Quantum Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

COMMON STOCK

COMMON STOCK

3 Months Ended

Jun. 30, 2024

Share-Based Payment Arrangement [Abstract]

Warrants

In connection with debt refinancing and amendment activities, the Company issued warrants to purchase shares of the Company common stock in December 2018 which are exercisable until December 27, 2028 (the "December 2018 Warrants”, in June 2020 which are exercisable until June 16, 2030 (the "June 2020 Warrants") and issued the June 2023 Warrants and May 2024 Warrants are until June 1, 2033 and May 24, 2034, respectively (collectively, the “Lender Warrants”).

The following summarizes the Company's outstanding Lender Warrants (in thousands, except exercise price):


	December 2018 Warrants		June 2020 Warrants		June 2023 Warrants		May 2024 Warrants		Total
March 31, 2024:
Exercise price	$	1.33	$	2.77	$	1.00	n/a
Number shares under warrant(s)	7,131		3,683		1,250		n/a		12,064
Fair value	$	2,320	$	1,135	$	591	n/a		$	4,046

June 30, 2024:
Exercise price	$	1.31	$	2.72	$	0.99	$	0.46
Number shares under warrant(s)	7,215		3,683		1,262		2,000		14,160
Fair value	$	1,331	$	750	$	391	$	691	$	3,163

The table below sets forth a summary of changes in the fair value of the Company’s Level 2 warrant liabilities as of June 30, 2024 and June 30, 2023:







Balance at March 31, 2023	$	7,989
Issuance of warrants	1,194
Change in fair value of warrant liabilities	(726)
Balance at June 30, 2023	$	8,457







Balance at March 31, 2024	$	4,046
Issuance of warrants	783
Change in fair value of warrant liabilities	(1,666)
Balance at June 30, 2024	$	3,163

Upon exercise, the aggregate exercise price of the Lender Warrants 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 common stock at the time of exercise. The exercise price and the number of shares underlying the Lender Warrants are subject to adjustment in the event

of specified events, including dilutive issuances of equity instruments at a price lower than the exercise price of the respective warrants (the "Down Round Feature"), repricing of existing equity-linked instruments at a price lower than the exercise price of the respective warrants (the "Warrant Repricing Feature"), a subdivision or combination of the common stock, a reclassification of the common stock or specified dividend payments. The Company's warrants also have a provision that determines the potential stock price used when applying the Black-Scholes valuation model to determine the settlement price of the warrants in Successor Major Transactions ("SMT"), as defined in the respective warrant agreements, which include a change in control or liquidation (the "Warrant Settlement Price Provision"). The Warrant Settlement Price Provision requires the use of the greater of the closing price of the Company's common stock on the trading day immediately preceding the date on which an SMT is consummated, the closing market price of the Company's common stock following the first public announcement of an SMT or the closing market of the Company's common stock immediately preceding the announcement of an SMT. Due to these terms, equity classification was precluded, and these warrants are carried as liabilities at fair value.

The Company also issued 50,000 warrants to purchase the Company's common stock in June 2020 and June 2023 to advisors of the Company at an exercise price of $3.00 and $1.00, respectively (collectively the "Other Warrants"). The Company has concluded that the Other Warrants do not contain provisions that would require liability classification under Topic 480 or Topic 718 and have been equity classified.

Registration Rights Agreements

The Lender Warrants grant the holders certain registration rights for the shares of common stock issuable upon the exercise of the applicable 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 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.