Core Insights - D-Wave Quantum (QBTS) is making strides in the integration of quantum computing and artificial intelligence by launching an open-source Quantum AI toolkit that works with PyTorch, enhancing accessibility for data scientists and AI developers [1][2][11] - The toolkit has demonstrated its capability to generate simple images using quantum methods, indicating progress towards advanced generative AI applications, with companies like Japan Tobacco and Triumph already leveraging D-Wave's platform for hybrid quantum-classical AI solutions [3][11] - D-Wave's strategy to merge quantum and AI technologies is expected to drive growth, particularly in its Leap cloud platform, and facilitate competitive advantages in industries such as pharmaceuticals, logistics, and manufacturing [4] Competitive Landscape - IBM is actively enhancing its quantum computing capabilities with AI through initiatives like the Qiskit Code Assistant and the introduction of the 133-qubit Quantum Heron processor, which offers significant performance improvements [5][11] - Google has achieved a significant breakthrough with its Willow quantum chip, which has demonstrated superior error correction capabilities and completed complex tasks much faster than classical supercomputers [6][11] Market Performance - D-Wave's shares have experienced a decline of 9.1% over the past month [7] - Analysts project a potential upside for D-Wave Quantum, with an average price target suggesting a 21.2% increase from the last closing price of $15.62 [12]

Core Insights - Quantum computing is in its early stages and has the potential to revolutionize multiple industries, with McKinsey projecting the market size could reach $131 billion by 2040 [1][2]. Established Leaders - Microsoft, with a market cap of approximately $3.7 trillion, is heavily investing in quantum computing, developing the Majorana 1 quantum processor using a new type of material [5][6]. - Alphabet, through its Google Quantum AI division, has achieved significant milestones in quantum computing and aims to develop a practical error-corrected quantum computer within the decade [7][8]. - IBM is committed to delivering the world's first large-scale, fault-tolerant quantum computer by 2029, maintaining its status as a major player in the tech industry [8]. Rising Stars - IonQ is recognized as a promising leader in quantum computing, offering hardware available on major cloud platforms and has an ambitious roadmap for powerful quantum computers [10][11]. - D-Wave Quantum, the first commercial quantum computing company, has a strong customer base and its Advantage2 quantum processing unit is among the most powerful superconducting quantum computers [12]. - Rigetti Computing and Quantum Computing Inc. are also noted for their advancements, with Rigetti demonstrating a large multi-chip quantum computer and Quantum Computing Inc. focusing on energy-efficient quantum solutions [13]. Alternative Investment Approaches - Investing in established companies like Microsoft, Alphabet, and IBM offers a less risky approach to quantum computing [14]. - "Pick-and-shovel" investments, such as Nvidia, which integrates AI supercomputers with quantum hardware, present another angle for investors [15]. - Smaller companies like Arqit Quantum, which develops encryption platforms against quantum attacks, may also be intriguing for aggressive investors [16].

Quantum Computing Sector Overview - Quantum stocks experienced a quiet week at the end of August, with notable movements in specific companies [1] Rigetti Computing (RGTI) - Rigetti Computing was awarded a $5.8 million contract from the Department of the Air Force for hybrid superconducting-optical quantum network nodes [2] - CNBC host Jim Cramer highlighted Rigetti as a speculative investment with potential for significant returns [3] - Rigetti announced a collaboration with Montana State University to establish the Quantum Core Research and Education Center, featuring a 9-qubit Rigetti Novera quantum processing unit [3] - RGTI stock increased by 9.5% over the past five days [4] IonQ (IONQ) - Personal finance expert Suze Orman recommended IonQ as a stock to individual investors, noting its prominence alongside major companies like Apple, AMD, and Meta [5] - IONQ shares rose approximately 7% over the past week and have increased more than 70% over the past six months [5] D-Wave Quantum (QBTS) - D-Wave Quantum shares declined over 11% in the past month, with rising short interest [5] - Currently, D-Wave has 59.84 million shares sold short, representing 18.13% of all available shares for trading [6] - It would take an average of 1.31 days for traders to cover their short positions based on trading volume [6] Quantum Computing, Inc. (QUBT) - Quantum Computing, Inc. had a quiet week with no specific news, ending the week mostly flat but up over 150% in the past six months [7]

Group 1: Quantum Computing Potential - Quantum computing is an emerging technology capable of solving complex problems rapidly, potentially reshaping traditional industries like energy [1] - Companies like Exxon Mobil Corporation (XOM) and D-Wave Quantum Inc. (QBTS) are positioned to leverage this technology for optimization and efficiency [1][6] Group 2: Company Performance - Year-to-date, ExxonMobil has gained 7.7%, while D-Wave has surged by 81.3%, indicating a significant performance contrast between the two companies [6] - Both companies are exploring quantum computing to enhance their operations, with ExxonMobil partnering with IBM for cleaner fuels and improved efficiency [8] Group 3: D-Wave's Applications - D-Wave is actively solving real-world optimization problems across various industries, including aerospace and oil, demonstrating its practical applications [4][6] - The company has developed systems that achieve over 90% success in planning patrol routes for police departments and is working with Aramco on geophysical optimization challenges [7] Group 4: Valuation and Investment Outlook - Both ExxonMobil and D-Wave are currently considered overvalued, with XOM trading at a trailing 12-month EV/EBITDA of 7.24x compared to the industry average of 4.39x, and D-Wave at a price/book of 7.46x against an industry average of 6.47x [9][10] - The outlook for both companies remains bright as demand for quantum computing increases, but caution is advised for investors due to current valuations [9]

Quantum Computing Inc. (NASDAQ: QUBT ) offers investors a highly speculative opportunity to gain exposure to the world of quantum computing. Despite being significantly sub-scale with an excessive valuation, fundamentals almost don't matter when it comes to speculativeAnalyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinio ...

Core Insights - SuperQ Quantum Computing Inc. has entered a strategic partnership with ArcTech Accelerate to enhance its position in Canada's defence and government procurement markets [1][3][5] - The collaboration will leverage ArcTech's expertise in federal procurement and its successful track record in helping Canadian SMEs secure over $100 million in funding and contract opportunities [4][7] - The partnership aims to integrate SuperQ's quantum computing capabilities into national defence programs, thereby accelerating its access to defence-related contracts and government revenue streams [6][8] Company Overview - SuperQ Quantum Computing Inc. is a leader in quantum and supercomputing, focusing on providing advanced computational solutions to global organizations [10][11] - The company's flagship Super™ platform aims to make quantum computing accessible and impactful for various sectors, including finance, healthcare, and defense [11] - SuperQ is strategically expanding its presence internationally, particularly in the US, Middle East, and Asia [11] Partnership Details - The partnership will be led by Daniel Martimbeault from ArcTech, who has extensive experience in Canada's defence procurement ecosystem [2][5] - ArcTech has a history of enabling Canadian companies to engage with Tier-1 prime contractors, facilitating long-term supplier roles and growth opportunities [5][7] - The collaboration is expected to enhance SuperQ's credibility and access to prime contractors and federal agencies, positioning it as a trusted partner in national programs [5][6] Financial Arrangement - SuperQ has reached an agreement to settle outstanding debt of $165,375 through the issuance of 137,812 common shares at a price of $1.20 per share [8]

Explanatory Note The Company is restating financial statements for the fiscal year ended March 31, 2025, due to revenue recognition issues and identified material weaknesses in internal controls - The Company is restating financial statements for the fiscal year ended March 31, 2025, due to inconsistencies in service and subscription revenue recognition under Topic 606 and an update to the standalone selling price used for revenue allocation[11](index=11&type=chunk)[12](index=12&type=chunk) - Material weaknesses were identified in the Company's internal control over financial reporting and disclosure controls and procedures as of December 31, 2024, and March 31, 2025[13](index=13&type=chunk) [Summary of Risk Factors](index=5&type=section&id=Summary%20of%20Risk%20Factors) Key risks include supply chain disruptions, reliance on third parties, global operations, stock price volatility, leadership changes, and internal control weaknesses - Key risks include cost increases and supply disruptions, reliance on third-party outsourcing, global operations risks, stock price volatility, leadership changes, potential Nasdaq delisting, fluctuating quarterly results, significant indebtedness and covenant compliance issues, challenges in business model transformation, and risks associated with restated financial statements and material weaknesses in internal controls[16](index=16&type=chunk)[17](index=17&type=chunk) [Note Regarding Forward-Looking Statements](index=6&type=section&id=Note%20Regarding%20Forward-Looking%20Statements) This report contains forward-looking statements subject to various risks, uncertainties, and assumptions detailed in the Risk Factors section - This report contains forward-looking statements based on current expectations and projections, which are subject to various risks, uncertainties, and assumptions, including competitive pressures, macroeconomic trends, supply chain management, intellectual property protection, international operations, new product development, and the risks detailed in Item 1A. Risk Factors[19](index=19&type=chunk) [PART I](index=7&type=section&id=PART%20I) [ITEM 1. Business](index=7&type=section&id=ITEM%201.%20Business) Quantum Corporation provides end-to-end data management solutions for unstructured data, particularly for AI applications and data-intensive workloads [Overview](index=7&type=section&id=Overview) Quantum delivers end-to-end data management solutions for unstructured data in the AI era, focusing on high-performance ingest and cost-efficient data lifecycle management - Quantum delivers end-to-end data management solutions for unstructured data in the AI era, focusing on high-performance ingest, massive data lakes, and cost-efficient solutions for the entire data lifecycle[22](index=22&type=chunk) - The company specializes in solutions for video, images, audio, and other large files, as unstructured data accounts for over **80%** of all data created and holds significant value for AI and other initiatives[22](index=22&type=chunk) [Products and Services](index=7&type=section&id=Products%20and%20Services) Quantum's portfolio includes primary and secondary storage software, devices, media, and global services, alongside CatDV Asset Management Software - Quantum's product portfolio includes primary storage software (Myriad All-Flash, StorNext, Unified Surveillance Platform), secondary storage software (ActiveScale Object Storage, DXi Backup Appliances, Scalar Tape Storage), and devices and media (standalone LTO tape drives and media)[23](index=23&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk)[28](index=28&type=chunk) - The company also offers CatDV Asset Management Software for indexing, cataloging, AI data enrichment, and workflow orchestration[26](index=26&type=chunk) - Services include 24x7x365 global support, deployment, consulting, education, and Quantum-as-a-Service, delivered via the MyQuantum Service Delivery Platform and Cloud-Based Analytics (CBA) AIOps software[27](index=27&type=chunk) [Global Support and Services, and Warranty](index=8&type=section&id=Global%20Support%20and%20Services%2C%20and%20Warranty) Global services offer comprehensive installation, integration, and maintenance in over 100 countries, with hardware warranties and additional support options - Global services are a key competitive advantage, providing comprehensive installation, integration, and maintenance in over **100 countries** through 24-hour, multi-language technical support centers[29](index=29&type=chunk)[30](index=30&type=chunk) - Hardware products are warranted for **one to three years**, with additional support options available for high-availability requirements, ranging from repair/replacement to on-site service[31](index=31&type=chunk)[30](index=30&type=chunk) [Research and Development](index=8&type=section&id=Research%20and%20Development) R&D focuses on advancing end-to-end storage systems and data management software, including hyperconverged storage, data reduction, and tape efficiency - R&D focuses on technology advancements for end-to-end storage systems and data management software, including ease of management at scale, searchable storage, software-defined hyperconverged storage, next-gen solid-state/hard-drive systems, data reduction, and tape efficiency for archival storage[32](index=32&type=chunk) [Sales and Distribution Channels](index=8&type=section&id=Sales%20and%20Distribution%20Channels) Quantum utilizes distributors, VARs, DMRs, direct sales to large entities, and OEM relationships to reach diverse markets - Quantum utilizes distributors, value-added resellers (VARs), and direct market resellers (DMRs) for product sales, offering a comprehensive product line through its reseller program[33](index=33&type=chunk) - Direct sales are made to large corporate entities and government agencies[33](index=33&type=chunk) - OEM relationships involve selling hardware products under their brands and licensing software, enabling reach into markets not served by branded channels or direct sales[34](index=34&type=chunk) [Customers](index=9&type=section&id=Customers) Quantum serves multiple global industries, with sales to the top five customers accounting for 21% of fiscal 2025 revenue - Quantum serves multiple global industries, including hyperscale, technology and industrial, media and entertainment, federal government, life sciences and healthcare, and financial sectors[35](index=35&type=chunk) - Sales to the top five customers accounted for **21% of revenue in fiscal 2025** and **26% in fiscal 2024**, with no single customer representing **10% or more** of total fiscal 2025 revenue[35](index=35&type=chunk) [Competition](index=9&type=section&id=Competition) The markets are highly competitive with rapid technological change, facing rivals like Dell EMC, IBM, NetApp, and public cloud providers - The markets are highly competitive, characterized by rapid technological change, with competitors often having greater resources[36](index=36&type=chunk) - Primary storage solutions compete with Dell EMC, IBM, and NetApp; secondary storage (tape) competes with IBM and others, while disk backup competes with Dell, HPE, and Veritas[38](index=38&type=chunk)[39](index=39&type=chunk) - Public cloud storage providers offer a competitive alternative, and future data storage infrastructures are expected to be hybrid-cloud and multi-cloud[37](index=37&type=chunk) [Manufacturing and Supply Chain](index=9&type=section&id=Manufacturing%20and%20Supply%20Chain) Quantum operates a global supply chain with contract manufacturers, facing inflationary pricing, import tariffs, and component constraints - Quantum operates a global supply chain with contract manufacturers in the U.S. and Mexico, and third-party logistics in EMEA and APAC[40](index=40&type=chunk) - Primary and secondary disk-based storage systems combine Quantum software with servers from various vendors, integrated by contract manufacturers. Tape storage systems are Quantum-designed and manufactured by a global contract manufacturer[41](index=41&type=chunk) - The supply chain has faced inflationary pricing and import tariffs, with ongoing constraints in server and tape automation components, leading to extended lead times and non-cancellable purchase orders[43](index=43&type=chunk) [Intellectual Property and Technology](index=9&type=section&id=Intellectual%20Property%20and%20Technology) Quantum relies on patents, copyrights, trademarks, and trade secrets, holding over 198 U.S. patents and participating in the linear-tape open consortium - Quantum relies on patent, copyright, trademark, and trade secret laws, holding over **198 U.S. patents** as of March 31, 2025[45](index=45&type=chunk) - The company is a member of the linear-tape open consortium, receiving royalty payments for licensed media technology[48](index=48&type=chunk) - Quantum engages in patent licensing and cross-licensing agreements, and has sold certain patents while retaining royalty-free licenses[47](index=47&type=chunk)[48](index=48&type=chunk) [Segment Information](index=10&type=section&id=Segment%20Information) Quantum operates as a single reporting unit and operating segment, with revenue details provided by product group and geographic regions - Quantum operates as a single reporting unit and operating segment, with revenue information by product group in Item 7 and geographic regions in Note 12[49](index=49&type=chunk) [Seasonality](index=10&type=section&id=Seasonality) Demand for products and services is typically highest in the fourth calendar quarter and lowest in the second calendar quarter - Demand for products and services is generally highest in the fourth calendar quarter (fiscal third quarter) and lowest in the second calendar quarter (fiscal first quarter)[50](index=50&type=chunk) [Information About Our Executive Officers](index=10&type=section&id=Information%20About%20Our%20Executive%20Officers) This section provides details on Quantum's management team, including recent appointments and their professional backgrounds Quantum Corporation Management Team (as of August 1, 2025) | Name | Position with Quantum | | :-------------- | :-------------------------------- | | Hugues Meyrath | President and Chief Executive Officer | | Lewis W. Moorehead | Chief Financial Officer | | Anthony Craythorne | Chief Revenue Officer | | Laura Nash | Chief Accounting Officer | - Hugues Meyrath was appointed President and CEO effective **June 2, 2025**, bringing experience from ServiceChannel and Dell Technologies Capital[52](index=52&type=chunk)[53](index=53&type=chunk) - Lewis Moorehead served as CFO from **April 2025 to August 2025**, previously holding roles as VP of Finance and Treasurer, and Chief Accounting Officer[54](index=54&type=chunk) [Human Capital](index=11&type=section&id=Human%20Capital) Quantum employs approximately 635 individuals globally, focusing on competitive rewards, flexible work, and an inclusive environment for talent development - As of March 31, 2025, Quantum had approximately **635 employees globally**, distributed across **19 countries** (**305 in North America, 180 in APAC, 150 in EMEA**)[58](index=58&type=chunk) - The company focuses on competitive total rewards programs, flexible/hybrid work arrangements, and fostering an inclusive, diverse, and respectful work environment[59](index=59&type=chunk)[60](index=60&type=chunk)[61](index=61&type=chunk)[62](index=62&type=chunk) - Initiatives include a redesigned employee recognition program, 'no internal meeting days,' and regular performance discussions for talent development[64](index=64&type=chunk)[65](index=65&type=chunk) [Available Information](index=12&type=section&id=Available%20Information) Annual, Quarterly, and Current Reports are available free of charge on Quantum's and the SEC's websites - Annual, Quarterly, and Current Reports (10-K, 10-Q, 8-K) are available free of charge on Quantum's website (https://www.quantum.com) and the SEC website (http://www.sec.gov)[66](index=66&type=chunk)[67](index=67&type=chunk) [ITEM 1A. Risk Factors](index=13&type=section&id=ITEM%201A.%20Risk%20Factors) Investing in Quantum's common stock involves significant risks related to its supply chain, customer relationships, global operations, and financial condition [Risks Related to Our Supply Chain, Customers and Sales Strategy](index=13&type=section&id=Risks%20Related%20to%20Our%20Supply%20Chain%2C%20Customers%20and%20Sales%20Strategy) Risks include cost increases, supply disruptions, reliance on third-party outsourcing, global operations, and dependence on indirect sales channels and key customers - Risks include cost increases, supply disruptions, raw material shortages (especially single-source components), and reliance on third-party outsourcing for component supply, manufacturing, and service repair[69](index=69&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk) - Global operations expose the company to risks like increased duties/tariffs, geopolitical conflicts, intellectual property protection issues, regulatory compliance challenges, and economic uncertainties[80](index=80&type=chunk)[81](index=81&type=chunk)[84](index=84&type=chunk) - Reliance on indirect sales channels and a few key customers (some of whom are also competitors) poses risks of reduced demand, loss of relationships, and difficulty in forecasting sales[82](index=82&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk) [Risks Related to Our Operating Results, Financial Condition, or Stock Price](index=16&type=section&id=Risks%20Related%20to%20Our%20Operating%20Results%2C%20Financial%20Condition%2C%20or%20Stock%20Price) The company faces risks from inflation, economic uncertainty, stock price volatility, leadership changes, fluctuating quarterly results, and declining demand for tape technology - The company faces risks from inflation, economic uncertainty, and slow economic growth, which can impact spending, credit markets, and component costs[92](index=92&type=chunk)[93](index=93&type=chunk) - Stock price has experienced significant volatility, influenced by operating results, market expectations, new product announcements, capital structure changes, and broader market fluctuations[94](index=94&type=chunk)[95](index=95&type=chunk) - Significant leadership changes and management transitions might disrupt operations, relationships, and temporarily affect business performance[96](index=96&type=chunk) - Quarterly operating results have fluctuated significantly due to factors like IT spending, supply chain constraints, customer order changes, seasonality, and competition[99](index=99&type=chunk)[104](index=104&type=chunk) - Future operating results depend on continued market acceptance of existing products and successful introduction of new products, with significant revenue still derived from tape technology, which faces declining demand[100](index=100&type=chunk)[103](index=103&type=chunk)[105](index=105&type=chunk)[106](index=106&type=chunk) - A significant decline in media royalty or branded software revenues, which have higher profit margins, could materially affect profitability[107](index=107&type=chunk) [Risks Related to Our Indebtedness and Liquidity](index=20&type=section&id=Risks%20Related%20to%20Our%20Indebtedness%20and%20Liquidity) Quantum has significant indebtedness, faces debt covenant compliance issues, and relies on equity agreements for liquidity, which could be dilutive - Quantum has significant indebtedness, imposing debt service obligations and operating/financial covenants that limit business discretion. Failure to comply could materially affect financial condition[108](index=108&type=chunk)[109](index=109&type=chunk)[111](index=111&type=chunk)[117](index=117&type=chunk) - The company has fallen out of compliance with financial covenants multiple times, requiring waivers from lenders, and faces risks if unable to obtain future waivers or refinance debt[109](index=109&type=chunk)[116](index=116&type=chunk)[119](index=119&type=chunk) - The Standby Equity Purchase Agreement (SEPA) allows for the sale of up to **$200.0 million** in common stock, but the actual number of shares and proceeds are unpredictable, and sales will be dilutive to stockholders[120](index=120&type=chunk)[121](index=121&type=chunk) [Risks Related to Our Business and Industry](index=23&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Industry) Unsuccessful business model changes, insufficient cost reduction, acquisition integration failures, cybersecurity breaches, product failures, and intense competition pose significant risks - Unsuccessful management of business model changes (e.g., transition to recurring software revenue), infrastructure, and management could disrupt operations and adversely impact financial results[123](index=123&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk) - Cost reduction steps may be insufficient to achieve profitability, and failure to successfully integrate future acquisitions could harm the business[126](index=126&type=chunk)[128](index=128&type=chunk) - Cybersecurity breaches could affect business operations, harm reputation, lead to significant liability, or damage financial results, despite security measures[129](index=129&type=chunk)[130](index=130&type=chunk) - Product failures could lead to increased warranty costs, reduced orders, loss of reputation, and potential liability for data loss or property damage[131](index=131&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk) - Intense competition in the data storage and protection market, including larger and financially stronger competitors, could lead to declining sales or gross margins[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk) [Risks Related to Intellectual Property](index=27&type=section&id=Risks%20Related%20to%20Intellectual%20Property) Risks include loss of third-party technology licenses, infringement claims, failure to protect proprietary IP, and challenges associated with open-source software - Loss or inability to obtain licenses for third-party technology, which provides important product functionality, could materially affect the business[140](index=140&type=chunk) - Third-party intellectual property infringement claims could result in substantial liability and significant costs, regardless of the outcome[141](index=141&type=chunk) - Failure to protect proprietary intellectual property (patents, copyrights, trademarks, trade secrets) or unauthorized use by others could harm the competitive position[144](index=144&type=chunk)[145](index=145&type=chunk) - Use of open-source software carries risks, including competitors using it to develop their own products, potential price pressure, and inadvertent release of proprietary code[146](index=146&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk) [Risks Related to Regulatory Matters](index=29&type=section&id=Risks%20Related%20to%20Regulatory%20Matters) Violations or changes in U.S. and international laws and regulations, including data privacy, could materially affect business and financial results - Violation of or changes in numerous U.S. and international laws and regulations (corporate conduct, fair competition, corruption, import/export, hazardous materials) could materially affect the business, leading to fines, penalties, or litigation[149](index=149&type=chunk)[150](index=150&type=chunk) - Failure to adequately protect personally identifiable information, subject to evolving privacy and data protection laws, could adversely affect the business, financial condition, and operating results[151](index=151&type=chunk)[152](index=152&type=chunk) [Risks Related to Being a Public Company](index=31&type=section&id=Risks%20Related%20to%20Being%20a%20Public%20Company) Operating as a public company incurs significant costs, requires compliance with SEC and Nasdaq rules, and faces risks from delisting and internal control weaknesses - Operating as a public company incurs significant costs and requires substantial management time for compliance with SEC reporting, Nasdaq requirements, and Sarbanes-Oxley Act provisions[153](index=153&type=chunk)[154](index=154&type=chunk) - Failure to meet Nasdaq listing requirements could result in delisting, impacting stock value and liquidity. The company has received multiple deficiency notices related to minimum bid price and timely filings[155](index=155&type=chunk)[156](index=156&type=chunk)[157](index=157&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk) - Restatement of prior financial statements has resulted in unanticipated costs, potential litigation, loss of investor confidence, and negative impacts on stock price[165](index=165&type=chunk)[166](index=166&type=chunk) - Identified material weaknesses in internal control over financial reporting could lead to additional misstatements, impair accurate financial reporting, and adversely affect investor confidence[167](index=167&type=chunk)[168](index=168&type=chunk)[170](index=170&type=chunk) [General Risk Factors](index=34&type=section&id=General%20Risk%20Factors) Health epidemics, foreign currency fluctuations, higher future tax liabilities, and anti-takeover provisions are general risks affecting the company - Health epidemics (like COVID-19) can adversely affect business and financial results by impacting workforce, operations, supply chains, and increasing costs[171](index=171&type=chunk)[172](index=172&type=chunk) - Fluctuations in foreign currency exchange rates can materially impact business, financial condition, and operating results, especially if exposures are inadequately hedged[173](index=173&type=chunk)[174](index=174&type=chunk) - Future tax liabilities could be higher than estimated due to challenges from taxing authorities or limitations on net operating loss and tax credit carryovers from stock ownership changes[175](index=175&type=chunk)[176](index=176&type=chunk) - Anti-takeover provisions in corporate documents and Delaware law could impair acquisition attempts, even if deemed desirable by stockholders[178](index=178&type=chunk)[179](index=179&type=chunk)[180](index=180&type=chunk) [Item 1B. Unresolved Staff Comments](index=38&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company has no unresolved staff comments from the SEC - There are no unresolved staff comments[181](index=181&type=chunk) [Item 1C. Cybersecurity](index=38&type=section&id=Item%201C.%20Cybersecurity) Quantum Corporation maintains a robust cybersecurity program, including a Cyber Incident Evaluation Committee (CIEC) and an Incident Response Plan (IRP), to manage threats and incidents [Risk Management and Strategy](index=38&type=section&id=Risk%20Management%20and%20Strategy) Quantum employs a Cyber Incident Evaluation Committee and an Incident Response Plan to assess and manage cybersecurity threats, engaging external experts for evaluation - Quantum has a Cyber Incident Evaluation Committee (CIEC) and an Incident Response Plan (IRP) to assess, respond to, and manage cybersecurity threats and incidents[183](index=183&type=chunk) - The CIEC, managed by the CIO, leads company-wide cybersecurity strategy, policy, standards, architecture, and processes, with the IRT responsible for incident response[183](index=183&type=chunk) - External experts, including cybersecurity assessors and consultants, are engaged to evaluate and test management systems and the IRP, aligning strategies with industry best practices[186](index=186&type=chunk) - To date, no identified cybersecurity threats or incidents have materially affected the Company's operations, business strategy, results, or financial condition[187](index=187&type=chunk) [Governance](index=38&type=section&id=Governance) The Board of Directors oversees the cybersecurity risk management program, receiving regular reports from the Cyber Incident Evaluation Committee and Incident Response Team - The Board of Directors considers cybersecurity risk as part of its risk oversight function and oversees management's implementation of the cybersecurity risk management program[188](index=188&type=chunk) - The Board receives regular reports from the CIEC on cybersecurity risks and updates on material incidents, along with briefings from the IRT on the cyber risk management program[188](index=188&type=chunk) - The CIEC, with over **20 years** of combined experience, is responsible for assessing and managing material risks, supervising internal personnel and external consultants[190](index=190&type=chunk) [Item 2. Properties](index=40&type=section&id=Item%202.%20Properties) Quantum's headquarters moved from San Jose, California, to Centennial, Colorado, effective August 1, 2025, with leased facilities globally deemed adequate - Quantum's headquarters moved from San Jose, California, to Centennial, Colorado, effective **August 1, 2025**[191](index=191&type=chunk) - The company leases facilities across North America, Europe, and Asia Pacific, which are deemed adequate for immediate future needs[191](index=191&type=chunk) [Item 3. Legal Proceedings](index=40&type=section&id=Item%203.%20Legal%20Proceedings) Information regarding legal proceedings is referenced in Note 10: Commitments and Contingencies to the consolidated financial statements - Legal proceedings information is detailed in Note 10: Commitments and Contingencies[192](index=192&type=chunk) [Item 4. Mine Safety Disclosures](index=40&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company has no mine safety disclosures to report - There are no mine safety disclosures[192](index=192&type=chunk) [PART II](index=41&type=section&id=PART%20II) [ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=41&type=section&id=ITEM%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Quantum's common stock trades on Nasdaq under "QMCO", with 200 holders of record, no cash dividends planned, and recent sales of unregistered securities under SEPA [Market Information](index=41&type=section&id=Market%20Information) Quantum's common stock is traded on the Nasdaq Global Market under the symbol "QMCO" - Quantum's common stock is traded on the Nasdaq Global Market under the symbol "**QMCO**"[194](index=194&type=chunk) [Holders of Record](index=41&type=section&id=Holders%20of%20Record) As of June 24, 2025, there were 200 holders of record of Quantum's common stock - As of **June 24, 2025**, there were **200 holders of record** of Quantum's common stock[195](index=195&type=chunk) [Dividends](index=41&type=section&id=Dividends) Quantum does not intend to pay cash dividends in the foreseeable future due to debt covenant restrictions - Quantum has no intention of paying cash dividends in the foreseeable future, as its ability to do so is restricted by covenants in its senior secured term loan and amended credit facility agreements[196](index=196&type=chunk) [Recent Sales of Unregistered Securities](index=41&type=section&id=Recent%20Sales%20of%20Unregistered%20Securities) Quantum issued 42,158 commitment shares and 1,114,981 additional shares under the SEPA between January and March 2025 - In connection with the SEPA, Quantum issued **42,158 commitment shares** on **January 29, 2025**, and additional shares totaling **1,114,981** between February and March 2025[197](index=197&type=chunk) [Issuer Purchases of Equity Securities](index=41&type=section&id=Issuer%20Purchases%20of%20Equity%20Securities) There were no purchases of common stock by or on behalf of Quantum during the three months ended March 31, 2025 - There were no purchases of common stock by or on behalf of Quantum or its affiliated purchasers during the three months ended March 31, 2025[198](index=198&type=chunk) [ITEM 6. [Reserved]](index=42&type=section&id=ITEM%206.%20%5BReserved%5D) This item is reserved and contains no information [ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=ITEM%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section discusses Quantum's financial condition and results for fiscal years 2025 and 2024, including a restatement, revenue decrease, net loss, and liquidity concerns [Overview and Highlights](index=43&type=section&id=Overview%20and%20Highlights) Quantum's mission is to deliver innovative solutions for capturing, creating, sharing, and protecting digital content, focusing on unstructured data value - Quantum's mission is to deliver innovative solutions for capturing, creating, sharing, and protecting digital content, emphasizing unlocking value from video and unstructured data[202](index=202&type=chunk) - Revenue is generated from selling technology and services, with significant expenses related to employee compensation, product design/manufacturing/marketing, data center costs, and income taxes[203](index=203&type=chunk) [Restatement](index=43&type=section&id=Restatement) The Management's Discussion and Analysis incorporates restatement adjustments for the quarter ended December 31, 2024, primarily due to revenue recognition issues - The Management's Discussion and Analysis gives effect to restatement adjustments made to previously reported consolidated financial statements for the quarter ended December 31, 2024, primarily due to revenue recognition inconsistencies[204](index=204&type=chunk) [Results of Operations](index=44&type=section&id=RESULTS%20OF%20OPERATIONS) This section provides a detailed comparison of Quantum's financial performance for fiscal years 2025 and 2024, and specific quarterly and nine-month periods [Comparison of the Years Ended March 31, 2025 and 2024](index=44&type=section&id=Comparison%20of%20the%20Years%20Ended%20March%2031%2C%202025%20and%202024) This section compares Quantum's financial performance for fiscal years 2025 and 2024, detailing changes in revenue, gross profit, and operating expenses Total Revenue (in thousands) | Category | 2025 | % of revenue | 2024 | % of revenue | $ Change | % Change | | :----------------------- | :-------- | :----------- | :-------- | :----------- | :-------- | :------- | | Product revenue | $154,182 | 57% | $174,879 | 56% | $(20,697) | (12)% | | Service and subscription | $110,658 | 40% | $126,590 | 41% | $(15,932) | (13)% | | Royalty revenue | $9,218 | 3% | $10,131 | 3% | $(913) | (9)% | | **Total revenue** | **$274,058** | **100%** | **$311,600** | **100%** | **$(37,542)** | **(12)%** | - Product revenue decreased by **$20.7 million (12%)** due to lower demand from hyperscale customers and general decreases in the overall tape market, with an anticipated further decrease as the company transitions to subscription-based offerings[210](index=210&type=chunk) - Service and subscription revenue decreased by **$15.9 million (13%)** due to certain long-lived products reaching end-of-service-life, partially offset by new support bookings and subscription transition[211](index=211&type=chunk) Gross Profit and Margin (in thousands) | Category | 2025 | Gross margin % | 2024 | Gross margin % | $ Change | Basis point change | | :---------------------------- | :-------- | :------------- | :-------- | :------------- | :--------- | :----------------- | | Product gross profit | $34,452 | 22.3% | $38,459 | 22.0% | $(4,007) | 30 | | Service and subscription gross profit | $66,162 | 59.8% | $76,299 | 60.3% | $(10,137) | (50) | | Royalty gross profit | $9,218 | 100.0% | $10,131 | 100.0% | $(913) | — | | **Gross profit** | **$109,832** | **40.1%** | **$124,889** | **40.1%** | **$(15,057)** | **—** | - Product gross margin decreased by **30 basis points** due to a revenue mix less weighted towards higher margin tape products[214](index=214&type=chunk) - Service and subscription gross margin increased by **50 basis points** due to improved operational costs and organization design[215](index=215&type=chunk) Operating Expenses (in thousands) | Category | 2025 | % of revenue | 2024 | % of revenue | $ Change | % Change | | :------------------------ | :-------- | :----------- | :-------- | :----------- | :-------- | :------- | | Sales and marketing | $52,320 | 19% | $60,893 | 20% | $(8,573) | (14)% | | General and administrative | $63,961 | 23% | $51,547 | 17% | $12,414 | 24% | | Research and development | $31,141 | 11% | $38,046 | 12% | $(6,905) | (18)% | | Restructuring charges | $4,090 | 2% | $3,280 | 1% | $810 | 25% | | **Total operating expenses** | **$151,512** | **55%** | **$153,766** | **50%** | **$(2,254)** | **(1)%** | - Sales and marketing expenses decreased by **14%** due to operational cost management and lower commission expense[217](index=217&type=chunk) - General and administrative expenses increased by **24%** due to large non-recurring costs related to Topic 606 re-evaluation and other projects[218](index=218&type=chunk) - Research and development expenses decreased by **18%** due to consolidation of acquisition costs and improved organization design[218](index=218&type=chunk) - Restructuring expenses increased by **25%** due to corporate restructuring activities[219](index=219&type=chunk) Other Expense, Net (in thousands) | Category | 2025 | % of revenue | 2024 | % of revenue | $ Change | % Change | | :---------------------- | :----- | :----------- | :------ | :----------- | :--------- | :------- | | Other income (expense), net | $(710) | 0% | $(1,746) | (1)% | $(1,036) | (59)% | - Other expense, net decreased by **$1.0 million (59%)** primarily due to differences in foreign currency gains and losses[220](index=220&type=chunk) Interest Expense (in thousands) | Category | 2025 | % of revenue | 2024 | % of revenue | $ Change | % Change | | :------------- | :-------- | :----------- | :-------- | :----------- | :-------- | :------- | | Interest expense | $(23,607) | (9)% | $(15,089) | (5)% | $(8,518) | 56% | - Interest expense increased by **$8.5 million (56%)** due to a higher principal balance on the Term Loan and a higher interest rate[221](index=221&type=chunk) Change in Fair Value of Warrant Liabilities (in thousands) | Category | 2025 | % of revenue | 2024 | % of revenue | $ Change | % Change | | :----------------------------- | :--------- | :----------- | :------ | :----------- | :--------- | :------- | | Change in fair value of warrant liabilities | $(45,270) | (17)% | $5,137 | 2% | $(50,407) | (981)% | - A non-cash loss of **$45.3 million** was recorded in fiscal 2025 related to warrant liabilities, compared to a **$5.1 million** gain in fiscal 2024, primarily driven by stock price fluctuations[222](index=222&type=chunk) Loss on Debt Extinguishment, Net (in thousands) | Category | 2025 | % of revenue | 2024 | % of revenue | $ Change | % Change | | :--------------------------- | :------- | :----------- | :--- | :----------- | :--------- | :------- | | Loss on debt extinguishment, net | $(3,003) | (1)% | — | —% | $(3,003) | (100)% | - A **$3.0 million** loss on debt extinguishment was recorded in fiscal 2025 due to prepayment of long-term debt[223](index=223&type=chunk) Income Tax Provision (in thousands) | Category | 2025 | % of revenue | 2024 | % of revenue | $ Change | % Change | | :----------------- | :--- | :----------- | :--- | :----------- | :------- | :------- | | Income tax provision | $821 | 0% | $711 | 0% | $(110) | (15)% | - The income tax provision increased by **$110 thousand (15%)** in fiscal 2025 due to a higher valuation allowance, warrant mark-to-market adjustment, and expiration of tax attributes[224](index=224&type=chunk) [Comparison of the Three Months Ended December 31, 2024 (Restated) and 2023](index=47&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20December%2031%2C%202024%20%28Restated%29%20and%202023) This section compares Quantum's restated financial results for the three months ended December 31, 2024, against the same period in 2023 Total Revenue (in thousands) - Q3 FY25 vs Q3 FY24 | Category | 2024 (Restated) | % of revenue | 2023 | % of revenue | $ Change | % Change | | :----------------------- | :-------------- | :----------- | :-------- | :----------- | :------- | :------- | | Product revenue | $38,634 | 57% | $37,113 | 51% | $1,521 | 4% | | Service and subscription | $27,724 | 40% | $32,771 | 46% | $(5,047) | (15)% | | Royalty | $2,326 | 3% | $2,042 | 3% | $284 | 14% | | **Total revenue** | **$68,684** | **100%** | **$71,926** | **100%** | **$(3,242)** | **(5)%** | - Product revenue increased by **4%** in Q3 FY25, driven by higher sales of Primary storage systems[227](index=227&type=chunk) - Service and subscription revenue decreased by **15%** due to long-lived products reaching end-of-service-life[228](index=228&type=chunk) Gross Profit and Margin (in thousands) - Q3 FY25 vs Q3 FY24 | Category | 2024 (Restated) | Gross margin % | 2023 | Gross margin % | $ Change | Basis point change | | :---------------------------- | :-------------- | :------------- | :-------- | :------------- | :--------- | :----------------- | | Product | $7,712 | 20.0% | $7,069 | 19.0% | $643 | 100 | | Service and subscription | $17,850 | 64.4% | $20,070 | 61.2% | $(2,220) | 320 | | Royalty | $2,326 | 100.0% | $2,042 | 100.0% | $284 | — | | **Gross profit** | **$27,888** | **40.6%** | **$29,181** | **40.6%** | **$(1,293)** | **—** | - Product gross margin increased by **100 basis points** due to a more favorable revenue mix and improved operational efficiency[231](index=231&type=chunk) - Service and subscription gross margin increased by **320 basis points** due to operational efficiency improvements[232](index=232&type=chunk) Operating Expenses (in thousands) - Q3 FY25 vs Q3 FY24 | Category | 2024 | % of revenue | 2023 | % of revenue | $ Change | % Change | | :------------------------ | :-------- | :----------- | :-------- | :----------- | :-------- | :------- | | Sales and marketing | $12,448 | 18% | $14,244 | 20% | $(1,796) | (13)% | | General and administrative | $14,142 | 21% | $11,893 | 17% | $2,249 | 19% | | Research and development | $7,683 | 11% | $8,763 | 12% | $(1,080) | (12)% | | Restructuring charges | $1,342 | 2% | $497 | 1% | $845 | 170% | | **Total operating expenses** | **$35,615** | **52%** | **$35,397** | **49%** | **$218** | **1%** | - Sales and marketing expenses decreased by **13%** due to improved operational efficiency[234](index=234&type=chunk) - General and administrative expenses increased by **19%** due to higher compliance-focused outside services[235](index=235&type=chunk) - Research and development expenses decreased by **12%** due to consolidation of acquisition costs and improved organization design[236](index=236&type=chunk) - Restructuring expenses increased by **170%** due to cost reduction initiatives[237](index=237&type=chunk) Other Income (Expense) (in thousands) - Q3 FY25 vs Q3 FY24 | Category | 2024 | % of revenue | 2023 | % of revenue | $ Change | % Change | | :---------------------- | :----- | :----------- | :------- | :----------- | :------- | :------- | | Other income (expense), net | $967 | 1% | $(1,419) | (2)% | $2,386 | 168% | - Other income (expense), net increased by **$2.4 million (168%)** primarily due to fluctuations in foreign currency exchange rates[238](index=238&type=chunk) Interest Expense (in thousands) - Q3 FY25 vs Q3 FY24 | Category | 2024 | % of revenue | 2023 | % of revenue | $ Change | % Change | | :------------- | :-------- | :----------- | :-------- | :----------- | :--------- | :------- | | Interest expense | $(6,840) | (10)% | $(3,937) | (5)% | $(2,903) | 74% | - Interest expense increased by **$2.9 million (74%)** due to a higher effective interest rate on the Term Loan[239](index=239&type=chunk) Change in Fair Value of Warrant Liabilities (in thousands) - Q3 FY25 vs Q3 FY24 | Category | 2024 | % of revenue | 2023 | % of revenue | $ Change | % Change | | :----------------------------- | :--------- | :----------- | :------ | :----------- | :--------- | :------- | | Change in fair value of warrant liabilities | $(61,630) | (90)% | $4,402 | 6% | $(66,032) | (1,500)% | - A non-cash loss of **$61.6 million** was recorded in Q3 FY25 related to warrant liabilities, compared to a **$4.4 million** gain in Q3 FY24, primarily driven by stock price fluctuations[240](index=240&type=chunk) - The income tax provision for Q3 FY25 and Q3 FY24 is primarily influenced by foreign and state income taxes, with a full valuation allowance against U.S. and certain foreign net deferred tax assets[241](index=241&type=chunk) [Comparison of the Nine Months Ended December 31, 2024 (Restated) and 2023](index=50&type=section&id=Comparison%20of%20the%20Nine%20Months%20Ended%20December%2031%2C%202024%20%28Restated%29%20and%202023) This section compares Quantum's restated financial results for the nine months ended December 31, 2024, against the same period in 2023 Total Revenue (in thousands) - Nine Months Ended Dec 31 | Category | 2024 (Restated) | % of revenue | 2023 | % of revenue | $ Change | % Change | | :----------------------- | :-------------- | :----------- | :-------- | :----------- | :-------- | :------- | | Product revenue | $120,565 | 56% | $138,635 | 58% | $(18,070) | (13)% | | Service and subscription | $84,640 | 40% | $94,229 | 39% | $(9,589) | (10)% | | Royalty | $7,592 | 4% | $7,235 | 3% | $357 | 5% | | **Total revenue** | **$212,797** | **100%** | **$240,099** | **100%** | **$(27,302)** | **(11)%** | - Product revenue decreased by **13%** due to a **$20 million** drop in demand from hyperscale customers and general declines in the tape market[243](index=243&type=chunk) - Service and subscription revenue decreased by **10%** due to long-lived products reaching end-of-service-life, partially offset by subscription-based revenue increases[245](index=245&type=chunk) Gross Profit and Margin (in thousands) - Nine Months Ended Dec 31 | Category | 2024 (Restated) | Gross margin % | 2023 | Gross margin % | $ Change | Basis point change | | :---------------------------- | :-------------- | :------------- | :-------- | :------------- | :--------- | :----------------- | | Product | $27,314 | 22.7% | $33,421 | 24.1% | $(6,107) | (141) | | Service and subscription | $50,686 | 59.9% | $56,900 | 60.4% | $(6,214) | (48) | | Royalty | $7,592 | 100.0% | $7,235 | 100.0% | $357 | — | | **Gross profit** | **$85,592** | **40.2%** | **$97,556** | **40.6%** | **$(11,964)** | **(43)** | - Product gross margin decreased by **140 basis points** due to a less favorable revenue mix[248](index=248&type=chunk) - Service and subscription gross margin decreased by **50 basis points** due to lower service revenues[249](index=249&type=chunk) Operating Expenses (in thousands) - Nine Months Ended Dec 31 | Category | 2024 | % of revenue | 2023 | % of revenue | $ Change | % Change | | :------------------------ | :-------- | :----------- | :-------- | :----------- | :------- | :------- | | Sales and marketing | $39,321 | 18% | $45,800 | 19% | $(6,479) | (14)% | | General and administrative | $49,186 | 23% | $34,833 | 15% | $14,353 | 41% | | Research and development | $24,255 | 11% | $28,828 | 12% | $(4,573) | (16)% | | Restructuring charges | $2,916 | 1% | $3,164 | 1% | $(248) | (8)% | | **Total operating expenses** | **$115,678** | **54%** | **$112,625** | **47%** | **$3,053** | **3%** | - Sales and marketing expenses decreased by **14%** due to improved operational efficiency[251](index=251&type=chunk) - General and administrative expenses increased by **41%** due to non-recurring costs related to the restatement[252](index=252&type=chunk) - Research and development expenses decreased by **16%** due to consolidation of acquisition costs and improved organization design[253](index=253&type=chunk) - Restructuring expenses decreased by **8%** due to prior year cost reduction initiatives[254](index=254&type=chunk) Other Income (Expense) (in thousands) - Nine Months Ended Dec 31 | Category | 2024 | % of revenue | 2023 | % of revenue | $ Change | % Change | | :---------------------- | :----- | :----------- | :------- | :----------- | :------- | :------- | | Other income (expense), net | $(408) | 0% | $(2,049) | (1)% | $1,641 | 80% | - Other income (expense), net increased by **$1.6 million (80%)** primarily due to fluctuations in foreign currency exchange rates[255](index=255&type=chunk) Interest Expense (in thousands) - Nine Months Ended Dec 31 | Category | 2024 | % of revenue | 2023 | % of revenue | $ Change | % Change | | :------------- | :--------- | :----------- | :--------- | :----------- | :--------- | :------- | | Interest expense | $(16,761) | (8)% | $(10,992) | (5)% | $(5,769) | 52% | - Interest expense increased by **$5.8 million (52%)** due to a higher effective interest rate on the Term Loan[256](index=256&type=chunk) Change in Fair Value of Warrant Liabilities (in thousands) - Nine Months Ended Dec 31 | Category | 2024 | % of revenue | 2023 | % of revenue | $ Change | % Change | | :----------------------------- | :--------- | :----------- | :------ | :----------- | :--------- | :------- | | Change in fair value of warrant liabilities | $(56,414) | (27)% | $7,341 | 3% | $(63,755) | (868)% | - A non-cash loss of **$56.4 million** was recorded in the nine months ended December 31, 2024, related to warrant liabilities, compared to a **$7.3 million** gain in the same period in fiscal 2024, driven by stock price fluctuations[257](index=257&type=chunk) Loss on Debt Extinguishment (in thousands) - Nine Months Ended Dec 31 | Category | 2024 | % of revenue | 2023 | % of revenue | $ Change | % Change | | :--------------------------- | :------- | :----------- | :--- | :----------- | :--------- | :------- | | Loss on debt extinguishment | $(3,003) | 1% | — | —% | $(3,003) | 100% | - A **$3.0 million** loss on debt extinguishment was recorded in the nine months ended December 31, 2024, related to a prepayment of the Term Loan[258](index=258&type=chunk) - The income tax provision for the nine months ended December 31, 2024 and 2023 is primarily influenced by foreign and state income taxes, with a full valuation allowance against U.S. and certain foreign net deferred tax assets[259](index=259&type=chunk) [Liquidity and Capital Resources](index=52&type=section&id=Liquidity%20and%20Capital%20Resources) Quantum's liquidity is primarily from operating activities and credit facilities, but negative cash flows and potential debt covenant violations raise going concern doubts - Quantum's principal liquidity sources are cash from operating activities, cash and cash equivalents, and the revolving credit facility[260](index=260&type=chunk) - As of March 31, 2025, cash and cash equivalents were **$16.5 million**, with total outstanding Term Loan debt of **$102.5 million** and **$0.4 million** available under the PNC Credit Facility[261](index=261&type=chunk) - The company generated negative cash flows from operations of **$23.6 million** in fiscal 2025 and **$10.2 million** in fiscal 2024, with net losses of **$115.1 million** and **$41.3 million**, respectively[262](index=262&type=chunk) - Quantum entered into a Standby Equity Purchase Agreement (SEPA) in **January 2025** to sell up to **$200 million** of common stock, having sold **1.2 million shares** for **$16.4 million** by March 31, 2025, and an additional **6.3 million shares** for **$66.6 million** by July 31, 2025[263](index=263&type=chunk) - The company expects to violate its net leverage covenant by **September 30, 2025**, which would make the Term Loan immediately due, raising substantial doubt about its ability to continue as a going concern[264](index=264&type=chunk) [Cash Flows](index=53&type=section&id=Cash%20Flows) This section details Quantum's cash flows from operating, investing, and financing activities for fiscal years 2025 and 2024 Consolidated Cash Flows (in thousands) | Activity | Year Ended March 31, 2025 | Year Ended March 31, 2024 | | :------------------------ | :------------------------ | :------------------------ | | Operating activities | $(23,613) | $(10,156) | | Investing activities | $(4,947) | $(5,869) | | Financing activities | $19,306 | $15,713 | | Effect of exchange rate changes | $(3) | $(3) | | Net change in cash, cash equivalents, and restricted cash | $(9,257) | $(315) | - Net cash used in operating activities increased by **$13.5 million** to **$23.6 million** in fiscal 2025, primarily due to decreased revenue, lower gross profit, and increased non-recurring costs related to Topic 606 re-evaluation[267](index=267&type=chunk) - Net cash used in investing activities was **$4.9 million** in fiscal 2025 (capital expenditures) and **$5.9 million** in fiscal 2024 (ERP system implementation)[268](index=268&type=chunk) - Net cash provided by financing activities was **$19.3 million** in fiscal 2025 and **$15.7 million** in fiscal 2024, primarily from Term Loan credit facility borrowings[269](index=269&type=chunk) [Commitments and Contingencies](index=54&type=section&id=Commitments%20and%20Contingencies) Contingent liabilities include financial guarantees and ordinary course litigation, with historical payments not materially impacting operating results - Contingent liabilities include financial guarantees related to product liability and potential intellectual property infringement, with historical payments not materially impacting operating results[270](index=270&type=chunk) - The company is also subject to ordinary course of business litigation, as detailed in Note 10[271](index=271&type=chunk) [Contractual Obligations](index=54&type=section&id=Contractual%20Obligations) This section outlines Quantum's debt obligations, future lease commitments, and purchase obligations as of March 31, 2025 Contractual Obligations as of March 31, 2025 (in thousands) | Category | Total | 1 year or less | 1 – 3 Years | 3 – 5 Years | More than 5 years | | :------------------- | :-------- | :------------- | :---------- | :---------- | :---------------- | | Debt obligations | $129,107 | $129,107 | $— | $— | $— | | Future lease commitments | $19,111 | $2,346 | $3,429 | $2,481 | $10,855 | | Purchase obligations | $48,612 | $48,612 | $— | $— | $— | | **Total** | **$196,830** | **$180,065** | **$3,429** | **$2,481** | **$10,855** | [Off-Balance Sheet Arrangements](index=54&type=section&id=Off-Balance%20Sheet%20Arrangements) Quantum currently has no off-balance sheet arrangements or holdings in variable interest entities - Quantum currently has no off-balance sheet arrangements or holdings in variable interest entities[273](index=273&type=chunk) [Critical Accounting Estimates and Policies](index=54&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES%20AND%20POLICIES) Critical accounting policies require significant management judgment, particularly in revenue recognition, income taxes, inventories, and warrant accounting - Critical accounting policies require significant management judgment and include revenue recognition (standalone selling price, variable consideration), income taxes (deferred tax assets, valuation allowance, uncertain tax positions), inventories (manufacturing and service parts valuation), and warrant accounting (equity vs. liability classification)[275](index=275&type=chunk)[276](index=276&type=chunk)[277](index=277&type=chunk)[278](index=278&type=chunk)[279](index=279&type=chunk)[280](index=280&type=chunk)[281](index=281&type=chunk)[283](index=283&type=chunk)[284](index=284&type=chunk)[285](index=285&type=chunk)[286](index=286&type=chunk) [ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk](index=56&type=section&id=ITEM%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Quantum's primary market risks are from inflation, interest rates, and foreign currency exchange rates, with efforts to minimize foreign currency exposures [Interest Rate Risk](index=57&type=section&id=Interest%20Rate%20Risk) Quantum is exposed to interest rate risk on its variable interest rate term debt and credit facility, though a 100-basis point change would not materially impact annual interest expense - Quantum is exposed to interest rate risk on its variable interest rate term debt and PNC Credit Facility. A hypothetical **100-basis point** change in market interest rates would not materially change annual interest expense for fiscal 2025[289](index=289&type=chunk) [Foreign Exchange Risk](index=57&type=section&id=Foreign%20Exchange%20Risk) International operations expose Quantum to foreign currency risk, which the company minimizes through natural hedges and potential future derivative contracts - International operations expose Quantum to foreign currency risk, primarily from transacting in foreign currencies and translating activity into U.S. dollars, which can result in transaction gains or losses[290](index=290&type=chunk) - The company minimizes foreign currency exposures by maintaining natural hedges between assets, liabilities, revenues, and expenses denominated in foreign currencies, and may use derivative contracts in the future[291](index=291&type=chunk) [ITEM 8. Financial Statements and Supplementary Data](index=58&type=section&id=ITEM%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Quantum's audited consolidated financial statements, including balance sheets, statements of operations, cash flows, and comprehensive notes, with an auditor's going concern opinion [Report of Independent Registered Public Accounting Firm](index=59&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Grant Thornton LLP issued an opinion on the consolidated financial statements, highlighting a going concern uncertainty and identifying standalone selling price determination as a critical audit matter - Grant Thornton LLP audited the consolidated financial statements for March 31, 2025, and 2024, and issued an opinion that they present fairly, in all material respects, the financial position, results of operations, and cash flows[295](index=295&type=chunk) - The auditor noted a going concern uncertainty due to the Company's expected violation of the net leverage covenant by **September 30, 2025**, which could make the Term Loan immediately due[296](index=296&type=chunk) - The determination of Standalone Selling Price (SSP) for revenue recognition was identified as a critical audit matter due to the high degree of auditor judgment and subjective assumptions required in the absence of directly observable data[301](index=301&type=chunk)[302](index=302&type=chunk)[303](index=303&type=chunk) [Consolidated Balance Sheets](index=61&type=section&id=Consolidated%20Balance%20Sheets) This section presents Quantum's consolidated balance sheets, showing a decrease in total assets and an increase in total liabilities and stockholders' deficit from 2024 to 2025 Consolidated Balance Sheet Highlights (in thousands) | Category | March 31, 2025 | March 31, 2024 | | :--------------------------- | :------------- | :------------- | | Cash and cash equivalents | $16,464 | $25,692 | | Total current assets | $102,806 | $131,784 | | Total assets | $155,402 | $187,615 | | Total current liabilities | $257,607 | $249,944 | | Total liabilities | $319,768 | $309,113 | | Total stockholders' deficit | $(164,366) | $(121,498) | - Total assets decreased from **$187.6 million** in 2024 to **$155.4 million** in 2025, while total liabilities increased from **$309.1 million** to **$319.8 million**[306](index=306&type=chunk) - Stockholders' deficit worsened from **$(121.5) million** in 2024 to **$(164.4) million** in 2025[306](index=306&type=chunk) [Consolidated Statements of Operations and Comprehensive Loss](index=62&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) This section details Quantum's consolidated statements of operations, showing a decrease in total revenue and a significant increase in net loss for fiscal year 2025 Consolidated Statements of Operations Highlights (in thousands) | Category | Year Ended March 31, 2025 | Year Ended March 31, 2024 | | :------------------------------- | :------------------------ | :------------------------ | | Total revenue | $274,058 | $311,600 | | Gross profit | $109,832 | $124,889 | | Loss from operations | $(41,680) | $(28,877) | | Interest expense | $(23,607) | $(15,089) | | Change in fair value of warrant liability | $(45,270) | $5,137 | | Net loss | $(115,091) | $(41,286) | | Net loss per share - basic and diluted | $(22.35) | $(8.68) | - Total revenue decreased by **12%** from **$311.6 million** in 2024 to **$274.1 million** in 2025[307](index=307&type=chunk) - Net loss significantly increased from **$(41.3) million** in 2024 to **$(115.1) million** in 2025[307](index=307&type=chunk) - The increase in net loss was largely driven by a **$45.3 million** non-cash loss from the change in fair value of warrant liabilities in 2025, compared to a **$5.1 million** gain in 2024[307](index=307&type=chunk) [Consolidated Statements of Cash Flows](index=63&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section presents Quantum's consolidated statements of cash flows, indicating increased net cash used in operating activities and net cash provided by financing activities in fiscal 2025 Consolidated Statements of Cash Flows Highlights (in thousands) | Activity | Year Ended March 31, 2025 | Year Ended March 31, 2024 | | :------------------------ | :------------------------ | :------------------------ | | Operating activities | $(23,613) | $(10,156) | | Investing activities | $(4,947) | $(5,869) | | Financing activities | $19,306 | $15,713 | | Net change in cash, cash equivalents, and restricted cash | $(9,257) | $(315) | - Net cash used in operating activities increased to **$23.6 million** in 2025 from **$10.2 million** in 2024[310](index=310&type=chunk) - Net cash provided by financing activities was **$19.3 million** in 2025, primarily from long-term debt borrowings and proceeds from SEPA shares[310](index=310&type=chunk) [Consolidated Statements of Stockholders' Deficit](index=64&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Deficit) This section outlines changes in Quantum's stockholders' deficit, reflecting a significant increase in accumulated deficit and additional paid-in capital from 2024 to 2025 Consolidated Statements of Stockholders' Deficit Highlights (in thousands) | Category | March 31, 2025 | March 31, 2024 | | :--------------------------- | :------------- | :------------- | | Common Stock (shares) | 6,962 | 4,792 | | Common Stock (amount) | $70 | $48 | | Additional paid-in capital | $779,645 | $708,027 | | Accumulated deficit | $(942,471) | $(827,380) | | Total stockholders' deficit | $(164,366) | $(121,498) | - The accumulated deficit increased significantly from **$(827.4) million** in 2024 to **$(942.5) million** in 2025, reflecting the net losses[312](index=312&type=chunk) - Additional paid-in capital increased due to warrants exercised related to long-term debt (**$52.9 million**) and shares issued related to the SEPA (**$15.8 million**)[312](index=312&type=chunk) [Notes to Consolidated Financial Statements](index=65&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed notes to Quantum's consolidated financial statements, covering business description, accounting policies, revenue, debt, and other financial information [Note 1: Description of Business and Significant Accounting Policies](index=65&type=section&id=Note%201%3A%20Description%20of%20Business%20and%20Significant%20Accounting%20Policies) This note describes Quantum's business of managing digital video and unstructured data, significant accounting policies, a reverse stock split, and going concern uncertainty - Quantum stores and manages digital video and unstructured data, offering software-defined, hyperconverged storage solutions across NVMe, SSD, HDD, tape, and cloud, leveraging a single namespace view[316](index=316&type=chunk) - A **1-for-20 reverse stock split** became effective on **August 26, 2024**, retroactively adjusting all share and per share amounts[319](index=319&type=chunk)[320](index=320&type=chunk) - Substantial doubt exists about the Company's ability to continue as a going concern due to an expected violation of the net leverage covenant by **September 30, 2025**, which would make the Term Loan immediately due[321](index=321&type=chunk)[322](index=322&type=chunk) - Critical accounting estimates include standalone selling price for revenue, inventory adjustments, useful lives of assets, stock-based compensation, fair value of warrants, and income tax provisions[324](index=324&type=chunk) [Note 2: Revenue](index=76&type=section&id=Note%202%3A%20Revenue) This note details Quantum's revenue recognition policies, contract balances, and remaining performance obligations, including deferred revenue by period Contract Balances (in thousands) | Category | March 31, 2025 | March 31, 2024 | March 31, 2023 | | :----------------------- | :------------- | :------------- | :------------- | | Accounts receivable, net | $52,502 | $67,788 | $72,464 | | Deferred revenue | $113,923 | $116,687 | $115,302 | - Revenue recognized from amounts included in contract liabilities at the beginning of the period was **$74.0 million** in 2025 and **$76.3 million** in 2024[387](index=387&type=chunk) - Total remaining performance obligations (RPO) were **$138.0 million** as of March 31, 2025, with **$97.0 million** current and **$41.0 million** non-current[388](index=388&type=chunk)[389](index=389&type=chunk) Deferred Revenue by Period (in thousands) | Category | Total | 1 year or less | 1 – 3 Years | 3 year or greater | | :---------------- | :-------- | :------------- | :---------- | :---------------- | | Service revenue | $94,462 | $65,498 | $23,342 | $5,622 | | Subscription revenue | $19,461 | $9,578 | $7,918 | $1,965 | | **Total** | **$113,923** | **$75,076** | **$31,260** | **$7,587** | [Note 3: Balance Sheet Information](index=77&type=section&id=Note%203%3A%20Balance%20Sheet%20Information) This note provides detailed breakdowns of Quantum's manufacturing and service inventories, property and equipment, intangible assets, goodwill, and other accrued liabilities Manufacturing and Service Inventories (in thousands) | Category | March 31, 2025 | March 31, 2024 | | :----------------------- | :------------- | :------------- | | Manufacturing inventories | $20,336 | $17,753 | | Service inventories | $2,098 | $9,783 | Property and Equipment, Net (in thousands) | Category | March 31, 2025 | March 31, 2024 | | :------------------------------- | :------------- | :------------- | | Machinery and equipment, and software | $47,385 | $49,095 | | Leasehold improvements | $13,529 | $12,473 | | Furniture and fixtures | $1,095 | $1,109 | | Less: accumulated depreciation | $(50,631) | $(50,649) | | **Total property, plant and equipment, net** | **$11,378** | **$12,028** | Intangible Assets, Net (in thousands) | Category | March 31, 2025 Net | March 31, 2024 Net | | :------------------ | :----------------- | :----------------- | | Developed technology | $— | $463 | | Customer lists | $281 | $1,206 | | **Intangible assets, net** | **$281** | **$1,669** | - Goodwill remained constant at **$12.97 million** for both fiscal years[394](index=394&type=chunk) - Other long-term assets primarily include capitalized SaaS implementation costs (**$13.9 million** in 2025) and capitalized debt costs (**$2.9 million** in 2025)[394](index=394&type=chunk) Other Accrued Liabilities (in thousands) | Category | March 31, 2025 | March 31, 2024 | | :----------------------- | :------------- | :------------- | | Accrued expenses | $7,558 | $4,251 | | Asset retirement obligation | $3,497 | $2,069 | | Accrued warranty | $1,032 | $1,545 | | **Total other accrued liabilities** | **$17,982** | **$13,986** | [Note 4: Debt](index=79&type=section&id=Note%204%3A%20Debt) This note summarizes Quantum's Term Loan and PNC Credit Facility, detailing amendments, interest rates, and warrant issuances to lenders Summary of Borrowings (in thousands) | Category | March 31, 2025 | March 31, 2024 | | :------------------ | :------------- | :------------- | | Term Loan | $102,507 | $87,942 | | PNC Credit Facility | $26,600 | $26,604 | | Less: current portion | $(123,086)

Core Viewpoint - Rosen Law Firm is investigating potential securities claims on behalf of shareholders of Quantum Corporation due to allegations of materially misleading business information [1] Group 1: Investigation and Legal Action - Shareholders of Quantum Corporation may be entitled to compensation through a class action lawsuit without any out-of-pocket fees [2] - The Rosen Law Firm is preparing a class action to seek recovery of investor losses [2] Group 2: Company Developments - On August 18, 2025, Quantum Corporation's CFO, Lewis Moorehead, resigned amid an internal accounting review related to revenue recognition practices [3] - Following the announcement of the CFO's resignation, Quantum's stock price fell by $0.61 per share, or 8.2%, closing at $6.83 per share on August 19, 2025 [3] Group 3: Rosen Law Firm's Credentials - The Rosen Law Firm has a strong track record in securities class actions, having achieved the largest securities class action settlement against a Chinese company at the time [4] - The firm has been ranked in the top 4 for securities class action settlements since 2013 and recovered hundreds of millions of dollars for investors, including over $438 million in 2019 [4]

Core Viewpoint - The article discusses the investment landscape and highlights the importance of understanding market dynamics and company fundamentals for making informed investment decisions [1] Group 1 - The article emphasizes the significance of thorough research and analysis in identifying potential investment opportunities [1] - It mentions that investors should be aware of the financial health and performance metrics of companies before making investment choices [1] - The piece suggests that market trends and economic indicators play a crucial role in shaping investment strategies [1] Group 2 - The article outlines the potential benefits of subscribing to investment analysis services for gaining insights into stock performance [1] - It indicates that affiliate relationships may influence the promotion of certain investment services, which could affect the objectivity of the analysis provided [1] - The importance of maintaining a critical perspective on investment advice is highlighted, urging investors to conduct their own due diligence [1]

Core Insights - D-Wave (NYSE: QBTS) is the first company to achieve a quantum annealing system, leading to a significant increase in its stock price since its IPO [1] - Since going public via SPAC in 2022, QBTS stock has surged from below $1, indicating strong market interest and investor confidence [1] Company Overview - D-Wave specializes in quantum computing technology, specifically in quantum annealing systems, which positions it uniquely in the tech industry [1] - The company's stock performance post-IPO reflects a growing trend and interest in quantum computing solutions [1]