Quantum Provides Business Update

Rhea-AI Summary

Quantum (Nasdaq: QMCO) provides business updates, emphasizing efforts to comply with Nasdaq listing requirements by May 7, 2024. The company is working on improving financial flexibility through asset disposition proceeds and prioritizing projects for working capital enhancement and new product acceleration. Quantum is re-evaluating its application of ASC 606, causing delays in filing Form 10-Qs for fiscal quarters.

Positive

• None.

Negative

• Quantum faces non-compliance with Nasdaq's $1.00 bid price requirement, necessitating a hearing for a possible extension. Delays in filing Form 10-Qs due to re-evaluation of ASC 606 may impact investor confidence.

Insights

Financial Analyst

The situation described with Quantum Corporation highlights a critical juncture in the company's efforts to maintain its listing status on the Nasdaq Global Market. The non-compliance with the $1.00 bid price requirement presents a tangible risk to the company's stock liquidity and investor perception. The request for a hearing and an additional 180-day extension to meet listing requirements indicates a proactive approach by management to address these compliance issues. However, the uncertainty surrounding the Panel's decision adds a layer of risk for current and potential investors.

Furthermore, the amendment to the company's term loan credit and security agreement, aimed at improving financial flexibility, suggests a strategic move to strengthen the balance sheet. The focus on the pay-down of existing debt is a positive sign that management is taking steps to improve the company's financial health. This could potentially be seen as a positive indicator by the market, as it may lead to a more sustainable capital structure in the long run.

Accounting Standards Expert

The re-evaluation of the standalone selling price under ASC 606 is a significant accounting undertaking that reflects Quantum's commitment to accurate financial reporting. ASC 606, which deals with revenue from contracts with customers, requires a detailed and methodical approach to recognize and measure revenue. The delayed filing of the Form 10-Qs indicates that Quantum is facing complexities in its revenue recognition practices, which could have material implications for its reported financial performance.

The extensive analysis of current and historical financial data to ensure compliance with ASC 606 may result in restatements of past financial statements, which could impact investor confidence and the company's market valuation. It is imperative for stakeholders to monitor the outcome of this re-evaluation process closely, as it will likely provide a clearer picture of the company's true financial position and performance.

Market Research Analyst

Quantum's current predicament is reflective of the broader challenges faced by companies operating in the high-tech sector where rapid innovation and product development cycles are important for maintaining competitive advantage. The emphasis on accelerating new products and focusing the business suggests a strategic pivot that may be necessary to stay relevant in the dynamic tech industry. However, the success of such a strategy is contingent upon the company's ability to execute effectively while also navigating the financial and compliance hurdles it currently faces.

Investors and market observers should consider the potential long-term benefits of Quantum's strategic initiatives against the backdrop of current compliance and financial challenges. The company's ability to emerge from this period with a stronger product portfolio and improved financial health could position it well for future growth, but the inherent uncertainties in this process cannot be overlooked.

SAN JOSE, Calif.--(BUSINESS WIRE)-- Quantum Corporation (Nasdaq: QMCO) ("Quantum" or the "Company"), the pioneer in end-to-end data management solutions designed for the AI era, today filed a Form 8-K regarding several business updates, including reiterating its efforts to be current with its SEC financial reports by May 7, 2024.

On March 19, 2024, the Company received a letter (the “Letter”) from the listing qualifications staff (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) regarding the Company’s non-compliance with the $1.00 bid price requirement for continued listing on the Nasdaq Global Market, as set forth in Nasdaq Listing Rules 5450(a)(1). Accordingly, the Company requested a hearing in response to the Letter to present to the Nasdaq Hearings Panel (the “Panel”) its plan to comply with all applicable requirements for continued listing on Nasdaq and request an additional 180-day extension to do so. Although there can be no assurance that the Panel will grant the Company’s request for an extension, the Company is diligently working to comply with all of the applicable Nasdaq listing criteria within the period of time that the Panel may grant.

Also as part of today’s news, Quantum filed a Form 8-K regarding an amendment to the Company’s term loan credit and security agreement, which stipulates that proceeds related to the disposition of assets be used to improve financial flexibility, including the pay-down of existing debt. This amendment is consistent with the Company’s broader efforts to prioritize certain financial and business projects targeting improvements to working capital, acceleration of new products and a more focused business.

As previously disclosed, the Company is in the process of re-evaluating its application of standalone selling price under Accounting Standards Codification Topic 606 ("ASC 606") that has resulted in the delayed filing of its Form 10-Qs for the second and third fiscal quarters of fiscal year ending March 31, 2024. This re-evaluation process has involved an extensive and detailed analysis of the current financial periods as well as historical quarterly and annual reports. Although the Company, along with its independent registered public accounting firm, is making significant progress, additional time is being taken in order to make a final determination.

About Quantum

Quantum delivers end-to-end data management solutions designed for the AI era. With over four decades of experience, our data platform has allowed customers to extract the maximum value from their unique, unstructured data. From high-performance ingest that powers AI applications and demanding data-intensive workloads, to massive, durable data lakes to fuel AI models, Quantum delivers the most comprehensive and cost-efficient solutions. Leading organizations in life sciences, government, media and entertainment, research, and industrial technology trust Quantum with their most valuable asset – their data. Quantum is listed on Nasdaq (QMCO). For more information visit www.quantum.com.

Quantum and the Quantum logo are registered trademarks of Quantum Corporation and its affiliates in the United States and/or other countries. All other trademarks are the property of their respective owners.

Forward-Looking Information

The information provided in this press release may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (Exchange Act). These forward-looking statements are largely based on our current expectations and projections about future events affecting our business. Such forward-looking statements include, in particular, statements related to the ongoing re-evaluation of certain accounting matters; timing of completion of the re-evaluation and filing of the Form 10-Qs; the Company’s ability to maintain compliance with the listing standards of Nasdaq; and the Company’s plans, objectives and intentions that are not historical facts generally.

These forward-looking statements may be identified by the use of terms and phrases such as “anticipates”, “believes”, “can”, “could”, “estimates”, “expects”, “forecasts”, “intends”, “may”, “plans”, “projects”, “targets”, “will”, and similar expressions or variations of these terms and similar phrases. Additionally, statements concerning future matters and other statements regarding matters that are not historical are forward-looking statements. Investors are cautioned that these forward-looking statements relate to future events or our future performance and are subject to business, economic, and other risks and uncertainties, both known and unknown, that may cause actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by any forward-looking statements.

These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected, including without limitation, the following: the outcome of the pending re-evaluation of accounting matters and the possibility of adjustments, including material adjustments, to the Company’s financial statements as the re-evaluation progresses; the discovery of additional and unanticipated information during the re-evaluation process; risks related to the timely completion of the re-evaluation and filing of the Form 10-Qs; the ability to meet stock exchange continued listing standards; the possibility that the Nasdaq may delist the Company’s securities; the possibility that the Nasdaq Hearings Panel may not grant an additional extension; risks related to the Company’s ability to implement and maintain effective internal control over financial reporting in the future; the impact of these factors on the Company’s performance and outlook. See also other risks that are described in “Risk Factors” in the Company’s filings with the Securities and Exchange Commission (the SEC), including its Annual Report on Form 10-K filed with the SEC for the fiscal year ended March 31, 2023, and any subsequent reports filed with the SEC. The Company does not intend to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law or regulation.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240325245773/en/

Investor Relations Contacts:

Shelton Group

Leanne K. Sievers | Brett L. Perry

P: 949-224-3874 | 214-272-0070

E: sheltonir@sheltongroup.com

Source: Quantum Corporation

FAQ

What is the ticker symbol for Quantum ?

The ticker symbol for Quantum is QMCO.

What updates did Quantum provide in the recent filing?

Quantum provided business updates in a recent filing, focusing on efforts to comply with Nasdaq listing requirements by May 7, 2024, improving financial flexibility through asset disposition proceeds, and re-evaluating its application of ASC 606.

Why did Quantum request a hearing with Nasdaq?

Quantum requested a hearing with Nasdaq to present its plan to comply with all applicable requirements for continued listing on Nasdaq and request an additional 180-day extension to do so.

How is Quantum working on improving financial flexibility?

Quantum is using proceeds from asset disposition to improve financial flexibility, including the pay-down of existing debt, as part of its efforts to prioritize certain financial and business projects.

What is causing delays in Quantum 's Form 10-Q filings?

Delays in Quantum 's Form 10-Q filings are due to the re-evaluation of its application of ASC 606, involving an extensive analysis of current and historical financial data.

What impact could Quantum 's non-compliance with Nasdaq's bid price requirement have?

Quantum 's non-compliance with Nasdaq's bid price requirement may lead to potential delisting from the Nasdaq Global Market, impacting investor confidence.

How is Quantum addressing its delayed Form 10-Q filings?

Quantum , along with its independent registered public accounting firm, is making significant progress in re-evaluating its application of ASC 606 to address the delayed Form 10-Q filings.

What projects is Quantum prioritizing for business improvement?

Quantum is prioritizing projects for working capital enhancement, new product acceleration, and a more focused business approach to drive improvements.

What is the timeline for Quantum to comply with Nasdaq listing requirements?

Quantum aims to be current with its SEC financial reports by May 7, 2024, to comply with Nasdaq listing requirements.

How is Quantum utilizing asset disposition proceeds?

Quantum is using proceeds from asset disposition to improve financial flexibility, including paying down existing debt, as part of its strategic initiatives.

What challenges is Quantum facing in its re-evaluation process?

Quantum is facing challenges in its re-evaluation process of ASC 606, involving an extensive and detailed analysis of current and historical financial data to make a final determination.

What is Quantum 's approach to compliance with Nasdaq listing criteria?

Quantum is diligently working to comply with all applicable Nasdaq listing criteria within the period that the Nasdaq Hearings Panel may grant, despite uncertainties regarding the extension request.