QUANTUM CORP /DE/ 10-Q

ITEM 1. FINANCIAL STATEMENTS QUANTUM CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts, unaudited) September 30, 2025 March 31, 2025 Assets Current assets: Cash and cash equivalents $ 14,670 $ 16,464 Restricted cash 659 139 Accounts receivable, net of allowance for credit losses of $ 151 and $ 99 , respectively 43,934 52,502 Inventories 18,930 22,434 Prepaid expenses 4,524 2,738 Other current assets 7,416 8,529 Total current assets 90,133 102,806 Property and equipment, net 10,697 11,378 Goodwill 12,969 12,969 Intangible assets, net — 281 Right-of-use assets 7,983 8,580 Other long-term assets 15,915 19,388 Total assets $ 137,697 $ 155,402 Liabilities and Stockholders’ Deficit Current liabilities: Accounts payable $ 24,193 $ 31,463 Accrued compensation 8,822 9,214 Deferred revenue, current portion 66,758 75,076 Accrued restructuring 855 786 Term debt 99,634 96,486 Revolving credit facility — 26,600 Warrant liabilities 23,895 — Other accrued liabilities 17,588 17,982 Total current liabilities 241,745 257,607 Deferred revenue, net of current portion 35,144 38,847 Operating lease liabilities 8,602 8,934 Other long-term liabilities 12,705 14,380 Total liabilities 298,196 319,768 Commitments and contingencies ( Note 10 ) Stockholders' deficit Preferred stock, 20,000 shares authorized; no shares issued and outstanding — — Common stock, $ 0.01 par value; 225,000 shares authorized; 13,333 and 6,962 shares issued and outstanding 133 70 Additional paid-in capital 846,451 779,645 Accumulated deficit ( 1,006,133 ) ( 942,471 ) Accumulated other comprehensive loss ( 950 ) ( 1,610 ) Total stockholders’ deficit ( 160,499 ) ( 164,366 ) Total liabilities and stockholders’ deficit $ 137,697 $ 155,402 See accompanying Notes to Condensed Consolidated Financial Statements. 1 Table of Contents QUANTUM CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (in thousands, except per share amounts, unaudited) Three Months Ended September 30, Six Months Ended September 30, 2025 2024 2025 2024 Revenue: Product $ 35,368 $ 39,278 $ 72,905 $ 81,931 Service and subscription 25,620 30,205 50,563 56,915 Royalty 1,727 2,363 3,534 5,265 Total revenue 62,715 71,846 127,002 144,111 Cost of revenue: Product 28,748 29,774 59,493 62,330 Service and subscription 10,415 11,427 21,243 24,080 Total cost of revenue 39,163 41,201 80,736 86,410 Gross profit 23,552 30,645 46,266 57,701 Operating expenses: Sales and marketing 11,819 13,578 24,474 26,873 General and administrative 11,006 13,977 24,576 35,042 Research and development 5,692 8,264 12,353 16,572 Restructuring charges 3,193 383 5,616 1,574 Total operating expenses 31,710 36,202 67,019 80,061 Loss from operations ( 8,158 ) ( 5,557 ) ( 20,753 ) ( 22,360 ) Other income (expense), net ( 185 ) ( 1,334 ) ( 616 ) ( 1,375 ) Interest expense ( 6,227 ) ( 6,131 ) ( 12,743 ) ( 9,921 ) Change in fair value of warrant liabilities 1,525 3,550 1,525 5,216 Loss on debt extinguishment ( 33,254 ) ( 2,308 ) ( 30,695 ) ( 3,003 ) Loss before income taxes ( 46,299 ) ( 11,780 ) ( 63,282 ) ( 31,443 ) Income tax provision 157 370 380 605 Net loss $ ( 46,456 ) $ ( 12,150 ) $ ( 63,662 ) $ ( 32,048 ) Net loss per share - basic and diluted $ ( 3.49 ) $ ( 2.54 ) $ ( 5.65 ) $ ( 6.69 ) Weighted average shares - basic and diluted 13,322 4,792 11,266 4,792 Net loss $ ( 46,456 ) $ ( 12,150 ) $ ( 63,662 ) $ ( 32,048 ) Foreign currency translation adjustments, net ( 62 ) 659 660 801 Total comprehensive loss $ ( 46,518 ) $ ( 11,491 ) $ ( 63,002 ) $ ( 31,247 ) See accompanying Notes to Condensed Consolidated Financial Statements. 2 Table of Contents QUANTUM CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands, unaudited) Six Months Ended September 30, 2025 2024 Operating activities Net loss $ ( 63,662 ) $ ( 32,048 ) Adjustments to reconcile net loss to net cash used in operating activities Depreciation and amortization 1,857 3,347 Amortization of debt issuance costs 3,998 2,081 Non-cash lease expense 697 934 Gain (loss) on debt extinguishment 5,275 3,003 Provision for product and manufacturing inventories 3,633 1,167 Stock-based compensation ( 205 ) 1,641 Paid-in-kind interest 3,579 1,844 Warrants issued in connection with debt amendments 25,420 — Change in fair value of warrant liabilities ( 1,525 ) ( 5,216 ) Other non-cash 1,936 851 Changes in assets and liabilities: Accounts receivable, net 8,429 16,638 Inventories ( 150 ) ( 1,625 ) Prepaid expenses ( 1,786 ) ( 1,446 ) Operating lease liabilities ( 587 ) ( 500 ) Accounts payable ( 7,794 ) 5,253 Accrued compensation ( 393 ) ( 4,350 ) Accrued restructuring charges 69 — Deferred revenue ( 12,021 ) ( 12,452 ) Other current assets 1,085 ( 780 ) Other non-current assets 1,077 1,280 Other current liabilities ( 241 ) 2,122 Other non-current liabilities ( 1,180 ) 1,062 Net cash used in operating activities ( 32,489 ) ( 17,194 ) Investing activities Purchases of property and equipment ( 1,606 ) ( 3,228 ) Net cash used in investing activities ( 1,606 ) ( 3,228 ) Financing activities Borrowings of long-term debt, net of debt issuance costs ( 6,317 ) 24,655 Repayments of long-term debt ( 909 ) ( 13,537 ) Borrowings of credit facility 71,625 209,852 Repayments of credit facility ( 98,682 ) ( 209,445 ) Proceeds from shares issued related to the SEPA, net 66,993 — Proceeds from the issuance of common stock, net 81 — Net cash provided by financing activities 32,791 11,525 Effect of exchange rate changes on cash, cash equivalents and restricted cash 30 ( 3 ) Net change in cash, cash equivalents and restricted cash ( 1,274 ) ( 8,900 ) Cash, cash equivalents and restricted cash at beginning of period 16,603 25,860 Cash, cash equivalents and restricted cash at end of period $ 15,329 $ 16,960 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 consolidated statements of cash flows: Cash and cash equivalents $ 14,670 $ 16,719 Restricted cash 659 241 Cash, cash equivalents and restricted cash at the end of period $ 15,329 $ 16,960 Supplemental disclosure of cash flow information Cash paid for interest $ 4,591 $ 5,539 Cash paid for income taxes, net $ 327 $ 1,304 Non-cash transactions Purchases of property and equipment included in accounts payable $ 117 $ 312 Right-of-use assets obtained in exchange for new lease liabilities $ 9 $ 472 Paid-in-kind interest $ 3,579 $ 1,844 See accompanying Notes to Condensed Consolidated Financial Statements. 3 Table of Contents QUANTUM CORPORATION CONDENSED 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, June 30, 2024 4,792 $ 48 $ 708,952 $ ( 847,278 ) $ ( 2,051 ) $ ( 140,329 ) Net loss — — — ( 12,150 ) — ( 12,150 ) Foreign currency translation adjustments, net — — — — 659 659 Stock-based compensation — — 716 — — 716 Balance, September 30, 2024 4,792 $ 48 $ 709,668 $ ( 859,428 ) $ ( 1,392 ) $ ( 151,104 ) Balance, June 30, 2025 13,319 $ 133 $ 846,046 $ ( 959,677 ) $ ( 888 ) $ ( 114,386 ) Net loss — — — ( 46,456 ) — ( 46,456 ) Foreign currency translation adjustments, net — — — — ( 62 ) ( 62 ) Shares issued under employee incentive plans, net 14 — 81 — — 81 Stock-based compensation — — 324 — — 324 Balance, September 30, 2025 13,333 $ 133 $ 846,451 $ ( 1,006,133 ) $ ( 950 ) $ ( 160,499 ) See accompanying Notes to Condensed Consolidated Financial Statements. QUANTUM CORPORATION 4 Table of Contents QUANTUM CORPORATION CONDENSED 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 Six Months Ended Shares Amount Balance, March 31, 2024 4,792 $ 48 $ 708,027 $ ( 827,380 ) $ ( 2,193 ) $ ( 121,498 ) Net loss — — — ( 32,048 ) — ( 32,048 ) Foreign currency translation adjustments, net — — — — 801 801 Stock-based compensation — — 1,641 — — 1,641 Balance, September 30, 2024 4,792 $ 48 $ 709,668 $ ( 859,428 ) $ ( 1,392 ) $ ( 151,104 ) Balance, March 31, 2025 6,962 $ 70 $ 779,645 $ ( 942,471 ) $ ( 1,610 ) $ ( 164,366 ) Net loss — — — ( 63,662 ) — ( 63,662 ) Foreign currency translation adjustments, net — — — — 660 660 Shares issued under employee incentive plans 51 — 81 — — 81 Shares issued related to the SEPA, (net of $ 2,700 issuance costs) 6,320 63 66,930 — — 66,993 Stock-based compensation — — ( 205 ) — — ( 205 ) Balance, September 30, 2025 13,333 $ 133 $ 846,451 $ ( 1,006,133 ) $ ( 950 ) $ ( 160,499 ) See accompanying Notes to Condensed Consolidated Financial Statements. 5 Table of Contents INDEX TO NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Page Note 1: Description of Business and Summary of Significant Accounting Policies 7 Note 2: Revenue 9 Note 3: Balance Sheet Information 10 Note 4: Debt 11 Note 5: Fair Value of Financial Instruments 14 Note 6: Leases 15 Note 7: Restructuring Charges 16 Note 8: Net Loss Per Share 17 Note 9: Income Taxes 17 Note 10: Commitments and Contingencies 18 Note 11: Segment Information 19 Note 12: Revision of Previously Issued Financial Statements 21 6 Table of Contents NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) NOTE 1: DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business Quantum Corporation, together with its consolidated subsidiaries, 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-volatile memory express, to solid state drives, hard disk drives, 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, direct marketing resellers, original equipment manufacturers and other suppliers to meet customers’ evolving needs. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. All intercompany balances and transactions have been eliminated. Certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted. The Company believes the disclosures made are adequate to prevent the information presented from being misleading. However, the accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included within the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2025 (the “Annual Report”). The unaudited condensed consolidated interim financial statements reflect all adjustments, consisting only of normal and recurring items, necessary to present fairly our financial position as of September 30, 2025, the results of operations and comprehensive loss, statements of cash flows, and changes in stockholders’ deficit for the three and six months ended September 30, 2025 and 2024. Interim results are not necessarily indicative of full year performance because of short-term variations. Going Concern These condensed 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 is required to repay the Term Loan (as defined herein) on August 5, 2026. At the present time, the Company does not have sufficient cash to be able to make this repayment nor does the Company expect to generate sufficient cash through operating activities to make this repayment by August 5, 2026. On September 23, 2025, the Company entered into a transaction agreement with Dialectic (as further discussed herein) which laid out the terms to exchange Dialectic’s portion of the Term Loan for one or more convertible notes with a three year maturity. The issuance of the convertible note(s) is subject to stockholder approval. In the same agreement, the Company also agreed to use the proceeds from the Standby Equity Purchase Agreement (“SEPA”) to repay OC III Lenders for its portion of the Term Loan. However, there is no assurance that the issuance of the Convertible Note will be approved nor that we will be able to raise sufficient cash proceeds from the SEPA to repay the Term Loan. See Note 4: Debt for further information on our credit agreements. The condensed 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. All credit facilities are collateralized by a pledge of the Company’s assets. Revision of Previously Issued Financial Statements for Immaterial Misstatements 7 Table of Contents In connection with the preparation of the Company’s Quarterly Report on Form 10-Q for the three and six months ended September 30, 2025, the Company identified that certain previously disclosed errors—which resulted in a restatement of the financial statements for the three and nine months ended December 31, 2024, as filed in the Annual Report also affected the financial statements for the three and six months ended September 30, 2024. The impact of these errors on the three and six months ended September 30, 2024 was evaluated in accordance with SEC Staff Accounting Bulletins No. 99 and 108 and was determined to be immaterial to the previously issued financial statements. Accordingly, the Company has revised, rather than restated, the comparative financial information for September 30, 2024 presented in this Quarterly Report on Form 10-Q. The nature of the revisions is as follows: • Service contract term – The Company identified inconsistencies in the contract term used to recognize service and subscription revenue under ASC 606. Revenue is required to be deferred and recognized ratably over the contractual term of the arrangement. Management reviewed and updated the revenue recognition periods to ensure consistent application for all relevant contracts invoiced during the fiscal year ended March 31, 2025. These adjustments have been reflected in the revenue calculations presented herein. See Note 12: Revision of Previously Issued Financial Statements for more information. • Application of ASC 606 related to standalone selling price (“SSP”) – The Company determined that the standalone selling prices used during the fiscal year ended March 31, 2025 had not been appropriately updated. Accordingly, prior to March 31, 2025, the Company refreshed the SSPs for all performance obligations in bundled contracts, maximizing the use of observable inputs. This adjustment resulted in changes to the allocation of transaction price and corresponding revenue recognition. For further discussion of the restatement of the financial statements for the three and nine months ended December 31, 2024, refer to the Annual Report. Reclassifications Certain prior-period amounts in the condensed consolidated statements of cash flows have been reclassified to conform to the current period presentation. These reclassifications had no effect on total cash flows. 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 $ 0.01 per share (the “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”). 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 condensed consolidated financial statements and notes thereto have been retroactively adjusted for all periods presented to give effect to the Reverse Stock Split. 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 8 Table of Contents reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. 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. Accounting Pronouncement Recently Adopted In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which required greater disaggregation of tax information in rate reconciliation and income taxes paid by jurisdiction. ASU 2023-09 was adopted beginning April 1, 2025, with no material impact. Recent Accounting Pronouncement Not Yet Adopted 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. The Company is currently evaluating the impact of this new standard on its financial statement disclosures. In July 2025, the FASB issued ASU 2025-05, "Financial Instruments—Credit Losses (Topic 326): Measurements of Credit Losses for Accounts Receivable and Contract Assets" ("ASU 2025-05"). The amendments in this update provide a practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under FASB Accounting Standards Codification 606. Under ASU 2025-05, an entity is required to disclose whether it has elected to use the practical expedient. An entity that makes the accounting policy election is required to disclose the date through which subsequent cash collections are evaluated. ASU 2025-05 is effective for the Company beginning in the fiscal year beginning April 1, 2026, with early adoption permitted. The Company is currently evaluating the impact of this new standard on its financial statement disclosures. In September 2025, the FASB issued ASU 2025-06, “Targeted Improvements to the Accounting for Internal-Use Software” (Topic 350). ASU 2025-06 eliminates references to software development project stages and revises the criteria that must be met to begin capitalizing internal-use software costs. The standard permits entities to adopt the guidance using a prospective, retrospective, or modified transition approach and becomes effective for us beginning January 1, 2028, with early adoption permitted. The Company is currently assessing the potential impact that ASU 2025-06 will have on its financial statements disclosures. NOTE 2: REVENUE Contract Balances The following table presents the Company’s receivables and contract liabilities and certain information related to this balance as of September 30, 2025, March 31, 2025 and March 31, 2024 (in thousands): September 30, 2025 March 31, 2025 March 31, 2024 Accounts receivable $ 43,934 $ 52,502 $ 67,788 Deferred revenue $ 101,902 $ 113,923 $ 116,687 Revenue recognized in the period from amounts included in contract liabilities at the beginning of the period $ 48,123 $ 74,048 $ 76,304 Remaining Performance Obligations 9 Table of Contents Total remaining performance obligations (“RPO”) representing contracted but not recognized revenue was $ 130.3 million as of September 30, 2025. RPO consists of both deferred revenue and uninvoiced, non-cancelable contracts that are expected to be invoiced and recognized as revenue in future periods and excludes variable consideration related to sales-based royalties. RPO consisted of the following (in thousands): Current Non-Current Total As of September 30, 2025 $ 92,504 $ 37,803 $ 130,307 NOTE 3: BALANCE SHEET INFORMATION Certain significant amounts included in the Company's condensed consolidated balance sheets consist of the following (in thousands): Manufacturing Inventories September 30, 2025 March 31, 2025 Finished goods $ 6,987 $ 10,471 Work in progress 1,517 380 Raw materials 9,488 9,485 Total manufacturing inventories $ 17,992 $ 20,336 Service Parts Inventories September 30, 2025 March 31, 2025 Finished goods $ 476 $ 1,189 Component parts 462 909 Total service parts inventories $ 938 $ 2,098 Intangibles, net September 30, 2025 March 31, 2025 Gross Accumulated Amortization Net Gross Accumulated Amortization Net Customer lists $ 4,398 $ ( 4,398 ) $ — $ 4,398 $ ( 4,117 ) $ 281 Intangible assets, net $ 4,398 $ ( 4,398 ) $ — $ 4,398 $ ( 4,117 ) $ 281 Intangible assets amortization expense was $ 0.1 million and $ 0.5 million, and $ 0.3 million and $ 0.9 million for the three and six months ended September 30, 2025 and 2024, respectively. The Company recorded amortization of developed technology in cost of product revenue, and customer lists in sales and marketing expenses in the condensed consolidated statements of operations. Goodwill As of September 30, 2025 and March 31, 2025, goodwill was approximately $ 13.0 million. There were no impairments to goodwill as of September 30, 2025 and March 31, 2025. 10 Table of Contents Other Long-Term Assets September 30, 2025 March 31, 2025 Capitalized SaaS implementation costs for internal use, net $ 12,972 $ 13,910 Capitalized debt costs — 2,871 Contract cost asset 1,068 1,144 Other 1,875 1,463 Total other long-term assets $ 15,915 $ 19,388 NOTE 4: DEBT The Company’s debt consisted of the following (in thousands): September 30, 2025 March 31, 2025 Term Loan $ 106,086 $ 102,507 PNC Credit Facility — 26,600 Less: current portion ( 99,634 ) ( 123,086 ) Less: unamortized debt issuance costs (1) ( 6,452 ) ( 6,021 ) 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 condensed consolidated balance sheets. Unamortized debt issuance costs related to the PNC Credit Facility are presented within other assets on the accompanying condensed consolidated balance sheets. On August 5, 2021, the Company entered into a Term Loan Credit and Security Agreement (the “Term Loan Credit Agreement”), pursuant to which a senior secured term loan was issued (the “2021 Term Loan”), maturing on August 5, 2026. The Company also entered into an Amended and Restated Revolving Credit and Security Agreement on December 27, 2018 (the “PNC Credit Facility” and, together with the Term Loan Credit Agreement, the “Credit Agreements”), which, per its terms, was maturing on August 5, 2026 and provided 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 (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 term of the loan. 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. 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 term of the loan. The July 2024 Amendments to the PNC Credit 11 Table of Contents 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 ended September 30, 2025; (iv) waived the testing requirement for the net leverage ratio financial covenant for the fiscal quarter ended September 30, 2024; (v) replaced the net leverage ratio financial covenant with a minimum EBITDA financial covenant for the fiscal quarters ended December 31, 2024 and March 31, 2025; (vi) reset the net leverage ratio financial covenant requirements for the fiscal quarters ended 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 ended 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 ‘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 380,310 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. 12 Table of Contents 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 term of the loan. 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. On April 2, 2025, the Company consented to an assignment (the “Master Assignment Agreement”) of the 2021 Term Loan and 2024 Term Loans. One of the lenders sold and assigned all of its interests to Dialectic. The Master Assignment Agreement was accounted for as a debt extinguishment. The Company recorded a gain on debt extinguishment of $ 2.4 million related to the net of discount on issuance of term loans to a new lender and write-off of all unamortized debt issuance costs and fees related to the previous lender. The $ 0.4 million in new lender fees were recorded as a reduction to the carrying amounts of the term loans and amortized to interest expense over the remaining term of the loan. On May 5, 2025, the Company entered into an amendment (the “May 2025 Term Loan Amendment”) to the Term Loan. The May 2025 Term Loan Amendment, among other things, revised the prepayment requirements under the Credit Agreement in connection with the net cash proceeds received from the SEPA. The May 2025 Term Loan Amendment was accounted for as a modification and the $ 0.1 million in lender amendment fees were recorded as a reduction to the carrying amounts of the term loans and amortized to interest expense over the remaining term of the loan. On August 13, 2025, the Company terminated its PNC Credit Facility. As of the date of termination, there were no amounts outstanding under the facility. In connection with the termination, the Company paid an exit fee of $ 1.2 million, which was recorded within Loss on Debt Extinguishment on the condensed consolidated statement of operations and comprehensive loss. On August 13, 2025, the Company obtained waivers to certain covenants including the net leverage covenant under the Term Loan Credit Agreement 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. On September 23, 2025, the Company entered into a Transaction Agreement (the “Transaction Agreement”) with the lenders under its Credit Agreement. Pursuant to this agreement, the Company agreed will issue to Dialectic Technology SPV LLC (“Dialectic”), on a dollar-for-dollar basis, one or more senior secured convertible notes (the “Convertible Note”) in exchange for the amounts then outstanding under the term loans held by Dialectic (the “Debt Exchange”). The closing of the Debt Exchange is subject to customary conditions, including approval by the Company’s stockholders. As of September 30, 2025, such approval has not been obtained, and the Debt Exchange had not occurred. As of September 30, 2025, total Term Loans outstanding to Dialectic was $ 52.6 million. On September 23, 2025, the Company also entered into the Fifteenth Amendment to the Term Loan Credit Agreement (the “Fifteenth Amendment”). The Fifteenth Amendment, among other things, (i) permits the Company to retain up to $ 15.0 million of net cash proceeds from the SEPA received on or after the date of the Fifteenth Amendment for working capital and general corporate purposes, (ii) converts certain tranches of term loans held by the OC III Lenders into new and separate tranches, (iii) defers payment of cash interest on term loans held by Dialectic accruing during the quarters ending September 30, 2025 and December 31, 2025, until the earliest of (a) the date the Company elects to pay such deferred cash interest, (b) the maturity of such term loans, or (c) the date the Debt Exchange occurs, at which point such deferred interest will be subject to the terms of the Convertible Note indenture, and increases the interest rate applicable to such term loans by 2.00 % during the period that such cash interest is being deferred, (iv) eliminates the existing maximum total net leverage ratio covenant and minimum daily liquidity covenant (noting that, following the Debt Exchange, the Convertible Notes will be subject to a minimum liquidity covenant), and (v) amends certain other provisions, including mandatory prepayment events, payment of fees and expenses, and reporting requirements. In connection with the Fifteenth Amendment, the Company issued warrants to Dialectic to purchase up to 2,653,308 shares of Common Stock, representing 19.9 % of the Company’s outstanding shares as of the Transaction Agreement date (the “Forbearance Warrant”) as consideration for the forbearance, waivers, and amendments granted under the Fifteenth Amendment. 13 Table of Contents The Fifteenth Amendment to the Term Loans held by Dialectic was accounted for as an extinguishment under ASC 470-50, resulting in the recognition of a new debt instrument, the derecognition of the original term loans, and a loss on extinguishment of $ 33.3 and $ 30.7 million, which is included in loss on debt extinguishment for the three and six months ended September 30, 2025. The fair value of the Forbearance Warrant was treated as a lender fee and included in the extinguishment loss calculation. The Fifteenth Amendment to the Term Loans held by OC III Lenders was accounted for as a modification. Related Party Transaction The Term Loan and Forbearance Warrant with Dialectic constitute related party transactions, as John Fichthorn, a member of the Company's Board of Directors, is also Managing Partner of Dialectic Capital Management, the investment advisor to Dialectic. The principal on the Term Loan totaled $ 52.6 million as of September 30, 2025,and is payable at maturity. The Forbearance Warrant allows Dialectic to purchase up to 2,653,308 shares, with a fair value of $ 23.9 million as of that date. Forbearance Warrant The Forbearance Warrant, issued on September 23, 2025, has an exercise price of $ 8.81 per share, representing 80 % of the seven-day volume-weighted average price as of September 22, 2025, and is exercisable until the seventh anniversary of its issuance. It includes a put right that allows the holder to require the Company to repurchase the unexercised portion for cash after the fifth anniversary, or earlier upon a change of control or liquidation. The repurchase price equals the holder’s pro rata share of the original issue value of $ 20 million, adjusted for any exercised portion. The Forbearance Warrant is classified as a liability under ASC 480, as it may require cash settlement and meets the definition of a derivative. It is initially measured at fair value, with subsequent changes recognized in the condensed consolidated statement of operations under “Change in fair value of warrant liabilities.” See Note 5: Fair Value of Financial Instruments for more information. Standby Equity Purchase Agreement On January 25, 2025, the Company entered into the 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. As of September 30, 2025, the Company has issued approximately 7.5 million shares of Common Stock under the SEPA for net proceeds of approximately $ 82.8 million, of which 6.3 million shares of Common Stock for net proceeds of approximately $ 66.3 million were issued in the six months ended September 30, 2025. No shares were issued in the three months ended September 30, 2025. NOTE 5: FAIR VALUE OF FINANCIAL INSTRUMENTS The Company’s assets measured and recorded at fair value on a recurring basis may consist of money market funds, which are included in cash and cash equivalents in the condensed consolidated balance sheets. These instruments are valued using quoted market prices in active markets (Level 1 fair value measurements) at the respective balance sheet dates. No impairment charges were recognized for non-financial assets for the three and six months ended September 30, 2025 and 2024. The Company has no non-financial liabilities measured and recorded at fair value on a non-recurring basis. Long-Term Debt The Company’s financial liabilities were comprised primarily of long-term debt as of September 30, 2025. The carrying amounts of the Company’s debt instruments are recorded at amortized cost. The fair value of the Company’s long-term debt is disclosed for informational purposes only and is not recognized in the condensed consolidated balance sheets. The fair value of the Company’s debt was estimated using a discounted cash flow approach based on the Company’s current borrowing rates for similar types of debt instruments, adjusted for credit and nonperformance 14 Table of Contents risk. The Company uses significant other observable market data and assumptions (Level 2 inputs, as defined in ASC 820, Fair Value Measurement) that it believes market participants would use in pricing such debt. The carrying value and estimated fair value of the Company’s long-term debt were as follows (in thousands): September 30, 2025 March 31, 2025 Carrying Value Fair Value Carrying Value Fair Value Term Loans $ 106,086 $ 99,135 $ 102,507 $ 91,576 PNC Credit Facility — — 26,600 24,755 Warrants On September 23, 2025, the Company established the initial fair value for the Forbearance Warrant issued to Dialectic in connection with the Fifteenth Amendment. The fair value was subsequently remeasured as of September 30, 2025, and the resulting change in fair value was recognized in the condensed consolidated statement of operations under “Change in fair value of warrant liabilities.” The Forbearance Warrant was valued using a Monte Carlo simulation model in conjunction with a Probability-Weighted Expected Return Model (“PWERM”). This model incorporates various assumptions, including the Company’s Common Stock price, expected volatility, risk-free interest rate, and the remaining contractual term of the warrant. Because the valuation relies on significant unobservable inputs, the fair value of the Forbearance Warrant is classified as Level 3 within the fair value hierarchy. The following table summarizes the key assumptions used in estimating the fair value of the Forbearance Warrant at issuance and at September 30, 2025: September 30, 2025 September 23, 2025 Discount period (years) 6.98 years 7.0 years Risk-free interest rate 3.57 % - 3.89 % 3.52 % - 3.83 % Stock price volatility 98.00 % 98.00 % Stock price at valuation date $ 9.92 $ 10.69 Probability 1 35 % - 15 % - 50 % 35 % - 15 % - 50 % Fair value (in thousands) $ 23,895 $ 25,420 (1) Scenario probability as of issuance was based on timing expectations of management that a liquidation event occurring was estimated at 35 %; a fundamental transaction occurring was estimated at 15 %; and none of the previous events was estimated at 50 %. The table below sets forth a summary of changes in the fair value of the Company’s warrant liabilities for the period ended September 30, 2025: Balance at June 30, 2025 $ — Issuance of warrants 25,420 Change in fair value of warrant liabilities ( 1,525 ) Balance at September 30, 2025 $ 23,895 NOTE 6: LEASES Supplemental balance sheet information related to leases is as follows (in thousands): 15 Table of Contents Operating Leases September 30, 2025 March 31, 2025 Operating lease right-of-use asset $ 7,983 $ 8,580 Operating lease liability within other accrued liabilities $ 702 $ 856 Operating lease liability, net 8,602 8,934 Total operating lease liabilities $ 9,304 $ 9,790 Components of lease cost were as follows (in thousands): Three Months Ended September 30, Six Months Ended September 30, Lease Cost 2025 2024 2025 2024 Operating lease cost $ 472 $ 779 $ 1,141 $ 1,491 Variable lease cost 36 82 75 152 Total lease cost $ 508 $ 861 $ 1,216 $ 1,643 Maturity of Lease Liabilities Operating Leases Remainder of fiscal year 2026 $ 1,099 2027 1,852 2028 1,625 2029 1,247 2030 1,244 Thereafter 10,855 Total lease payments 17,922 Less: imputed interest ( 8,618 ) Present value of lease liabilities $ 9,304 Lease Term and Discount Rate September 30, 2025 March 31, 2025 Weighted average remaining operating lease term (years) 10.21 10.19 Weighted average discount rate for operating leases 12.6 % 12.59 % Operating cash outflows related to operating leases each totaled $ 1.1 million and $ 1.4 million for the six months ended September 30, 2025 and 2024, respectively. NOTE 7: RESTRUCTURING CHARGES During the quarters ended September 30, 2025 and 2024, the Company had certain approved restructuring plans to improve operational efficiencies and rationalize its cost structure. During the quarter ended September 30, 2025, the Company recognized $ 3.2 million of restructuring charges primarily related to employee severance and other termination benefits. These charges are presented within restructuring charges in the Condensed Consolidated Statements of Operations. The Company expects to recognize additional restructuring charges in future periods, primarily related to severance and termination benefits, and is expected to be substantially complete by the end of the fourth quarter of fiscal year 2026, which is subject to change. The following tables present the activity and the estimated timing of future payouts for accrued restructuring included in other current liabilities in the condensed consolidated balance sheets (in thousands): 16 Table of Contents Severance and Benefits Balance as of March 31, 2024 $ — Restructuring charges 1,571 Cash payments ( 1,511 ) Other non-cash ( 2 ) Balance as of September 30, 2024 $ 58 Balance as of March 31, 2025 $ 786 Restructuring charges 5,616 Cash payments ( 5,599 ) Other non-cash 52 Balance as of September 30, 2025 $ 855 During the three and six months ended September 30, 2025, the Company recognized approximately $ 0.2 million and $ 0.3 million in forfeitures of unvested restricted stock units (“RSUs”) in connection with workforce reductions and employee departures. NOTE 8: NET LOSS PER SHARE The Company has performance share units, restricted stock units and options to purchase shares under its Employee Stock Purchase Plan, as amended and restated on July 25, 2023 (“ESPP”), granted under various stock incentive plans that, upon exercise and vesting, would increase shares outstanding. The Company has also issued a warrant to purchase shares of Common Stock. The dilutive impact related to shares of Common Stock from incentive plans and the outstanding warrant 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. In periods of a net loss, all potentially dilutive weighted-average outstanding shares of Common Stock equivalents were excluded from the computation of diluted net income (loss) per share attributable to common stockholders for the periods presented because including them would have been anti-dilutive. 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): Three Months Ended September 30, Six Months Ended September 30, 2025 2024 2025 2024 Stock Awards 104 11 91 24 The Company had outstanding market based restricted stock units as of September 30, 2025 that were eligible to vest into shares of the 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 34,201 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 September 30, 2025. NOTE 9: INCOME TAXES The effective tax rate for the three months and six months ended September 30, 2025 and 2024 was ( 0.4 )% and ( 0.6 )%, as compared to ( 2.3 )% and ( 1.6 )% respectively. The effective tax rates differed from the federal statutory tax rate of 21% during each of these periods due primarily to unbenefited losses experienced in jurisdictions with 17 Table of Contents valuation allowances on deferred tax assets as well as the forecasted mix of earnings in domestic and international jurisdictions. As of September 30, 2025, including interest and penalties, the Company had $ 83.6 million of unrecognized tax benefits, $ 74.4 million of which, if recognized, would favorably affect the effective tax rate without consideration of the valuation allowance. As of September 30, 2025, the Company had accrued interest and penalties related to these unrecognized tax benefits of $ 1.3 million. The Company recognizes interest and penalties related to income tax matters in the income tax provision in the condensed consolidated statements of operations. As of September 30, 2025, $ 76.0 million of unrecognized tax benefits were recorded as a contra deferred tax asset in other long-term assets in the condensed consolidated balance sheets and $ 7.6 million (including interest and penalties) were recorded in other long-term liabilities in the condensed consolidated balance sheets. During the next 12 months, it is reasonably possible that approximately $ 5.3 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, $ 5.2 million will be offset by the establishment of a related valuation allowance. The net tax benefit recognized in the statements of operation is estimated to be $ 0.1 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 material impact to the Company's condensed consolidated financial statements for the quarter ended September 30, 2025, 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. 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 the Company’s 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 September 30, 2025, the Company had issued non-cancelable commitments for $ 45.0 million to purchase inventory from its contract manufacturers and suppliers. Litigation On September 4, 2025, a shareholder class action complaint was filed in the United States District Court for the District of Colorado. The complaint identifies Seung Lee as the plaintiff and names Quantum Corporation and James J. Lerner, Kenneth P. Gianella, and Laura Nash as defendants. It alleges certain violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 related to certain disclosures made in the Company’s quarterly and annual reports regarding its financial reporting for the third quarter of the Company’s fiscal year 2025 and its restatement of that financial reporting. The complaint seeks to designate the plaintiff as the lead plaintiff for the class and define a class period of November 15, 2024 through August 18, 2025, and seeks an award of unspecified damages, costs, and expenses. At this time, Quantum is not able to determine whether this lawsuit would have any material impact on our business, operating results, or financial condition. On October 28, 2025, a shareholder derivative complaint was filed in the United States District Court for the District of Colorado. The complaint was filed by Brent Cullison derivatively on behalf of Quantum Corporation against James J. Lerner, Kenneth P. Gianella, Laura Nash, Don Jaworski, John Fichthorn, Hugues Meyrath, John R. Tracy, Emily White, James C. Clancy, and Tony J. Blevins. The complaint substantially repeats the allegations of the shareholder litigation described above and alleges related breaches of fiduciary duties and other causes of action. The complaint seeks recovery of damages sustained by Quantum arising from the allegations, as well as fees and costs incurred. 18 Table of Contents Another shareholder derivative complaint was filed in the same court on November 4, 2025. That complaint names Felicia Marti on behalf of Quantum Corporation as the plaintiff, with James J. Lerner, Kenneth P. Gianella, Laura Nash, John Fichthorn, Donald J. Jaworski, Hugues Meyrath, John R. Tracy, and Emily White named as defendants. The complaint substantially repeats the allegations of the Cullison derivative litigation and seeks relief of recovery of damages sustained by Quantum arising from the allegations, certain corporate governance reforms, and fees and costs incurred. At this time, Quantum is not able to determine whether the derivative lawsuits would have any material impact on our business, operating results, or financial condition. Additionally, from time to time, the Company is party to various legal proceedings and claims arising from the normal course of business activities. Based on current available information, the Company does not expect that the ultimate outcome of any currently pending matters, individually or in the aggregate, will have a material adverse effect on the Company’s results of operations, cash flows or financial position. NOTE 11: SEGMENT INFORMATION Our chief operating decision maker (“CODM”), the Chief Executive Officer, manages business activities as a single operating and reportable segment at the consolidated level. The CODM reviews and utilizes consolidated financial information, including revenue, gross profit, operating loss and net loss as reported on the condensed consolidated statements of operations, to assess performance and allocate resources to support strategic priorities. Condensed consolidated net loss is our segment’s primary measure of profit or loss. The measure of segment assets is reported on the condensed consolidated balance sheets as total consolidated assets. Our CODM reviews the following significant segment expenses, which are each separately disclosed and presented in the condensed consolidated statements of operations: cost of revenue for product, cost of revenue for subscription services, research and development expenses, sales and marketing expenses, and general and administrative expenses. Other segment items within condensed consolidated net loss include restructuring and impairment expenses, other income (expense), net and income tax provision. Other significant noncash segment expenses include stock-based compensation, depreciation and amortization and fair value adjustments on warrant liabilities. 19 Table of Contents 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 CODM evaluates its financial performance (in thousands): Three Months Ended September 30, Six Months Ended September 30, 2025 2024 2025 2024 Americas 1 Product revenue $ 20,937 $ 21,845 $ 43,689 $ 46,424 Service and subscription 14,988 16,680 29,347 31,389 Total revenue 35,925 57 % 38,525 54 % 73,036 57 % 77,813 54 % EMEA Product revenue 10,849 12,455 20,832 25,974 Service and subscription 8,423 11,299 16,905 20,701 Total revenue 19,272 31 % 23,754 33 % 37,737 30 % 46,675 32 % APAC Product revenue 3,582 4,978 8,384 9,533 Service and subscription 2,209 2,226 4,311 4,825 Total revenue 5,791 9 % 7,204 10 % 12,695 10 % 14,358 10 % Consolidated Product revenue 35,368 39,278 72,905 81,931 Service and subscription 25,620 30,205 50,563 56,915 Royalty 2 1,727 3 % 2,363 3 % 3,534 3 % 5,265 4 % Total revenue $ 62,715 100 % $ 71,846 100 % $ 127,002 100 % $ 144,111 100 % 1 Revenue for the Americas geographic region outside of the United States is not significant. 2 Royalty revenue is not allocatable to geographic regions. Revenue by Solution Three Months Ended September 30, Six Months Ended September 30, 2025 % 2024 % 2025 % 2024 % Primary storage systems $ 10,968 17 % $ 12,204 17 % $ 23,497 18 % $ 29,798 21 % Secondary storage systems 19,778 32 % 23,333 33 % 38,285 30 % 39,744 27 % Device and media 7,550 12 % 7,827 11 % 17,492 14 % 17,428 12 % Service 22,692 36 % 26,119 36 % 44,194 35 % 51,876 36 % Royalty 1,727 3 % 2,363 3 % 3,534 3 % 5,265 4 % Total revenue 1 $ 62,715 100 % $ 71,846 100 % $ 127,002 100 % $ 144,111 100 % 1 Subscription revenue of $ 6.4 million and $ 5.0 million was allocated to primary and secondary storage systems for the three months ended September 30, 2025 and 2024, respectively. Subscription revenue of $ 2.9 million and $ 4.1 million was allocated to primary and secondary storage systems for the six months ended September 30, 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): 20 Table of Contents Three Months Ended September 30, Six Months Ended September 30, 2025 2024 2025 2024 Total revenue $ 62,715 $ 71,846 $ 127,002 $ 144,111 Total cost of revenue 39,163 41,201 80,736 86,410 Gross profit 23,552 30,645 46,266 57,701 Gross margin 37.6 % 42.7 % 36.4 % 40.0 % Operating expenses Salaries & fringe 1 16,731 21,244 34,733 42,667 Outside services 2 4,763 7,690 12,439 20,884 Infrastructure 3 2,330 2,882 4,852 5,790 Operational costs 4 2,060 2,440 4,392 4,796 Restructuring 3,193 383 5,616 1,574 Other 5 2,633 1,563 4,987 4,350 Total operating expenses 31,710 36,202 67,019 80,061 Loss from operations ( 8,158 ) ( 5,557 ) ( 20,753 ) ( 22,360 ) Other income (expense), net ( 185 ) ( 1,334 ) ( 616 ) ( 1,375 ) Interest expense ( 6,227 ) ( 6,131 ) ( 12,743 ) ( 9,921 ) Change in fair value of warrant liabilities 1,525 3,550 1,525 5,216 Loss on debt extinguishment ( 33,254 ) ( 2,308 ) ( 30,695 ) ( 3,003 ) Loss before income taxes ( 46,299 ) ( 11,780 ) ( 63,282 ) ( 31,443 ) Income tax provision 157 370 380 605 Net loss $ ( 46,456 ) $ ( 12,150 ) $ ( 63,662 ) $ ( 32,048 ) 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 dues 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. NOTE 12: REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS The unaudited condensed consolidated financial statements for the three and six months ended September 30, 2024 have been revised. The nature of the revisions is as follows: 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 revisions to the unaudited condensed consolidated financial statements as of and for the three and six months ended September 30, 2024 (in thousands, unaudited): 21 Table of Contents CONDENSED CONSOLIDATED BALANCE SHEET September 30, 2024 As previously reported Revisions Reference As revised Liabilities and Stockholders’ Deficit Deferred revenue, current portion $ 69,369 $ ( 3,868 ) a, b $ 65,501 Total current liabilities 134,601 ( 3,868 ) 130,733 Deferred revenue, net of current portion 37,164 1,569 a, b 38,733 Total liabilities 316,549 ( 2,299 ) 314,250 Stockholders' deficit Accumulated deficit ( 861,727 ) 2,299 a, b ( 859,428 ) Total stockholders’ deficit ( 153,403 ) 2,299 ( 151,104 ) Total liabilities and stockholders’ deficit $ 163,146 $ — $ 163,146 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS Three Months Ended September 30, 2024 Six Months Ended September 30, 2024 As previously reported Revisions Reference As revised As previously reported Revisions Reference As revised Revenue: Product $ 36,785 $ 2,493 b $ 39,278 $ 77,779 $ 4,152 b $ 81,931 Service and subscription 31,321 ( 1,116 ) a, b 30,205 58,768 ( 1,853 ) a, b 56,915 Gross profit 29,268 1,377 30,645 55,402 2,299 57,701 Gain (loss) from operations ( 6,934 ) 1,377 ( 5,557 ) ( 24,659 ) 2,299 ( 22,360 ) Net gain (loss) before income taxes ( 13,157 ) 1,377 ( 11,780 ) ( 33,742 ) 2,299 ( 31,443 ) Net loss $ ( 13,527 ) $ 1,377 $ ( 12,150 ) $ ( 34,347 ) $ 2,299 $ ( 32,048 ) CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Six Months Ended September 30, 2024 As previously reported Revisions Reference As revised Operating activities Net loss $ ( 34,347 ) $ 2,299 a, b $ ( 32,048 ) Adjustments to reconcile net loss to net cash used in operating activities Deferred revenue ( 10,153 ) ( 2,299 ) a, b ( 12,452 ) Net cash used in operating activities $ ( 17,194 ) $ — $ ( 17,194 ) 22 Table of Contents CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders' Deficit Three Months Ended Shares Amount Balance, June 30, 2024, as revised 4,792 $ 48 $ 708,952 $ ( 847,278 ) $ ( 2,051 ) $ ( 140,329 ) Net loss — — — ( 12,150 ) — ( 12,150 ) Foreign currency translation adjustments, net — — — — 659 659 Stock-based compensation — — 716 — — 716 Balance, September 30, 2024, as revised 4,792 $ 48 $ 709,668 $ ( 859,428 ) $ ( 1,392 ) $ ( 151,104 ) Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders' Deficit Six Months Ended Shares Amount Balance, March 31, 2024 4,792 $ 48 $ 708,027 $ ( 827,380 ) $ ( 2,193 ) $ ( 121,498 ) Net loss — — — ( 32,048 ) — ( 32,048 ) Foreign currency translation adjustments, net — — — — 801 801 Stock-based compensation — — 1,641 — — 1,641 Balance, September 30, 2024, as revised 4,792 $ 48 $ 709,668 $ ( 859,428 ) $ ( 1,392 ) $ ( 151,104 ) 23 Table of Contents NOTE 13: SUBSEQUENT EVENTS During the period from October 1, 2025 through November 10, 2025, the Company issued approximately 0.3 million shares of Common Stock under the SEPA for net proceeds of approximately $ 2.8 million. 24 Table of Contents