qtm-20210930

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 September 30, 2021


☐			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.)

224 Airport Parkway

Suite 550

San Jose

95110

(Address of Principal Executive Offices)

(Zip Code)


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



(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

Table of Contents

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.

Yes

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, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


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

☐

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 November 1, 2021, there were 59,281,377 shares of Quantum Corporation’s common stock issued and outstanding.

Table of Contents

QUANTUM CORPORATION

QUARTERLY REPORT ON FORM 10-Q

For the Quarter Ended September 30, 2021

Table of Contents



		Page
Note about forward looking statements		1
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 Stockholders’ Deficit	4
	Index to Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27
PART II
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 6.	Exhibits	29

Signatures		30

As used in this Quarterly Report on Form 10-Q, the terms "Quantum," "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 statements regarding COVID-19's 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, 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 those described under Item 1A. 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

Table of Contents

statements will be achieved or occur. We do not intend 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, except as required by law.

Table of Contents

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

QUANTUM CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts, unaudited)


	September 30, 2021		March 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	22,757	$	27,430
Restricted cash	450		707

Accounts receivable, net of allowance for doubtful accounts of $350 and $406	63,098		73,102
Manufacturing inventories	28,848		24,467
Service parts inventories	23,564		23,421
Other current assets	11,451		6,939
Total current assets	150,168		156,066
Property and equipment, net	12,295		10,051
Intangible assets, net	9,132		5,037
Goodwill	10,262		3,466
Restricted cash	—		5,000
Right-of-use assets, net	7,917		9,383
Other long-term assets	8,684		5,921
Total assets	$	198,458	$	194,924
Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable	$	36,991	$	35,245

Deferred revenue	78,105		84,027
Accrued restructuring charges	20		580
Long-term debt, current portion	3,125		1,850


Accrued compensation	15,435		19,214
Other accrued liabilities	18,750		18,174
Total current liabilities	152,426		159,090
Deferred revenue	40,766		36,126

Long-term debt, net of current portion	101,368		90,890

Operating lease liabilities	6,818		8,005
Other long-term liabilities	13,073		13,058
Total liabilities	314,451		307,169
Commitments and contingencies (Note 10)
Stockholders' deficit
Preferred stock, 20,000 shares authorized; no shares issued and outstanding	—		—
Common stock, $0.01 par value; 125,000 shares authorized; 59,272 and 56,915 shares issued and outstanding	593		570
Additional paid-in capital	636,538		626,664
Accumulated deficit	(752,029)		(738,623)
Accumulated other comprehensive loss	(1,095)		(856)
Total stockholders’ deficit	(115,993)		(112,245)
Total liabilities and stockholders’ deficit	$	198,458	$	194,924

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

QUANTUM CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except per share amounts, unaudited)


	Three Months Ended September 30,				Six Months Ended September 30,
	2021		2020		2021		2020
Revenue:
Product	$	54,655	$	50,850	$	106,786	$	90,537
Service	34,359		31,494		67,189		61,880
Royalty	4,166		3,477		8,303		6,709
Total revenue	93,180		85,821		182,278		159,126
Cost of revenue:
Product	41,124		34,998		79,864		65,380
Service	13,669		12,089		26,748		24,160
Total cost of revenue	54,793		47,087		106,612		89,540
Gross profit	38,387		38,734		75,666		69,586
Operating expenses:
Research and development	12,389		10,233		23,680		20,395
Sales and marketing	15,462		13,153		29,414		24,723
General and administrative	11,466		10,263		23,293		21,825
Restructuring charges	8		1,585		274		2,637
Total operating expenses	39,325		35,234		76,661		69,580
Income (loss) from operations	(938)		3,500		(995)		6
Other income (expense), net	126		(312)		(71)		(697)
Interest expense	(3,070)		(7,578)		(6,956)		(14,015)
Loss on debt extinguishment, net	(4,960)		—		(4,960)		—
Net loss before income taxes	(8,842)		(4,390)		(12,982)		(14,706)
Income tax provision	411		202		424		622
Net loss	$	(9,253)	$	(4,592)	$	(13,406)	$	(15,328)

Net loss per share - basic and diluted	$	(0.16)	$	(0.11)	$	(0.23)	$	(0.38)

Weighted average shares - basic and diluted	58,567		40,286		57,852		40,097


Net loss	$	(9,253)	$	(4,592)	$	(13,406)	$	(15,328)
Foreign currency translation adjustments, net	(506)		722		(239)		1,009
Total comprehensive loss	$	(9,759)	$	(3,870)	$	(13,645)	$	(14,319)

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

QUANTUM CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, unaudited)


	Six Months Ended September 30,
	2021		2020
Operating activities
Net loss	$	(13,406)	$	(15,328)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Depreciation and amortization	3,967		2,580
Amortization of debt issuance costs	1,629		3,015
Long-term debt related costs	—		167
Provision for product and service inventories	2,418		3,588
Stock-based compensation	6,273		4,550
Paycheck Protection Program loan forgiveness	(10,000)		—

Non-cash loss on debt extinguishment	8,471		—
Other	(20)		1,268







Changes in assets and liabilities:
Accounts receivable, net	10,024		7,568
Manufacturing inventories	(5,199)		(8,858)
Service parts inventories	(1,818)		(4,333)

Accounts payable	1,559		1,601

Accrued restructuring charges	(560)		240
Accrued compensation	(3,779)		2,922
Deferred revenue	(9,032)		(12,584)
Other assets and liabilities	(5,789)		(5,693)
Net cash used in operating activities	(15,262)		(19,297)
Investing activities


Purchases of property and equipment	(2,396)		(1,434)
Business acquisition, net of cash acquired	(5,000)		—


Net cash used in investing activities	(7,396)		(1,434)
Financing activities
Borrowings of long-term debt, net of debt issuance costs	94,961		19,400
Repayments of long-term debt	(93,051)		—
Borrowings of credit facility	126,084		140,987
Repayments of credit facility	(116,084)		(144,058)
Borrowings of payment protection program	—		10,000

Proceeds from issuance of common stock	806		537

Net cash provided by financing activities	12,716		26,866
Effect of exchange rate changes on cash, cash equivalents and restricted cash	12		(96)
Net change in cash, cash equivalents and restricted cash	(9,930)		6,039
Cash, cash equivalents, and restricted cash at beginning of period	33,137		12,270
Cash, cash equivalents, and restricted cash at end of period	$	23,207	$	18,309
Cash, Cash Equivalents and Restricted Cash at end of period
Cash and cash equivalents	$	22,757	$	12,517
Restricted cash, current	450		792
Restricted cash, long-term	—		5,000
Cash, cash equivalents and restricted cash at the end of period	$	23,207	$	18,309
Supplemental disclosure of cash flow information
Cash paid for interest	$	5,198	$	14,181
Cash paid (received) for income taxes, net	$	480	$	(1,578)
Non-cash transactions
Purchases of property and equipment included in accounts payable	$	309	$	294
Purchases of property and equipment included in accrued liabilities	$	—	$	1,255
Transfer of inventory to property and equipment	$	76	$	207

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

QUANTUM CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

(in thousands, unaudited)


	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders' Deficit
Three Months Ended	Shares	Amount
Balance, June 30, 2020	39,905	$	399	$	519,235	$	(713,900)	$	(1,235)	$	(195,501)
Net loss	—	—		—		(4,592)		—		(4,592)
Foreign currency translation adjustments, net	—	—		—		—		722		722
Shares issued under employee stock purchase plan	133	2		537		—		—		539
Shares issued under employee incentive plans, net	702	7		(7)		—		—		—


Stock-based compensation	—	—		2,592		—		—		2,592
Balance, September 30, 2020	40,740	$	408	$	522,357	$	(718,492)	$	(513)	$	(196,240)

Balance, June 30, 2021	57,280	$	573	$	629,862	$	(742,776)	$	(589)	(112,930)
Net loss	—	—		—		(9,253)		—		(9,253)
Foreign currency translation adjustments, net	—	—		—		—		(506)		(506)
Shares issued under employee stock purchase plan	145	1		805		—		—		806
Shares issued under employee incentive plans, net	1,387	14		(14)		—		—		—


Shares issued in connection with business acquisition	460	5		2,813		—		—		2,818
Stock-based compensation	—	—		3,072		—		—		3,072
Balance, September 30, 2021	59,272	$	593	$	636,538	$	(752,029)	$	(1,095)	$	(115,993)

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents


	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders' Deficit
Six Months Ended	Shares	Amount
Balance, March 31, 2020	39,905	$	399	$	505,762	$	(703,164)	$	(1,522)	(198,525)
Net loss	—	—		—		(15,328)		—		(15,328)
Foreign currency translation adjustments, net	—	—		—		—		1,009		1,009
Shares issued under employee stock purchase plan	133	2		537						539
Shares issued under employee incentive plans, net	702	7		(7)		—				—
Warrants issued related to long-term debt, net	—	—		11,515		—		—		11,515

Stock-based compensation	—	—		4,550		—		—		4,550
Balance, September 30, 2020	40,740	$	408	$	522,357	$	(718,492)	$	(513)	$	(196,240)

Balance, March 31, 2021	56,915	$	570	$	626,664	$	(738,623)	$	(856)	$	(112,245)
Net loss	—	—		—		(13,406)		—		(13,406)
Foreign currency translation adjustments, net	—	—		—		—		(239)		(239)
Shares issued under employee stock purchase plan	145	1		805				—		806
Shares issued under employee incentive plans, net	1,752	17		(17)		—		—		—


Shares issued in connection with business acquisition	460	5		2,813		—		—		2,818
Stock-based compensation		—		6,273		—		—		6,273
Balance, September 30, 2021	59,272	$	593	$	636,538	$	(752,029)	$	(1,095)	$	(115,993)

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

INDEX TO NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


		Page
Note 1:	Description of Business and Summary of Significant Accounting Policies	7
Note 2:	Revenue	7
Note 3:	Business Combination	9
Note 4:	Balance Sheet Information	9
Note 5:	Long-Term Debt	11
Note 6:	Leases	13
Note 7:	Restructuring Charges	14
Note 8:	Net Loss Per Share	15

Note 9:	Income Taxes	15
Note 10:	Commitments and Contingencies	15
Note 11:	Fair Value of Financial Instruments	17
Note 12:	Subsequent Events	17

Table of Contents

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1: DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Quantum is a technology company whose mission is to deliver innovative solutions to organizations around 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.

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 most recent Annual Report on Form 10-K.

The unaudited consolidated interim financial statements reflect all adjustments, consisting only of normal and recurring items, necessary to present fairly our financial position as of September 30, 2021, the results of operations and comprehensive loss, statements of cash flows, and changes in stockholder's deficit for the three and six months ended September 30, 2021 and 2020. Interim results are not necessarily indicative of full year performance because of the impact of seasonal and short-term variations.

Use of Estimates

Company management has made estimates and assumptions relating to the reporting of certain assets and liabilities in conformity with GAAP. These estimates and assumptions have been applied using methodologies that are consistent throughout the periods presented with consideration given to the potential impacts of the COVID-19 pandemic. However, actual results could differ materially from these estimates and be significantly affected by the severity and duration of the pandemic, the extent of actions to contain or treat COVID-19, how quickly and to what extent normal economic and operating activity can resume, and the severity and duration of the global economic downturn that may result from the pandemic.

Recent Accounting Pronouncements

Recent accounting pronouncements issued by the Financial Accounting Standards Board (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not have, or are not expected to have, a material impact on our present or future consolidated financial statements.

NOTE 2: REVENUE

Based on how the Company manages its business, the Company has determined that it currently operates in one reportable segment. The Company operates in three geographic regions: (a) Americas; (b) Europe, Middle East and

Table of Contents

Africa (“EMEA”); and (c) Asia Pacific (“APAC”). Revenue by geography is based on the location of the customer from which the revenue is earned.

In the following table, revenue is disaggregated by major product offering and geographies (in thousands):


	Three Months Ended September 30,				Six Months Ended September 30,
	2021		2020		2021		2020
Americas1
Primary storage systems	$	11,264	$	16,933	$	18,458	$	23,792
Secondary storage systems	12,174		9,317		28,886		17,993
Device and media	5,269		6,069		11,791		12,431
Service	21,341		19,399		41,534		37,994
Total revenue	50,048		51,718		100,669		92,210

EMEA
Primary storage systems	4,244		2,798		7,020		5,094
Secondary storage systems	9,720		6,352		17,479		12,968
Device and media	4,513		4,745		9,894		8,767
Service	11,035		10,227		21,847		20,042
Total revenue	29,512		24,122		56,240		46,871

APAC
Primary storage systems	1,175		879		2,516		1,938
Secondary storage systems	4,365		3,234		8,098		6,434
Device and media	1,931		523		2,644		1,120
Service	1,983		1,868		3,808		3,844
Total revenue	9,454		6,504		17,066		13,336

Consolidated
Primary storage systems	16,683		20,610		27,994		30,824
Secondary storage systems	26,259		18,903		54,463		37,395
Device and media	11,713		11,337		24,329		22,318
Service	34,359		31,494		67,189		61,880
Royalty2	4,166		3,477		8,303		6,709
Total revenue	$	93,180	$	85,821	$	182,278	$	159,126

1 Revenue for Americas geographic region outside of the United States is not significant.

2 Royalty revenue is not allocable to geographic regions.

Contract Balances

The following table presents the Company’s contract liabilities and certain information related to this balance as of and for the six months ended September 30, 2021 (in thousands):


	September 30, 2021
Contract liabilities (deferred revenue)	$	118,871
Revenue recognized in the period from amounts included in contract liabilities at the beginning of the period	53,833

Remaining Performance Obligations

Remaining performance obligations consisted of the following (in thousands):

Table of Contents


	Current		Non-Current		Total
As of September 30, 2021	$	130,708	$	42,855	$	173,563

The Company's non-current remaining performance obligations are expected to be recognized in the next 13 to 60 months.

NOTE 3: BUSINESS ACQUISITION

On July 20, 2021, the Company purchased specified assets related to the video surveillance business of PV3 (an ABC) LLC, a Delaware limited liability company as assignee for the benefit of Pivot3, Inc., a Delaware corporation (“Pivot 3”). The transaction costs associated with the acquisition were not material and expensed as incurred. Goodwill generated from this acquisition is primarily attributable to the expected post-acquisition synergies from integrating Pivot3's video surveillance portfolio and assets with our platform to expand our video surveillance portfolio with hardware and software offerings that will be offered under the Quantum VS-Series portfolio. Goodwill obtained in an asset acquisition is deductible for tax purposes.

The total purchase consideration for the acquisition of Pivot3 was $7.8 million, which consisted of the following (in thousands):


Cash	$	5,000
Fair value of stock consideration	2,818
Total	$	7,818

The following table summarizes the preliminary fair values of assets acquired and liabilities assumed as of the date of the acquisition (in thousands):


	Amount		Estimated Useful Life
Goodwill	$	6,796
Identified intangible assets:
Developed technology	1,700		2 years
Customer lists	3,700		4 years
Property, plant and equipment	4,300		3 years
Net liabilities assumed	(8,678)
Total	$	7,818

Pivot 3 has also agreed to license to the Company certain intellectual property rights related to the business. The historical results of operations for Pivot 3 were not significant to the Company's consolidated results of operations for the periods presented.

NOTE 4: BALANCE SHEET INFORMATION

Certain significant amounts included in the Company's consolidated balance sheets consist of the following (in thousands):

Manufacturing inventories

Table of Contents


	September 30, 2021		March 31, 2021
Finished goods:
Manufactured finished goods	$	11,013	$	12,452
Distributor inventory	136		238
Total finished goods	11,149		12,690
Work in progress	3,653		2,074
Raw materials	14,046		9,703
Total manufacturing inventories	$	28,848	$	24,467

Service parts inventories


	September 30, 2021		March 31, 2021
Finished goods	$	17,817	$	18,773
Component parts	5,747		4,648
Total service parts inventories	$	23,564	$	23,421

Intangibles, net


	September 30, 2021						March 31, 2021
	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net

Developed technology	$	6,400	$	(1,425)	$	4,975	$	4,700	$	(473)	$	4,227
Customer lists	4,600		(443)		4,157		900		(90)		810

Intangible assets, net	$	11,000	$	(1,868)	$	9,132	$	5,600	$	(563)	$	5,037

Intangible assets amortization expense was $0.8 million and $0 for the three months ended September 30, 2021 and 2020, respectively, and $1.3 million and $0 for the six months ended September 30, 2021 and 2020, respectively. As of September 30, 2021, the remaining weighted-average amortization period for definite-lived intangible assets was approximately 2.8 years.

As of September 30, 2021, the future expected amortization expense for intangible assets is as follows (in thousands):


Fiscal year ending	Estimated future amortization expense
Remainder of 2022	$	1,796
2023	3,641
2024	2,490


Thereafter	1,205
Total	$	9,132

Goodwill



	Amount
Balance at March 31, 2021	$	3,466
Goodwill acquired	6,796
Balance at September 30, 2021	$	10,262

There were no impairments to goodwill during the second quarter and first two quarters of fiscal 2021 and 2022.

Table of Contents

NOTE 5: LONG-TERM DEBT

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


	September 30, 2021		March 31, 2021
Term Loan	$	99,375	$	—
Senior Secured Term Loan	—		92,426
PNC Credit Facility	10,000		—
Paycheck Protection Program Loan	—		10,000
Less: current portion	(3,125)		(1,850)
Less: unamortized debt issuance costs (1)	(4,882)		(9,686)
Long-term debt, net	$	101,368	$	90,890

(1) The unamortized debt issuance costs related to the Senior Secured Term Loan and 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 December 27, 2018, the Company entered into a senior secured term loan to borrow an aggregate of $165.0 million (the “Senior Secured Term Loan”). In connection with the Senior Secured Term Loan, the Company amended its existing revolving credit facility with PNC (the PNC Credit Facility together with the Senior Secured Term Loan, the “December 2018 Credit Agreements”) providing for borrowings up to a maximum principal amount of the lesser of: (a) $45.0 million or (b) the amount of the borrowing base, as defined in the PNC Credit Facility agreement.

On June 16, 2020, the Company entered into amendments to the December 2018 Credit Agreements (the "June 2020 Amendment" and collectively with the amendments to the December 2018 Credit Agreements occurring on March 30, 2020, March 31, 2020 and April 3, 2020, the “2020 Amendments”). The June 2020 Amendment provided an additional borrowing of $20.0 million which was immediately drawn in full.

In connection with the June 2020 Amendment, the Company issued to the lenders warrants (the “2020 Term Loan Warrants”) to purchase 3,400,000 shares of the Company’s common stock, at an exercise price of $3.00 per share. The exercise price and the number of shares underlying the 2020 Term Loan Warrants are subject to adjustment in the event of specified events, including dilutive issuances of common stock linked equity instruments at a price lower than the exercise price of the warrants, a subdivision or combination of the Company’s common stock, a reclassification of the Company’s common stock or specified dividend payments. The 2020 Term Loan Warrants are exercisable until June 16, 2030. Upon exercise, the aggregate exercise price may be paid, at each warrant holder’s election, in cash or on a net issuance basis, based upon the fair market value of the Company’s common stock at the time of exercise.

The 2020 Amendments related to the Senior Secured Term Loan were accounted for as modifications. In connection with the modifications, the Company incurred $11.9 million in costs including $11.3 million related to the value of the 2020 Term Loan Warrants and $0.6 million in fees paid to the lenders. These debt issuance costs are reflected as a reduction to the carrying amount of the Senior Secured Term Loan and are amortized to interest expense over the remaining loan term. The 2020 Amendments related to the PNC Credit Facility were accounted for as modifications. Fees paid to PNC of approximately $0.5 million were recorded to other assets and are amortized to interest expense over the remaining term of the agreement.

Table of Contents

On August 5, 2021 (the “Closing Date”), the Company entered into a senior secured term loan to borrow an aggregate of $100.0 million, (the “Term Loan”). A portion of the proceeds were used to repay in full all outstanding borrowings under the Senior Secured Term Loan. Borrowings under the Term Loan mature on August 5, 2026. Principal is payable at a rate per annum equal to (a) 2.5% of the original principal balance thereof during the first year following the Closing Date and (b) 5% of the original principal balance thereof thereafter. Principal and interest payments are payable on a quarterly basis. The Company incurred $5.1 million in costs related to the Term Loan. These debt issuance costs are reflected as a reduction of the carrying amount of the Term Loan and are being recognized as interest expense over the term of the Term Loan.

The Company recorded a loss on debt extinguishment of $15.0 million related to the repayment of the Senior Secured Term Loan which was comprised of $6.4 million in prepayment penalties, $0.1 million in legal fees, and the write-off of unamortized debt issuance costs of $8.4 million.

Loans under the Term Loan designated as “Prime Rate Loans” will bear interest at a rate per annum equal to the greatest of (i) 1.75%, (ii) the Federal funds rate plus 0.50%, (iii) the LIBOR 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 5.00%. Loans designated as “LIBOR Rate Loans” will bear interest at a rate per annum equal to the LIBOR Rate plus an applicable margin of 6.00%. The “LIBOR Rate” is subject to a floor of 0.75%. The Company can designate a loan as a Prime Rate Loan or LIBOR Rate Loan in its discretion.

The Term Loan contains certain covenants, including requirements to prepay the Term Loan in an amount equal to (i) 100% of the net cash proceeds from certain asset dispositions, extraordinary receipts, debt issuances and equity issuances, subject to certain reinvestment rights and other exceptions and (ii) 75% of certain excess cash flow of the Company and its subsidiaries beginning in the fiscal year ended March 31, 2023, subject to certain exceptions, including reductions to the percentage of such excess cash flow that is required to prepay the loans to 50% and 0%, based on the Company’s applicable total net leverage ratio. Amounts outstanding under the Term Loan may become due and payable upon the occurrence of specified events, which among other things include (subject to certain exceptions and cure periods): (i) failure to pay principal, interest, or any fees when due; (ii) breach of any representation or warranty, covenant, or other agreement in the Term Loan and other related loan documents; (iii) the occurrence of a bankruptcy or insolvency proceeding with respect to the Company or certain of its subsidiaries; (iv) any “Event of Default” with respect to other indebtedness involving an aggregate amount of $3,000,000 or more; (v) any lien created by the Term Loan or any related security documents ceasing to be valid and perfected; (vi) the Term Loan Credit Agreement or any related security documents or guarantees ceasing to be legal, valid, and binding upon the parties thereto; or (vii) a change of control shall occur. Additionally, the Term Loan contains financial covenants relating to minimum liquidity and total net leverage.

On September 30, 2021, the Company amended the PNC Credit Facility (the PNC Credit Facility together with the Term Loan, the “Credit Agreements”). The amendment, among other things (a) extended the maturity date to August 5, 2026; (b) reduced the principal amount of the revolving commitments to a maximum amount equal to the lesser of: (i) $30.0 million or (ii) the amount of the borrowing base, as defined in the PNC Credit Facility agreement;(c) replaced existing debt covenants with net leverage ratio, minimum liquidity and fixed charges coverage ratio covenants; and, (d) removed the requirement to maintain a $5.0 million restricted cash reserve with PNC.

The interest rate under the PNC Credit Facility is 2.25% per annum for LIBOR Rate Loans and 1.25% per annum for Domestic Rate Loans and Swing Loans through December 31, 2021, and effective as of January 1, 2022 on the first day of each fiscal quarter ending thereafter (the “Applicable Margin Adjustment Date”), between 1.75% and 2.25% per annum for LIBOR Rate Loans and between 0.75% and 1.25% per annum for Domestic Rate Loans and Swing Loans, based on the percentage of Average Undrawn Availability (as defined in the PNC Credit Agreement) for the most recently completed fiscal quarter prior to the Applicable Margin Adjustment Date (the “Applicable Interest Rate”).

With respect to any LIBOR Rate Loan, the Company has agreed to pay affiliates of certain Term Loan lenders a fee equal to a percentage per annum equal to the sum of (x) 6.00%, minus (y) the Applicable Interest Rate, plus (z) if the LIBOR Rate applicable to such interest payment is less than 0.75%, (i) 0.75% minus (ii) such LIBOR Rate. With respect to any Domestic Rate Loan or Swing Loan, the Company has agreed to pay an affiliate of Blue Torch a fee equal to a percentage per annum equal to the sum of (x) 5.00%, minus (y) the Applicable Interest Rate, plus (z) if the Alternative Base Rate applicable to such interest payment is less than 1.00%, (i) 1.00% minus (ii) such Alternative Base Rate. If on the last day of any calendar quarter, the average “Usage Amount” during such calendar quarter does not equal the “Maximum Revolving Advance Amount” (as such terms are defined in the PNC Credit

Table of Contents

Facility), then the Company has agreed to pay affiliates of certain Term Loan lenders a fee at a rate per annum equal to 1.00% minus a fee percentage between 0.25% to 0.375% on the amount by which the Maximum Revolving Advance Amount exceeds such average Usage Amount.

As of September 30, 2021, the interest rates on the Term Loan and the PNC Credit Facility were 6.75% and 2.34%, respectively, and PNC Credit Facility had a borrowing base of $20.0 million, of which $8.6 million was available at that date. As of March 31, 2021, the Company was required to maintain a $5.0 million restricted cash reserve as part of the PNC Credit Facility, which was presented as long-term restricted cash within the accompanying condensed consolidated balance sheet as of March 31, 2021. The September 30, 2021 amendment to the PNC Credit Facility removed the restricted cash reserve requirement.

Registration Rights Agreement

In connection with the June 2020 Amendment to the Senior Secured Term Loan, the Company entered into an amended and restated registration rights agreement (the “Amended Registration Rights Agreement”) with the holders of the warrants previously issued to the Senior Secured Term Loan lenders in December 2018 and the 2020 Term Loan Warrants (collectively, the “Term Loan Warrants”). The Amended Registration Rights Agreement grants the holders of the Term Loan Warrants certain registration rights for the shares of common stock issuable upon the exercise of the applicable Term Loan Warrants, including (a) the ability of a holder to request that the Company file a Form S-1 registration statement with respect to at least 40% of the registrable securities held by such holder as of the issuance date of the applicable Term Loan Warrants; (b) the ability of a holder to request that the Company file a Form S-3 registration statement with respect to outstanding registrable securities if at any time the Company is eligible to use a Form S-3 registration statement; and (c) certain piggyback registration rights related to potential future equity offerings of the Company, subject to certain limitations.

Paycheck Protection Program Loan

On April 13, 2020, the Company entered into a Paycheck Protection Program Term Loan (“PPP Loan”) effective April 11, 2020 with PNC in an aggregate principal amount of $10.0 million pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. In July 2021, the Company received notice from PNC that the PPP Loan and related accrued interest was approved for forgiveness in full by the U.S. Small Business Administration (the “SBA”). The Company recorded the amount forgiven as gain on debt extinguishment of $10.0 million in the three and six months ended September 30, 2021.

NOTE 6: LEASES

Supplemental balance sheet information related to leases is as follows (in thousands):


Operating leases	September 30, 2021		March 31, 2021
Operating lease right-of-use asset	$	7,917	$	9,383

Other accrued liabilities	2,092		2,581
Operating lease liability	6,818		8,005
Total operating lease liabilities	$	8,910	$	10,586

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

Table of Contents


	Three Months Ended September 30,				Six Months Ended September 30,
Lease Cost	2021		2020		2021		2020
Operating lease cost	$	994	$	1,338	$	2,129	$	2,669
Variable lease cost	177		211		351		423
Short-term lease cost	4		39		4		92
Total lease cost	$	1,175	$	1,588	$	2,484	$	3,184


Maturity of Lease Liabilities	Operating Leases
2022, excluding the six months ended September 30, 2021	$	1,734
2023	2,695
2024	2,543
2025	2,264
2026	1,827
Thereafter	698
Total lease payments	$	11,761
Less: imputed interest	(2,851)
Present value of lease liabilities	$	8,910


Lease Term and Discount Rate	September 30, 2021		March 31, 2021
Weighted average remaining operating lease term (years)	4.15		4.53
Weighted average discount rate for operating leases	13.64	%	13.96	%

Operating cash outflows related to operating leases totaled $1.0 million and $1.3 million for the six months ended September 30, 2021 and 2020, respectively.

NOTE 7: RESTRUCTURING CHARGES

The following table summarizes the restructuring activities for the six months ended September 30, 2021 and 2020 (in thousands):


	Severance and Benefits		Facilities		Total
Balance as of March 31, 2021	$	580	$	—	$	580
Restructuring costs	274		—		274
Adjustments to prior estimates	(50)		—		(50)
Cash payments	(784)		—		(784)

Balance as of September 30, 2021	$	20	$	—	$	20

Balance as of March 31, 2020	$	—	$	—	$	—
Restructuring costs	2,637		—		2,637

Cash payments	(2,397)		—		(2,397)

Balance as of September 30, 2020	$	240	$	—	$	240

Table of Contents

NOTE 8: NET LOSS PER SHARE

The following outstanding stock-based instruments which are comprised of performance share units, restricted stock units, and warrants were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive (in thousands):


Three Months Ended September 30,		Six Months Ended September 30,
2021	2020	2021	2020
9,195	8,020	10,315	7,180

The dilutive impact related to common shares from restricted stock units and warrants is determined by applying the treasury stock method to the assumed vesting of outstanding restricted stock units and the exercise of outstanding warrants. The dilutive impact related to common shares 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.

For the three and six months ended September 30, 2020, there were 1.6 million and 0.5 million of contingently issuable market based and performance based restricted stock units, respectively, excluded from the calculation of diluted net income (loss) per share, as their market and performance conditions had not yet been achieved. These shares were earned based on the Company’s achievement of certain average stock price and performance targets in addition to a time-based vesting period. There were no contingently issuable market based and performance based restricted stock units excluded from the diluted net loss per share as of September 30, 2021.

NOTE 9: INCOME TAXES

The effective tax rate for the three and six months ended September 30, 2021 and 2020 was (4.6)% and (3.2)% and 1.0% and 0.0%, 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 valuation allowances on deferred tax assets as well as the forecasted mix of earnings in domestic and international jurisdictions.

As of September 30, 2021, including interest and penalties, the Company had $108.4 million of unrecognized tax benefits, $89.9 million of which, if recognized, would favorably affect the effective tax rate without consideration of the valuation allowance. After taking into account the valuation allowance, of the $89.9 million, only $7.5 million, if recognized, would favorably affect the effective tax rate. As of September 30, 2021, the Company had accrued interest and penalties related to these unrecognized tax benefits of $1.3 million. The Company recognizes interest and penalties related to income tax matters in the income tax provision in the condensed consolidated statements of operations. As of September 30, 2021, $100.9 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 $7.5 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 $14.0 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. After taking into account the valuation allowance, of the $14.0 million, only $1.0 million would affect the effective tax rate.

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

Table of Contents

obsolete inventory. As of September 30, 2021, the Company had issued non-cancelable commitments for $57.3 million to purchase inventory from its contract manufacturers and suppliers.

Legal Proceedings

On July 22, 2016, Realtime Data LLC d/b/a IXO (“Realtime Data”) filed a patent infringement lawsuit against the Company in the U.S. District Court for the Eastern District of Texas, alleging infringement of U.S. Patents Nos. 7,161,506, 7,378,992, 7,415,530, 8,643,513, 9,054,728, and 9,116,908. The lawsuit has been transferred to the U.S. District Court for the Northern District of California for further proceedings. Realtime Data asserts that the Company has incorporated Realtime Data’s patented technology into its compression products and services. Realtime Data seeks unspecified monetary damages and other relief that the Court deems appropriate. On July 31, 2017, the District Court stayed proceedings in this litigation pending the outcome of Inter Partes Review proceedings before the Patent Trial and Appeal Board relating to the Realtime patents. In those proceedings the asserted claims of the ’506 patent, the ’992 patent, and the ’513 patent were found unpatentable. In addition, on July 19, 2019, the United States District Court for the District of Delaware issued a decision finding that all claims of the ’728 patent, the ’530 patent, and the ’908 patent are not eligible for patent protection under 35 U.S.C. § 101 (the “Delaware Action”). On appeal, the Federal Circuit vacated the decision in the Delaware Action and remanded for the Court to “elaborate on its ruling.” The case pending against Quantum in the Northern District of California remains stayed pending the final outcome in the Delaware Action. On May 4, 2021, the Court in the Delaware Action reaffirmed its earlier ruling and granted defendants’ motions to dismiss under Section 101. The Court also granted Realtime Data fourteen days to file amended complaints in the Delaware Action where they sought leave to do so. On May 19, 2021, Realtime Data filed amended complaints including revised bases for claims of infringement of the same patents. On June 29, 2021, defendants in the Delaware Action filed a renewed motion to dismiss under Section 101. Realtime Data filed its opposition to the motion to dismiss on July 13, 2021. On August 23, 2021, the Court again reaffirmed its earlier ruling and granted defendants’ motions to dismiss under Section 101. Realtime Data has appealed that decision to the Federal Circuit. Quantum believes the probability that this lawsuit will have a material adverse effect on our business, operating results or financial condition is remote.

On July 14, 2020, Starboard Value LP, Starboard Value and Opportunity Master Fund Ltd., Starboard Value and Opportunity S LLC, and Starboard Value and Opportunity C LP (collectively, “Starboard”) filed a lawsuit against Quantum Corporation, Quantum’s former CEO and board member Jon Gacek, and former Quantum board member Paul Auvil in the California Superior Court in Santa Clara County. The complaint alleges that between 2012 and 2014, Starboard purchased a large number of shares of Quantum’s common stock, obtained three seats on Quantum’s board of directors and then, in July 2014, entered into an agreement with Quantum whereby Starboard would not seek control of Quantum’s board but would instead support Quantum’s slate of board nominees so long as Quantum met certain performance objectives by the end of fiscal 2015. The complaint further alleges that Quantum hid its failure to meet those performance objectives by improperly recognizing revenue in fiscal 2015. Mr. Gacek resigned from the board effective May 1, 2017, and as CEO effective November 7, 2017; Mr. Auvil resigned from the board effective November 8, 2017. The complaint’s accounting allegations largely repeat allegations made in now-concluded shareholder class actions, shareholder derivative actions and an SEC investigation, the settlement of which Quantum previously reported in the Company’s Form 10-Q filed with the SEC on January 29, 2020 and Form 10-K filed with the SEC on August 6, 2019 (among other SEC filings). On September 14, 2020, defendants filed a motion to dismiss the California action on grounds of forum non conveniens and the mandatory Delaware forum selection clauses set forth in the contracts between Starboard and Quantum. On November 19, 2020, Starboard filed a first amended complaint in which Quantum was not named as a defendant, in effect dismissing Quantum from the California action. On January 8, 2021, Messrs. Gacek and Auvil moved to dismiss the amended complaint in California on grounds of forum non conveniens and the mandatory Delaware forum selection clauses set forth in the contracts between Starboard and Quantum. On March 11, 2021, the California Superior Court stayed the California action.

On April 14, 2021, Starboard filed a new action in the Delaware Court of Chancery, naming as defendants Messrs. Gacek and Auvil and Quantum. The new action largely repeats the allegations of the California action, alleging claims for fraud against all defendants, fraudulent concealment against all defendants, negligent misrepresentation against all defendants, breach of contract against Quantum, breach of the implied covenant of good faith and fair dealing against Quantum, and breach of fiduciary duty against Messrs. Gacek and Auvil. The complaint prays for unspecified damages in an amount to be determined at trial, costs and attorneys’ fees, and any other relief deemed just or appropriate by the court. On May 10, 2021, Quantum filed a motion to dismiss this Delaware action, as did Messrs. Gacek and Auvil. Under the briefing schedule agreed to by the parties and approved by the Court of

Table of Contents

Chancery, briefing on the motions ended July 26, 2021. The Court set oral argument on the motions for September 28, 2021, but on August 4, 2021, on its own motion, postponed the hearing to November 1, 2021. At this time, Quantum is unable to estimate the range of possible outcomes with respect to this matter.

Other Commitments

Additionally, from time to time, the Company is a 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 of these other currently pending unresolved 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: 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 are valued using quoted market prices (level 1 fair value measurements) at the respective balance sheet dates.

No impairment charges were recognized for non-financial assets in the six months ended September 30, 2021 and 2020. The Company has no non-financial liabilities measured and recorded at fair value on a non-recurring basis.

Long-term Debt

The table below represents the carrying value and total estimated fair value of long-term debt as of September 30, 2021 and 2020. The fair value has been classified as Level 2 within the fair value hierarchy.


	September 30,
	2021				2020
	Carrying Value		Fair Value		Carrying Value		Fair Value
Senior Secured Term Loan	$	99,375	$	99,375	$	185,208	$	185,208
Amended PNC Credit Facility	10,000		10,000		—		—

NOTE 12: SUBSEQUENT EVENTS

On October 1, 2021, the Company acquired the assets of EnCloudEn, an early stage hyperconverged infrastructure software company, for $2.3 million in cash.

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

The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements, the accompanying notes, and other information included in this Quarterly Report and our annual report for the year ended March 31, 2021. In particular, the disclosure contained in Item 1A in our annual report, as updated by Part II, Item 1A in this Quarterly Report, may reflect trends, demands, commitments, events, or uncertainties that could materially impact our results of operations and liquidity and capital resources.

The following discussion contains forward-looking statements, such as statements regarding COVID-19's anticipated impacts on our business, our future operating results and financial position, our business strategy and

Table of Contents

plans, 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; interest associated with our long term debt and income taxes.

Highlights from second quarter of fiscal year 2022 included:

•Revenue increased 5% from the prior quarter and 9% year-over-year to $93 million.

•We completed the Pivot3 assets acquisition, which adds a portfolio of industry leading hyperconverged infrastructure (HCI) and intelligent software solutions for the security and surveillance markets.

•We completed the EnClouden assets acquisition which will enable us to expand the addressable market for our video surveillance portfolio, offering customers a solution using their server hardware of choice with a flexible subscription-based software model.

•We completed the refinancing of our term loan, significantly reducing our annual debt service and greatly increasing our financial flexibility related to covenants and restrictions.

•We brought on industry veteran John Hurley as Chief Revenue Officer. John brings extensive experience working with the largest global enterprise, commercial, and service provider customers.

COVID-19 IMPACT AND ASSOCIATED ACTIONS

Since the beginning of March 2020, COVID-19 has led governments and other authorities around the world, including federal, state and local authorities in the United States, to impose measures intended to reduce its spread, including restrictions on freedom of movement and business operations such as travel bans, border closings, business limitations and closures (subject to exceptions for essential operations and businesses), quarantines and shelter-in-place orders. These measures may remain in place for a significant period of time.

In light of these events, we have taken actions to protect the health and safety of our employees while continuing to serve our global customers as an essential business. We have implemented more thorough sanitation practices as outlined by health organizations and instituted social distancing policies at our locations around the world, including working from home, limiting the number of employees attending meetings, reducing the number of people in our sites at any one time, and suspending employee travel.

We have seen a gradual stabilization in our business during the second half of fiscal 2021 and into fiscal 2022 as customers increasingly adapted to the COVID-19 environment. The pervasive disruption in the global supply chain continues to have an impact on our business. Before the current disruptions in the global supply chain our historical backlog was very limited and typically represented less than 5% of quarterly revenues. During our second fiscal quarter our backlog grew to $50 million from $30 million at the end of the prior quarter. This unprecedented backlog is a result of the strong demand we have been seeing across our business but limited by the ongoing supply constraints. Of the $50 million ending backlog, just over 70% of the backlog was from hyperscaler customers and just over 85% of the backlog was related to tape products. Approximately two-thirds of the backlog is expected to be shipped in the second half of fiscal 2022 and the remaining one-third of the backlog has ship dates early in fiscal 2023.

Table of Contents

We will continue to actively monitor the impact of COVID-19 and may take further actions altering our business operations that we determine are in the best interests of our employees, customers, partners, suppliers, and stakeholders, or as required by federal, state, or local authorities. See “The recent COVID-19 pandemic could adversely affect our business, results of operations and financial condition” in Part II, Item 1A, Risk Factors, of our most recent Annual Report on Form 10-K for more information regarding the risks we face as a result of the COVID-19 pandemic.

RESULTS OF OPERATIONS


	Three Months Ended September 30,				Six Months Ended September 30,
(in thousands)	2021		2020		2021		2020
Total revenue	$	93,180	$	85,821	$	182,278	$	159,126
Total cost of revenue (1)	54,793		47,087		106,612		89,540
Gross profit	38,387		38,734		75,666		69,586
Operating expenses
Research and development (1)	12,389		10,233		23,680		20,395
Sales and marketing (1)	15,462		13,153		29,414		24,723
General and administrative (1)	11,466		10,263		23,293		21,825
Restructuring charges	8		1,585		274		2,637
Total operating expenses	39,325		35,234		76,661		69,580
Income (loss) from operations	(938)		3,500		(995)		6
Other income (expense), net	126		(312)		(71)		(697)
Interest expense	(3,070)		(7,578)		(6,956)		(14,015)
Loss on debt extinguishment, net	(4,960)		—		(4,960)		—
Net loss before income taxes	(8,842)		(4,390)		(12,982)		(14,706)
Income tax provision	411		202		424		622
Net loss	$	(9,253)	$	(4,592)	$	(13,406)	$	(15,328)

(1) Includes stock-based compensation as follows:


	Three Months Ended September 30,				Six Months Ended September 30,
(in thousands)	2021		2020		2021		2020
Cost of revenue	$	298	$	227	$	591	$	396
Research and development	1,331		591		2,863		1,062
Sales and marketing	613		495		1,113		832
General and administrative	830		1,279		1,706		2,260
Total	$	3,072	$	2,592	$	6,273	$	4,550

Table of Contents

Comparison of the Three Months Ended September 30, 2021 and 2020

Revenue


	Three Months Ended September 30,
(dollars in thousands)	2021		% of revenue	2020		% of revenue	$ Change		% Change
Product revenue
Primary storage systems	$	16,683	18	$	20,610	24	$	(3,927)	(19)
Secondary storage systems	26,259		28	18,903		22	7,356		39
Devices and media	11,713		13	11,337		13	376		3
Total product revenue	54,655		59	50,850		59	3,805		7
Service revenue	34,359		37	31,494		37	2,865		9
Royalty revenue	4,166		4	3,477		4	689		20
Total revenue	$	93,180	100	$	85,821	100	$	7,359	9

Product revenue

In the three months ended September 30, 2021, product revenue increased $3.8 million, or 7%, as compared to the same period in 2020. Secondary storage systems represented $7.4 million, or a 39% increase, driven by higher demand in our hyperscale, backup and archive use cases. Primary storage systems decreased $3.9 million, or 19%, partially driven by our transition to a recurring software subscription licensing model which results in a shift from product to services revenue.

Service revenue

We offer a broad range of services including product maintenance, implementation, and training as well as software subscriptions. Service revenue is primarily comprised of customer field support contracts which provide standard support services for our hardware. Standard service contracts may be extended or include enhanced service, such as faster service response times.

Service revenue increased 9% in the three months ended September 30, 2021 compared to the same period in 2020 driven partially by growing sales of our recurring software subscription offerings as well as service revenue associated with newly acquired businesses.

Royalty revenue

We receive royalties from third parties that license our LTO media patents through our membership in the LTO consortium. Royalty revenue increased $0.7 million, or 20%, in the three months ended September 30, 2021 compared to the same period in 2020 due to increased market volume of LTO media.

Gross Profit and Margin



	Three Months Ended September 30,
(dollars in thousands)	2021		Gross margin %	2020		Gross margin %	$ Change		Basis point change
Product gross profit	$	13,531	24.8	$	15,852	31.2	$	(2,321)	(640)
Service gross profit	20,690		60.2	19,405		61.6	1,285		(140)
Royalty gross profit	4,166		100.0	3,477		100.0	689		—
Gross profit	$	38,387	41.2	$	38,734	45.1	$	(347)	(390)

Product Gross Margin

Product gross margin decreased 640 basis points for the three months ended September 30, 2021, as compared with the same period in 2020. This decrease was due primarily to a product mix weighted towards lower margin offerings and cost pressures as a result of constraints in the global supply chain.

Table of Contents

Service Gross Margin

Service gross margins decreased 140 basis points for the three months ended September 30, 2021, as compared with the same period in 2020. This was partially driven by cost pressures as a result of certain constraints in the global supply chain.

Royalty Gross Margin

Royalties do not have significant related cost of sales.

Operating expenses



	Three Months Ended September 30,
(dollars in thousands)	2021		% of revenue	2020		% of revenue	$ Change		% Change
Research and development	$	12,389	13.3	$	10,233	11.9	$	2,156	21
Sales and marketing	15,462		16.6	13,153		15.3	2,309		18
General and administrative	11,466		12.3	10,263		12.0	1,203		12
Restructuring charges	8		—	1,585		1.8	(1,577)		(99)
Total operating expenses	$	39,325	42.2	$	35,234	41.1	$	4,091	12

In the three months ended September 30, 2021, research and development expense increased $2.2 million, or 21%, as compared with the same period in 2020. This increase was primarily driven by an increase in personnel costs due to increased headcount focused on new product development. This increase in headcount includes those employees added through acquisitions over the year.

In the three months ended September 30, 2021, sales and marketing expenses increased $2.3 million, or 18%, as compared with the same period in 2020. This increase was driven by increased headcount as we invest in strategic areas to accelerate growth. This increase in headcount includes those employees added through acquisitions over the year. Both marketing expense and travel expense have also increased over the prior year as COVID-19 restrictions ease.

In the three months ended September 30, 2021, general and administrative expenses increased $1.2 million, or 12%, as compared with the same period in 2020. This increase was due primarily to increased legal and other expenses related to our long-term debt amendments and business acquisition related activities.

In the three months ended September 30, 2021, restructuring expenses decreased $1.6 million, or 99%, as compared with the same period in 2020. The decrease was the result of one-time workforce reductions in the prior year.

Other Income (Expense)



	Three Months Ended September 30,
(dollars in thousands)	2021		% of revenue	2020		% of revenue	$ Change		% Change
Other income (expense)	$	126	0	$	(312)	—	$	438	140
Interest expense	(3,070)		3	(7,578)		9	4,508		59
Loss on debt extinguishment	(4,960)		5	—		—	(4,960)		n/a

The increase in other income (expense), net during the three months ended September 30, 2021 compared with the same period in 2020 was related primarily to fluctuations in foreign currency exchange rates.

In the three months ended September 30, 2021, interest expense decreased $4.5 million, or 59%, as compared with the same period in 2020 due to a lower principal balance and a lower effective interest rate.

Table of Contents

Loss on debt extinguishment, net during the three months ended September 30, 2021 was related to prepayment of our Senior Secured Term Loan that occurred during the period offset by the $10.0 million gain on the forgiveness of the Paycheck Protection Program Loan.

Income Taxes



	Three Months Ended September 30,
(dollars in thousands)	2021		% of revenue	2020		% of revenue	$ Change		% Change
Income tax provision	$	411	—	$	202	—	$	209	103

The income tax provision for the three months ended September 30, 2021 and 2020 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 judgement is required in assessing our ability to realize any future benefit from our net deferred tax assets. We intend to maintain this valuation allowance until sufficient positive evidence exists to support its reversal. Our income tax expense recorded in the future will be reduced to the extent that sufficient positive evidence materializes to support a reversal of, or decrease in, our valuation allowance.

Comparison of the Six Months Ended September 30, 2021 and 2020

Revenue


	Six Months Ended September 30,
(dollars in thousands)	2021		% of revenue		2020		% of revenue		$ Change		% Change
Product revenue
Primary storage systems	27,994		15	%	$	30,824	19	%	$	(2,830)	(9)	%
Secondary storage systems	54,463		30		37,395		24		17,068		46
Devices and media	24,329		13		22,318		14		2,011		9
Total product revenue	$	106,786	58	%	$	90,537	57	%	$	16,249	18
Service revenue	67,189		37		61,880		39		5,309		9
Royalty revenue	8,303		5		6,709		4		1,594		24
Total revenue	$	182,278	100	%	$	159,126	100	%	$	23,152	15

Product revenue

In the six months ended September 30, 2021, product revenue increased $16.2 million, or 18%, as compared to the same period in 2020. Secondary storage systems represented $17.1 million of the increase, driven primarily by a growing customer base in the hyperscale segment. Devices and media represented $2.0 million of the increase, driven by higher volume of LTO media sold through our high-volume channel partners. Primary storage systems decreased $2.8 million driven partially by driven by our transition to a recurring software subscription licensing model which results in a shift from product to services revenue.

Service revenue

Service revenue increased $5.3 million, or 9% in the six months ended September 30, 2021 compared to the same period in 2020, driven partially by the increase in recurring software subscription revenue. Growth is also driven by a higher level of installation and professional services attached to our product sales.

Table of Contents

Royalty revenue

We receive royalties from third parties that license our LTO media patents through our membership in the LTO consortium. Royalty revenue increased $1.6 million, or 24%, in the six months ended September 30, 2021 compared to the same period in 2020 due to higher overall market volume.

Gross Profit and Margin



	Six Months Ended September 30,
(dollars in thousands)	2021		Gross margin %		2020		Gross margin %		$ Change		Basis point change
Product gross profit	$	26,922	25.2	%	$	25,157	27.8	%	$	1,765	(260)
Service gross profit	40,441		60.2		37,720		61.0		2,721		(80)
Royalty gross profit	8,303		100.0		6,709		100.0		1,594		—
Gross profit	$	75,666	41.5	%	$	69,586	43.7	%	$	6,080	(220)

Product Gross Margin

Product gross margin decreased 260 basis points for the six months ended September 30, 2021, as compared with the same period in 2020. This decrease was primarily the result of a less favorable product mix to our enterprise customers, as well as cost pressures as a result of constraints in the global supply chain.

Service Gross Margin

Service gross margin decreased 80 basis points for the six months ended September 30, 2021, as compared with the same period in 2020. This decrease was partially due to cost pressures as a result of constraints in the global supply chain.

Royalty Gross Margin

Royalties do not have significant related cost of sales.

Operating expenses



	Six Months Ended September 30,
(dollars in thousands)	2021		% of revenue		2020		% of revenue		$ Change		% Change
Research and development	$	23,680	12.9	%	$	20,395	12.8	%	$	3,285	16	%
Sales and marketing	29,414		16.1		24,723		15.5		4,691		19
General and administrative	23,293		12.8		21,825		13.7		1,468		7
Restructuring charges	274		0.2		2,637		1.7		(2,363)		(90)
Total operating expenses	$	76,661	42.1	%	$	69,580	43.7	%	$	7,081	10

In the six months ended September 30, 2021, research and development expense increased $3.3 million, or 16%, as compared with the same period in 2020. This increase was primarily driven by an increase in personnel costs due to increased headcount focused on new product development. This increase in headcount includes those employees added through acquisitions over the year.

In the six months ended September 30, 2021, sales and marketing expenses increased $4.7 million, or 19%, as compared with the same period in 2020. This increase was driven by increased headcount as we invest in strategic areas to accelerate growth. This increase in headcount includes those employees added through acquisitions over the year. Both marketing expense and travel expense have also increased over the prior year as COVID-19 restrictions ease.

In the six months ended September 30, 2021, general and administrative expenses increased $1.5 million, or 7% as compared with the same period in 2020. This increase was due primarily to increased legal and other expenses related to our long-term debt amendments and business acquisition related activities.

Table of Contents

In the six months ended September 30, 2021, restructuring expenses decreased $2.4 million, or 90% as compared with the same period in 2020. The decrease was the result of a reduction in workforce to improve operational efficiency and rationalize our cost structure in the prior year.

Other Income (Expense)



	Six Months Ended September 30,
(dollars in thousands)	2021		% of revenue	2020		% of revenue		$ Change		% Change
Other income (expense)	$	(71)	0	$	(697)	—	%	$	626	90	%
Interest expense	(6,956)		(4)	(14,015)		(9)		7,059		(50)
Loss on debt extinguishment	(4,960)		(3)	—		—		(4,960)		n/a

The change in other income (expense), net during the six months ended September 30, 2021 and 2020 was related primarily to fluctuations in foreign currency exchange rates.

In the six months ended September 30, 2021, interest expense decreased $7.1 million, or 50%, as compared with the same period in 2020 due primarily to a lower principal balance and a lower effective interest rate on the term debt.

Loss on debt extinguishment, net during the six months ended September 30, 2021 was related to prepayment of our Senior Secured Term Loan that occurred during the period offset by the $10.0 million gain on the forgiveness of the Paycheck Protection Program loan.

Income Taxes



	Six Months Ended September 30,
(dollars in thousands)	2021		% of revenue		2020		% of revenue		$ Change		% Change
Income tax provision	$	424	—	%	$	622	—	%	$	(198)	(32)	%

The income tax provision for the six months ended September 30, 2021 and 2020 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 judgement 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.

Table of Contents

LIQUIDITY AND CAPITAL RESOURCES

We had cash and cash equivalents of $22.8 million as of September 30, 2021, which consisted primarily of bank deposits and money market accounts.

We consider liquidity in terms of the sufficiency of internal and external cash resources to fund our operating, investing and financing activities. Our principal sources of liquidity include cash from operating activities, cash and cash equivalents on our balance sheet and amounts available under our PNC Credit Facility. We require significant cash resources to meet obligations to pay principal and interest on our outstanding debt, provide for our research and development activities, fund our working capital needs, and make capital expenditures. Our future liquidity requirements will depend on multiple factors, including our research and development plans and capital asset needs. We are subject to the risks arising from COVID-19 which have caused substantial financial market volatility and have adversely affected both the U.S. and the global economy. We believe that these social and economic impacts have had a negative effect on sales due to disruptions in our supply chain and a decline in our customers' ability or willingness to purchase our products and services. The extent of the impact will depend, in part, on how long the negative trends in customer demand and supply chain levels will continue. We expect the impact of COVID-19 to continue to have a significant impact on our liquidity and capital resources.

We are subject to various debt covenants under our Credit Agreements. Our failure to comply with our debt covenants could materially and adversely affect our financial condition and ability to service our obligations. For additional information about our debt, see the sections entitled “Risk Factors—Risks Related to Our Business Operations” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2021.

Term Loan

On August 5, 2021 (the “Closing Date”), we entered into a senior secured term loan to borrow an aggregate of $100.0 million, (the “Term Loan”). A portion of the proceeds were used to repay in full all outstanding borrowings under the Senior Secured Term Loan. Borrowings under the Term Loan mature on August 5, 2026. Principal is payable at a rate per annum equal to (a) 2.5% of the original principal balance thereof during the first year following the Closing Date and (b) 5% of the original principal balance thereof thereafter. Principal and interest payments are payable on a quarterly basis.

Revolving Credit Facility

On September 30, 2021, we amended the PNC Credit Facility. The amendment, among other things (a) extended the maturity date to August 5, 2026; (b) reduced the principal amount of the revolving commitments to a maximum amount equal to the lesser of: (i) $30.0 million or (ii) the amount of the borrowing base, as defined in the PNC Credit Facility agreement;(c) replaced existing debt covenants with net leverage ratio, minimum liquidity and fixed charges coverage ratio covenants; and, (d) removed the requirement to maintain a $5.0 million restricted cash reserve with PNC.

Paycheck Protection Program Loan

In July 2021, we received notice from PNC that the Paycheck Protection Program Loan and related accrued interest was approved for forgiveness in full by the U.S. Small Business Administration. We recorded the amount forgiven as gain on debt extinguishment of $10.0 million in the three and six months ended September 30, 2021.

Cash Flows

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

Table of Contents


	Six Months Ended September 30,
(in thousands)	2021		2020
Cash provided by (used in):
Operating activities	$	(15,262)	$	(19,297)
Investing activities	(7,396)		(1,434)
Financing activities	12,716		26,866
Effect of exchange rate changes	12		(96)
Net increase (decrease) in cash and cash equivalents and restricted cash	$	(9,930)	$	6,039

Cash Used In Operating Activities

Net cash used in operating activities was $15.3 million for the six months ended September 30, 2021. This use of cash was primarily attributable to changes in working capital of $14.6 million driven by increases in manufacturing and service part inventories of $7.0 million, a decrease in deferred revenue of $9.0 million and a net changes in other assets and liabilities of $5.8 million. These were partially offset by cash generated by a $10.0 million decrease in accounts receivables. The decrease in deferred revenue reflects the seasonal nature of service contract renewals.

Net cash used in operating activities was $19.3 million for the six months ended September 30, 2020. This use of cash was primarily attributable to changes in working capital of $19.1 million driven by the increases in manufacturing and service inventory of $13.2 million and a decrease in deferred revenue of $12.6 million. These were partially offset by a decrease in accounts receivable of $7.6 million. The decrease in deferred revenue reflects the seasonal nature of service contract renewals which peak in the fourth fiscal quarter.

Cash Used in Investing Activities

Net cash used in investing activities for the six months ended September 30, 2021 was attributable to cash paid for our acquisition of Pivot3 of $5.0 million and capital expenditures of $2.4 million.

Net cash used in investing activities was $1.4 million in the six months ended September 30, 2020 related to capital expenditures.

Cash Provided by Financing Activities

Net cash provided by financing activities for the six months ended September 30, 2021 was related primarily to borrowings under our credit facility, and proceeds from the new Term Loan offset by the repayment in full of the Senior Secured Term Loan.

Net cash provided by financing activities was $26.9 million in the six months ended September 30, 2020 which included Senior Secured Term Loan borrowings of $19.4 million, $10.0 million in borrowings under the Paycheck Protection Program and the net pay-down of our Amended PNC Credit Facility.

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.

Table of Contents

We are also subject to ordinary course litigation and potential costs related to our financial statement restatement activities and related legal costs.

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.

Contractual Obligations

We have contractual obligations and commercial commitments, some of which, such as purchase obligations, are not recognized as liabilities in our financial statements. There have not been any other material changes to the contractual obligations disclosed in our Annual Report on Form 10-K for the fiscal year ended March 31, 2021.

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 consolidated financial statements and accompanying notes included elsewhere in this Quarterly Report on Form 10-Q. 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 our most recently filed Annual Report on Form 10-K for the fiscal year ended March 31, 2021 under the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Critical Accounting 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 on Form 10-Q.

Recently Issued and Adopted Accounting Pronouncements

See Note 1 to the notes to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q and in our most recently filed Annual Report on Form 10-K.

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 our most recent Annual Report on Form 10-K, 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), 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 effective at the reasonable assurance level described below.

Changes in Internal Control

Table of Contents

In connection with the evaluation required by Rule 13a-15(d) under the Securities Exchange Act of 1934, there were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2021 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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, of the notes to the unaudited 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 1 “Part I, Item 1A, Risk Factors” in our Annual Report on Form 10-K for the year ended March 31, 2021. You should consider carefully these factors, together with all of the other information in this Quarterly Report on Form 10-Q, including our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, before making an investment decision.

Table of Contents

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 Securities Exchange Act of 1934 (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

Exhibit
Number

Exhibit Description

Form

Filing Date

Exhibit

Filed or Furnished Herewith

2.1

Purchase Agreement dated July 18, 2021 by and between PV3 (an ABC) LLC, a Delaware limited liability company as assignee for the benefit of Pivot3, Inc., a Delaware corporation, and Quantum Corporation.*

8-K

7/22/2021

2.1

10.1

Quantum Corporation 2012 Long Term Incentive Plan, as amended and restated on September 21, 2021.

10.2

Term Loan Credit and Security Agreement, dated August 5, 2021, between the Company, Quantum LTO, Square Box, the lenders party thereto, and Blue Torch Finance LLC, as disbursing and collateral agent.

8-K

8/5/21

10.1

10.3

First Amendment to Term Loan Credit and Security Agreement, dated September 30, 2021, among the Company, Quantum LTO Holdings, LLC, the borrowers and guarantors party thereto, the lenders party thereto, and Blue Torch Finance LLC, as disbursing agent and collateral agent.

8-K

10/6/21

10.2

10.4

Seventh Amendment to Amended and Restated Revolving Credit and Security Agreement, dated September 30, 2021, between the Company, Quantum LTO Holdings, LLC, the borrowers and guarantors party thereto, the lenders party thereto, and PNC Bank, National Association, as administrative agent.

8-K

10/6/21

10.1

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

32.2

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

Interactive data files

104

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

* Schedules and attachments to the Purchase Agreement have been omitted pursuant to Item 601(b)(2) 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.

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)

November 3, 2021

/s/ James J. Lerner

(Date)

James J. Lerner

President, Chief Executive Officer and Chairman of the Board

(Principal Executive Officer)

November 3, 2021

/s/ J. Michael Dodson

(Date)

J. Michael Dodson

Chief Financial Officer

(Principal Financial Officer)