UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June~~September 30, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

Commission File Number 001-13449


Quantum Corporation
(Exact name of registrant as specified in its charter)

Delaware

94-2665054

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

10770 E. Briarwood Avenue

Centennial

80112

(Address of Principal Executive Offices)

(Zip Code)


(408)			944-4000
Registrant's telephone number, including area code

~~224~~N/A ~~Airport Parkway, Suite 550, San Jose, CA 95110~~ (Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, $0.01 par value per share

QMCO

Nasdaq Global Market

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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ¨x Yes x¨ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	x	Smaller reporting company	x
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐

Yes

As of the close of business on ~~September~~November 911, 2025, there were 13,~~319~~721,~~249~~291 shares of Quantum Corporation’s common stock issued and outstanding.

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QUANTUM CORPORATION

QUARTERLY REPORT ON FORM 10-Q

For the Quarter Ended ~~June~~September 30, 2025

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		Page
PART I
Item 1.	Financial Statements (unaudited):
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss	2
	Condensed Consolidated Statements of Cash Flows	3
	Condensed Consolidated Statements of Changes in Stockholders’ Deficit	4
	Index to Notes to Condensed Consolidated Financial Statements	56
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2225
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2834
Item 4.	Controls and Procedures	2834
PART II
Item 1.	Legal Proceedings	3036
Item 1A.	Risk Factors	3036
Item 5.	Other Information	3036
Item 6.	Exhibits	3137
Signatures		3238

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As used in this Quarterly Report on Form 10-Q, the terms "Quantum," the “Company,” "we," "us," and "our" refer to Quantum Corporation and its subsidiaries taken as a whole, unless otherwise noted or unless the context indicates otherwise.

Note Regarding Forward-Looking Statements

This report contains forward-looking statements. All statements contained in this report other than statements of historical fact, including, but not limited to, statements regarding our future operating results and financial position; our business strategy, focus and plans; our market growth and trends; our products, services and expected benefits thereof; and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “could,” “would,” “project,” “plan,” “potentially,” “preliminary,” “likely,” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including: the competitive pressures that we face; risks associated with executing our strategy; the impact of macroeconomic and geopolitical trends and events; the need to manage third-party suppliers and the distribution of our products and the delivery of our services effectively; the protection of our intellectual property assets, including intellectual property licensed from third parties; risks associated with our international operations; the development and transition of new products and services and the enhancement of existing products and services to meet customer needs; our response to emerging technological trends; the execution and performance of contracts by us and our suppliers, customers, clients and partners; the hiring and retention of key employees; risks associated with business combination and investment transactions; the execution, timing and results of any transformation or restructuring plans, including estimates and assumptions related to the cost and the anticipated benefits of the transformation and restructuring plans; the outcome of any legal proceedings, claims and disputes; the ability to meet stock exchange continued listing standards; the possibility that Nasdaq may delist our securities; risks related to our restatement and revisions to financial statements; risks related to our ability to implement and maintain effective internal control over financial reporting in the future; risks related to changes in our management; and those risks described under Part II, Item 1A. Risk Factors. Moreover, we operate in a competitive and changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the effect of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the future events and trends discussed in this report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Accordingly, you should not rely on forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, performance, or events and circumstances reflected in the forward-looking statements will be achieved or occur. We undertake no obligation to update any of these forward-looking statements for any reason after the date of this report or to conform these statements to actual results or revised expectations.

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PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

QUANTUM CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts, unaudited)

	June 30, 2025		March 31, 2025
	September 30, 2025		March 31, 2025
Assets
Current assets:
Cash and cash equivalents	$	3714,~~404~~670	$	16,464
Restricted cash	~~143~~659		139
Accounts receivable, net of allowance for credit losses of $100 and $99, respectively	48,445		52,502
Accounts receivable, net of allowance for credit losses of $151 and $99, respectively	43,934		52,502
Manufacturing inventories	18,507		20,336
Inventories	18,930		22,434
Service parts inventories	1,523		2,098
Prepaid expenses	4,524		2,738
Prepaid expenses	3,763		2,738
Other current assets	7,416		8,529
Other current assets	8,658		8,529
Total current assets	90,133		102,806
Total current assets	118,443		102,806
Property and equipment, net	10,697		11,378
Property and equipment, net	11,025		11,378
Goodwill	12,969		12,969
Intangible assets, net	51—		281
Right-of-use assets	87,~~314~~983		8,580
Other long-term assets	1815,~~352~~915		19,388
Total assets	$	~~169~~137,~~154~~697	$	155,402
Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable	$	2624,~~824~~193	$	31,463
Accrued compensation	108,~~250~~822		9,214
Deferred revenue, current portion	6966,~~675~~758		75,076
Accrued restructuring	~~1,779~~855		786
Term debt	9699,~~713~~634		96,486
Revolving credit facility	—		26,600
Other accrued liabilities	18,511		17,982
Warrant liabilities	23,895		—
Total current liabilities	223,752		257,607
Other accrued liabilities	17,588		17,982
Deferred revenue, net of current portion	36,580		38,847
Total current liabilities	241,745		257,607
Operating lease liabilities	8,787		8,934
Deferred revenue, net of current portion	35,144		38,847
Other long-term liabilities	14,421		14,380
Operating lease liabilities	8,602		8,934
Total liabilities	283,540		319,768
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; 13,319 and 6,962 shares issued and outstanding	133		70
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,~~046~~451		779,645
Accumulated deficit	(~~959~~1,~~677~~006,133)		(942,471)
Accumulated other comprehensive loss	(~~888~~950)		(1,610)
Total stockholders’ deficit	(~~114~~160,~~386~~499)		(164,366)
Total liabilities and stockholders’ deficit	$	~~169~~137,~~154~~697	$	155,402

See accompanying Notes to Condensed Consolidated Financial Statements.

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QUANTUM CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except per share amounts, unaudited)

	Three Months Ended June 30,
	Three Months Ended September 30,				Six Months Ended September 30,
	2025		2024		2025		2024
Revenue:
Product	$	3735,~~535~~368	$	4239,~~652~~278	$	72,905	$	81,931
Service and subscription	2425,~~943~~620		2630,~~711~~205		50,563		56,915
Royalty	1,~~808~~727		2,~~902~~363		3,534		5,265
Total revenue	6462,~~286~~715		7271,~~265~~846		127,002		144,111
Cost of revenue:
Product	3028,~~745~~748		3229,~~555~~774		59,493		62,330
Service and subscription	10,~~829~~415		1211,~~653~~427		21,243		24,080
Total cost of revenue	4139,~~574~~163		4541,~~208~~201		80,736		86,410
Gross profit	2223,~~712~~552		2730,~~057~~645		46,266		57,701
Operating expenses:
Sales and marketing	1211,~~655~~819		13,~~295~~578		24,474		26,873
General and administrative	1311,~~569~~006		2113,~~065~~977		24,576		35,042
Research and development	65,~~661~~692		8,~~308~~264		12,353		16,572
Restructuring charges	23,~~423~~193		~~1,192~~383		5,616		1,574
Total operating expenses	3531,~~308~~710		4336,~~860~~202		67,019		80,061
Loss from operations	(128,~~596~~158)		(165,~~803~~557)		(20,753)		(22,360)
Other income (expense), net	(~~430~~185)		(411,334)		(616)		(1,375)
Interest expense	(6,~~516~~227)		(36,~~790~~131)		(12,743)		(9,921)
Change in fair value of warrant liabilities	—1,525		13,~~666~~550		1,525		5,216
Gain (loss) on debt extinguishment	2,559		(695)
Loss on debt extinguishment	(33,254)		(2,308)		(30,695)		(3,003)
Net loss before income taxes	(16,983)		(19,663)
Loss before income taxes	(46,299)		(11,780)		(63,282)		(31,443)
Income tax provision	~~223~~157		~~235~~370		380		605
Net loss	$	(1746,~~206~~456)	$	(1912,~~898~~150)	$	(63,662)	$	(32,048)
Net loss per share - basic and diluted	$	(13.8749)	$	(42.1554)	$	(5.65)	$	(6.69)
Weighted average shares - basic and diluted	913,~~187~~322		4,792		11,266		4,792
Net loss	$	(1746,~~206~~456)	$	(1912,~~898~~150)	$	(63,662)	$	(32,048)
Foreign currency translation adjustments, net	~~722~~(62)		~~142~~659		660		801
Total comprehensive loss	$	(1646,~~484~~518)	$	(1911,~~756~~491)	$	(63,002)	$	(31,247)

See accompanying Notes to Condensed Consolidated Financial Statements.

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QUANTUM CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, unaudited)

	Three Months Ended June 30,
	Six Months Ended September 30,
	2025		2024
Operating activities
Net loss	$	(1763,~~206~~662)	$	(1932,~~898~~048)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization	1,~~032~~857		13,~~780~~347
Amortization of debt issuance costs	23,~~075~~998		~~804~~2,081
Noncash lease expense	343		464
Non-cash lease expense	697		934
Gain (loss) on debt extinguishment	(25,~~559)~~275		~~695~~3,003
Provision for product and manufacturing inventories	23,~~701~~633		~~407~~1,167
Stock-based compensation	(~~529~~205)		~~925~~1,641
Paid in kind interest	1,758		684
Paid-in-kind interest	3,579		1,844
Change in fair value of warrant liabilities	—		(1,666)
Warrants issued in connection with debt amendments	25,420		—
Other non-cash	1,201		(409)
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	48,~~043~~429		616,~~346~~638
Manufacturing inventories	(783)		(1,325)
Inventories	(150)		(1,625)
Service parts inventories	486		1,475
Prepaid expenses	(1,786)		(1,446)
Prepaid expenses	(1,024)		(1,694)
Operating lease liabilities	(587)		(500)
Operating lease liabilities	(283)		(87)
Accounts payable	(7,794)		5,253
Accounts payable	(4,484)		6,828
Accrued compensation	(393)		(4,350)
Accrued compensation	1,036		(2,123)
Accrued restructuring charges	69		—
Accrued restructuring charges	993		404
Deferred revenue	(12,021)		(12,452)
Deferred revenue	(7,668)		(6,048)
Other current assets	1,085		(780)
Other current assets	840		98
Other non-current assets	1,077		1,280
Other current liabilities	~~1,137~~(241)		102,~~444~~122
Net cash used in operating activities	(16,891)		(1,896)
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,~~192~~606)		(13,~~620~~228)
Net cash used in investing activities	(1,~~192~~606)		(13,~~620~~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		~~105~~209,~~568~~852
Repayments of credit facility	(98,682)		(96209,~~829~~445)
Proceeds from shares issued related to the SEPA, net	66,993		—
Net cash provided by financing activities	39,027		(4,798)
Proceeds from the issuance of common stock, net	81		—
Effect of exchange rate changes on cash, cash equivalents and restricted cash	—		(3)
Net cash provided by financing activities	32,791		11,525
Net change in cash, cash equivalents and restricted cash	20,944		(8,317)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	30		(3)
Cash, cash equivalents, and restricted cash at beginning of period	16,603		25,860
Net change in cash, cash equivalents and restricted cash	(1,274)		(8,900)
Cash, cash equivalents, and restricted cash at end of period	$	37,547	$	17,543
Cash, cash equivalents and restricted cash at beginning of period	16,603		25,860
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the statement of cash flows:
Cash, cash equivalents and restricted cash at end of period	$	15,329	$	16,960
Cash and cash equivalents	37,404		$	17,287
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:
Restricted cash, current	143		256
Cash and cash equivalents	$	14,670	$	16,719
Cash, cash equivalents and restricted cash at the end of period	$	37,547	$	17,543
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	$	24,~~987~~591	$	25,~~134~~539
Cash paid for income taxes, net	$	~~141~~327	$	~~495~~1,304
Non-cash transactions
Purchases of property and equipment included in accounts payable	$	~~105~~117	$	~~(135)~~312
Right-of-use assets obtained in exchange for new lease liabilities	$	—9	$	~~231~~472
Paid-in-kind interest	$	3,579	$	1,844

See accompanying Notes to Condensed Consolidated Financial Statements.

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QUANTUM CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

(in thousands, unaudited)

	Common Stock			AdditionalPaid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders' Deficit
Three Months Ended	Shares	Amount
Balance, March 31, 2024	4,792	$	48	$	708,027	$	(827,380)	$	(2,193)	$	(121,498)
Net loss	—	—		—		(19,898)		—		(19,898)
Foreign currency translation adjustments, net	—	—		—		—		142		142
Stock-based compensation	—	—		925		—		—		925
Balance, June 30, 2024	4,792	$	48	$	708,952	$	(847,278)	$	(2,051)	$	(140,329)
Balance, March 31, 2025	6,962	$	70	$	779,645	$	(942,471)	$	(1,610)	$	(164,366)
Net loss	—	—		—		(12,150)		—		(12,150)
Net loss	—	—		—		(17,206)		—		(17,206)
Foreign currency translation adjustments, net	—	—		—		—		659		659
Foreign currency translation adjustments, net	—	—		—		—		722		722
Stock-based compensation	—	—		716		—		—		716
Shares issued under employee incentive plans, net	37	—		—		—		—		—
Balance, September 30, 2024	4,792	$	48	$	709,668	$	(859,428)	$	(1,392)	$	(151,104)
Shares issued related to the SEPA, net	6,320	63		66,930		—		—		66,993
Stock-based compensation	—	—		(529)		—		—		(529)
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

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~~INDEX~~QUANTUM ~~TO NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~CORPORATION

		Page
Note 1:	Description of Business and Summary of Significant Accounting Policies	6
Note 2:	Revenue	8
Note 3:	Balance Sheet Information	9
Note 4:	Debt	10
Note 5:	Fair Value of Financial Instruments	13
Note 6:	Leases	14
Note 7:	Restructuring Charges	15
Note 8:	Net Loss Per Share	15
Note 9:	Income Taxes	15
Note 10:	Commitments and Contingencies	16
Note 11:	Segment Information	16
Note 12:	Revision of Previously Issued Financial Statements	18
Note 13:	Subsequent Events	21

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.

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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

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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 ~~(“Quantum” or the “Company”)~~, stores and manages digital video and other forms of unstructured data, providing streaming performance for video and rich media applications, along with low-cost, long-term storage systems for data protection and archiving. The Company helps customers around the world capture, create and share digital data and preserve and protect it for decades. The Company’s software-defined, hyperconverged storage solutions span from non-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 ~~June~~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 ~~June~~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

In connection with the preparation of the Company’s Quarterly Report on Form 10-Q for the three months ended June 30, 2025, the Company identified that certain previously disclosed errors—which resulted in a restatement of the financial statements for the quarter ended December 31, 2024, as filed in the Annual Report also affected the financial statements for the quarter ended June 30, 2024.7

The impact of these errors on the quarter ended June 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 June 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.

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~~maximizing~~In connection with the ~~use~~preparation of ~~observable~~the ~~inputs.~~Company’s ~~This~~Quarterly ~~adjustment~~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 ~~changes~~a torestatement of the ~~allocation~~financial ofstatements ~~transaction~~for ~~price~~the three and ~~corresponding~~nine ~~revenue~~months ~~recognition~~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.

~~For~~The ~~further~~impact ~~discussion~~ of these errors on the ~~restatement~~three ofand 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. ~~for~~Accordingly, the ~~quarter~~Company ~~ended~~has ~~December~~revised, 31rather than restated, ~~2024~~the comparative financial information for September 30, ~~refer~~2024 topresented ~~the~~in ~~Annual~~this Quarterly Report on Form 10-Q.

The nature of the revisions is as follows:

•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.

Going Concern

The Company expects to be in violation of the net leverage ratio financial covenant under the Term Loan (as defined herein) for the quarter ended December 31, 2025. Under the terms of the agreement, certain proceeds from the Standby Equity Purchase Agreement dated January 25, 2025 (the “SEPA”) must also be used to repay the Term Loan. On August 13, 2025, the Company terminated its revolving credit facility agreement with PNC Bank, National Association (“PNC Bank”) (as amended, the “PNC Credit Facility”). If additional waivers cannot be obtained, the Term Loan will become immediately due, requiring additional liquidity to satisfy obligations. Because covenant violations render the Term Loan currently payable, the long-term portion of the Term Loan has been reclassified as a current liability in the consolidated balance sheets as of March 31, 2025. See Note 4: Debt for further information on credit agreements.

Management is actively seeking covenant waivers and evaluating options to restructure or refinance the Term Loan. If a waiver is not secured, additional funding will be needed to repay the Term Loan. There is no assurance, however, that the Company will be able to obtain a waiver or obtain funding on acceptable terms, if at all.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and accompanying notes. Actual results could differ from these estimates and assumptions due to risks and uncertainties. Such estimates include, but are not limited to, the determination of standalone selling price for revenue arrangements with multiple performance obligations, inventory adjustments, useful lives of intangible assets and property and equipment, stock-based compensation, fair value of warrants, and provision for income taxes including related reserves. Management bases its estimates on historical experience and on various other assumptions which management believes to be ~~reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.~~

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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 December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires greater disaggregation of tax information in rate reconciliation and income taxes paid by jurisdiction. ASU 2023-09 will be effective for our fiscal year beginning April 1, 2025, with early adoption permitted. The Company is currently evaluating the impact of this standard on our financial statement disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income -Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires additional disclosures of specific expense categories included within each expense caption presented on the Statements of Operations. The new standard can be applied on either a fully retrospective or prospective basis ASU 2024-03 will be effective for our fiscal year beginning April 1, 2027, and interim periods within our fiscal year beginning April 1, 2028, with early adoption permitted. 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 ~~June~~September 30, 2025, March 31, 2025 and March 31, 2024 (in thousands):

	June 30, 2025		March 31, 2025		March 31, 2024
	September 30, 2025		March 31, 2025		March 31, 2024
Accounts receivable	$	4843,~~445~~934	$	52,502	$	67,788
Deferred revenue	$	~~106~~101,~~255~~902	$	113,923	$	116,687
Revenue recognized in the period from amounts included in contract liabilities at the beginning of the period	$	2648,~~586~~123	$	74,048	$	76,304

Remaining Performance Obligations

Total remaining performance obligations (“RPO”) representing contracted but not recognized revenue was $125.2 million as of June 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. 9

RPO consisted of the following (in thousands):

						Current						Non-Current						Total
As of June 30, 2025						$	86,727					$	38,428					$	125,155

Deferred revenue consists of amounts that have been invoiced but have not yet been recognized as revenue including performance obligations pertaining to subscription services. The table below reflects the Company’s deferred revenue as of June 30, 2025 (in thousands):

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	Deferred revenue by period
	Total		1 year or less		1 – 3 Years		3 year or greater
Service revenue	$	81,969	$	57,185	$	22,607	$	2,177
Subscription revenue	24,286		12,490		10,710		1,086
Balance as of June 30, 2025	$	106,255	$	69,675	$	33,317	$	3,263

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~~Inventories

	June 30, 2025		March 31, 2025
	September 30, 2025		March 31, 2025
Finished goods	$	76,~~885~~987	$	10,471
Work in progress	1,~~085~~517		380
Raw materials	9,~~537~~488		9,485
Total manufacturing inventories	$	1817,~~507~~992	$	20,336

Service ~~parts~~Parts ~~inventories~~Inventories

	June 30, 2025		March 31, 2025
	September 30, 2025		March 31, 2025
Finished goods	$	~~764~~476	$	1,189
Component parts	~~759~~462		909
Total service parts inventories	$	~~1,523~~938	$	2,098

Intangibles, net

	June 30, 2025						March 31, 2025
	September 30, 2025						March 31, 2025
	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Customer lists	$	4,398	$	(4,~~347~~398)	$	51—	$	4,398	$	(4,117)	$	281
Intangible assets, net	$	4,398	$	(4,~~347~~398)	$	51—	$	4,398	$	(4,117)	$	281

Intangible assets amortization expense was $0.21 million and $0.5 million, and $0.3 million and $0.9 million for the three and six months ended ~~June~~September 30, 2025 and 2024, respectively. ~~As of June 30, 2025, the remaining weighted-average amortization period for definite-lived intangible assets was approximately 0.1 years.~~ 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 ~~June~~September 30, 2025 and March 31, 2025, goodwill was approximately $13.0 million. There were no impairments to goodwill as of ~~June~~September 30, 2025 and March 31, 2025.

Other long-term assets
	June 30, 2025		March 31, 2025
Capitalized SaaS implementation costs for internal use	$	13,440	$	13,910
Capitalized debt costs	2,339		2,871
Contract cost asset	1,097		1,144
Other	1,476		1,463
Total other long-term assets	$	18,352	$	19,388

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The following table details the change in the accrued warranty balance (in thousands):


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

	June 30, 2025		March 31, 2025
Beginning balance	$	1,032	$	1,545
Current period accruals	622		2,333
Adjustments to prior estimates	(19)		46
Charges incurred	(735)		(2,735)
Reclassification to long-term warranty	27		(157)
Ending balance	$	927	$	1,032

NOTE 4: DEBT

The Company’s debt consisted of the following (in thousands):

	June 30, 2025		March 31, 2025
	September 30, 2025		March 31, 2025
Term Loan	$	~~104~~106,~~265~~086	$	102,507
PNC Credit Facility	—		26,600
Less: current portion	(9699,~~713~~634)		(123,086)
Less: unamortized debt issuance costs (1)	(76,~~552~~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 ~~(as~~was ~~amended,~~issued (the “2021 Term Loan”), maturing on August 5, 2026. The Company also ~~had~~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 ~~(as~~Credit ~~defined below)~~Agreement, the “Credit Agreements”), which, per its terms, ~~matured~~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 (~~as amended,~~ the “2023 Term Loan” and, together with the 2021 Term Loan, the "Term Loan") and incurred $0.9 million in original issuance discount and origination fees which have been recorded as a reduction to the carrying amount of the 2023 Term Loan and amortized to interest expense over the 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.

The June 2023 Amendment to the 2021 Term Loan was accounted for as a modification. The value of the June 2023 Warrants in addition to $0.7 million of fees paid to the lenders have been reflected as a reduction to the carrying amount of the Term Loan and amortized to interest expense over the remaining term of the loan. The Company incurred $0.9 million of legal and financial advisory fees which were included in general and administrated expenses in the condensed consolidated statement of operations and comprehensive loss. The June 2023 Amendment to the PNC Credit Facility was accounted for as a modification and $0.7 million in related fees and expenses were recorded to other assets and are amortized to interest expense over the remaining term of the agreement.

On February 14, 2024, the Company entered into amendments to the Credit Agreements (“February 2024 Amendments”) which waived testing of the total net leverage ratio financial covenant for the fiscal quarter ended

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December 31, 2023. In connection with the amendment, the Company incurred fees related to the Term Loan that was paid-in-kind of $1.2 million and an amendment fee of $0.1 million that was paid in cash. As the February 2024 Amendments were accounted for as a modification, the fees were reflected as a reduction to the carrying amount of the Term Loan and are amortized to interest expense over the remaining term of the loan. In connection with the related PNC Credit Facility amendment, the Company incurred $0.2 million in fees and expenses.

On March 22, 2024, the Company entered into further amendments to the Credit Agreements (the "March 2024 Amendments"). The March 2024 Amendments, among other things, (i) permit the sale of certain assets by the Company and (ii) require that certain proceeds from the sale of such assets be applied to partially prepay the outstanding term loans under the Term Loan credit facility. The Company did not incur any amendment fees related to the March 2024 Amendments and the financial terms of the Credit Agreements were not impacted.

During the quarter ended June 30, 2024, the Company prepaid $12.3 million of the Term Loan. In connection with this prepayment, the Company recorded a loss on debt extinguishment of $0.7 million related to the write-off of a portion of unamortized debt issuance costs.

On May 24, 2024, the Company entered into amendments to the Credit Agreements (the “May 2024 Amendments”) which, among other things, (i) waived compliance with the Company’s net leverage ratio financial covenant as of March 31, 2024; and (ii) reduced the daily minimum liquidity covenant below $15.0 million until June 16, 2024 and waived any default that might arise as a result of the restatement of certain of the Company’s historical financial statements. In connection with the May 2024 Amendments, the Company issued to the Term Loan lenders warrants to purchase an aggregate of 100,000 shares of the Common Stock at a purchase price of $9.20 (the “May 2024 Warrants”). Additionally, in connection with the May 2024 Amendment to the Term Loan, the Company incurred an amendment fee that was paid-in-kind of $0.8 million and issued the May 2024 Warrants with a fair market value of $0.8 million. In connection with the May 2024 Amendment to the PNC Credit Facility Amendment, the Company incurred $ 0.5 million of fees and expenses paid to the lender.

The May 2024 Amendment to the Term Loan was accounted for as a modification. The value of the May 2024 Warrants, in addition to $0.8 million of amendment fees paid to the lenders, have been reflected as a reduction to the carrying amount of the Term Loan and amortized to interest expense over the remaining term of the loan. The May 2024 Amendment to the PNC Credit Facility was accounted for as a modification and the $0.5 million in related fees and expenses were recorded to other assets and are amortized to interest expense over the remaining term of the agreement.

On July 11, 2024, the Company entered into amendments to the Credit Agreements (the “July 2024 Amendments”) which, among other things, delayed the testing of the Company’s June 30, 2024 net leverage ratio financial covenant until July 31, 2024. In connection with the amendments, the Company issued the Term Loan lenders warrants to purchase an aggregate of 50,000 shares of the Common Stock at a purchase price of $8.20 (the “July 2024 Warrants”).

The July 2024 Amendments to the 2021 Term Loan were accounted for as a modification. The fair value of the July 2024 Warrants of $0.4 million is reflected as a reduction to the carrying amount of the 2021 Term Loan and amortized to interest expense over the remaining term of the loan. The July 2024 Amendments to the PNC Credit Facility were accounted for as a modification and the $0.1 million in related fees and expenses were recorded to other assets and are amortized to interest expense over the remaining term of the agreement.

On August 13, 2024, the Company entered into amendments to the Credit Agreements (the “August 2024 Amendments”) which, among other things, (i) waived compliance with the June 30, 2024 net leverage ratio financial covenant; (ii) waived any non-compliance with the minimum liquidity financial covenant through the date of the amendments; (iii) removed the fixed charges coverage ratio financial covenant until the fiscal quarter ending September 30, 2025; (iv) waived the testing requirement for the net leverage ratio financial covenant for the fiscal quarter ending September 30, 2024; (v) replaced the net leverage ratio financial covenant with a minimum EBITDA financial covenant for the fiscal quarters ending December 31, 2024 and March 31, 2025; (vi) reset the net leverage ratio financial covenant requirements for the fiscal quarters ending June 30, 2025 and September 30, 2025; (vii) reduced the minimum liquidity covenant to $10 million through September 30, 2025; (viii) adjusted the applicable interest rates on the Term Loan and PNC Credit Facility; (ix) removed required 2021 Term Loan principal amortization until the fiscal quarter ending September 30, 2025; and (x) repriced certain lender warrants.

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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 4.00x, and a step-down of 1.00% per annum if the Company’s total net leverage ratio is less than 3.50x (which shall reduce the paid-in-kind component of the applicable margin). The SOFR Rate is subject to a floor of 2.00%. The Company can designate a loan as an ABR Rate Loan or SOFR Rate Loan in its discretion.

Subsequent to the August 2024 Amendments, PNC Credit Facility loans designated as (x) PNC SOFR Loans bear interest at a rate per annum equal to a SOFR based rate, plus an applicable margin of 4.75% and (y) PNC Domestic Rate Loans and Swing Loans bear interest at a rate per annum equal to the greatest of (i) the base commercial lending rate of PNC Bank; (ii) the Overnight Bank Funding Rate plus 0.5%; and (iii) the daily SOFR rate plus 1.0%, plus an applicable margin of 3.75%. The Company can designate a loan as a PNC SOFR Loan or PNC Domestic Rate Loan in its discretion.

In connection with the August 2024 Amendments, the Company issued warrants to purchase an aggregate of 380,~~510~~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.

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.

The August 2024 Amendments to the PNC Credit Facility were accounted for as a modification, and the $0.7 million in related fees and expenses were recorded to other assets and amortized to interest expense over the remaining term of the agreement.

On January 27, 2025, the Company entered into an amendment (the “January 2025 Term Loan Amendment”) to the Term Loan. The January 2025 Term Loan Amendment, among other things, (i) amends the minimum EBITDA covenant so that such covenant is not tested on December 31, 2024 or March 31, 2025, (ii) amends certain

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~~mandatory~~The ~~prepayment~~August ~~events,~~2024 ~~and~~Amendments ~~(iii)~~to ~~waives~~the ~~certain~~2021 ~~events~~Term Loan held by one lender was accounted for as a modification. The $1.2 million fair value of ~~default,~~the inAugust ~~each~~2024 ~~case,~~Warrants issued to this lender and the $0.5 million of PIK fees paid to this lender are reflected as ~~set~~a ~~forth~~reduction into the ~~January~~carrying ~~2025~~amount of their Term Loan ~~Amendment~~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 ~~January~~April 272, 2025, the Company ~~entered~~consented ~~into~~to an ~~amendment~~assignment (the “~~January~~Master ~~2025~~Assignment ~~Revolver Amendment~~Agreement”) toof the ~~PNC~~2021 ~~Credit~~Term ~~Facility~~Loan and 2024 Term Loans. One of the lenders sold and assigned all of its interests to Dialectic. The ~~January~~Master ~~2025~~Assignment ~~Revolver~~Agreement ~~Amendment,~~was ~~among~~accounted ~~other~~for ~~things,~~as ~~(i)~~a ~~amends~~debt ~~the~~extinguishment. ~~minimum~~The ~~EBITDA~~Company ~~covenant~~recorded soa ~~that~~gain ~~such~~on ~~covenant~~debt isextinguishment ~~not~~of ~~tested~~$2.4 million related to the net of discount on ~~December~~issuance ~~31,~~of ~~2024~~term orloans ~~March~~to ~~31,~~a ~~2025,~~new ~~(ii)~~lender ~~amends~~and ~~certain~~write-off ~~mandatory~~of ~~prepayment~~all ~~events,~~unamortized debt issuance costs and ~~(iii)~~fees ~~waives~~related ~~certain~~to ~~events~~the ofprevious ~~default,~~lender. The $0.4 million in ~~each~~new ~~case,~~lender fees were recorded as ~~set~~a ~~forth~~reduction into the ~~January~~carrying ~~2025~~amounts ~~Revolver~~of ~~Amendment~~the term loans and amortized to interest expense over the remaining term of the loan.

On ~~April~~May 25, 2025, the Company ~~consented~~entered tointo an ~~assignment~~amendment (the “~~Master~~May ~~Assignment~~2025 ~~Agreement~~Term Loan Amendment”) ofto the ~~2021~~ Term Loan ~~and 2024 Term Loans~~. ~~One~~The ofMay ~~the~~2025 ~~lenders~~Term ~~sold~~Loan ~~and~~Amendment, ~~assigned~~among ~~all~~other ofthings, ~~its~~revised ~~interests~~the toprepayment arequirements ~~new~~under ~~lender.~~the ~~The~~Credit ~~Master Assignment~~ Agreement ~~was~~in ~~accounted~~connection ~~for~~with asthe anet ~~debt~~cash ~~extinguishment.~~proceeds ~~The~~received ~~Company~~from ~~recorded~~the ~~a gain on debt extinguishment of $2~~SEPA.~~4 million~~ ~~related~~The toMay ~~the~~2025 ~~net~~Term ofLoan ~~discount~~Amendment onwas ~~issuance~~accounted offor ~~term~~as ~~loans to~~ a ~~new~~modification ~~lender~~ and ~~write-off of all unamortized debt issuance costs and fees related to~~ the ~~previous lender. The~~ $0.41 million in ~~new~~ 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 ~~May~~August 513, 2025, the Company ~~entered~~terminated ~~into~~its anPNC ~~amendment~~Credit ~~(the~~Facility. ~~“May~~As ~~2025~~of ~~Term Loan Amendment”) to~~ the ~~Term~~date ~~Loan.~~of ~~The May 2025 Term Loan Amendment~~termination, ~~among~~there ~~other~~were ~~things,~~no ~~revised~~amounts ~~the~~outstanding ~~prepayment requirements~~ under the ~~Credit~~facility. ~~Agreement~~In in connection with the ~~net~~termination, ~~cash~~the ~~proceeds~~Company ~~received~~paid ~~from~~an ~~SEPA.~~exit ~~The~~fee ~~May~~of ~~2025 Term Loan Amendment was accounted for as a modification and the~~ $0.1.2 million, inwhich ~~lender~~was ~~amendment~~recorded ~~fees~~within ~~were~~Loss ~~recorded~~on asDebt aExtinguishment ~~reduction~~on to the ~~carrying~~condensed ~~amounts~~consolidated statement of ~~the~~operations ~~term loans~~ and ~~amortized~~comprehensive ~~to interest expense over the remaining term of the loan~~loss.

On AsAugust ~~of June 30~~13, 2025, the ~~interest~~Company ~~rates~~obtained onwaivers to certain covenants including the ~~2021~~net ~~Term~~leverage ~~Loan,~~covenant ~~2023~~under the Term Loan, ~~and~~Credit ~~2024~~Agreement ~~Term~~for ~~Loans~~the ~~were~~quarter ~~14.31%~~ended June 30, 142025.~~56%~~ Additionally, ~~and~~the ~~18.56%,~~requirement ~~respectively.~~to use certain proceeds of the SEPA to pay down the Term Loan was waived.

~~Also,~~On asSeptember ~~of June 30~~23, 2025, the ~~PNC~~Company entered into a Transaction Agreement (the “Transaction Agreement”) with the lenders under its Credit ~~Facility~~Agreement. ~~had~~Pursuant anto ~~available~~this ~~borrowing~~agreement, ~~base~~the ofCompany ~~$23~~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”).~~3 million~~ The closing of the Debt Exchange is subject to customary conditions, including approval by the Company’s stockholders. As of ~~which~~September 30, 2025, such approval has not been obtained, and the ~~entire~~Debt ~~amount~~Exchange ~~was~~had ~~available~~not tooccurred. ~~borrow~~As atof ~~that~~September ~~date~~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.

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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

As of ~~June~~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. ~~and~~These instruments are valued using quoted market prices in active markets (~~level~~Level 1 fair value measurements) at the respective balance sheet dates.

No impairment charges were recognized for non-financial assets infor the three and six months ended ~~June~~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~~Term Debt

The Company’s financial liabilities were comprised primarily of long-term debt as of ~~June~~ September 30, 2025. The ~~Company~~carrying ~~uses~~amounts ~~significant~~of ~~other~~the ~~observable~~Company’s ~~market~~debt ~~data~~instruments orare ~~assumptions~~recorded ~~(Level~~at 2amortized ~~inputs~~cost. asThe ~~defined~~fair invalue of the ~~accounting~~Company’s ~~guidance)~~long-term ~~that~~debt itis ~~believes~~disclosed ~~market~~for ~~participants~~informational ~~would~~purposes ~~use~~only and is not recognized in ~~pricing~~the ~~debt~~condensed consolidated balance sheets.

The ~~carrying~~fair value ~~and~~of ~~fair~~the ~~value~~Company’s ofdebt was estimated using a discounted cash flow approach based on the Company’s ~~financial~~current ~~liabilities~~borrowing ~~were~~rates ~~primarily~~for ~~comprised~~similar types of ~~the~~debt ~~following~~instruments, ~~(in~~adjusted ~~thousands):~~for credit and nonperformance

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	June 30, 2025				March 31, 2025
	Carrying Value		Fair Value		Carrying Value		Fair Value
Term Loan	$	104,265	$	95,848	$	102,507	$	91,576
PNC Credit Facility	—		—		26,600		24,755

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
Probability1	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):

Operating Leases	June 30, 2025		March 31, 2025
Operating lease right-of-use asset	$	8,314	$	8,580
Operating lease liability within other accrued liabilities	797		856
Operating lease liability, net	8,787		8,934
Total operating lease liabilities	$	9,584	$	9,790

Components of lease cost were as follows (in thousands):

	Three Months Ended June 30,
Lease Cost	2025		2024
Operating lease cost	$	669	$	712
Variable lease cost	39		70
Short-term lease cost	75		—
Total lease cost	$	783	$	782

Maturity of Lease Liabilities	Operating Leases
Remainder of fiscal year 2026	$	1,710
2027	1,859
2028	1,623
2029	1,245
2030	1,242
Thereafter	10,855
Total lease payments	$	18,534
Less: imputed interest	(8,950)
Present value of lease liabilities	$	9,584

Lease Term and Discount Rate	June 30, 2025		March 31, 2025
Weighted average remaining operating lease term (years)	10.19		10.19
Weighted average discount rate for operating leases	12.6	%	12.59	%

Operating cash outflows related to operating leases each totaled $0.7 million for the three months ended June 30, 2025 and 2024, respectively.

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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 ~~ending~~ended ~~June~~ September 30, 2025 and 2024, the Company had ~~approved~~ certain approved restructuring plans ~~designed~~ 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 ~~show~~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):

	Severance and Benefits
Balance as of March 31, 2024	$	—
Restructuring charges	1,192
Cash payments	(788)
Balance as of June 30, 2024	$	404
Balance as of March 31, 2025	$	786
Restructuring charges	2,423
Cash payments	(1,475)
Other non-cash	45
Balance as of June 30, 2025	$	1,779

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	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 ~~warrants~~a warrant to purchase shares of Common Stock.

The dilutive impact related to shares of Common Stock from incentive plans and the outstanding ~~warrants~~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 June 30,
	Three Months Ended September 30,		Six Months Ended September 30,
	2025	2024	2025	2024
Stock Awards	~~210~~104	~~750~~11	91	24

The Company had outstanding market based restricted stock units as of ~~June~~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 7734,~~545~~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 ~~June~~September 30, 2025.

NOTE 9: INCOME TAXES

The effective tax rate for the three months and six months ended ~~June~~September 30, 2025 and 2024 was (10.4)% and (10.16)%, 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

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~~unbenefited losses experienced in jurisdictions with~~ valuation allowances on deferred tax assets as well as the forecasted mix of earnings in domestic and international jurisdictions.

As of ~~June~~September 30, 2025, including interest and penalties, the Company had $83.36 million of unrecognized tax benefits, $74.14 million of which, if recognized, would favorably affect the effective tax rate without consideration of the valuation allowance. As of ~~June~~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 ~~June~~September 30, 2025, $7576.90 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 $7.46 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 $95.63 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, $95.42 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 $0.21 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 ~~June~~September 30, 2025, the Company had issued non-cancelable commitments for $4745.10 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.

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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.

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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 and depreciation and amortization.

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 June 30,
	Three Months Ended September 30,								Six Months Ended September 30,
	2025				2024				2025				2024
Americas1
Product revenue	$	2220,~~750~~937			$	2421,~~580~~845			$	43,689			$	46,424
Service and subscription	14,~~359~~988				1416,~~710~~680				29,347				31,389
Total revenue	3735,~~109~~925		57	%	3938,~~290~~525		54	%	73,036		57	%	77,813		54	%
EMEA
Product revenue	910,~~983~~849				1312,~~518~~455				20,832				25,974
Service and subscription	8,~~482~~423				911,~~402~~299				16,905				20,701
Total revenue	1819,~~465~~272		2931	%	2223,~~920~~754		3233	%	37,737		30	%	46,675		32	%
APAC
Product revenue	43,~~802~~582				4,~~554~~978				8,384				9,533
Service and subscription	2,~~102~~209				2,~~599~~226				4,311				4,825
Total revenue	65,~~904~~791		119	%	7,~~153~~204		10	%	12,695		10	%	14,358		10	%
Consolidated
Product revenue	3735,~~535~~368				4239,~~652~~278				72,905				81,931
Service and subscription	2425,~~943~~620				2630,~~711~~205				50,563				56,915
Royalty2	1,~~808~~727		3	%	2,~~902~~363		43	%	3,534		3	%	5,265		4	%
Total revenue	$	6462,~~286~~715	100	%	$	7271,~~265~~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 June 30,
	Three Months Ended September 30,								Six Months Ended September 30,
	2025		%		2024		%		2025		%		2024		%
Primary storage systems	$	1210,~~529~~968	1917	%	$	1712,~~594~~204	2417	%	$	23,497	18	%	$	29,798	21	%
Secondary storage systems	1819,~~506~~778		3032	%	1623,~~412~~333		2333	%	38,285		30	%	39,744		27	%
Device and media	97,~~941~~550		1512	%	97,~~601~~827		1311	%	17,492		14	%	17,428		12	%
Service	2122,~~502~~692		3336	%	2526,~~756~~119		36	%	44,194		35	%	51,876		36	%
Royalty	1,~~808~~727		3	%	2,~~902~~363		43	%	3,534		3	%	5,265		4	%
Total revenue1	$	6462,~~286~~715	100	%	$	7271,~~265~~846	100	%	$	127,002	100	%	$	144,111	100	%

1 Subscription revenue of $36.4 million and $15.0 million was allocated to primary and secondary storage systems for the three months ended ~~June~~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

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The following table shows reported segment revenue, segment profit or loss, and significant segment expenses were as follows: (in thousands):

	Three Months Ended June 30,
		2025			2024
Total revenue		$	64,286		$	72,265
Total cost of revenue		41,574			45,208
Gross profit		22,712			27,057
Gross margin		35.3		%	37.4		%
Operating expenses
Salaries & fringe1		18,001			21,423
Outside services2		7,676			13,194
Infrastructure3		2,522			2,908
Operational costs4		2,332			2,355
Restructuring		2,423			1,192
Other5		2,354			2,788
Total operating expenses		35,308			43,860
Loss from operations		(12,596)			(16,803)
Other expense, net		(430)			(41)
Interest expense		(6,516)			(3,790)
Change in fair value of warrant liability		—			1,666
Loss on debt extinguishment, net		2,559			(695)
Net loss before income taxes		(16,983)			(19,663)
Income tax provision		223			235
Net loss		$	(17,206)		$	(19,898)

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	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 & fringe1	16,731			21,244			34,733			42,667
Outside services2	4,763			7,690			12,439			20,884
Infrastructure3	2,330			2,882			4,852			5,790
Operational costs4	2,060			2,440			4,392			4,796
Restructuring	3,193			383			5,616			1,574
Other5	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 ~~due~~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 ~~June~~ 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 ~~June~~ September 30, 2024 (in thousands, unaudited):

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CONDENSED CONSOLIDATED BALANCE ~~SHEETS~~SHEET

June 30, 2024

September 30, 2024

As previously reported

Revisions

Reference

As revised

Liabilities and Stockholders’ Deficit

Deferred revenue, current portion

7469,~~802~~369

(43,~~669~~868)

a, b

7065,~~133~~501

Total current liabilities

~~155~~134,~~608~~601

(43,~~669~~868)

~~150~~130,~~939~~733

Deferred revenue, net of current portion

3637,~~759~~164

31,~~747~~569

a, b

4038,~~506~~733

Total liabilities

~~314~~316,~~340~~549

(~~922~~2,299)

~~313~~314,~~418~~250

Stockholders' deficit

Accumulated deficit

(~~848~~861,~~200~~727)

~~922~~2,299

a, b

(~~847~~859,~~278~~428)

Total stockholders’ deficit

(~~141~~153,~~251~~403)

~~922~~2,299

(~~140~~151,~~329~~104)

Total liabilities and stockholders’ deficit

~~173~~163,~~089~~146

—$

—

~~173~~163,~~089~~146

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

	Three Months Ended June 30, 2024
	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	$	4036,~~994~~785	$	12,~~658~~493	b	$	4239,~~652~~278	$	77,779	$	4,152	b	$	81,931
Service and subscription	2731,~~447~~321		(~~736~~1,116)		a, b	2630,~~711~~205		58,768		(1,853)		a, b	56,915
Gross profit	2629,~~135~~268		~~922~~1,377			2730,~~057~~645		55,402		2,299			57,701
Loss from operations	(17,725)		922			(16,803)
Gain (loss) from operations	(6,934)		1,377			(5,557)		(24,659)		2,299			(22,360)
Net loss before income taxes	(20,585)		922			(19,663)
Net gain (loss) before income taxes	(13,157)		1,377			(11,780)		(33,742)		2,299			(31,443)
Net loss	$	(2013,~~820~~527)	$	~~922~~1,377		$	(1912,~~898~~150)	$	(34,347)	$	2,299		$	(32,048)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended June 30, 2024

Six Months Ended September 30, 2024

As previously reported

Revisions

Reference

As revised

Operating activities

Net loss

(2034,~~820~~347)

~~922~~2,299

a, b

(1932,~~898~~048)

Adjustments to reconcile net loss to net cash used in operating activities

Deferred revenue

(510,~~126~~153)

(~~922~~2,299)

a, b

(612,~~048~~452)

Net cash used in operating activities

(117,~~896~~194)

—

(117,~~896~~194)

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

	Common Stock			AdditionalPaid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders' Deficit
Three Months Ended	Shares	Amount
Balance, March 31, 2024	4,792	$	48	$	708,027	$	(827,380)	$	(2,193)	$	(121,498)
Net loss	—	—		—		(19,898)		—		(19,898)
Foreign currency translation adjustments, net	—	—		—		—		142		142
Stock-based compensation	—	—		925		—		—		925
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)

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NOTE 13: SUBSEQUENT EVENTS

OnDuring ~~July 4, 2025, President Trump signed into law~~ the ~~legislation~~period ~~commonly~~from ~~referred~~October ~~to as the One Big Beautiful Bill Act (“OBBBA”). The OBBBA includes various provisions~~1, 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.~~November ~~While there is no impact to the Company's condensed consolidated financial statements for the quarter ended June 30~~10, 2025, the Company isissued ~~assessing~~approximately ~~its~~0.3 million ~~impact~~shares onof ~~the~~Common ~~consolidated~~Stock ~~financial~~under ~~statements that would take effect beginning in~~ the ~~period~~SEPA infor ~~which~~net ~~the~~proceeds ~~OBBBA~~of ~~was~~approximately ~~signed into law~~$2.8 million.

On August 13, 2025, the Company terminated the PNC Credit Facility. As of the date of termination, there were no amounts drawn on the PNC Credit Facility and the Company paid an exit fee of $1.2 million in connection with the termination.24

On August 13, 2025, the Company obtained waivers to certain covenants including the net leverage covenant under the Term Loan for the quarter ended June 30, 2025. Additionally, the requirement to use certain proceeds of the SEPA to pay down the Term Loan was waived.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis compares the change in the consolidated financial statements for quarters ~~ending~~and ~~June~~six months ended September 30, 2025 and ~~June~~September 30, 2024, and should be read together with our condensed consolidated financial statements and the related notes thereto included in this Quarterly Report on Form 10-Q, and the audited consolidated financial statements and notes thereto and management’s discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2025 (the “Annual Report”). In particular, the risk factors contained in Part I, Item 1A of the Annual Report under the heading “Risk Factors” may reflect trends, demands, commitments, events, or uncertainties that could materially impact our results of operations and liquidity and capital resources. For comparisons of quarters and six months ended ~~June~~September 30, 2024 and ~~June~~September 30, 2023, see our Management's Discussion and Analysis of Financial Condition and Results of Operations in Item 2 of our Quarterly Report on Form 10-Q for the quarter ended ~~June~~September 30, 2024, filed with the SEC on ~~August~~November 14, 2024, and incorporated herein by reference. Our fiscal year ends on March 31 of each calendar year. "Fiscal 2025" refers to the fiscal year ended March 31, 2025.

The following discussion contains forward-looking statements, such as statements regarding anticipated impacts on our business, our future operating results and financial position, our business strategy and plans, our market growth and trends, and our objectives for future operations. Please see "Note Regarding Forward-Looking Statements" for more information about relying on these forward-looking statements.

OVERVIEW

We are a technology company whose mission is to deliver innovative solutions to organizations across the world. We design, manufacture and sell technology and services that help customers capture, create and share digital content, and protect it for decades. We emphasize innovative technology in the design and manufacture of our products to help our customers unlock the value in their video and unstructured data in new ways to solve their most pressing business challenges.

We generate revenue by designing, manufacturing, and selling technology and services. Our most significant expenses are related to compensating employees; designing, manufacturing, marketing, and selling our products and services; data center costs in support of our cloud-based services; and interest associated with our long-term debt and income taxes.

Macroeconomic Conditions

We continue to actively monitor, evaluate and respond to the current uncertain macro environment, including the impact of ~~higher~~changing interest rates, inflation, tariffs, lingering supply chain challenges, and afluctuation ~~stronger~~in the U.S. dollar. During the quarter we continued to experience longer sales cycle for opportunities with our enterprise as well as commercial customers.

The macro environment remains unpredictable and our past results may not be indicative of future performance.

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RESULTS OF OPERATIONS

	Three Months Ended June 30,
	Three Months Ended September 30,				Six Months Ended September 30,
(in thousands)	2025		2024		2025		2024
Total revenue	$	6462,~~286~~715	$	7271,~~265~~846	$	127,002	$	144,111
Total cost of revenue (1)	4139,~~574~~163		4541,~~208~~201		80,736		86,410
Gross profit	2223,~~712~~552		2730,~~057~~645		46,266		57,701
Operating expenses
Sales and marketing (1)	1211,~~655~~819		13,~~295~~578		24,474		26,873
General and administrative (1)	1311,~~569~~006		2113,~~065~~977		24,576		35,042
Research and development (1)	65,~~661~~692		8,~~308~~264		12,353		16,572
Restructuring charges (1)	23,~~423~~193		~~1,192~~383		5,616		1,574
Total operating expenses	3531,~~308~~710		4336,~~860~~202		67,019		80,061
Loss from operations	(128,~~596~~158)		(165,~~803~~557)		(20,753)		(22,360)
Other income (expense), net	(~~430~~185)		(411,334)		(616)		(1,375)
Interest expense	(6,~~516~~227)		(36,~~790~~131)		(12,743)		(9,921)
Change in fair value of warrant liabilities	—1,525		13,~~666~~550		1,525		5,216
Gain (loss) on debt extinguishment	2,559		(695)
Loss on debt extinguishment	(33,254)		(2,308)		(30,695)		(3,003)
Net loss before income taxes	(16,983)		(19,663)
Loss before income taxes	(46,299)		(11,780)		(63,282)		(31,443)
Income tax provision	~~223~~157		~~235~~370		380		605
Net loss	$	(1746,~~206~~456)	$	(1912,~~898~~150)	$	(63,662)	$	(32,048)

(1) Includes stock-based compensation as follows:

	Three Months Ended June 30,
	Three Months Ended September 30,				Six Months Ended September 30,
(in thousands)	2025		2024		2025		2024
Cost of revenue	$	~~(21)~~41	$	~~190~~76	$	(567)	$	266
Research and development	6819		~~188~~161		87		349
Sales and marketing	76(82)		8885		(6)		173
General and administrative	~~(652)~~346		~~459~~394		281		853
Total	$	~~(529)~~324	$	~~925~~716	$	(205)	$	1,641

Comparison of the Three Months Ended ~~June~~September 30, 2025 and 2024

Revenue

	Three Months Ended June 30,
	Three Months Ended September 30,
(dollars in thousands)	2025		% ofrevenue		2024		% ofrevenue		$ Change		% Change
Product revenue	$	3735,~~535~~368	5856	%	$	4239,~~652~~278	5955	%	$	(53,~~117~~910)	(1210)	%
Service and subscription	2425,~~943~~620		3941	%	2630,~~711~~205		3742	%	(14,~~768~~585)		(715)	%
Royalty	1,~~808~~727		3	%	2,~~902~~363		43	%	(~~1,094~~636)		(3827)	%
Total revenue	$	6462,~~286~~715	100	%	$	7271,~~265~~846	100	%	$	(79,~~979~~131)	(1113)	%

Product Revenue

In the three months ended ~~June~~September 30, 2025, product revenue decreased $53.19 million, or 1210%, as compared to the same period in fiscal ~~2024~~2025. The primary driver of the decrease was indue ~~Primary~~to ~~storage systems with a~~ large ~~video~~orders ~~surveillance order~~ in the prior period. across secondary and primary storage.

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Service and Subscription Revenue

Service and subscription revenue decreased $14.86 million, or 715%, in the three months ended ~~June~~September 30, 2025 compared to the same period in fiscal ~~2024~~2025. 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~~decreased ~~a decrease of~~ $10.16 million, or 3827%, in the three months ended ~~June~~September 30, 2025 compared to the same period in fiscal ~~2024~~2025 due to ~~decreased~~both lower market volume and a mix weighted towards linear-tape-open (“LTO”) types with lower royalty rates.

Gross Profit and Margin

	Three Months Ended June 30,
	Three Months Ended September 30,
(dollars in thousands)	2025		Grossmargin %		2024		Grossmargin %		$ Change		Basis point change
Product	$	6,~~790~~620	18.17	%	$	109,~~097~~504	2324.72	%	$	(32,~~307~~884)	(~~560~~550)
Service and subscription	1415,~~114~~205		5659.63	%	1418,~~058~~778		5262.62	%	56(3,573)		~~400~~(290)
Royalty	1,~~808~~727		100.0	%	2,~~902~~363		100.0	%	(~~1,094~~636)		—
Gross profit	$	2223,~~712~~552	3537.36	%	$	2730,~~057~~645	3742.47	%	$	(47,~~345~~093)	(~~210~~510)

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

Product Gross Margin

Product gross margin decreased by $32.39 million, or by ~~560~~550 basis points, for the three months ended ~~June~~September 30, 2025, as compared with the same period in fiscal ~~2024~~2025. This decrease was primarily due to an inventory provision accrued for certain end-of-life products, as well as ~~supply~~an ~~chain~~overall ~~logistics~~mix ~~costs~~weighted ~~including~~towards ~~import~~lower ~~tariffs.~~margin products.

Service and Subscription Gross Margin

Service and subscription gross margins ~~increased~~decreased ~~400~~290 basis points for the three months ended ~~June~~September 30, 2025, as compared with the same period in fiscal ~~2024~~2025. This ~~increase~~decrease was primarily driven by ~~improvements~~reduced inrevenue ~~our~~as ~~operational~~many ~~efficiency~~long-lived ~~and~~products ~~logistics~~reach their end-of-service life. To mitigate these declines, costs of service has been reduced across the organization, including logistics, repair, and labor.

Royalty Gross Margin

Royalties do not have significant related cost of sales.

Operating Expenses

	Three Months Ended June 30,
	Three Months Ended September 30,
(dollars in thousands)	2025		% of revenue		2024		% of revenue		$ Change		% Change
Sales and marketing	$	1211,~~655~~819	2019	%	$	13,~~295~~578	1819	%	$	(~~640~~1,759)	(513)	%
General and administrative	1311,~~569~~006		2118	%	2113,~~065~~977		2919	%	(72,~~496~~971)		(3621)	%
Research and development	65,~~661~~692		109	%	8,~~308~~264		1112	%	(12,~~647~~572)		(2031)	%
Restructuring charges	23,~~423~~193		45	%	~~1,192~~383		21	%	12,~~231~~810		~~103~~734	%
Total operating expenses	$	3531,~~308~~710	5551	%	$	4336,~~860~~202	6150	%	$	(84,~~552~~492)	(1912)	%

In the three months ended ~~June~~September 30, 2025, sales and marketing expenses decreased $01.68 million, or 513%, as compared with the same period in fiscal ~~2024~~2025. This decrease was primarily driven by improved operational efficiency and increased leverage of our channel.

In the three months ended ~~June~~September 30, 2025, general and administrative expenses decreased $73.50 million, or 3621%, as compared with the same period in fiscal ~~2024~~2025. This decrease was primarily driven by higher expense in the prior year related to compliance focused outside services.

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In the three months ended ~~June~~September 30, 2025, research and development expenses decreased $12.6 million, or 2031%, as compared with the same period in fiscal ~~2024~~2025. This decrease was the result of ~~the~~efficiencies ~~continued~~realized through improved organization design, including the consolidation of ~~acquisition~~common ~~costs,~~functions and ~~efficiencies~~increased ~~realized~~weighting ~~through~~of ~~improved~~resources ~~organization~~in ~~design~~lower-cost regions.

In the three months ended ~~June~~September 30, 2025, restructuring expenses increased $1.2.8 million, or ~~103~~734% as compared with the same period in fiscal ~~2024~~2025. ~~The~~This increase ~~was~~in ~~the~~restructuring ~~result~~expenses primarily involves workforce reductions and related severance and termination benefits.These actions are part of ~~cost~~management’s ~~reduction~~ongoing ~~initiatives~~efforts into align the ~~current year~~Company’s organizational structure and resources with its strategic priorities and to streamline operations across business units.

~~Other~~The ~~Income~~Company ~~(Expense)~~expects these initiatives to result in future cost savings and productivity improvements beginning in fiscal 2026. The restructuring activities are expected to be substantially completed by the end of the fourth quarter of fiscal year 2026; however, the timing and total amount of charges are subject to change as implementation progresses.

	Three Months Ended June 30,
(dollars in thousands)	2025		% of revenue		2024		% of revenue		$ Change		% Change
Other income (expense)	$	(430)	(1)	%	$	(41)	(—)	%	$	(389)	(949)	%

Other Income (Expense), net

The change in other income (expense), net during the three months ended June 30, 2025 compared with the same period in fiscal 2024 was related primarily to fluctuations in foreign currency exchange rates during the three months ended June 30, 2025.



	Three Months Ended September 30,
(dollars in thousands)	2025		% of revenue		2024		% of revenue		$ Change		% Change
Other income (expense),net	$	(185)	0	%	$	(1,334)	(2)	%	$	1,149	86	%

The change in other income (expense), net during the three months ended September 30, 2025 compared with the same period in fiscal 2025 was related primarily to fluctuations in foreign currency exchange rates during the three months ended September 30, 2025.

Interest Expense

	Three Months Ended June 30,
	Three Months Ended September 30,
(dollars in thousands)	2025		% of revenue		2024		% of revenue		$ Change		% Change
Interest expense	$	(6,~~516~~227)	(10)	%	$	(36,~~790~~131)	(59)	%	$	(~~2,726~~96)	722	%

In the three months ended ~~June~~September 30, 2025, interest expense increased $20.71 million, or 722%, as compared with the same period in fiscal ~~2024~~2025 due to a higher effective interest rate on our Term Loan.

Warrant ~~liabilities~~Liabilities

	Three Months Ended June 30,
	Three Months Ended September 30,
(dollars in thousands)	2025		% of revenue		2024		% of revenue		$ Change		% Change
Change in fair value of warrant liabilities	$	—1,525	—2	%	$	13,~~666~~550	36	%	$	(12,~~666~~025)	(~~100~~57)	%

In ~~June~~the three months ended September 30, ~~2024~~2025, we recorded a non-cash ~~loss~~gain of $1.75 million related to the change in fair value of our ~~warrant~~Forbearance Warrant liabilities. ~~driven~~In bythe ~~fluctuations~~three inmonths ~~our~~ended ~~stock price. As of June~~ September 30, ~~2025~~2024, ~~there~~we ~~were~~recorded noa ~~outstanding~~non-cash ~~warrants~~gain of $3.6 million.

~~Gain (~~Loss) on ~~debt~~Debt ~~extinguishment~~Extinguishment

	Three Months Ended June 30,
(dollars in thousands)	2025		% of revenue		2024		% of revenue		$ Change		% Change
Gain (loss) on debt extinguishment	$	2,559	4	%	$	(695)	(1)	%	$	3,254	(468)	%
Loss on debt extinguishment	$	(33,254)	(48)	%	$	(2,308)	(3)	%	$	(30,946)	1,341	%

In June 30, 2025, gain on debt extinguishment was 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. In June 30, 2024, loss on debt extinguishment was related to prepayment of our long-term debt.28

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In September 30, 2025, loss on debt extinguishment was 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. In September 30, 2024, loss on debt extinguishment was related to prepayment of our long-term debt.

Income Taxes

	Three Months Ended June 30,
	Three Months Ended September 30,
(dollars in thousands)	2025		% of pretax income		2024		% of pretax income		$ Change		% Change
Income tax provision	$	~~223~~157	~~(1)~~—	%	$	~~235~~370	(13)	%	$	(12213)	(558)	%

25The income tax provision for the three months ended September 30, 2025 and 2024 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.

On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA), which includes various tax law changes effective beginning in 2025; while the Act had no material impact on the Company’s third-quarter 2025 results, the Company is evaluating its future effects.

Comparison of the Six Months Ended September 30, 2025 and 2024

Revenue


	Six Months Ended September 30,
(dollars in thousands)	2025		% of revenue		2024		% of revenue		$ Change		% Change





Product revenue	$	72,905	57	%	$	81,931	57	%	$	(9,026)	(11)	%
Service and subscription	50,563		40	%	56,915		39	%	(6,352)		(11)	%
Royalty	3,534		3	%	5,265		4	%	(1,731)		(33)	%
Total revenue	$	127,002	100	%	$	144,111	100	%	$	(17,109)	(12)	%

Product Revenue

In the six months ended September 30, 2025, product revenue decreased $$9.0 million, or 11%, as compared to the same period in fiscal 2025. The primary driver of the decrease was in Primary storage systems with a large video surveillance order in the prior period.

Service and Subscription Revenue

Service and subscription revenue decreased $6.4 million, or 11%, in the six months ended September 30, 2025 compared to the same period in fiscal 2025. 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 decrease of $1.7 million, or 33%, in the six months ended September 30, 2025 compared to the same period in fiscal 2025 due to both lower market volume and a mix weighted towards LTO types with lower royalty rates.

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~~The~~Gross ~~income~~Profit ~~tax provision for the three months ended June 30, 2025~~ and 2024 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.Margin



	Six Months Ended September 30,
(dollars in thousands)	2025		Gross margin %		2024		Gross margin %		$ Change		Basis point change

Product	$	13,412	18.7	%	$	19,601	24.2	%	$	(6,189)	(550)
Service and subscription	29,320		59.3	%	32,835		62.2	%	(3,515)		(290)
Royalty	3,534		100.0	%	5,265		100.0	%	(1,731)		—
Gross profit	$	46,266	37.6	%	$	57,701	42.7	%	$	(11,435)	(510)

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

Product Gross Margin

Product gross margin decreased by $6.2 million, or by 550 basis points, for the six months ended September 30, 2025, as compared with the same period in fiscal 2025. This decrease was primarily due to an inventory provision accrued for certain end-of-life products, as well as supply chain logistics costs including import tariffs.

Service and Subscription Gross Margin

Service and subscription gross margins decreased (290) basis points for the six months ended September 30, 2025, as compared with the same period in fiscal 2025. This decrease was primarily driven by reduced revenue as many long-lived products reach their end-of-service life. To mitigate these declines, costs of service has been reduced across the organization, including logistics, repair, and labor.

Royalty Gross Margin

Royalties do not have significant related cost of sales.

Operating Expenses



	Six Months Ended September 30,
(dollars in thousands)	2025		% of revenue		2024		% of revenue		$ Change		% Change
Sales and marketing	$	24,474	39	%	$	26,873	37	%	$	(2,399)	(9)	%
General and administrative	24,576		39	%	35,042		49	%	(10,466)		(30)	%
Research and development	12,353		20	%	16,572		23	%	(4,219)		(25)	%
Restructuring charges	5,616		9	%	1,574		2	%	4,042		257	%
Total operating expenses	$	67,019	107	%	$	80,061	111	%	$	(13,042)	(16)	%

In the six months ended September 30, 2025, sales and marketing expenses decreased $2.4 million, or 9%, as compared with the same period in fiscal 2025. This decrease was primarily driven by improved operational efficiency and increased leverage of our channel.

In the six months ended September 30, 2025, general and administrative expenses decreased $10.5 million, or 30%, as compared with the same period in fiscal 2025. This decrease was primarily driven by higher expense in the prior year related to compliance focused outside services.

In the six months ended September 30, 2025, research and development expenses decreased $4.2 million, or 25%, as compared with the same period in fiscal 2025. This decrease was the result of efficiencies realized through improved organization design, including the consolidation of common functions and increased weighting of resources in lower-cost regions.

In the six months ended September 30, 2025, restructuring expenses increased $4.0 million, or 257% as compared with the same period in fiscal 2025. The increase was the result of significant changes in management structure, and overall consolidation of resources designed to improve operational efficiencies and rationalize its cost structure. These actions are part of management’s ongoing efforts to align the Company’s organizational structure and resources with its strategic priorities and to streamline operations across business units. The restructuring plan primarily involves workforce reductions and related severance and termination benefits.

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The Company expects these initiatives to result in future cost savings and productivity improvements beginning in fiscal 2026. The restructuring activities are expected to be substantially completed by the end of the fourth quarter of fiscal year 2026; however, the timing and total amount of charges are subject to change as implementation progresses.

Other Income (Expense), net



	Six Months Ended September 30,
(dollars in thousands)	2025		% of revenue		2024		% of revenue		$ Change		% Change
Other income (expense), net	$	(616)	(1)	%	$	(1,375)	(2)	%	$	759	55	%

The change in other income (expense), net during the six months ended September 30, 2025 compared with the same period in fiscal 2025 was related primarily to fluctuations in foreign currency exchange rates during the three months ended September 30, 2025.

Interest Expense



	Six Months Ended September 30,
(dollars in thousands)	2025		% of revenue		2024		% of revenue		$ Change		% Change

Interest expense	$	(12,743)	(10)	%	$	(9,921)	(7)	%	$	(2,822)	28	%

In the six months ended September 30, 2025, interest expense increased $0.1 million, or 2%, as compared with the same period in fiscal 2025 due to a higher effective interest rate on our Term Loan.

Warrant Liabilities



	Six Months Ended September 30,
(dollars in thousands)	2025		% of revenue		2024		% of revenue		$ Change		% Change

Change in fair value of warrant liabilities	$	1,525	1	%	$	5,216	4	%	$	(3,691)	(71)	%

In the six months ended September 30, 2025, we recorded a non-cash gain of $1.5 million related to the change in fair value of our Forebearance Warrant liabilities. In the six months ended September 30, 2024, we recorded a non-cash gain of $5.2 million.

Loss on Debt Extinguishment



	Six Months Ended September 30,
(dollars in thousands)	2025		% of revenue		2024		% of revenue		$ Change		% Change

Loss on debt extinguishment	$	(30,695)	(24)	%	$	(3,003)	(2)	%	$	(27,692)	922	%

Income Taxes


	Six Months Ended September 30,
(dollars in thousands)	2025		% of pretax income		2024		% of pretax income		$ Change		% Change
Income tax provision	$	380	—	%	$	605	(3)	%	$	(225)	(37)	%

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The income tax provision for the six months ended September 30, 2025 and 2024 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.

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, and cash and cash equivalents on our balance sheet. 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 future liquidity requirements will depend on multiple factors, including our ability to raise additional capital, research and development plans and capital asset needs.

We had cash and cash equivalents of $3714.47 million as of ~~June~~September 30, 2025, which consisted primarily of bank deposits and money market accounts. As of ~~June~~September 30, 2025, our total outstanding Term Loan debt was $~~104~~106.31 million ~~and our revolving credit facility agreement with PNC Bank, National Association, as amended from time to time (the “PNC Credit Facility”) had an available borrowing base of $23~~.~~3 million,~~ ~~of which the entire amount was available to borrow at that date. As discussed in Note 13: Subsequent Events, the Company terminated the PNC Credit Facility on August 13, 2025.~~

We generated negative cash flows from operations of approximately $1632.95 million and $117.92 million for the ~~quarters~~six months ended ~~June~~September 30, 2025 and 2024, respectively, and generated net losses of approximately $1763.27 million and $1932.90 million for the ~~quarters~~six months ended ~~June~~September 30, 2025 and 2024, respectively. We have funded operations through the sale of Common Stock, ~~term~~Term ~~debt~~Loan borrowings and PNC Credit Facility borrowings described in Note 4: Debt.

On January 25, 2025, the Company entered into athe 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 ~~June~~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 $66.9 million were issued in the six months ended September 30, 2025. No shares were issued in the three months ended September 30, 2025.

~~We are subject to various debt covenants under our credit agreements.~~ Our ~~failure~~Term toLoan ~~comply~~has ~~with~~a ~~our~~maturity ~~debt~~date ~~covenants~~of ~~could~~August ~~materially~~5, ~~and adversely affect our financial condition and ability to service our obligations~~2026. As discussed in Note 1: Description of Business and Summary of Significant Accounting Policies—Going Concern, we believe we will not be inable ~~violation~~to ofmake ~~our~~the ~~net~~required ~~leverage~~repayment ~~ratio~~on ~~financial~~that ~~covenant~~date asusing ofcash ~~the~~generated ~~December~~from ~~31,~~operating ~~2025~~activities. ~~testing~~We ~~date~~entered ~~and~~into the ~~violation~~Transaction Agreement that will ~~cause~~convert Dialectic’s portion of the Term Loan ~~outstanding~~into ~~balance~~a toConvertible ~~become~~Note ~~due~~with asa anthree ~~event~~year ~~of default~~maturity. AsWe aalso ~~result,~~agreed weto ~~classified~~use the ~~Term~~proceeds ~~Loan~~from asthe aSEPA ~~current~~to ~~liability~~repay in the ~~accompanying~~OC ~~consolidated~~III ~~balance~~Lenders ~~sheets~~portion of the Term Loan. ~~Additionally,~~The issuance of the weConvertible ~~are~~Note ~~evaluating~~is ~~strategies~~subject to ~~restructure~~stockholder orapproval ~~refinance~~and ~~our~~there ~~debt,~~is ~~including~~no ~~potential~~assurance ~~covenant~~that ~~waivers~~it will be approved. WeAlso, we may not be ~~unable~~able to ~~obtain~~access ~~additional~~the ~~funding.~~SEPA Asto ~~such,~~generate ~~there~~sufficient ~~can~~cash beto norepay ~~assurance~~OC ~~that~~III weLenders ~~will~~by bethe ~~able~~maturity todate. ~~obtain~~We ~~additional~~may ~~liquidity~~be ~~when~~unable ~~needed~~to orobtain ~~under~~additional ~~acceptable~~funding ~~terms,~~from ifother ~~at all~~sources.

Cash Flows

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

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Three Months Ended June 30,

Six Months Ended September 30,

(in thousands)

2025

2024

Cash provided by (used in):

Operating activities

(1632,~~891~~489)

(117,~~896~~194)

Investing activities

(1,~~192~~606)

(13,~~620~~228)

Financing activities

3932,~~027~~791

(411,~~798)~~525

Effect of exchange rate changes

—30

(3)

Net decrease in cash, cash equivalents and restricted cash

20(1,~~944~~274)

(8,~~317~~900)

Cash Used In Operating Activities

Net cash used in operating activities was $1632.95 million for the ~~three~~six months ended ~~June~~September 30, 2025. This use of cash was primarily attributed to lower earnings.

Net cash used in operating activities was $117.92 million for the ~~three~~six months ended ~~June~~September 30, 2024. This use of cash was primarily attributed to ~~cash~~lower ~~used in operations excluding changes in assets and liabilities of $16~~earnings.~~3 million offset in part by cash provided by working capital changes.~~

Cash Used in Investing Activities

Net cash used in investing activities was $1.26 million in the ~~three~~six months ended ~~June~~September 30, 2025, which was attributable to capital expenditures.

Net cash used in investing activities was $13.62 million in the ~~three~~six months ended ~~June~~September 30, 2024, which was attributable to capital expenditures.

Cash Provided by Financing Activities

Net cash provided by financing activities was $3932.08 million for the ~~three~~six months ended ~~June~~September 30, 2025, which was related primarily to borrowings on our Term Loan.

Net cash ~~used~~provided inby financing activities was $411.85 million for the ~~three~~six months ended ~~June~~September 30, 2024, which was related primarily to ~~borrowings~~proceeds onfrom ~~our~~shares ~~PNC~~issued ~~Credit~~under ~~Facility~~the SEPA.

Commitments and Contingencies

Our contingent liabilities consist primarily of certain financial guarantees, both express and implied, related to product liability and potential infringement of intellectual property. We have little history of costs associated with such indemnification requirements and contingent liabilities associated with product liability may be mitigated by our insurance coverage. In the normal course of business to facilitate transactions of our services and products, we indemnify certain parties with respect to certain matters, such as intellectual property infringement or other claims. We also have indemnification agreements with our current and former officers and directors. It is not possible to determine the maximum potential amount under these indemnification agreements due to the limited history of our indemnification claims, and the unique facts and circumstances involved in each particular agreement. Historically, payments made by us under these agreements have not had a material impact on our operating results, financial position or cash flows.

We are also subject to ordinary course litigation. See Note 10: Commitments and Contingencies to the unaudited condensed consolidated financial statements for a discussion of our legal matters.

Off Balance Sheet Arrangements

Except for the indemnification commitments described under “Commitments and Contingencies” above, we do not currently have any other off-balance sheet arrangements and do not have any holdings in variable interest entities.

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Contractual Obligations

We have contractual obligations and commercial commitments, some of which, such as purchase obligations, are not recognized as liabilities in our condensed consolidated financial statements. There have not been any material changes to the contractual obligations disclosed in the Annual Report.

Critical Accounting Estimates and Policies

The preparation of our consolidated financial statements in accordance with generally accepted accounting principles requires management to make judgments, estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes included elsewhere in this Quarterly Report. 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 certain 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. Our accounting policies that include estimates that require management’s subjective or complex judgments about the effects of matters that are inherently uncertain are summarized in the Annual Report under the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates and Policies.” For additional information on our significant accounting policies, see Note 1 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.

Recently Issued and Adopted Accounting Pronouncements

See Note 1 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes to our quantitative and qualitative disclosures about market risk from those described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Annual Report, which such section is incorporated herein by reference.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive and principal financial officers, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)), as of the end of the period covered by this Quarterly Report. Based on such evaluation, our principal executive and principal financial officers have concluded that as of such date, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses described below.

Notwithstanding the identified material weaknesses, management, including our chief executive officer and ~~chief~~principal financial officer have determined, that the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q fairly represent in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, for the periods presented in accordance with U.S. generally accepted accounting principles.

Material Weaknesses in Internal Control Over Financial Reporting

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

Management did not adequately design and implement effective control activities resulting in the identification of the following material weaknesses:

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Revenue Recognition

The Company did not maintain effective internal controls related to revenue recognition for the following:

•Controls related to the Company’s accounting practices and procedures for application of standalone selling price under Accounting Standards Codification Topic 606 Revenue from Contracts with Customers (“Topic 606”). Specifically, the Company did not have adequate controls in place to conclude on the application of standalone selling price consistent with the generally accepted application of the guidance in Topic 606.

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

•Controls for reviewing and updating deferral schedules, which drives the timing of service revenue recognition. Specifically, the start and end dates in the deferral schedules were not consistently aligned with the contractual service periods.

Manufacturing Inventory

The Company did not maintain effective internal controls related to manufacturing inventory. Specifically, controls to assess the accuracy of inventory held at third-party locations were not adequately executed.

Control Environment

Based on the material weaknesses identified in revenue recognition and manufacturing inventory, management concluded that the Company did not maintain effective entity-level controls within the control environment to prevent or detect material misstatements to the consolidated financial statements. Specifically, the Company (i) lacked sufficiently qualified staff or resources to perform control activities and (ii) conducted inadequate risk assessment and monitoring activities resulting in untimely or ineffective identification of internal control risks to support the design implementation and evaluation of the internal controls necessary to provide effective oversight over financial reporting.

Remediation Plan

The Company has implemented and is continuing to implement enhancements to address the identified material weaknesses. Actions include:

•Reviewing and updating relevant policies, procedures, and controls; this may include automation of certain controls within the ERP system where appropriate.

•Providing additional training to personnel responsible for executing and reviewing key controls.

•Enhancing efforts to assess risk and monitor the effectiveness of control design and operation over time.

•Engaging third-party specialists to assist the Company in assessing and establishing standalone selling price. While this has been completed, efforts are ongoing to increase automation in the calculation of standalone selling price.

•Engaging third-party specialists to help design and implement a control that reviews draft invoices above specified thresholds against customer purchase orders to assess the accuracy of the inputs in the sales order entry process prior to invoicing.

The Company is committed to maintaining a strong internal control environment and believes the remediation efforts will represent significant improvements in its controls over the control environment. These steps will take time to be fully implemented and confirmed to be effective and sustainable. Additional controls may also be required over time. While the Company believes that these efforts will improve its internal control over financial reporting, the Company will not be able to conclude whether the steps the Company is taking will remediate the material weaknesses in internal control over financial reporting until a sufficient period has passed to allow management to test the design and operational effectiveness of the new and enhanced controls. Until the remediation steps set forth above are fully implemented and tested, the material weaknesses will continue to exist.

Changes in Internal Control

During the quarter ended September 30, 2025, Lewis Moorehead resigned as CFO effective August 18, 2025 and Laura Nash was appointed principal financial officer in his place. Except for the ongoing remediation measures to address the material weaknesses, in connection with the evaluation required by Rule 13a-15(d) under the Exchange Act, there were no changes in our internal control over financial reporting that occurred during the quarter ended ~~June~~ September 30, 2025 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~Limitations on Effectiveness of Controls~~35

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Limitations on Effectiveness of Controls

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Note 10: Commitments and Contingencies to the unaudited condensed consolidated financial statements for a discussion of our legal matters.

ITEM 1A. RISK FACTORS

There have been no material changes to the previously disclosed risk factors discussed in “Part I, Item 1A, Risk Factors” in the Annual Report. You should consider carefully these factors, together with all of the other information in this Quarterly Report, including our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report, before making an investment decision.

ITEM 5. OTHER INFORMATION

Rule 10b5-1 Trading Arrangement

During the period covered by this Quarterly Report, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

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ITEM 6. EXHIBITS

The exhibits required to be filed or furnished as part of this Quarterly Report are listed below. Notwithstanding any language to the contrary, exhibits 32.1 and 32.2 shall not be deemed to be filed as part of this Quarterly Report for purposes of Section 18 of the Exchange Act or deemed to be incorporated by reference into any filing under the Exchange Act or the Securities Act of 1933, except to the extent that the Company specifically incorporates it by reference.

Incorporated by Reference

ExhibitNumber

Exhibit Description

Form

Filing Date

Exhibit

Filed or Furnished Herewith

3.1

Amended and Restated Certificate of Incorporation of the Company, as amended through August 26, 2024

S-1

1/27/25

3.1

3.2

Amended and Restated Bylaws, as amended through June 12, 2025

8-K

6/18/25

3.1

10.1#

Offer Letter dated April 9, 2025 by and between the Company and Lewis W. Moorehead

4.1

Warrant to Purchase Common Stock dated September 23, 2025 issued to Dialectic Technology SPV LLC

8-K

9/23/25

4.1

10.2#

Offer Letter dated April 10, 2025 by and between the Company and John A. Fichthorn

4.2

Registration Rights Agreement dated September 23, 2025 by and between the Company and Dialectic Technology SPV LLC

8-K

9/23/25

4.2

10.3#

Offer Letter dated June 12, 2025 by and between the Company and Hugues Meyrath

8-K

6/18/25

10.1

10.1#

Offer Letter dated August 27, 2025 by and between the Company and James C. Clancy

8-K

8/28/25

10.1

10.4#

Change of Control Agreement dated June 12, 2025 by and between the Company and Hugues Meyrath

8-K

6/18/25

10.2

10.2#

Offer Letter dated August 27, 2025 by and between the Company and Tony J. Blevins

8-K

8/28/25

10.2

10.5#

Letter Agreement dated March 28, 2025 by and between the Company and Kenneth P. Gianella

8-K

4/03/25

10.1

10.3*

Transaction Agreement dated September 23, 2025 by and among the Company, Dialectic Technology SPV LLC, OC III LVS XXXIII LP., and OC III LVS XL LP

8-K

9/23/25

10.1

10.4*

Fifteenth Amendment to Term Loan Credit and Security Agreement dated September 23, 2025 by and among the Company, Quantum LTO Holdings, LLC, the borrowers and guarantors party thereto, the lenders party thereto, and Alter Domus (US) LLC, as disbursing agent and collateral agent

8-K

9/23/25

10.2

10.5#

Settlement Agreement dated July 16, 2025 by and between Quantum Storage UK Ltd and H.J.W. Spanjaard

10.6#

Separation Agreement and General Release of Claims dated August 20, 2025, by and between the Company and Lewis W. Moorehead

31.1

Certification of the Principal Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002

31.2

Certification of the Principal Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002

32.1

Certification of Principal Executive Officer pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002

32.1^

Certification of Principal Executive Officer pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002

32.2

Certification of Principal Financial Officer pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002

32.2^

Certification of Principal Financial Officer pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover page interactive data file, submitted using inline XBRL (contained in Exhibit 101)

* Schedules and attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant hereby undertakes to furnish supplemental copies of any of the omitted schedules and attachments upon request by the Securities and Exchange Commission.

# Indicates management contract or compensatory plan or arrangement.

31^ This exhibit is not deemed “filed” with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after date hereof and irrespective of any general incorporation language contained in such filing.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Quantum Corporation

(Registrant)

September 11, 2025

/s/ Hugues Meyrath

November 13, 2025

/s/ Hugues Meyrath

(Date)

Hugues Meyrath

President and Chief Executive Officer

(Principal Executive Officer)

September 11, 2025

/s/ Laura A. Nash

November 13, 2025

/s/ Laura A. Nash

(Date)

Laura A. Nash

Chief Accounting Officer

(Principal Financial Officer and Principal Accounting Officer)

3238

Filing Compare · QUANTUM CORP /DE/