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Item 7. Management’s Discussion and Analysis

2026-06-25 compared with 2025-08-26 · 113 added, 177 removed, 268 unchanged (52% of the section changed)

5 unchanged sentences

The following discussion of our financial condition and results of operations covers fiscal 2026 and fiscal 2025 items and year-over-year comparisons between fiscal 2026 and fiscal 2025.

Discussions of fiscal 2023 items and year-over-year comparisons between fiscal 2024 and 2023 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended March 31, 2024, that was filed with the SEC on June 28, 2024.

Discussions of fiscal 2024 items and year-over-year comparisons between fiscal 2025 and fiscal 2024 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended March 31, 2025, that was filed with the SEC on August 26, 2025.

Overview and Highlights

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and income taxes.

The accompanying Management’s Discussion and Analysis of Financial Condition and Results of Operations gives effect to the restatement adjustments made to the previously reported consolidated financial statements for the quarter ended December 31, 2024.

For additional information related to the quarterly restatement, see Note 14:

Restatement of Unaudited Quarterly Financial Statements in the Notes to our consolidated financial statements included in this Annual Report on Form 10-K under the caption Item 8.

Financial Statements and Supplementary Data.

RESULTS OF OPERATIONS

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Change in fair value of warrant liability 11,315 (45,270)

Change in fair value of convertible note (4,119) —

Loss on debt extinguishment, net (59,641) (3,003)

Net income (loss) before income taxes (114,270) (40,575)

Loss before income taxes (100,038) (114,270)

Income tax provision 1,008 821

Net income (loss) $ (115,091) $ (41,286)

Net loss $ (101,046) $ (115,091)

(1) Includes stock-based compensation as follows:

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Product Revenue

In fiscal 2025, product revenue decreased $20.7 million, or 12%, as compared to fiscal 2024.

The primary driver of the decrease was a drop in demand from our large hyperscale customers in the first quarter of the prior year, as well as more general decreases in the overall tape market.

Outside of the Tape and Hyperscale business, our remaining Secondary and Primary storage systems are also offered as a subscription.

We anticipate the product revenue portion of our Primary and Secondary storage systems to decrease as we continue to transition to subscription-based offerings.

In fiscal 2026, product revenue increased $18.2 million, or 12%, as compared to fiscal 2025.

The primary driver of this increase was strong demand across all secondary storage product lines including Scalar tape storage products, DXi backup appliances, and ActiveScale object storage appliances.

Demand growth increased worldwide with product revenues increasing across all regions.

Overall secondary storage revenue increased by $27.1 million, or 36.7% as compared to fiscal 2025.

Devices and media revenues also increased by $6.1 million, or 17.7% as compared to fiscal 2025.

These increases were partially offset by continuing declines in primary storage.

Service and Subscription Revenue

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Product gross margin decreased 130 basis points for fiscal 2026, as compared to fiscal 2025.

This decrease was due primarily to a revenue mix less weighted towards higher margin tape products.

This decrease was due primarily to a revenue mix slightly more weighted towards lower margin devices and media products.

Product costs also fluctuated through the year from external factors such as import tariffs and component material costs.

Service and Subscription Gross Margin

Service and subscription gross margin increased 50 basis points for fiscal 2025, as compared to fiscal 2024.

This increase was due primarily to improved operational costs as we implemented strict cost controls and improved our organization design.

Service and subscription gross margin decreased 50 basis points for fiscal 2026, as compared to fiscal 2025.

This decrease was due primarily to higher shipping and handling costs and inventory carrying charges, partially offset by lowered internal costs from continued improvement in operational design.

Royalty Gross Margin

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In fiscal 2026, sales and marketing expenses decreased $0.3 million, or 1%, as compared with fiscal 2025.

This decrease was primarily driven by an increase in operational cost management, as well as decreased commission expense on lower revenue.

In fiscal 2025, general and administrative expenses increased $12.4 million, or 24%, as compared with fiscal 2024 This increase was primarily driven by large non-recurring costs related to our re-evaluation of Topic 606, and other non-recurring projects.

This decrease was primarily driven by an improved organizational structure following management changes in fiscal 2026.

In fiscal 2026, general and administrative expenses decreased $20.0 million, or 31%, as compared with fiscal 2025 This decrease was primarily driven by large non-recurring projects not recurring in fiscal 2026 including the launch of a new ERP system in the prior year.

Expenses also decreased as administrative efficiency gains were realized through more streamlined functions and process automation.

In fiscal 2026, research and development expenses decreased $7.6 million, or 25%, as compared with fiscal 2025.

This decrease was the result of the continued consolidation of acquisition costs, and efficiencies realized through improved organization design.

In fiscal 2025, restructuring expenses increased $0.8 million, or 25%, as compared with fiscal 2024.

This decrease was the result of the efficiencies realized through improved organization design, better aligning commonalities between major products.

In fiscal 2026, restructuring charges increased $4.0 million, or 98%, as compared with fiscal 2025.

This increase is driven by corporate restructuring activities as we consolidated our physical footprint and operations in certain markets.

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Other income (expense), net $ (1,511) (1) % $ (710) 0 % $ 801 113 %

In fiscal 2025, other income (expense) resulted in a net decrease of $1.0 million or 59%, compared to fiscal 2024.

The decrease was primarily related to differences in foreign currency gains and losses during each period.

In fiscal 2026, the change in other expense resulted in a net increase of $0.8 million or 113%, compared to fiscal 2025.

The increase was primarily related to differences in foreign currency gains and losses during each period.

Interest expense

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Interest expense $ (21,575) (8) % $ (23,607) (9) % 2,032 (9) %

In fiscal 2025, interest expense increased $8.5 million, or 56%, as compared to fiscal 2024.

This increase was primarily due to a higher principal balance on our Term Loan as well as a higher interest rate.

In fiscal 2026, interest expense decreased by $2.0 million, or 9%, as compared to fiscal 2025.

This decrease was primarily due to the restructuring of our Term Loan (as defined herein) in September 2025.

Warrant liabilities

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Change in fair value of warrant liabilities $ 11,315 4 % $ (45,270) (17) % $ 56,585 (125) %

In fiscal 2025, we recorded a non-cash loss of $45.3 million related to the change in fair value of our warrant liabilities, compared to a non-cash gain of $5.1 million in the same period in fiscal 2024.

In fiscal 2026, we recorded a non-cash loss of $11.3 million related to the change in fair value of our forbearance warrant which was issued in September 2025.

The loss was primarily driven by fluctuations in our stock price.

We recorded a non-cash gain of $45.3 million in the same period in fiscal 2025 related to lender warrants issued to the holders of our Term Loan.

These warrants were exercised in December 2024 and January 2025.

This gain was primarily driven by fluctuations in our stock price.

Convertible note

Year Ended March 31,

(in thousands) 2026 % of

revenue 2025 % of

revenue $ Change % Change

Change in fair value of convertible note $ (4,119) (1) % $ — — % $ (4,119) 100 %

In fiscal 2026, we recorded a non-cash gain of $4.1 million related to the change in fair value of our convertible note issued in December 2025.

This change was primarily driven by fluctuations in our stock price.

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Loss on debt extinguishment, net $ (59,641) (21) % $ (3,003) (1) % $ (56,638) 1,886 %

In fiscal 2026, we recorded a loss of $59.6 million on debt extinguishment primarily related to the September 2025 and December 2025 debt transactions, partially offset by a gain on termination of our revolving credit facility in August 2025.

In fiscal 2025, loss on debt extinguishment, net was related to prepayment of our long-term debt.

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Year Ended March 31,

(in thousands) 2025 % of

revenue 2024 % of

revenue $ Change % Change

(in thousands) 2026 % of pretax income 2025 % of pretax income $ Change % Change

Income tax provision $ 1,008 (1) % $ 821 (1) % $ (187) (23) %

In fiscal 2025, the income tax provision increased $110 thousands or 15%, compared to fiscal 2024.

The income tax provision increased in 2025 primarily due to a higher valuation allowance and a warrant mark-to-market adjustment, which together offset the federal statutory tax benefit from pre-tax losses.

In fiscal 2026, the income tax provision increased $0.2 million or 23%, compared to fiscal 2025.

The income tax provision increased in 2026 primarily due to a higher valuation allowance and a significant warrant mark-to-market adjustment, which together offset the federal statutory tax benefit from pre-tax losses.

Additionally, the expiration of tax attributes contributed to the increase, as previously available deferred tax assets could no longer be used.

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Our 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, our valuation allowance.

Comparison of the Three Months Ended December 31, 2024 (Restated) and 2023

Three Months Ended December 31,

Comparison of the Years Ended March 31, 2025 and 2024

Year Ended March 31,

(dollars in thousands) 2025 % of

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Product Revenue

In the three months ended December 31, 2024, product revenue increased $1.5 million, or 4%, as compared to the same period in fiscal 2024.

The primary driver of the increase was in Primary storage systems with higher sales of our StorNext based solutions.

Service and Subscription Revenue

Service and subscription revenue decreased $5.0 million, or 15%, in the three months ended December 31, 2024 compared to the same period in fiscal 2024.

This decrease was due to certain long-lived products reaching their end-of-service-life.

Royalty Revenue

We receive royalties from third parties that license our linear-tape open media patents through our membership in the linear-tape open consortium.

Royalty revenue saw a small increase of $0.3 million, or 14%, in the three months ended December 31, 2024 compared to the same period in fiscal 2024 due to product mix.

Gross Profit and Margin

Three Months Ended December 31,

(dollars in thousands) 2024 Gross

margin % 2023 Gross

margin % $ Change Basis point change

Product $ 7,712 20.0 % $ 7,069 19.0 % $ 643 100

Service and subscription 17,850 64.4 % 20,070 61.2 % (2,220) 320

Royalty 2,326 100.0 % 2,042 100.0 % 284 —

Gross profit $ 27,888 40.6 % $ 29,181 40.6 % $ (1,293) —

Gross profit and margin percentages are key metrics that management monitors to assess the performance on the business.

Product Gross Margin

Product gross margin increased by $0.6 million, or by 100 basis points, for the three months ended December 31, 2024, as compared with the same period in fiscal 2024.

This increase was primarily due to a more favorable mix of revenues, weighted towards our higher margin product lines, as well as improvements in our operational efficiency and logistics costs.

Service and Subscription Gross Margin

Service and subscription gross margins increased 320 basis points for the three months ended December 31, 2024, as compared with the same period in fiscal 2024.

This increase was primarily driven by improvements in our operations efficiency.

Royalty Gross Margin

Royalties do not have significant related cost of sales.

Operating Expenses

Three Months Ended December 31,

(dollars in thousands) 2024 % of revenue 2023 % of revenue $ Change % Change

Sales and marketing $ 12,448 18 % $ 14,244 20 % $ (1,796) (13) %

General and administrative 14,142 21 % 11,893 17 % 2,249 19 %

Research and development 7,683 11 % 8,763 12 % (1,080) (12) %

Restructuring charges 1,342 2 % 497 1 % 845 170 %

Total operating expenses $ 35,615 52 % $ 35,397 49 % $ 218 1 %

In the three months ended December 31, 2024, sales and marketing expenses decreased $1.8 million, or 13%, as compared with the same period in fiscal 2024.

This decrease was primarily driven by improved operational efficiency and increased leverage of our channel.

In the three months ended December 31, 2024, general and administrative expenses increased $2.2 million, or 19%, as compared with the same period in fiscal 2024 This increase was primarily driven by higher expense in compliance focused outside services related to ongoing projects.

In the three months ended December 31, 2024, research and development expenses decreased $1.1 million, or 12%, as compared with the same period in fiscal 2024 This decrease was the result of the continued consolidation of acquisition costs, and efficiencies realized through improved organization design.

In the three months ended December 31, 2024, restructuring expenses increased $0.8 million, or 170% as compared with the same period in fiscal 2024 The increase was the result of cost reduction initiatives in the current year.

Other Income (Expense)

Three Months Ended December 31,

(dollars in thousands) 2024 % of revenue 2023 % of revenue $ Change % Change

Other income (expense) $ 967 1 % $ (1,419) (2) % $ 2,386 168 %

The change in other income (expense), net during the three months ended December 31, 2024 compared with the same period in fiscal 2024 was related primarily to fluctuations in foreign currency exchange rates during the three months ended December 31, 2024.

Interest Expense

Three Months Ended December 31,

(dollars in thousands) 2024 % of revenue 2023 % of revenue $ Change % Change

Interest expense $ (6,840) (10) % $ (3,937) (5) % $ (2,903) 74 %

In the three months ended December 31, 2024, interest expense increased $2.9 million, or 74%, as compared with the same period in fiscal 2024 due to a higher effective interest rate on our Term Loan.

Warrant liabilities

Three Months Ended December 31,

(dollars in thousands) 2024 % of revenue 2023 % of revenue $ Change % Change

Change in fair value of warrant liabilities $ (61,630) (90) % $ 4,402 6 % $ (66,032) (1,500) %

In December 31, 2024, we recorded a non-cash loss of $61.6 million related to the change in fair value of our warrant liabilities, compared to a non-cash gain of $4.4 million in the same period in fiscal 2024.

This change was primarily driven by fluctuations in our stock price.

Three Months Ended December 31,

(dollars in thousands) 2024 % of pretax income 2023 % of pretax income $ Change % Change

Income tax provision $ 70 — % $ 510 (5) % $ (440) (86) %

The income tax provision for the three months ended December 31, 2024 and 2023 is primarily influenced by foreign and state income taxes.

Due to our history of net losses in the United States, the protracted period for utilizing tax attributes in certain foreign jurisdictions, and the difficulty in predicting future results, we believe that we cannot rely on projections of future taxable income to realize most of our deferred tax assets.

Accordingly, we have established a full valuation allowance against our U.S.

and certain foreign net deferred tax assets.

Significant management judgment is required in assessing our ability to realize any future benefit from our net deferred tax assets.

We intend to maintain this valuation allowance until sufficient positive evidence exists to support its reversal.

Our 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, our valuation allowance.

Comparison of the Nine Months Ended December 31, 2024 (Restated) and 2023

Nine Months Ended December 31,

(dollars in thousands) 2024 % of revenue 2023 % of revenue $ Change % Change

Product revenue $ 120,565 56 % $ 138,635 58 % $ (18,070) (13) %

Service and subscription 84,640 40 % 94,229 39 % (9,589) (10) %

Royalty 7,592 4 % 7,235 3 % 357 5 %

Total revenue $ 212,797 100 % $ 240,099 100 % $ (27,302) (11) %

Product Revenue

In the nine months ended December 31, 2024, product revenue decreased $18.1 million, or 13%, as compared to the same period in fiscal 2024.

The primary driver of the decrease was a $20 million decrease in demand from our large hyperscale customers, as well as more general decreases in the overall tape market with declines in media and devices revenue.

In fiscal 2025, product revenue decreased $20.7 million, or 12%, as compared to fiscal 2024.

The primary driver of the decrease was a drop in demand from our large hyperscale customers in the first quarter of the prior year, as well as more general decreases in the overall tape market.

Outside of the Tape and Hyperscale business, our remaining Secondary and Primary storage systems are also offered as a subscription.

We expect the product revenue portion of our Primary and Secondary storage systems to decrease as we continue to transition to subscription-based offerings.

Service and Subscription Revenue

We offer a broad range of services including product maintenance, implementation, and training as well as software subscriptions.

Service revenue is primarily comprised of customer field support contracts which provide standard support services for our hardware.

Standard service contracts may be extended or include enhanced service, such as faster service response times.

Service and subscription revenue decreased $9.6 million, or 10%, in the nine months ended December 31, 2024 compared to the same period in fiscal 2024.

This decrease was primarily driven by certain long-lived products reaching their end-of-service-life, partially offset by increases in subscription-based revenue.

Service and subscription revenue decreased $15.9 million, or 13%, in fiscal 2025 compared to fiscal 2024.

This decrease was due in part to certain long-lived products reaching their end-of-service-life, partially offset by new support bookings and the transition towards subscription-based licensing.

Royalty Revenue

We receive royalties from third parties that license our linear-tape open media patents through our membership in the linear-tape open consortium.

Royalty revenue saw a small increase of $0.4 million, or 5%, in the nine months ended December 31, 2024 compared to the same period in fiscal 2024 due to product mix.

Royalty revenue decreased $0.9 million, or 9%, in fiscal 2025, as compared to fiscal 2024, related to lower overall unit shipments.

Gross Profit and Margin

Nine Months Ended December 31,

Year Ended March 31,

(dollars in thousands) 2025 Gross

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Product Gross Margin

Product gross margin decreased 140 basis points, for the nine months ended December 31, 2024, as compared with the same period in fiscal 2024.

This decrease was primarily due to a less favorable mix of revenues, weighted towards our lower margin product lines, which were partially offset from improvements in our operational efficiency and logistics costs.

Product gross margin decreased 30 basis points for fiscal 2025, as compared to fiscal 2024.

This decrease was due primarily to a revenue mix less weighted towards higher margin tape products.

Service and Subscription Gross Margin

Service and subscription gross margin decreased 50 basis points for the nine months ended December 31, 2024, as compared with the same period in fiscal 2024.

This decrease was primarily driven by lower service revenues.

Service and subscription gross margin increased 50 basis points for fiscal 2025, as compared to fiscal 2024.

This increase was due primarily to improved operational costs as we implemented strict cost controls and improved our organization design.

Royalty Gross Margin

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Operating Expenses

Nine Months Ended December 31,

Year Ended March 31,

(dollars in thousands) 2025 % of revenue 2024 % of revenue $ Change % Change

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Total operating expenses $ 151,512 55 % $ 153,766 49 % $ (2,254) (1) %

In the nine months ended December 31, 2024, sales and marketing expense decreased $6.5 million, or 14% , compared with the same period in fiscal 2024.

This decrease was primarily driven by improved operational efficiency and increased leverage of our channel.

In the nine months ended December 31, 2024, general and administrative expense increased $14.4 million, or 41%, compared with the same period in fiscal 2024.

This increase was primarily driven by non-recurring costs related to our previously announced restatement of our historical financial statements, and other related projects.

In the nine months ended December 31, 2024, research and development expenses decreased $4.6 million, or 16%, as compared with the same period in fiscal 2024.

In fiscal 2025, sales and marketing expenses decreased $8.6 million, or 14%, as compared with fiscal 2024.

This decrease was primarily driven by an increase in operational cost management, as well as decreased commission expense on lower revenue.

In fiscal 2025, research and development expenses decreased $6.9 million, or 18%, as compared with fiscal 2024.

This decrease was the result of the continued consolidation of acquisition costs, and efficiencies realized through improved organization design.

In the nine months ended December 31, 2024, restructuring expenses decreased $0.2 million, or 8% , as compared with the same period in fiscal 2024.

The decrease was the result of cost reduction initiatives in the prior year.

In fiscal 2025, restructuring expenses increased $0.8 million, or 25%, as compared with fiscal 2024.

This increase is driven by corporate restructuring activities as we consolidated our physical footprint and operations in certain markets.

Other Income (Expense)

Nine Months Ended December 31,

Year Ended March 31,

(dollars in thousands) 2025 % of revenue 2024 % of revenue $ Change % Change

Other income (expense) $ (710) 0 % $ (1,746) (1) % $ 1,036 59 %

The change in other income (expense), net during the nine months ended December 31, 2024 compared with the same period in fiscal 2024 was related primarily to fluctuations in foreign currency exchange rates during the nine months ended December 31, 2024.

In fiscal 2025, other income (expense) resulted in a net decrease of $1.0 million or 59%, compared to fiscal 2024.

The decrease was primarily related to differences in foreign currency gains and losses during each period.

Interest Expense

Nine Months Ended December 31,

Year Ended March 31,

(dollars in thousands) 2025 % of revenue 2024 % of revenue $ Change % Change

Interest expense $ (23,607) (9) % $ (15,089) (5) % $ (8,518) 56 %

In the nine months ended December 31, 2024, interest expense increased $5.8 million, or 52%, as compared with the same period in fiscal 2024 due to a higher effective interest rate on our Term Loan.

In fiscal 2025, interest expense increased $8.5 million, or 56%, as compared to fiscal 2024.

This increase was primarily due to a higher principal balance on our Term Loan as well as a higher interest rate.

Warrant liabilities

Nine Months Ended December 31,

Year Ended March 31,

(dollars in thousands) 2025 % of revenue 2024 % of revenue $ Change % Change

Change in fair value of warrant liabilities $ (45,270) (17) % $ 5,137 2 % $ (50,407) (981) %

In December 31, 2024, we recorded a non-cash loss of $56.4 million related to the change in fair value of our warrant liabilities, compared to a non-cash gain of $7.3 million in the same period in fiscal 2024.

This change was primarily driven by fluctuations in our stock price.

Loss on debt extinguishment

Nine Months Ended December 31,

Year Ended March 31,

(dollars in thousands) 2025 % of revenue 2024 % of revenue $ Change % Change

Loss on debt extinguishment $ (3,003) (1) % $ — — % $ (3,003) 100 %

In the nine months ended December 31, 2024, loss on debt extinguishment was related to a prepayment of our Term Loan.

Nine Months Ended December 31,

In fiscal 2025, loss on debt extinguishment, net was related to prepayment of our long-term debt.

Year Ended March 31,

(dollars in thousands) 2025 % of pretax income 2024 % of pretax income $ Change % Change

Income tax provision $ 821 (1) % $ 711 (2) % $ 110 15 %

The income tax provision for the nine months ended December 31, 2024 and 2023 is primarily influenced by foreign and state income taxes.

Accordingly, we have established a full valuation allowance against our U.S.

and certain foreign net deferred tax assets.

Significant management judgment is required in assessing our ability to realize any future benefit from our net deferred tax assets.

We intend to maintain this valuation allowance until sufficient positive evidence exists to support its reversal.

Our 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, our valuation allowance.

In fiscal 2025, the income tax provision increased $0.1 million, or 15%, compared to fiscal 2024.

Additionally, the expiration of tax attributes contributed to the increase, as previously available deferred tax assets could no longer be used.

Liquidity and Capital Resources

We consider liquidity in terms of the sufficiency of internal and external cash resources to fund our operating, investing and financing activities.

Our principal sources of liquidity include cash from operating activities, cash and cash equivalents on our balance sheet and amounts available under our revolving credit facility agreement with PNC Bank, National Association, as amended from time to time (the “PNC Credit Facility”).

We require significant cash resources to meet obligations to pay principal and interest on our outstanding debt, provide for our research and development activities, fund our working capital needs, and make capital expenditures.

Our principal sources of liquidity include cash from operating activities, cash and cash equivalents on our balance sheet and proceeds from the sale of Common Stock under the SEPA (as defined herein).

In fiscal 2025, there were also amounts available under our revolving credit facility agreement with PNC Bank, National Association, as amended from time to time (the “PNC Credit Facility”) however, this agreement was terminated in August 2025.

We require significant cash resources to provide for our research and development activities, fund our working capital needs, and make capital expenditures.

Our future liquidity requirements will depend on multiple factors, including our research and development plans and capital asset needs.

We had cash and cash equivalents of $15.6 million as of March 31, 2026, which excludes $0.7 million of short-term restricted cash.

Our total outstanding Term Loan debt was $102.5 million, and we had $0.4 million available to borrow under the PNC Credit Facility as of March 31, 2025.

Our total outstanding Term Loan debt was $55.9 million and the fair value of the Convertible Note (as defined herein) was $90.0 million.

We generated negative cash flows from operations of approximately $37.9 million and $23.6 million for the fiscal years ended March 31, 2026 and 2025, respectively, and generated net losses of approximately $101.0 million and $115.1 million for the fiscal years ended March 31, 2026 and 2025, respectively.

We have funded operations through the sale of common stock, term debt borrowings and PNC Credit Facility borrowings described in Note 4:

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.

We have funded operations through the sale of common stock under the SEPA and debt borrowings as described in Note 4:

On January 25, 2025, the Company entered into a Standby Equity Purchase Agreement (the "SEPA") with YA II PN, Ltd., a Cayman Islands exempt limited partnership ("YA"), in which pursuant to and subject to its terms, the Company has the right, but not the obligation, to sell up to $200.0 million of Common Stock at any time during the three-year period following the date of the SEPA.

As of March 31, 2026, the Company has sold 8.7 million shares of Common Stock under the SEPA with net proceeds of approximately $91.0 million.

Subsequent to March 31, 2025 through July 31, 2025, the Company sold an additional 6.3 million shares of Common Stock under the SEPA with net proceeds of $66.6 million.

As of July 31, 2025, the Company had cash and cash equivalents of approximately $28.1 million as well as $0.0 borrowed.

C ommon Stock for additional information related to the SEPA.

On August 13, 2025, the Company terminated the PNC Credit Facility.

We are subject to various debt covenants under our credit agreements.

Our failure to comply with our debt covenants could materially and adversely affect our financial condition and ability to service our obligations.

As discussed in Note 1:

Description of Business and Significant Accounting Policies—Going Concern , we believe we will be in violation of our net leverage covenant as of the September 30, 2025 testing date and the violation will cause the Term Loan outstanding balance to become due as an event of default.

As a result, we classified the Term Loan as current liabilities in the accompanying consolidated balance sheet.

Additionally, the Company is evaluating strategies to restructure or refinance our debt, including potential covenant waivers.

We may be unable to obtain additional funding.

As such, there can be no assurance that we will be able to obtain additional liquidity when needed or under acceptable terms, if at all.

For additional information about our debt, see the sections entitled “Risk Factors—Risks Related to Our Indebtedness and Liquidity” in Item 1A.

Risk Factors and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” in this Annual Report.

Subsequent to March 31, 2026, we completed several transactions which have significantly impacted our future liquidity.

On June 1, 2026, the Company entered into Securities Purchase Agreements to issue and sell to certain accredited investors an aggregate of 10,615,712 shares of the Company’s Common Stock.

After deducting placement agent fees and other offering expenses payable by the Company, the Company received net proceeds of $94.7 million.

On June 4, 2026, the Company paid an aggregate of $57.8 million in connection with the termination of the Term Loan Credit Agreement.

This fully paid down and extinguished our Term Loans (as defined herein).

Also on June 4, 2026, the Company provided a notice to YA regarding its termination of the SEPA, effective June 11, 2026.

There were no amounts owed to YA under the SEPA at the time the termination notice was provided.

See Note 13 :

Subsequent Events , for further details.

With the cash proceeds, after repayment of the Term Loans, we forecast that operating performance, cash and current working capital will provide us with sufficient capital to fund operations for at least one year from the financial statement issuance date.

The following table summarizes our consolidated cash flows for the periods indicated.

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Net Cash Used in Operating Activities

Net cash used in operating activities increased by $13.5 million to $23.6 million for the year ended March 31, 2025 compared to $10.2 million for the year ended March 31, 2024, The increase was primarily attributable the decrease in revenue and associated gross profit in addition to an increase in large non-recurring costs related to our re-evaluation of Topic 606, and other non-recurring projects.

Net cash used in operating activities increased by $14.2 million to $37.9 million for the year ended March 31, 2026 compared to $23.6 million for the year ended March 31, 2025.

The increase was primarily attributable increase in product costs and associated decrease gross profit in addition to large non-recurring costs related to our re-evaluation of Topic 606, and other non-recurring projects.

Net Cash Used in Investing Activities

Net cash used in investing activities was $4.9 million for the year ended March 31, 2025, primarily attributable to capital expenditures.

Net cash used in investing activities was $5.9 million for the year ended March 31, 2024, primarily attributable to the implementation costs of a new Enterprise Resource Planning system.

Net cash used in investing activities was $1.7 million and $4.9 million for the years ended March 31, 2026 and 2025, respectively, primarily attributable to capital expenditures.

Net Cash Provided by Financing Activities

Net cash provided by financing activities was $19.3 million for the year ended March 31, 2025 due primarily to borrowings under our Term Loan credit facility.

Net cash provided by financing activities was $15.7 million for the year ended March 31, 2024 due primarily to borrowings under our Term Loan credit facility.

Net cash provided by financing activities was $39.2 million for the year ended March 31, 2026 due primarily to cash proceeds from the SEPA, partially offset by the repayment of the revolver in the first quarter of fiscal 2026.

Net cash provided by financing activities was $19.3 million for the year ended March 31, 2025 due primarily to cash proceeds from the SEPA, partially offset by the repayment of the PNC Credit Facility in August 2025.

Commitments and Contingencies

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Total $ 222,420 $ 134,628 $ 75,701 $ 2,522 $ 9,569

(1) Consists of principal on our Term Loan and PNC Credit Facility.

(1) Consists of principal on our Term Loan and Convertible Note.

(2) Represents aggregate future minimum lease payments under non-cancelable operating leases.

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The preparation of our consolidated financial statements in accordance with generally accepted accounting principles in the United States of America (“GAAP”) requires management to make judgments, estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes included elsewhere in this Annual Report on Form 10-K.

On an ongoing basis, we evaluate estimates, which are based on historical experience and on various other assumptions that we believe to be reasonable under the

circumstances.

On an ongoing basis, we evaluate estimates, which are based on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.

We consider the following accounting policies to be critical to understanding our financial statements because the application of these policies requires significant judgment on the part of management, which could have a material impact on our financial statements if actual performance should differ from historical experience or if our assumptions were to change.

The following accounting policies include estimates that require management’s subjective or complex judgments about the effects of matters that are inherently uncertain.

For information on our significant accounting policies, including the policies discussed below, see Note 1:

For information on our

significant accounting policies, including the policies discussed below, see Note 1:

Description of Business and Significant Accounting Policies , to our consolidated financial statements.

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Product revenue is recognized at the point in time when the customer takes control of the product, which typically occurs at the point of shipment.

Service and subscription revenue consists of customer support agreements, software subscriptions, installation, and consulting & training.

Service and subscription revenue consists of customer support agreements, software subscriptions, installation, and consulting and training.

Our software subscriptions include term licenses which are recognized as revenue when the license has been delivered to the customer and related customer support, which is recognized ratably over the service period.

Revenue from customer support agreements is recognized ratably over the contractual term of the agreement.

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.

Installation services are typically completed within a short period of time and revenue from these services is recognized at the point when installation is complete.

A majority of our consulting and training revenue does not take significant time to complete therefore these obligations are satisfied upon completion of such services over time as each day is completed.

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The reports substantiate that our performance obligation has been satisfied and we recognize royalty revenue based on the reports or when amounts can be reasonably estimated.

There are significant judgments used when applying Accounting Standards Codification (“ASC”) Topic 606 to contracts with customers.

There are significant judgments used when applying Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers ("Topic 606"), to contracts with customers.

Most of our contracts contain multiple goods and services designed to meet each customer's unique storage needs.

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We reevaluate 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.

We recognize penalties and tax-related interest expense as a component of income tax expense in our consolidated statements of operations.

This evaluation is based on factors including, but not limited to, changes in facts or circumstances and changes in tax law.

We recognize penalties and tax-related interest expense as a component of income tax expense in our consolidated statements of operations and comprehensive loss.

Income Taxes , to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Manufacturing Inventories

Our 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.

Our manufacturing inventories are 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.

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Warrant Accounting

We account 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 480, Distinguishing Liabilities from Equity (“Topic 480”) and ASC 815, Derivatives and Hedging (“Topic 815”) .

We account 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 480, Distinguishing Liabilities from Equity (“Topic 480”) and ASC 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 shares of common stock 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.

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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.

Convertible Note

Pursuant to ASC Topic 825, Financial Instruments (“ASC 825”), the Company has elected the fair value option for the convertible note issued in December 2025 (the “Convertible Note”).

The Convertible Note is initially recorded at its estimated fair value on the date of issuance and subsequently remeasured at fair value at each reporting period-end.

Changes in fair value are recognized in earnings in “Change in fair value of Convertible Note” in the condensed consolidated statements of operations and comprehensive loss, which includes the component related to accrued interest.

In accordance with ASC 825, the portion of the change in fair value attributable to instrument-specific credit risk is recognized in other comprehensive income.

For the year ended March 31, 2026, the Company determined that the change attributable to instrument-specific credit risk was immaterial.

Fair Value of Financial Instruments , with respect to the fair value option election, and Note 4:

Debt , for a discussion of the Convertible Note.

Recently Issued and Adopted Accounting Pronouncements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis