $ 740,521 $ ( 934,727 ) $ ( 2,469 ) $ ( 196,622 )
Common Stock Additional
Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders' Deficit
Nine Months Ended Shares Amount
Balance, March 31, 2024 4,792 $ 48 $ 708,027 $ ( 827,380 ) $ ( 2,193 ) $ ( 121,498 )
Net loss — — — ( 107,347 ) — ( 107,347 )
Foreign currency translation adjustments, net — — — — ( 276 ) ( 276 )
Shares issued under employee incentive plans, net 109 1 ( 1 ) — — —
Warrants exercised related to long-term debt
406 4 30,119 — — 30,123
Stock-based compensation — — 2,376 — — 2,376
Balance, December 31, 2024 As Restated
5,307 $ 53 $ 740,521 $ ( 934,727 ) $ ( 2,469 ) $ ( 196,622 )
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.