☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Quantum Corporation
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(Exact name of registrant as specified in its charter)
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Delaware
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94-2665054
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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||
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224 Airport Parkway
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Suite 550
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San Jose
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CA
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95110
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(Address of Principal Executive Offices)
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(Zip Code)
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(408
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)
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944-4000
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Registrant's telephone number, including area code
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(Former name, former address, and former fiscal year, if changed since last report)
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Title of each class
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Trading Symbol
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Name of each exchange on which registered
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Common Stock, $0.01 par value per share
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QMCO
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Nasdaq Global Select Market
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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
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¨
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Yes
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x
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No
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Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
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¨
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Yes
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x
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No
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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x
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Yes
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¨
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No
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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).
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x
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Yes
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¨
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No
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Page
Number
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PART I
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PART II
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PART III
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PART IV
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•
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The media and entertainment industry producing high-resolution content for movies and TV shows, including content in streaming services;
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•
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Large corporations producing video content for marketing and advertising, and for internal training and communication purposes;
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•
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Surveillance cameras for city surveillance, critical infrastructure, higher education, retail, restaurants, and more;
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•
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Scientific research and applications;
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•
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Life sciences, genome sequencing and microscopy;
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•
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Military and defense applications that manage images and video from drones and satellites;
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•
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Video, image, and sensor data captured on the manufacturing floor;
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•
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Video, image, and sensor data produced by cars as part of ADAS and autonomous vehicle development.
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•
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The Quantum F-Series: A line of ultra-fast, highly available NVMe storage servers for editing, rendering, and processing of video content and other large unstructured datasets.
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•
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Quantum QXS-Series: A line of high performance, reliable hybrid storage arrays, offered with either HDDs, SSDs, or some combination of the two.
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Name
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Position with Quantum
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James J. Lerner
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President, Chief Executive Officer and Chairman of the Board
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J. Michael Dodson
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Chief Financial Officer
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Elizabeth King
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Chief Revenue Officer
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Lewis Moorehead
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Chief Accounting Officer
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Regan MacPherson
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Senior Vice President, Chief Legal & Compliance Officer and Secretary
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Don Martella
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Senior Vice President, Engineering
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•
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Further disruptions to our supply chain, our operations or those of our strategic partners, customers or suppliers caused by employees or others contracting COVID-19, or governmental orders to contain the spread of COVID-19 such as travel restrictions, quarantines, shelter in place orders, trade controls, and business shutdowns;
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•
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A global economic downturn or a recession causing a decrease in short- or long-term demand for our products, resulting in industry oversupply and decreases of average selling prices (“ASPs”), which would negatively impact our sales and profitability;
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•
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Deterioration of worldwide credit markets that may limit our ability or increase our cost to obtain external financing to fund our operations and capital expenditures and result in a higher rate of losses on our accounts receivables due to customer credit defaults;
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•
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Extreme volatility in financial markets which has and may continue to adversely impact our stock price and our ability to access the financial markets on acceptable terms, or at all;
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•
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Increased data security and technology risk as many employees transition to work from home arrangements, including possible outages to systems and technologies critical to remote work and increased data privacy risk with cybercriminals attempting to take advantage of the disruption; and
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•
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Management’s ongoing commitment of significant time, attention and resources to respond to the pandemic.
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•
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Our ability to invest in growing our business is constrained by the financial covenants contained in our credit facility, which require us to maintain a minimum fixed charge coverage ratio and liquidity levels;
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•
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We must dedicate a significant portion of our cash flow from operations and other capital resources to debt service, thereby reducing our ability to fund working capital, capital expenditures, research and development and other cash requirements;
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•
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Our flexibility in planning for, or reacting to, changes and opportunities in the markets in which we compete may be limited, including our ability to engage in mergers and acquisitions activity, which may place us at a competitive disadvantage;
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•
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We are subject to mandatory field audits and control of cash receipts by the lenders if we do not maintain liquidity above certain thresholds;
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•
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We may be more vulnerable to adverse economic and industry conditions; and
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•
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We may be unable to make payments on other indebtedness or obligations.
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•
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Incur debt;
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•
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Incur liens;
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•
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Make acquisitions of businesses or entities or sell certain assets;
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•
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Make investments, including loans, guarantees and advances;
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•
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Engage in transactions with affiliates;
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•
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Pay dividends or engage in stock repurchases; and
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•
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Enter into certain restrictive agreements.
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•
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A change in competitive strategy that adversely affects a reseller’s willingness or ability to distribute our products;
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•
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The reduction, delay or cancellation of orders or the return of a significant amount of products;
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•
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Our inability to gain traction in developing new indirect sales channels for our branded products;
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•
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The loss of one or more of such distributors or resellers;
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•
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Any financial difficulties of such distributors or resellers that result in their inability to pay amounts owed to us; or
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•
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Changes in requirements or programs that allow our products to be sold by third parties to government customers.
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Increased costs related to fulfillment of our warranty obligations;
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•
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The reduction, delay or cancellation of orders or the return of a significant amount of products;
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•
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Focused failure analysis causing distraction of the sales, operations and management teams; or
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•
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The loss of reputation in the market and customer goodwill.
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•
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F-Series: an all-flash NVMe storage array – designed for the most demanding media workloads
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•
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R-Series: a ruggedized in-vehicle storage array purpose-built for autonomous vehicle development (to ingest large number of data streams) or for transportation surveillance applications;
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•
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VS-Series: a highly resilient, hyper-converged surveillance storage system that meets all the needs of security teams; and
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•
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Distributed Cloud Services: a set of Quantum services that offers cloud-like simplicity and economics for on-premise environments.
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•
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Our new products will achieve market acceptance and significant market share, or that the markets for these products will continue or grow as we have anticipated;
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•
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Our new products will be successfully or timely qualified with our customers by meeting customer performance and quality specifications which must occur before customers will place large product orders; or
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•
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We will achieve high volume production of these new products in a timely manner, if at all;
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•
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We will introduce additional new products in the time frame we are forecasting; or
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•
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We will not experience technical, quality, performance-related or other difficulties that could prevent or delay the introduction and market acceptance of new products.
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•
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competitors consolidating, having greater resources and becoming more competitive with us;
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•
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companies that we have not historically competed against entering into one or more of our primary markets and increasing competition in such market(s);
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•
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customers that are also competitors becoming more competitive with us and/or reducing their purchase of our products; and
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competitors acquiring our current suppliers or business partners and negatively impacting our business model.
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•
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The continued use by our customers of tape media for storage;
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•
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The size of the installed base of devices and similar products that use tape media cartridges;
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•
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The performance of our strategic licensing partners, which sell tape media cartridges;
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•
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The relative growth in units of newer device products, since the associated media cartridges for newer products typically sell at higher prices than the media cartridges associated with older products;
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•
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The media consumption habits and rates of end users;
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The pattern of device retirements;
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•
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The level of channel inventories; and
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agreement on standards for newer generations of the tape media that generates our royalty revenue.
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open source license terms may be ambiguous and may subject us to unanticipated obligations regarding our products, technologies and intellectual property;
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•
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open source software generally cannot be protected under trade secret law; and
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•
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it may be difficult for us to accurately determine the origin of the open source code and whether the open source software infringes, misappropriates or violates third-party intellectual property or other rights.
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import and export duties and value-added taxes;
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import, export and trade regulation changes that could erode our profit margins or restrict our ability to transport our products;
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reduced or limited protection of our intellectual property;
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•
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compliance with multiple and potentially conflicting regulatory requirements and practices;
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•
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commercial laws that favor local businesses;
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•
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exposure to economic fluctuations including inflationary risk and continuing sovereign debt risk;
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shortages in component parts and raw materials;
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the burden and cost of complying with foreign and U.S. laws governing corporate conduct outside the U.S. including the Foreign Corrupt Practices Act, the United Kingdom Bribery Act and other similar regulations;
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adverse movement of foreign currencies against the U.S. dollar (the currency in which our results are reported) and uncertain global economic conditions generally;
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inflexible employee contracts and employment laws that may make it difficult to terminate or change the compensation structure for employees in some foreign countries in the event of business downturns;
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recruiting employees in highly competitive markets and wage inflation in certain markets;
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potential restrictions on the transfer of funds between countries;
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•
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political instability, military, social and infrastructure risks, especially in emerging or developing economies;
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natural disasters, including earthquakes, flooding, typhoons and tsunamis;
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pandemics and epidemics, including the impact of COVID-19, and governmental restrictions on the operation of businesses, travel and other restrictions, which may vary from country-to-country; and
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•
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cultural differences that affect the way we do business.
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•
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fluctuations in IT spending as a result of economic conditions or fluctuations in U.S. federal government spending;
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•
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failure by our contract manufacturers to complete shipments in the last month of a quarter during which a substantial portion of our products are typically shipped;
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•
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changes in product mix;
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•
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new product announcements by us or our competitors which may cause delays in purchasing;
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customers canceling, reducing, deferring or rescheduling significant orders as a result of excess inventory levels, weak economic conditions or other factors;
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•
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seasonality, including customer fiscal year-ends and budget availability impacting customer demand for our products;
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declines in large orders (defined as orders greater than $200,000);
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declines in royalty or software revenues;
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•
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product development and ramp cycles and product performance or quality issues of ours or our competitors;
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•
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poor execution of and performance against expected sales and marketing plans and strategies;
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reduced demand from our OEM or distributors, VAR, DMR and other large customers;
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increased competition which may, among other things, increase pricing pressure or reduce sales;
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•
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restructuring actions or unexpected costs; and
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foreign exchange fluctuations.
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quarterly variations in our results of operations;
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failure to meet our expectations or the expectations of securities analysts and investors;
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failure to comply with applicable regulatory requirements or any investigations or enforcement actions; related to a potential failure to comply with applicable regulations;
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significant changes in our brand or reputation;
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new products, services, innovations and strategic developments by our competitors or us, or business combinations and investments by our competitors or us;
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changes in our capital structure, including issuance of additional debt or equity to the public, and the issuance of common stock upon exercise of our outstanding warrants;
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large or sudden purchases or sales of stock by existing or new investors; and
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•
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the result of any litigation or governmental investigation, which could result in liabilities and reputational harm.
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changes in interest and exchange rates;
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a continued widespread decline in the U.S. or global economy as a result of the continued impact of COVID-19 or other pandemics or natural disasters;
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fluctuations in the stock market in general and market prices for technology companies in particular; and
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•
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tariffs imposed by the U.S. Government on sales originating in or being shipped to countries with which we have on-going trade or other political conflicts.
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•
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failure to realize anticipated synergies from the acquisition;
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•
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difficulties in assimilating and retaining employees;
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•
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potential incompatibility of business cultures or resistance to change;
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•
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coordinating geographically separate organizations;
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•
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diversion of management’s attention from ongoing business concerns;
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•
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coordinating infrastructure operations in a rapid and efficient manner;
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•
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the potential inability to maximize our financial and strategic position through the successful incorporation of acquired technology and rights into our products and services;
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•
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failure of acquired technology or products to provide anticipated revenue or margin contribution;
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•
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insufficient revenues to offset increased expenses associated with the acquisition;
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•
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costs and delays in implementing or integrating common systems and procedures;
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•
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reduction or loss of customer orders due to the potential for market confusion, hesitation and delay;
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•
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impairment of existing customer, supplier and strategic relationships of either company;
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•
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insufficient cash flows from operations to fund the working capital and investment requirements;
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•
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difficulties in entering markets in which we have no or limited direct prior experience and where competitors in such markets have stronger market positions;
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•
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the possibility that we may not receive a favorable return on our investment, the original investment may become impaired, and/or we may incur losses from these investments;
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•
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dissatisfaction or performance problems with the acquired company;
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•
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the assumption of risks of the acquired company that are difficult to quantify, such as litigation;
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•
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the cost associated with the acquisition, including restructuring actions, which may require cash payments that, if large enough, could materially and adversely affect our liquidity; and
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•
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assumption of unknown liabilities or other unanticipated adverse events or circumstances.
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Location
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Function
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North America
|
|
|
San Jose, CA
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Corporate headquarters, administration, research and development
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Irvine, CA
|
|
Administration, research and development, sales, service
|
Englewood, CO
|
|
Administration, research and development, sales, service, operations
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Mendota Heights, MN
|
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Research and development
|
Richardson, TX
|
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Research and development
|
Bellevue, WA
|
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Administration and sales
|
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||
Europe
|
|
|
Paris, France
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Sales and service
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Boehmenkirch, Germany
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Service
|
Munich, Germany
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|
Sales, service
|
Zurich, Switzerland
|
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Administration, operations management
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Bracknell, UK
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Sales, service
|
London, UK
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Sales
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Ghent, Belgium
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|
Research and development
|
|
||
Asia Pacific
|
|
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Adelaide, Australia
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Research and development
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Kuala Lumpur, Malaysia
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Customer service
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Seoul, Korea
|
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Sales, service
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Singapore City, Singapore
|
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Administration, operations management, sales
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Tokyo, Japan
|
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Sales
|
|
For the Year Ended March 31,
|
||||||||||||||||||
|
2020(1)
|
|
2019
|
|
2018
|
|
2017
|
|
2016
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||||||||||
|
(In thousands, except per share data)
|
||||||||||||||||||
Statement of Operations Data
|
|
|
|
|
|
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|
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||||||||||
Total revenue
|
$
|
402,949
|
|
|
$
|
402,680
|
|
|
$
|
437,684
|
|
|
$
|
493,054
|
|
|
$
|
479,843
|
|
Total cost of revenue
|
230,441
|
|
|
235,066
|
|
|
264,900
|
|
|
287,782
|
|
|
276,524
|
|
|||||
Gross margin
|
172,508
|
|
|
167,614
|
|
|
172,784
|
|
|
205,272
|
|
|
203,319
|
|
|||||
Income (loss) from operations
|
21,204
|
|
|
(4,746
|
)
|
|
(28,622
|
)
|
|
6,681
|
|
|
(67,040
|
)
|
|||||
Net loss
|
(5,210
|
)
|
|
(42,797
|
)
|
|
(43,346
|
)
|
|
(2,408
|
)
|
|
(75,626
|
)
|
|||||
Net loss per share - basic and diluted
|
$
|
(0.14
|
)
|
|
$
|
(1.20
|
)
|
|
$
|
(1.25
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(2.30
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance Sheet Data
|
|
|
|
|
|
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|
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|
||||||||||
Total assets
|
$
|
165,995
|
|
|
$
|
172,871
|
|
|
$
|
202,639
|
|
|
$
|
221,242
|
|
|
$
|
230,812
|
|
Short-term debt
|
7,321
|
|
|
1,650
|
|
|
7,500
|
|
|
62,827
|
|
|
3,000
|
|
|||||
Long-term debt, net
|
146,847
|
|
|
145,621
|
|
|
115,986
|
|
|
66,676
|
|
|
131,961
|
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
StorNext scale out file storage: A line of products designed for the highest speed ingest, processing, and analysis of video and other forms of unstructured data. Powered by the StorNext file system software and data management platform, this product line includes new NVMe flash storage servers (F-series) and hybrid SSD/HDD storage arrays.
|
•
|
Video Surveillance Systems: Quantum offers a broad portfolio of solutions designed for video surveillance and physical security, including network video recording servers (NVRs), hyperconverged (HCI) storage servers to host multiple physical security workloads, GPU-based analytics servers, and file and object storage systems for large scale surveillance archives.
|
•
|
ActiveScale Object Storage: Massively scalable object storage systems used to preserve and protect data with the highest levels of data durability.
|
•
|
Tape Storage: Low cost, ultra-secure storage systems for long term archiving and ransomware protection. Quantum provides both the storage systems and sells tape media under the Quantum brand.
|
•
|
Backup Storage Systems: high-performance, scalable storage for backup and multi-site disaster recovery.
|
•
|
Quantum Services: A full line of services including managed services and Storage-as-a-Service offerings, as well as maintenance, implementation, training and consulting services.
|
•
|
Although depreciation and amortization expense are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
|
•
|
Adjusted EBITDA does not reflect: (1) interest and tax payments that may represent a reduction in cash available to us; (2) capital expenditures, future requirements for capital expenditures or contractual commitments; (3) changes in, or cash requirements for, working capital needs; (4) the potentially dilutive impact
|
•
|
Adjusted Net Income (Loss) does not reflect: (1) potential future restructuring activities; (2) the potentially dilutive impact of stock-based compensation expense; (3) loss on debt extinguishment; or (4) potential future restructuring expenses; and
|
•
|
Other companies, including companies in our industry, may calculate Adjusted EBITDA, Adjusted Net Income (Loss) or similarly titled measures differently, which reduces its usefulness as a comparative measure.
|
|
Year Ended March 31,
|
||||||||||
(dollars in thousands)
|
2020
|
|
2019
|
|
2018
|
||||||
Total revenue
|
$
|
402,949
|
|
|
$
|
402,680
|
|
|
$
|
437,684
|
|
Total cost of revenue (1)
|
230,441
|
|
|
235,066
|
|
|
264,900
|
|
|||
Gross profit
|
172,508
|
|
|
167,614
|
|
|
172,784
|
|
|||
Operating expenses
|
|
|
|
|
|
||||||
Research and development (1)
|
36,301
|
|
|
32,113
|
|
|
38,562
|
|
|||
Sales and marketing (1)
|
59,524
|
|
|
69,400
|
|
|
102,242
|
|
|||
General and administrative (1)
|
54,457
|
|
|
65,277
|
|
|
52,128
|
|
|||
Restructuring charges
|
1,022
|
|
|
5,570
|
|
|
8,474
|
|
|||
Total operating expenses
|
151,304
|
|
|
172,360
|
|
|
201,406
|
|
|||
Income (loss) from operations
|
21,204
|
|
|
(4,746
|
)
|
|
(28,622
|
)
|
|||
Other income (expense)
|
(261
|
)
|
|
2,878
|
|
|
767
|
|
|||
Interest expense
|
(25,350
|
)
|
|
(21,095
|
)
|
|
(11,670
|
)
|
|||
Loss on debt extinguishment, net
|
—
|
|
|
(17,458
|
)
|
|
(6,934
|
)
|
|||
Income (loss) before income taxes
|
(4,407
|
)
|
|
(40,421
|
)
|
|
(46,459
|
)
|
|||
Income tax provision (benefit)
|
803
|
|
|
2,376
|
|
|
(3,113
|
)
|
|||
Net income (loss)
|
$
|
(5,210
|
)
|
|
$
|
(42,797
|
)
|
|
$
|
(43,346
|
)
|
|
Year Ended March 31,
|
||||||||||
(dollars in thousands)
|
2020
|
|
2019
|
|
2018
|
||||||
Cost of revenue
|
$
|
452
|
|
|
$
|
334
|
|
|
$
|
725
|
|
Research and development
|
984
|
|
|
440
|
|
|
906
|
|
|||
Sales and marketing
|
1,165
|
|
|
179
|
|
|
1,790
|
|
|||
General and administrative
|
4,147
|
|
|
2,456
|
|
|
1,973
|
|
|||
Total
|
$
|
6,748
|
|
|
$
|
3,409
|
|
|
$
|
5,394
|
|
|
Year Ended March 31,
|
|
|
|
|
|||||||||||||||
(dollars in thousands)
|
2020
|
|
% of
revenue |
|
20191
|
|
% of
revenue |
|
$ Change
|
|
% Change
|
|||||||||
Product revenue
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Secondary storage systems
|
$
|
111,672
|
|
|
28
|
%
|
|
$
|
126,528
|
|
|
31
|
%
|
|
$
|
(14,856
|
)
|
|
(12
|
)%
|
Primary storage systems
|
77,152
|
|
|
19
|
%
|
|
58,811
|
|
|
15
|
%
|
|
18,341
|
|
|
31
|
%
|
|||
Devices and media
|
62,344
|
|
|
15
|
%
|
|
59,315
|
|
|
15
|
%
|
|
3,029
|
|
|
5
|
%
|
|||
Total product revenue
|
$
|
251,168
|
|
|
62
|
%
|
|
$
|
244,654
|
|
|
61
|
%
|
|
$
|
6,514
|
|
|
3
|
%
|
Service revenue
|
131,050
|
|
|
33
|
%
|
|
134,696
|
|
|
33
|
%
|
|
(3,646
|
)
|
|
(3
|
)%
|
|||
Royalty revenue
|
20,731
|
|
|
5
|
%
|
|
23,330
|
|
|
6
|
%
|
|
(2,599
|
)
|
|
(11
|
)%
|
|||
Total revenue
|
$
|
402,949
|
|
|
100
|
%
|
|
$
|
402,680
|
|
|
100
|
%
|
|
$
|
269
|
|
|
—
|
%
|
|
Year Ended March 31,
|
|
|
|
|
|||||||||||||||
(dollars in thousands)
|
2020
|
|
Gross
margin % |
|
2019
|
|
Gross
margin % |
|
$ Change
|
|
Basis point change
|
|||||||||
Product gross profit
|
$
|
71,408
|
|
|
28.4
|
%
|
|
$
|
64,808
|
|
|
26.5
|
%
|
|
$
|
6,600
|
|
|
190
|
|
Service gross profit
|
80,369
|
|
|
61.3
|
%
|
|
79,476
|
|
|
59.0
|
%
|
|
893
|
|
|
230
|
|
|||
Royalty gross profit
|
20,731
|
|
|
100.0
|
%
|
|
23,330
|
|
|
100.0
|
%
|
|
(2,599
|
)
|
|
—
|
|
|||
Gross profit
|
$
|
172,508
|
|
|
42.8
|
%
|
|
$
|
167,614
|
|
|
41.6
|
%
|
|
$
|
4,894
|
|
|
120
|
|
|
Year Ended March 31,
|
|
|
|
|
|||||||||||||||
(dollars in thousands)
|
2020
|
|
% of
revenue |
|
2019
|
|
% of
revenue |
|
$ Change
|
|
% Change
|
|||||||||
Research and development
|
$
|
36,301
|
|
|
9
|
%
|
|
$
|
32,113
|
|
|
8
|
%
|
|
$
|
4,188
|
|
|
13
|
%
|
Sales and marketing
|
59,524
|
|
|
15
|
%
|
|
69,400
|
|
|
17
|
%
|
|
(9,876
|
)
|
|
(14
|
)%
|
|||
General and administrative
|
54,457
|
|
|
14
|
%
|
|
65,277
|
|
|
16
|
%
|
|
(10,820
|
)
|
|
(17
|
)%
|
|||
Restructuring charges
|
1,022
|
|
|
—
|
%
|
|
5,570
|
|
|
1
|
%
|
|
(4,548
|
)
|
|
(82
|
)%
|
|||
Total operating expenses
|
$
|
151,304
|
|
|
38
|
%
|
|
$
|
172,360
|
|
|
43
|
%
|
|
$
|
(21,056
|
)
|
|
(12
|
)%
|
|
Year Ended March 31,
|
|
|
|
|
|||||||||||||||
(dollars in thousands)
|
2020
|
|
% of
revenue |
|
2019
|
|
% of
revenue |
|
$ Change
|
|
% Change
|
|||||||||
Other income (expense)
|
$
|
(261
|
)
|
|
0
|
%
|
|
$
|
2,878
|
|
|
1
|
%
|
|
$
|
3,139
|
|
|
(109
|
)%
|
Interest expense
|
(25,350
|
)
|
|
(6
|
)%
|
|
(21,095
|
)
|
|
(5
|
)%
|
|
4,255
|
|
|
20
|
%
|
|||
Loss on debt extinguishment
|
—
|
|
|
—
|
%
|
|
(17,458
|
)
|
|
(4
|
)%
|
|
(17,458
|
)
|
|
(100
|
)%
|
|
Year Ended March 31,
|
|
|
|
|
|||||||||||||||
(dollars in thousands)
|
2020
|
|
% of
revenue |
|
2019
|
|
% of
revenue |
|
$ Change
|
|
% Change
|
|||||||||
Income tax provision
|
$
|
803
|
|
|
—
|
%
|
|
$
|
2,376
|
|
|
1
|
%
|
|
$
|
(1,573
|
)
|
|
(66
|
)%
|
|
Year Ended March 31,
|
|
|
|
|
|||||||||||||||
(dollars in thousands)
|
20191
|
|
% of
revenue |
|
20181
|
|
% of
revenue |
|
$ Change
|
|
% Change
|
|||||||||
Product revenue
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Primary storage systems
|
$
|
58,811
|
|
|
15
|
%
|
|
$
|
77,976
|
|
|
18
|
%
|
|
$
|
(19,165
|
)
|
|
(25
|
)%
|
Secondary storage systems
|
126,528
|
|
|
31
|
%
|
|
121,402
|
|
|
28
|
%
|
|
5,126
|
|
|
4
|
%
|
|||
Devices and media
|
59,315
|
|
|
15
|
%
|
|
69,204
|
|
|
16
|
%
|
|
(9,889
|
)
|
|
(14
|
)%
|
|||
Total product revenue
|
$
|
244,654
|
|
|
61
|
%
|
|
$
|
268,582
|
|
|
61
|
%
|
|
$
|
(23,928
|
)
|
|
(9
|
)%
|
Service revenue
|
134,696
|
|
|
33
|
%
|
|
136,523
|
|
|
31
|
%
|
|
(1,827
|
)
|
|
(1
|
)%
|
|||
Royalty revenue
|
23,330
|
|
|
6
|
%
|
|
32,579
|
|
|
8
|
%
|
|
(9,249
|
)
|
|
(28
|
)%
|
|||
Total revenue
|
$
|
402,680
|
|
|
100
|
%
|
|
$
|
437,684
|
|
|
100
|
%
|
|
$
|
(35,004
|
)
|
|
(8
|
)%
|
|
Year Ended March 31,
|
|
|
|
|
|||||||||||||||
(dollars in thousands)
|
2019
|
|
Gross
margin % |
|
2018
|
|
Gross
margin % |
|
$ Change
|
|
Basis point change
|
|||||||||
Product gross profit
|
$
|
64,808
|
|
|
26.5
|
%
|
|
$
|
62,471
|
|
|
23.3
|
%
|
|
$
|
2,337
|
|
|
320
|
|
Service gross profit
|
79,476
|
|
|
59.0
|
%
|
|
77,734
|
|
|
56.9
|
%
|
|
1,742
|
|
|
210
|
|
|||
Royalty gross profit
|
23,330
|
|
|
100.0
|
%
|
|
32,579
|
|
|
100.0
|
%
|
|
(9,249
|
)
|
|
—
|
|
|||
Gross profit
|
$
|
167,614
|
|
|
41.6
|
%
|
|
$
|
172,784
|
|
|
39.5
|
%
|
|
$
|
(5,170
|
)
|
|
210
|
|
|
Year Ended March 31,
|
|
|
|
|
|||||||||||||||
(dollars in thousands)
|
2019
|
|
% of
revenue |
|
2018
|
|
% of
revenue |
|
$ Change
|
|
% Change
|
|||||||||
Research and development
|
$
|
32,113
|
|
|
8
|
%
|
|
$
|
38,562
|
|
|
9
|
%
|
|
$
|
(6,449
|
)
|
|
(17
|
)%
|
Sales and marketing
|
69,400
|
|
|
17
|
%
|
|
102,242
|
|
|
23
|
%
|
|
(32,842
|
)
|
|
(32
|
)%
|
|||
General and administrative
|
65,277
|
|
|
16
|
%
|
|
52,128
|
|
|
12
|
%
|
|
13,149
|
|
|
25
|
%
|
|||
Restructuring charges
|
5,570
|
|
|
1
|
%
|
|
8,474
|
|
|
2
|
%
|
|
(2,904
|
)
|
|
(34
|
)%
|
|||
Total operating expenses
|
$
|
172,360
|
|
|
43
|
%
|
|
$
|
201,406
|
|
|
46
|
%
|
|
$
|
(29,046
|
)
|
|
(14
|
)%
|
|
Year Ended March 31,
|
|
|
|
|
||||||||||||||
(dollars in thousands)
|
2019
|
|
% of
revenue |
|
2018
|
|
% of
revenue |
|
$ Change
|
|
% Change
|
||||||||
Other income (expense)
|
$
|
2,878
|
|
|
1
|
%
|
|
$
|
767
|
|
|
0
|
%
|
|
(2,111
|
)
|
|
275
|
%
|
Interest expense
|
(21,095
|
)
|
|
(5
|
)%
|
|
(11,670
|
)
|
|
(3
|
)%
|
|
9,425
|
|
|
(81
|
)%
|
||
Loss on debt extinguishment
|
(17,458
|
)
|
|
(4
|
)%
|
|
(6,934
|
)
|
|
(2
|
)%
|
|
10,524
|
|
|
(152
|
)%
|
|
Year Ended March 31,
|
|
|
|
|
|||||||||||||||
(dollars in thousands)
|
2019
|
|
% of
revenue |
|
2018
|
|
% of
revenue |
|
$ Change
|
|
% Change
|
|||||||||
Income tax provision (benefit)
|
$
|
2,376
|
|
|
1
|
%
|
|
$
|
(3,113
|
)
|
|
(1
|
)%
|
|
$
|
5,489
|
|
|
(176
|
)%
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||
|
Mar. 31, 2020
|
|
Dec. 31, 2019
|
|
Sep. 30, 2019
|
|
June 30, 2019
|
|
Mar. 31, 2019
|
|
Dec. 31, 2018
|
|
Sep. 30, 2018
|
|
June 30, 2018
|
||||||||||||||||
Total revenue
|
$
|
88,215
|
|
|
$
|
103,315
|
|
|
$
|
105,789
|
|
|
$
|
105,630
|
|
|
$
|
103,277
|
|
|
$
|
101,979
|
|
|
$
|
89,912
|
|
|
$
|
107,512
|
|
Total cost of revenue
|
52,132
|
|
|
56,239
|
|
|
62,266
|
|
|
59,804
|
|
|
60,611
|
|
|
58,897
|
|
|
54,385
|
|
|
61,173
|
|
||||||||
Gross profit
|
36,083
|
|
|
47,076
|
|
|
43,523
|
|
|
45,826
|
|
|
42,666
|
|
|
43,082
|
|
|
35,527
|
|
|
46,339
|
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Research and development
|
9,243
|
|
|
9,325
|
|
|
9,350
|
|
|
8,383
|
|
|
8,083
|
|
|
7,907
|
|
|
7,862
|
|
|
8,261
|
|
||||||||
Sales and marketing
|
13,423
|
|
|
15,421
|
|
|
14,824
|
|
|
15,856
|
|
|
16,603
|
|
|
16,990
|
|
|
16,682
|
|
|
19,125
|
|
||||||||
General and administrative
|
10,833
|
|
|
10,719
|
|
|
14,329
|
|
|
18,576
|
|
|
18,333
|
|
|
13,481
|
|
|
14,072
|
|
|
19,391
|
|
||||||||
Restructuring charges
|
2
|
|
|
(64
|
)
|
|
821
|
|
|
263
|
|
|
142
|
|
|
1,227
|
|
|
294
|
|
|
3,907
|
|
||||||||
Total
|
33,501
|
|
|
35,401
|
|
|
39,324
|
|
|
43,078
|
|
|
43,161
|
|
|
39,605
|
|
|
38,910
|
|
|
50,684
|
|
||||||||
Income (loss) from operations
|
2,582
|
|
|
11,675
|
|
|
4,199
|
|
|
2,748
|
|
|
(495
|
)
|
|
3,477
|
|
|
(3,383
|
)
|
|
(4,345
|
)
|
||||||||
Other income (expense)
|
185
|
|
|
(611
|
)
|
|
76
|
|
|
89
|
|
|
(992
|
)
|
|
3,846
|
|
|
(196
|
)
|
|
220
|
|
||||||||
Interest expense
|
(6,272
|
)
|
|
(6,425
|
)
|
|
(6,347
|
)
|
|
(6,306
|
)
|
|
(6,286
|
)
|
|
(6,238
|
)
|
|
(4,636
|
)
|
|
(3,935
|
)
|
||||||||
Loss on debt extinguishment, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,033
|
)
|
|
(12,425
|
)
|
|
—
|
|
||||||||
Income (loss) before income taxes
|
(3,505
|
)
|
|
4,639
|
|
|
(2,072
|
)
|
|
(3,469
|
)
|
|
(7,773
|
)
|
|
(3,948
|
)
|
|
(20,640
|
)
|
|
(8,060
|
)
|
||||||||
Income tax provision (benefit)
|
332
|
|
|
(110
|
)
|
|
243
|
|
|
338
|
|
|
1,637
|
|
|
337
|
|
|
977
|
|
|
(575
|
)
|
||||||||
Net income (loss)
|
$
|
(3,837
|
)
|
|
$
|
4,749
|
|
|
$
|
(2,315
|
)
|
|
$
|
(3,807
|
)
|
|
$
|
(9,410
|
)
|
|
$
|
(4,285
|
)
|
|
$
|
(21,617
|
)
|
|
$
|
(7,485
|
)
|
Net income (loss) per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
$
|
(0.10
|
)
|
|
$
|
0.12
|
|
|
$
|
(0.06
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
(0.61
|
)
|
|
$
|
(0.21
|
)
|
Diluted
|
$
|
(0.10
|
)
|
|
$
|
0.10
|
|
|
$
|
(0.06
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
(0.61
|
)
|
|
$
|
(0.21
|
)
|
|
Year Ended March 31,
|
||||||||||
(Dollars in thousands)
|
2020
|
|
2019
|
|
2018
|
||||||
Cash provided by (used in):
|
|
|
|
|
|
||||||
Operating activities
|
(1,181
|
)
|
|
$
|
(16,859
|
)
|
|
$
|
(5,032
|
)
|
|
Investing activities
|
(4,599
|
)
|
|
235
|
|
|
(2,296
|
)
|
|||
Financing activities
|
1,211
|
|
|
16,210
|
|
|
(11,232
|
)
|
|||
Effect of exchange rate changes
|
(16
|
)
|
|
62
|
|
|
(145
|
)
|
|||
Net decrease in cash and cash equivalents and restricted cash
|
$
|
(4,585
|
)
|
|
$
|
(352
|
)
|
|
$
|
(18,705
|
)
|
|
Payments Due by Period
|
||||||||||||||||||
(in thousands)
|
Total
|
|
Less than
1 year
|
|
1 – 3 Years
|
|
3 –5 Years
|
|
More than
5 years
|
||||||||||
Long-term debt(1)
|
$
|
167,828
|
|
|
$
|
7,321
|
|
|
$
|
3,300
|
|
|
$
|
157,207
|
|
|
$
|
—
|
|
Interest on long-term debt(2)
|
69,419
|
|
|
17,546
|
|
|
37,874
|
|
|
13,999
|
|
|
—
|
|
|||||
Operating leases(3)
|
19,405
|
|
|
4,878
|
|
|
6,496
|
|
|
5,142
|
|
|
2,889
|
|
|||||
Purchase obligations(4)
|
19,487
|
|
|
19,487
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
276,139
|
|
|
$
|
49,232
|
|
|
$
|
47,670
|
|
|
$
|
176,348
|
|
|
$
|
2,889
|
|
|
Page
|
|
March 31,
|
||||||
|
2020
|
|
2019
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
6,440
|
|
|
$
|
10,790
|
|
Restricted cash
|
830
|
|
|
1,065
|
|
||
Accounts receivable, net of allowance for doubtful accounts of $1,247 and $68, respectively
|
70,370
|
|
|
86,828
|
|
||
Manufacturing inventories
|
29,196
|
|
|
18,440
|
|
||
Service parts inventories
|
20,502
|
|
|
19,070
|
|
||
Other current assets
|
8,489
|
|
|
18,095
|
|
||
Total current assets
|
135,827
|
|
|
154,288
|
|
||
Property and equipment, net
|
9,046
|
|
|
8,437
|
|
||
Restricted cash
|
5,000
|
|
|
5,000
|
|
||
Right-of-use assets, net
|
12,689
|
|
|
—
|
|
||
Other long-term assets
|
3,433
|
|
|
5,146
|
|
||
Total assets
|
$
|
165,995
|
|
|
$
|
172,871
|
|
Liabilities and Stockholders’ Deficit
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
36,949
|
|
|
$
|
37,395
|
|
Deferred revenue
|
81,492
|
|
|
90,407
|
|
||
Accrued restructuring charges
|
—
|
|
|
2,876
|
|
||
Long-term debt, current portion
|
7,321
|
|
|
1,650
|
|
||
Accrued compensation
|
14,957
|
|
|
17,117
|
|
||
Other accrued liabilities
|
17,535
|
|
|
29,025
|
|
||
Total current liabilities
|
158,254
|
|
|
178,470
|
|
||
Deferred revenue
|
37,443
|
|
|
36,733
|
|
||
Long-term debt, net of current portion
|
146,847
|
|
|
145,621
|
|
||
Operating lease liability
|
10,822
|
|
|
—
|
|
||
Other long-term liabilities
|
11,154
|
|
|
11,827
|
|
||
Total liabilities
|
364,520
|
|
|
372,651
|
|
||
Commitments and Contingencies (Note 10)
|
|
|
|
|
|
||
Stockholders’ deficit
|
|
|
|
||||
Preferred stock:
|
|
|
|
||||
Preferred stock, 20,000 shares authorized; no shares issued as of March 31, 2020 and 2019
|
—
|
|
|
—
|
|
||
Common stock:
|
|
|
|
||||
Common stock, $0.01 par value; 125,000 shares authorized; 39,905 and 36,040 shares issued and outstanding at March 31, 2020 and 2019, respectively
|
399
|
|
|
360
|
|
||
Additional paid-in capital
|
505,762
|
|
|
499,224
|
|
||
Accumulated deficit
|
(703,164
|
)
|
|
(697,954
|
)
|
||
Accumulated other comprehensive loss
|
(1,522
|
)
|
|
(1,410
|
)
|
||
Total stockholders' deficit
|
(198,525
|
)
|
|
(199,780
|
)
|
||
Total liabilities and stockholders' deficit
|
$
|
165,995
|
|
|
$
|
172,871
|
|
|
Year Ended March 31,
|
||||||||||
|
2020
|
|
2019
|
|
2018
|
||||||
Revenue:
|
|
|
|
|
|
||||||
Product
|
$
|
251,168
|
|
|
$
|
244,654
|
|
|
$
|
268,582
|
|
Service
|
131,050
|
|
|
134,696
|
|
|
136,523
|
|
|||
Royalty
|
20,731
|
|
|
23,330
|
|
|
32,579
|
|
|||
Total revenue
|
402,949
|
|
|
402,680
|
|
|
437,684
|
|
|||
Cost of revenue:
|
|
|
|
|
|
||||||
Product
|
179,760
|
|
|
179,846
|
|
|
206,111
|
|
|||
Service
|
50,681
|
|
|
55,220
|
|
|
58,789
|
|
|||
Total cost of revenue
|
230,441
|
|
|
235,066
|
|
|
264,900
|
|
|||
Gross profit
|
172,508
|
|
|
167,614
|
|
|
172,784
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Research and development
|
36,301
|
|
|
32,113
|
|
|
38,562
|
|
|||
Sales and marketing
|
59,524
|
|
|
69,400
|
|
|
102,242
|
|
|||
General and administrative
|
54,457
|
|
|
65,277
|
|
|
52,128
|
|
|||
Restructuring charges
|
1,022
|
|
|
5,570
|
|
|
8,474
|
|
|||
Total operating expenses
|
151,304
|
|
|
172,360
|
|
|
201,406
|
|
|||
Income (loss) from operations
|
21,204
|
|
|
(4,746
|
)
|
|
(28,622
|
)
|
|||
Other income (expense), net
|
(261
|
)
|
|
2,878
|
|
|
767
|
|
|||
Interest expense
|
(25,350
|
)
|
|
(21,095
|
)
|
|
(11,670
|
)
|
|||
Loss on debt extinguishment, net
|
—
|
|
|
(17,458
|
)
|
|
(6,934
|
)
|
|||
Net loss before income taxes
|
(4,407
|
)
|
|
(40,421
|
)
|
|
(46,459
|
)
|
|||
Income tax provision (benefit)
|
803
|
|
|
2,376
|
|
|
(3,113
|
)
|
|||
Net loss
|
$
|
(5,210
|
)
|
|
$
|
(42,797
|
)
|
|
$
|
(43,346
|
)
|
|
|
|
|
|
|
||||||
Net loss per share - basic and diluted
|
$
|
(0.14
|
)
|
|
$
|
(1.20
|
)
|
|
$
|
(1.25
|
)
|
Weighted average shares - basic and diluted
|
37,593
|
|
|
35,551
|
|
|
34,687
|
|
|||
|
|
|
|
|
|
||||||
Net loss
|
$
|
(5,210
|
)
|
|
$
|
(42,797
|
)
|
|
$
|
(43,346
|
)
|
Foreign currency translation adjustments, net
|
(112
|
)
|
|
(1,136
|
)
|
|
1,402
|
|
|||
Total comprehensive loss
|
$
|
(5,322
|
)
|
|
$
|
(43,933
|
)
|
|
$
|
(41,944
|
)
|
|
Year Ended March 31,
|
||||||||||
|
2020
|
|
2019
|
|
2018
|
||||||
Operating activities
|
|
|
|
|
|
||||||
Net loss
|
$
|
(5,210
|
)
|
|
$
|
(42,797
|
)
|
|
$
|
(43,346
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
4,287
|
|
|
4,266
|
|
|
4,970
|
|
|||
Amortization of debt issuance costs
|
4,017
|
|
|
2,825
|
|
|
1,537
|
|
|||
Paid-in-kind interest
|
1,858
|
|
|
—
|
|
|
—
|
|
|||
Provision for manufacturing and service inventories
|
6,255
|
|
|
8,851
|
|
|
8,146
|
|
|||
Tax benefit from settlement and Tax Reform Act
|
—
|
|
|
—
|
|
|
(3,952
|
)
|
|||
Stock-based compensation
|
6,748
|
|
|
3,409
|
|
|
5,394
|
|
|||
Deferred income taxes
|
458
|
|
|
2,356
|
|
|
69
|
|
|||
Bad debt expense
|
1,221
|
|
|
315
|
|
|
295
|
|
|||
Unrealized foreign exchange (gain) loss
|
128
|
|
|
(224
|
)
|
|
1,437
|
|
|||
Non-cash loss on debt extinguishment
|
—
|
|
|
17,851
|
|
|
6,962
|
|
|||
(Gain) loss on investment
|
—
|
|
|
(2,729
|
)
|
|
118
|
|
|||
Other non-cash
|
—
|
|
|
1,795
|
|
|
566
|
|
|||
Changes in assets and liabilities, net of effect of acquisition:
|
|
|
|
|
|
||||||
Accounts receivable
|
15,237
|
|
|
8,054
|
|
|
6,510
|
|
|||
Manufacturing inventories
|
(11,092
|
)
|
|
13,054
|
|
|
(2,613
|
)
|
|||
Service parts inventories
|
(3,817
|
)
|
|
(3,506
|
)
|
|
(6,760
|
)
|
|||
Accounts payable
|
(768
|
)
|
|
(25,356
|
)
|
|
21,647
|
|
|||
Deferred revenue
|
(11,334
|
)
|
|
(8,367
|
)
|
|
4,228
|
|
|||
Accrued restructuring charges
|
(2,876
|
)
|
|
(2,943
|
)
|
|
(463
|
)
|
|||
Accrued compensation
|
(2,161
|
)
|
|
(2,342
|
)
|
|
(4,330
|
)
|
|||
Other assets and liabilities
|
(4,132
|
)
|
|
8,629
|
|
|
(5,447
|
)
|
|||
Net cash used in operating activities
|
(1,181
|
)
|
|
(16,859
|
)
|
|
(5,032
|
)
|
|||
Investing activities
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
(2,633
|
)
|
|
(2,708
|
)
|
|
(2,584
|
)
|
|||
Cash distributions from investments
|
—
|
|
|
2,943
|
|
|
288
|
|
|||
Business acquisition
|
(1,966
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash provided by (used in) investing activities
|
(4,599
|
)
|
|
235
|
|
|
(2,296
|
)
|
|||
Financing activities
|
|
|
|
|
|
||||||
Borrowings of long-term debt and credit facility
|
331,632
|
|
|
507,707
|
|
|
367,755
|
|
|||
Repayments of long-term debt and credit facility
|
(330,250
|
)
|
|
(491,143
|
)
|
|
(316,053
|
)
|
|||
Repayments of convertible subordinated debt
|
—
|
|
|
—
|
|
|
(62,827
|
)
|
|||
Payment of taxes due upon vesting of restricted stock
|
(171
|
)
|
|
(354
|
)
|
|
(1,822
|
)
|
|||
Proceeds from issuance of common stock
|
—
|
|
|
—
|
|
|
1,715
|
|
|||
Net cash provided by (used in) financing activities
|
1,211
|
|
|
16,210
|
|
|
(11,232
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(16
|
)
|
|
62
|
|
|
(145
|
)
|
|||
Net change in cash, cash equivalents and restricted cash
|
(4,585
|
)
|
|
(352
|
)
|
|
(18,705
|
)
|
|||
Cash and cash equivalents at beginning of period
|
16,855
|
|
|
17,207
|
|
|
35,912
|
|
|||
Cash and cash equivalents at end of period
|
$
|
12,270
|
|
|
$
|
16,855
|
|
|
$
|
17,207
|
|
Supplemental disclosure of cash flow information
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
16,488
|
|
|
$
|
17,677
|
|
|
$
|
10,244
|
|
Cash paid for income taxes, net of refunds
|
$
|
(490
|
)
|
|
$
|
68
|
|
|
$
|
1,455
|
|
Non-cash transactions
|
|
|
|
|
|
||||||
Purchases of property and equipment included in accounts payable
|
$
|
368
|
|
|
$
|
105
|
|
|
$
|
173
|
|
Transfer of inventory to property and equipment
|
$
|
400
|
|
|
$
|
408
|
|
|
$
|
1,036
|
|
Payment of litigation settlements with insurance proceeds
|
$
|
8,950
|
|
|
$
|
—
|
|
|
$
|
—
|
|
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the statement of cash flows:
|
|||||||||||
Cash and cash equivalents
|
$
|
6,440
|
|
|
$
|
10,790
|
|
|
$
|
10,865
|
|
Restricted cash, current
|
830
|
|
|
1,065
|
|
|
1,342
|
|
|||
Restricted cash, long-term
|
5,000
|
|
|
5,000
|
|
|
5,000
|
|
|||
Total cash, cash equivalents and restricted cash at the end of period
|
$
|
12,270
|
|
|
$
|
16,855
|
|
|
$
|
17,207
|
|
|
Common Stock
|
|
Additional
Paid-in Capital |
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Loss
|
|
Total Stockholders' Deficit
|
|||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|||||||||||||||
Balance, March 31, 2017
|
34,063
|
|
|
$
|
340
|
|
|
$
|
473,851
|
|
|
$
|
(611,811
|
)
|
|
$
|
(1,676
|
)
|
|
$
|
(139,296
|
)
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(43,346
|
)
|
|
—
|
|
|
(43,346
|
)
|
|||||
Foreign currency translation adjustments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,402
|
|
|
1,402
|
|
|||||
Shares issued under employee stock purchase plan
|
316
|
|
|
3
|
|
|
1,712
|
|
|
—
|
|
|
—
|
|
|
1,715
|
|
|||||
Shares issued under employee incentive plans, net
|
1,064
|
|
|
11
|
|
|
(1,827
|
)
|
|
—
|
|
|
—
|
|
|
(1,816
|
)
|
|||||
Share-based compensation
|
—
|
|
|
—
|
|
|
5,990
|
|
|
—
|
|
|
—
|
|
|
5,990
|
|
|||||
Reclassifications of liability classified warrants to equity
|
—
|
|
|
—
|
|
|
1,884
|
|
|
—
|
|
|
—
|
|
|
1,884
|
|
|||||
Balance, March 31, 2018
|
35,443
|
|
|
354
|
|
|
481,610
|
|
|
(655,157
|
)
|
|
(274
|
)
|
|
(173,467
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(42,797
|
)
|
|
—
|
|
|
(42,797
|
)
|
|||||
Foreign currency translation adjustments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,136
|
)
|
|
(1,136
|
)
|
|||||
Shares issued under employee incentive plans, net
|
597
|
|
|
6
|
|
|
(360
|
)
|
|
—
|
|
|
—
|
|
|
(354
|
)
|
|||||
Share-based compensation
|
—
|
|
|
—
|
|
|
3,409
|
|
|
—
|
|
|
—
|
|
|
3,409
|
|
|||||
Reclassifications of liability classified warrants to equity
|
—
|
|
|
—
|
|
|
14,565
|
|
|
—
|
|
|
—
|
|
|
14,565
|
|
|||||
Balance, March 31, 2019
|
36,040
|
|
|
360
|
|
|
499,224
|
|
|
(697,954
|
)
|
|
(1,410
|
)
|
|
(199,780
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,210
|
)
|
|
—
|
|
|
(5,210
|
)
|
|||||
Foreign currency translation adjustments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(112
|
)
|
|
(112
|
)
|
|||||
Shares issued under employee incentive plans, net
|
1,082
|
|
|
11
|
|
|
(182
|
)
|
|
—
|
|
|
—
|
|
|
(171
|
)
|
|||||
Shares issued from warrants exercised, net
|
2,783
|
|
|
28
|
|
|
(28
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Share-based compensation
|
—
|
|
|
—
|
|
|
6,748
|
|
|
—
|
|
|
—
|
|
|
6,748
|
|
|||||
Balance, March 31, 2020
|
39,905
|
|
|
$
|
399
|
|
|
$
|
505,762
|
|
|
$
|
(703,164
|
)
|
|
$
|
(1,522
|
)
|
|
$
|
(198,525
|
)
|
|
|
Page
|
Note 1:
|
||
Note 2:
|
||
Note 3:
|
||
Note 4:
|
||
Note 5:
|
||
Note 6:
|
||
Note 7:
|
||
Note 8:
|
||
Note 9:
|
||
Note 10:
|
||
Note 11:
|
||
Note 12:
|
Level 1:
|
Unadjusted quoted prices in active markets for identical assets or liabilities.
|
Level 2:
|
Other than quoted prices that are observable in the market for the asset or liability, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or model-derived valuations or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|
Level 3:
|
Inputs are unobservable and reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.
|
Machinery and equipment
|
3 to 5 years
|
Computer equipment
|
3 to 5 years
|
ERP software
|
10 years
|
Other software
|
3 years
|
Furniture and fixtures
|
5 years
|
Other office equipment
|
5 years
|
Leasehold improvements
|
Shorter of useful life or life of lease
|
|
Year Ended March 31,
|
||||||||||
|
2020
|
|
20191
|
|
20181
|
||||||
Americas2
|
|
|
|
|
|
||||||
Primary storage systems
|
$
|
54,211
|
|
|
$
|
33,789
|
|
|
$
|
44,693
|
|
Secondary storage systems
|
57,192
|
|
|
72,696
|
|
|
69,582
|
|
|||
Device and media
|
31,228
|
|
|
34,079
|
|
|
39,664
|
|
|||
Service
|
82,607
|
|
|
87,040
|
|
|
87,960
|
|
|||
Total revenue
|
225,238
|
|
|
227,604
|
|
|
241,899
|
|
|||
|
|
|
|
|
|
||||||
EMEA
|
|
|
|
|
|
||||||
Primary storage systems
|
16,078
|
|
|
18,902
|
|
|
24,006
|
|
|||
Secondary storage systems
|
40,008
|
|
|
40,666
|
|
|
37,376
|
|
|||
Device and media
|
25,484
|
|
|
19,064
|
|
|
21,306
|
|
|||
Service
|
39,467
|
|
|
37,216
|
|
|
37,875
|
|
|||
Total revenue
|
121,037
|
|
|
115,848
|
|
|
120,563
|
|
|||
|
|
|
|
|
|
||||||
APAC
|
|
|
|
|
|
||||||
Primary storage systems
|
6,863
|
|
|
6,120
|
|
|
9,277
|
|
|||
Secondary storage systems
|
14,472
|
|
|
13,166
|
|
|
14,444
|
|
|||
Device and media
|
5,632
|
|
|
6,172
|
|
|
8,234
|
|
|||
Service
|
8,976
|
|
|
10,440
|
|
|
10,688
|
|
|||
Total revenue
|
35,943
|
|
|
35,898
|
|
|
42,643
|
|
|||
|
|
|
|
|
|
||||||
Consolidated
|
|
|
|
|
|
||||||
Primary storage systems
|
77,152
|
|
|
58,811
|
|
|
77,976
|
|
|||
Secondary storage systems
|
111,672
|
|
|
126,528
|
|
|
121,402
|
|
|||
Device and media
|
62,344
|
|
|
59,315
|
|
|
69,204
|
|
|||
Service
|
131,050
|
|
|
134,696
|
|
|
136,523
|
|
|||
Royalty3
|
20,731
|
|
|
23,330
|
|
|
32,579
|
|
|||
Total revenue
|
$
|
402,949
|
|
|
$
|
402,680
|
|
|
$
|
437,684
|
|
|
|
March 31, 2020
|
||
Deferred revenue
|
|
$
|
118,935
|
|
Revenue recognized in the period from amounts included in contract liabilities at the beginning of the period
|
|
$
|
80,977
|
|
|
|
Current
|
|
Non-Current
|
|
Total
|
||||||
As of March 31, 2020
|
|
$
|
89,036
|
|
|
$
|
46,827
|
|
|
$
|
135,864
|
|
•
|
persuasive evidence of an arrangement exists,
|
•
|
delivery has occurred or services have been rendered,
|
•
|
the price to the buyer is fixed or determinable, and
|
•
|
when collectability is reasonably assured.
|
Manufacturing inventories
|
March 31,
|
||||||
|
2020
|
|
2019
|
||||
Finished goods
|
|
|
|
|
|
||
Manufactured finished goods
|
$
|
15,790
|
|
|
$
|
8,160
|
|
Distributor inventory
|
504
|
|
|
3,345
|
|
||
Total finished goods
|
16,294
|
|
|
11,505
|
|
||
Work in progress
|
1,001
|
|
|
107
|
|
||
Raw materials
|
11,901
|
|
|
6,828
|
|
||
Total manufacturing inventories
|
$
|
29,196
|
|
|
$
|
18,440
|
|
Service inventories
|
March 31,
|
||||||
|
2020
|
|
2019
|
||||
Finished goods
|
$
|
15,845
|
|
|
$
|
13,437
|
|
Component parts
|
4,657
|
|
|
5,633
|
|
||
Total service inventories
|
$
|
20,502
|
|
|
$
|
19,070
|
|
Other current assets
|
March 31,
|
||||||
|
2020
|
|
2019
|
||||
Insurance receivable
|
$
|
—
|
|
|
$
|
8,950
|
|
Other
|
8,489
|
|
|
9,145
|
|
||
Total other current assets
|
$
|
8,489
|
|
|
$
|
18,095
|
|
Property and equipment, net
|
March 31,
|
||||||
|
2020
|
|
2019
|
||||
Machinery and equipment
|
$
|
33,804
|
|
|
$
|
30,306
|
|
Leasehold improvements
|
6,733
|
|
|
6,990
|
|
||
Furniture and fixtures
|
1,862
|
|
|
2,073
|
|
||
|
42,399
|
|
|
39,369
|
|
||
Less: accumulated depreciation
|
(33,353
|
)
|
|
(30,932
|
)
|
||
Total property, plant and equipment, net
|
$
|
9,046
|
|
|
$
|
8,437
|
|
Other accrued liabilities
|
March 31,
|
||||||
|
2020
|
|
2019
|
||||
Accrued expenses
|
$
|
3,237
|
|
|
$
|
8,925
|
|
Asset retirement obligation
|
1,655
|
|
|
1,936
|
|
||
Accrued settlement
|
101
|
|
|
10,452
|
|
||
Accrued warranty
|
2,668
|
|
|
3,456
|
|
||
Accrued interest
|
3,192
|
|
|
230
|
|
||
Other
|
6,682
|
|
|
4,026
|
|
||
Total other accrued liabilities
|
$
|
17,535
|
|
|
$
|
29,025
|
|
|
Year Ended March 31,
|
||||||||||
|
2020
|
|
2019
|
|
2018
|
||||||
Balance as of April 1
|
$
|
3,456
|
|
|
$
|
2,422
|
|
|
3,689
|
|
|
Current period accruals
|
3,516
|
|
|
5,766
|
|
|
5,140
|
|
|||
Adjustments to prior estimates
|
(114
|
)
|
|
326
|
|
|
(116
|
)
|
|||
Charges incurred
|
(4,190
|
)
|
|
(5,058
|
)
|
|
(6,291
|
)
|
|||
Balance as of March 31
|
$
|
2,668
|
|
|
$
|
3,456
|
|
|
$
|
2,422
|
|
|
Year Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Senior Secured Term Loan
|
$
|
165,208
|
|
|
$
|
164,588
|
|
Amended PNC Credit Facility
|
2,620
|
|
|
—
|
|
||
Less: current portion
|
(7,321
|
)
|
|
(1,650
|
)
|
||
Less unamortized debt issuance costs(1)
|
(13,660
|
)
|
|
(17,317
|
)
|
||
Long-term debt, net
|
$
|
146,847
|
|
|
$
|
145,621
|
|
Operating leases
|
|
March 31, 2020
|
||
Operating lease right-of-use asset
|
|
$
|
12,689
|
|
|
|
|
||
Other current liabilities
|
|
$
|
3,065
|
|
Operating lease liability
|
|
10,822
|
|
|
Total operating lease liabilities
|
|
$
|
13,887
|
|
Lease expense
|
|
Year Ended March 31, 2020
|
||
Operating lease expense
|
|
$
|
4,901
|
|
Variable lease expense
|
|
277
|
|
|
Short-term lease expense
|
|
102
|
|
|
Total lease expense
|
|
$
|
5,280
|
|
Maturity of Lease Liabilities
|
|
Operating Leases
|
||
2021
|
|
4,878
|
|
|
2022
|
|
3,671
|
|
|
2023
|
|
2,825
|
|
|
2024
|
|
2,857
|
|
|
2025
|
|
2,285
|
|
|
Thereafter
|
|
2,889
|
|
|
Total lease payments
|
|
$
|
19,405
|
|
Less: Imputed interest
|
|
(5,518
|
)
|
|
Present value of lease liabilities
|
|
$
|
13,887
|
|
Lease Term and Discount Rate
|
|
March 31, 2020
|
|
Weighted average remaining operating lease term (years)
|
|
4.99
|
|
Weighted average discount rate for operating leases
|
|
13.91
|
%
|
|
Severance and
benefits
|
|
Facilities
|
|
Total
|
||||||
Balance as of March 31, 2017
|
$
|
130
|
|
|
$
|
6,152
|
|
|
$
|
6,282
|
|
Restructuring costs
|
8,266
|
|
|
208
|
|
|
8,474
|
|
|||
Cash payments
|
(6,368
|
)
|
|
(1,971
|
)
|
|
(8,339
|
)
|
|||
Other non-cash
|
(598
|
)
|
|
—
|
|
|
(598
|
)
|
|||
Balance as of March 31, 2018
|
1,430
|
|
|
4,389
|
|
|
5,819
|
|
|||
Restructuring costs
|
4,708
|
|
|
862
|
|
|
5,570
|
|
|||
Cash payments
|
(6,138
|
)
|
|
(2,375
|
)
|
|
(8,513
|
)
|
|||
Balance as of March 31, 2019
|
—
|
|
|
2,876
|
|
|
2,876
|
|
|||
Adjustments of prior estimates
|
—
|
|
|
1,022
|
|
|
1,022
|
|
|||
Cash payments
|
—
|
|
|
(3,961
|
)
|
|
(3,961
|
)
|
|||
Other non-cash
|
—
|
|
|
63
|
|
|
63
|
|
|||
Balance as of March 31, 2020
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Year Ended March 31,
|
||||
|
2020
|
|
2019
|
|
2018
|
Expected life
|
0.5 years
|
|
n/a
|
|
0.5 years
|
Volatility
|
49.81%
|
|
n/a
|
|
0.05%
|
Risk-free interest rate
|
0.41%
|
|
n/a
|
|
91%
|
Dividend yield
|
—%
|
|
n/a
|
|
—%
|
Weighted-average grant date fair value
|
$4.78
|
|
n/a
|
|
$2.20
|
Weighted-Average
|
|
2020
|
|
2019
|
|
2018
|
Discount period (years)
|
|
3.00
|
|
1.95
|
|
7.00
|
Risk-free interest rate
|
|
1.45%
|
|
2.63%
|
|
2.48%
|
Stock price volatility
|
|
72.00%
|
|
69.35%
|
|
75.52%
|
Grant date fair value
|
|
$5.92
|
|
$1.70
|
|
$4.29
|
|
Shares
|
|
Weighted-Average
Grant Date Fair Value per Share
|
|||
Outstanding as of March 31, 2019
|
1,313
|
|
|
$
|
3.61
|
|
Granted
|
645
|
|
|
$
|
4.77
|
|
Vested
|
(877
|
)
|
|
$
|
4.55
|
|
Forfeited or cancelled
|
(95
|
)
|
|
$
|
5.54
|
|
Outstanding as of March 31, 2020
|
986
|
|
|
$
|
3.42
|
|
|
Year Ended March 31,
|
||||||||||
|
2020
|
|
2019
|
|
2018
|
||||||
Cost of revenue
|
$
|
452
|
|
|
$
|
334
|
|
|
$
|
725
|
|
Research and development
|
984
|
|
|
440
|
|
|
906
|
|
|||
Sales and marketing
|
1,165
|
|
|
179
|
|
|
1,790
|
|
|||
General and administrative
|
4,147
|
|
|
2,456
|
|
|
1,973
|
|
|||
Total share-based compensation
|
$
|
6,748
|
|
|
$
|
3,409
|
|
|
$
|
5,394
|
|
|
Year Ended March 31,
|
||||||||||
|
2020
|
|
2019
|
|
2018
|
||||||
Restricted stock units
|
$
|
3,610
|
|
|
$
|
3,178
|
|
|
$
|
5,004
|
|
Performance share units
|
3,103
|
|
|
274
|
|
|
(171
|
)
|
|||
Stock options
|
—
|
|
|
(43
|
)
|
|
44
|
|
|||
Employee stock purchase plan
|
35
|
|
|
—
|
|
|
517
|
|
|||
Total share-based compensation
|
$
|
6,748
|
|
|
$
|
3,409
|
|
|
$
|
5,394
|
|
|
Year Ended March 31,
|
||||||||||
|
2020
|
|
2019
|
|
2018
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net loss
|
$
|
(5,210
|
)
|
|
$
|
(42,797
|
)
|
|
$
|
(43,346
|
)
|
Denominator:
|
|
|
|
|
|
||||||
Weighted average shares - basic and diluted
|
37,593
|
|
|
35,551
|
|
|
34,687
|
|
|||
Net loss per share - basic and diluted
|
$
|
(0.14
|
)
|
|
$
|
(1.20
|
)
|
|
$
|
(1.25
|
)
|
|
Year Ended March 31,
|
|||||||||||
|
2020
|
|
2019
|
|
2018
|
|||||||
U.S.
|
$
|
(6,318
|
)
|
|
$
|
(40,935
|
)
|
|
$
|
(46,923
|
)
|
|
Foreign
|
1,911
|
|
514
|
|
514
|
|
|
464
|
|
|||
Total
|
$
|
(4,407
|
)
|
|
$
|
(40,421
|
)
|
|
$
|
(46,459
|
)
|
|
Year Ended March 31,
|
||||||||||
|
2020
|
|
2019
|
|
2018
|
||||||
Current tax expense
|
|
|
|
|
|
||||||
Federal
|
$
|
(115
|
)
|
|
$
|
(217
|
)
|
|
$
|
(3,484
|
)
|
State
|
106
|
|
|
31
|
|
|
26
|
|
|||
Foreign
|
1,271
|
|
|
1,103
|
|
|
206
|
|
|||
Total current tax expense
|
1,262
|
|
|
917
|
|
|
(3,252
|
)
|
|||
Deferred tax expense
|
|
|
|
|
|
|
|
|
|||
State
|
33
|
|
|
32
|
|
|
32
|
|
|||
Foreign
|
(492
|
)
|
|
1,427
|
|
|
107
|
|
|||
Total deferred tax expense
|
(459
|
)
|
|
1,459
|
|
|
139
|
|
|||
Income tax provision (benefit)
|
$
|
803
|
|
|
$
|
2,376
|
|
|
$
|
(3,113
|
)
|
|
For the year ended March 31,
|
||||||||||
|
2020
|
|
2019
|
|
2018
|
||||||
Expense (benefit) at the federal statutory rate
|
$
|
(925
|
)
|
|
$
|
(8,488
|
)
|
|
$
|
(14,634
|
)
|
Equity compensation
|
280
|
|
|
905
|
|
|
1,024
|
|
|||
Permanent items
|
914
|
|
|
359
|
|
|
564
|
|
|||
Foreign taxes
|
1,612
|
|
|
(2,133
|
)
|
|
1,336
|
|
|||
State income taxes
|
(20
|
)
|
|
(997
|
)
|
|
(830
|
)
|
|||
Valuation allowance
|
(2,639
|
)
|
|
10,913
|
|
|
(42,784
|
)
|
|||
Uncertain tax positions
|
(8,654
|
)
|
|
(9,278
|
)
|
|
(336
|
)
|
|||
Tax reform
|
—
|
|
|
(207
|
)
|
|
52,682
|
|
|||
Credit monetization
|
—
|
|
|
—
|
|
|
(323
|
)
|
|||
Expiration of attributes
|
11,679
|
|
|
12,268
|
|
|
410
|
|
|||
Research and development credits
|
(1,566
|
)
|
|
(879
|
)
|
|
(1,714
|
)
|
|||
Other
|
122
|
|
|
(87
|
)
|
|
1,492
|
|
|||
Income tax provision
|
$
|
803
|
|
|
$
|
2,376
|
|
|
$
|
(3,113
|
)
|
|
As of March 31,
|
||||||
|
2020
|
|
2019
|
||||
Deferred tax assets
|
|
|
|
||||
Inventory valuation method
|
$
|
924
|
|
|
$
|
882
|
|
Accrued warranty expense
|
650
|
|
|
814
|
|
||
Distribution reserves
|
187
|
|
|
2,137
|
|
||
Loss carryforwards
|
85,638
|
|
|
93,308
|
|
||
Tax credits
|
17,416
|
|
|
20,346
|
|
||
Restructuring charge accruals
|
—
|
|
|
678
|
|
||
Deferred revenue
|
17,043
|
|
|
13,094
|
|
||
Acquired intangibles
|
2,660
|
|
|
2,822
|
|
||
Lease obligations
|
3,413
|
|
|
—
|
|
||
Other accruals and reserves not currently deductible for tax purposes
|
16,152
|
|
|
7,051
|
|
||
Gross deferred tax assets
|
144,083
|
|
|
141,132
|
|
||
Valuation allowance
|
(137,814
|
)
|
|
(140,359
|
)
|
||
Total deferred tax assets, net of valuation allowance
|
$
|
6,269
|
|
|
$
|
773
|
|
Deferred tax liabilities
|
|
|
|
||||
Depreciation
|
$
|
(1,440
|
)
|
|
$
|
(450
|
)
|
Lease assets
|
(3,413
|
)
|
|
—
|
|
||
Other
|
(967
|
)
|
|
(524
|
)
|
||
Total deferred tax liabilities
|
$
|
(5,820
|
)
|
|
$
|
(974
|
)
|
Net deferred tax assets (liabilities)
|
$
|
449
|
|
|
$
|
(201
|
)
|
|
For the year ended March 31,
|
||||||||||
|
2020
|
|
2019
|
|
2018
|
||||||
Beginning Balance
|
$
|
116,032
|
|
|
$
|
150,559
|
|
|
$
|
170,730
|
|
Increase in balances related to tax positions in current period
|
2,275
|
|
|
1,718
|
|
|
3,298
|
|
|||
Increase in balances related to tax positions in prior period
|
144
|
|
|
—
|
|
|
25
|
|
|||
Decrease in balances related to tax positions in prior period
|
(4
|
)
|
|
(25,095
|
)
|
|
(20,692
|
)
|
|||
Decrease in balances due to lapse in statute of limitations
|
(11,165
|
)
|
|
(11,150
|
)
|
|
(810
|
)
|
|||
Settlement and effective settlements with tax authorities and related remeasurements
|
—
|
|
|
—
|
|
|
(1,992
|
)
|
|||
Ending balance
|
$
|
107,282
|
|
|
$
|
116,032
|
|
|
$
|
150,559
|
|
Inputs
|
|
Year Ended March 31,
|
||
|
|
2019
|
|
2018
|
Company's stock price
|
|
$1.62 - $2.40
|
|
$3.64 - $5.63
|
Exercise prices
|
|
$0.01 - $2.40
|
|
$0.01
|
Expected term (years)
|
|
4.5 to 5.0
|
|
4.8 to 5.0
|
Volatility
|
|
64.1% - 71.8%
|
|
59.8% - 69.1%
|
Risk free interest rate
|
|
2.5% - 3.0%
|
|
2.1% - 2.7%
|
Dividend rate
|
|
—%
|
|
—%
|
|
Warrant liability
|
||
As of March 31, 2018
|
$
|
272
|
|
Issuances
|
5,683
|
|
|
Settlements
|
(615
|
)
|
|
Changes in fair value
|
297
|
|
|
Reclassifications to stockholders' deficit
|
(5,637
|
)
|
|
As of March 31, 2019
|
$
|
—
|
|
|
|
March 31,
|
||||||||||||||
|
|
2020
|
|
2019
|
||||||||||||
|
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
||||||||
Senior Secured Term Loan
|
|
$
|
165,208
|
|
|
$
|
151,678
|
|
|
$
|
164,588
|
|
|
$
|
160,259
|
|
Amended PNC Credit Facility
|
|
2,620
|
|
|
2,226
|
|
|
—
|
|
|
—
|
|
•
|
We enhanced the controls over revenue recognition and the preparation, analysis, and review of significant account reconciliations and closing adjustments required to assess the appropriateness of revenue recognition and certain other account balances at period end. The enhanced controls have operated for a sufficient period of time in order for management to conclude, through testing, that these controls are designed and operating effectively.
|
•
|
We assessed our accounting resource requirements across the Company and as a result have hired additional experienced accounting personnel and have taken steps to improve the overall control effectiveness and efficiency of our accounting and reporting processes. Our assessment was performed in the prior fiscal year, continuing into the current fiscal year, which has allowed for the hiring of additional personnel to have a sufficient period of time to operate relevant controls. In addition to these resources, we have enhanced the design of our existing controls and implemented certain new controls over the following areas: (1) our global risk assessment process, evaluation, and mitigation strategies; (2) updated our internal audit plan to include internal audit monitoring activities responsive to the issues identified in the independent investigation and review of our financial records; and (3) implemented new procedures and enhanced controls governing our internal management-led Disclosure Committee and strengthened our sub-certification and external reporting processes associated with the review and approval of the content of our SEC filings and other public disclosures. The enhanced controls have operated for a sufficient period of time in order for management to conclude, through testing, that these controls are designed and operating effectively.
|
•
|
We have designed and where appropriate enhanced controls over the preparation, analysis and review of revenue recognition and significant account reconciliations. In addition, we have reinforced existing policies
|
|
|
|
|
Incorporated by Reference
|
|
|
||||
Exhibit
Number
|
|
Exhibit Description
|
|
Form
|
|
Filing Date
|
|
Exhibit
|
|
Filed or Furnished Herewith
|
3.1
|
|
|
8-K
|
|
8/16/07
|
|
3.1
|
|
|
|
3.2
|
|
|
8-K
|
|
12/5/08
|
|
3.1
|
|
|
|
3.3
|
|
|
8-K
|
|
1/26/10
|
|
3.1
|
|
|
|
3.4
|
|
|
8-K
|
|
2/8/16
|
|
3.5
|
|
|
|
3.5
|
|
|
10-Q
|
|
11/9/17
|
|
3.1
|
|
|
|
4.1
|
|
|
S-3
|
|
10/9/03
|
|
4.7
|
|
|
|
4.2
|
|
|
8-K
|
|
12/28/18
|
|
4.1
|
|
|
|
4.3
|
|
|
8-K
|
|
12/28/18
|
|
4.2
|
|
|
|
4.4
|
|
|
8-K
|
|
12/28/18
|
|
4.3
|
|
|
|
4.5
|
|
|
8-K
|
|
6/17/20
|
|
4.1
|
|
|
|
4.6
|
|
|
8-K
|
|
6/17/20
|
|
4.2
|
|
|
|
4.7
|
|
|
8-K
|
|
6/17/20
|
|
4.3
|
|
|
|
4.8
|
|
|
8-K
|
|
6/17/20
|
|
4.4
|
|
|
|
4.9
|
|
|
8-K
|
|
6/17/20
|
|
4.5
|
|
|
|
4.10
|
|
|
|
|
|
|
4.1
|
|
X
|
|
10.1
|
|
|
8-K
|
|
2/10/06
|
|
10.2
|
|
|
|
10.2
|
|
|
8-K
|
|
2/10/06
|
|
10.3
|
|
|
|
10.3
|
|
|
8-K
|
|
4/4/07
|
|
10.4
|
|
|
|
10.4
|
|
|
8-K
|
|
5/10/11
|
|
10.3
|
|
|
|
10.5
|
|
|
10-K
|
|
6/12/15
|
|
10.25
|
|
|
|
10.6
|
|
|
10-Q
|
|
11/6/15
|
|
10.2
|
|
|
|
10.7
|
|
|
8-K
|
|
10/21/16
|
|
10.2
|
|
|
|
10.8
|
|
|
8-K
|
|
5/4/17
|
|
10.1
|
|
|
|
10.9
|
|
|
8-K
|
|
8/24/17
|
|
10.2
|
|
|
|
10.10
|
|
|
8-K
|
|
9/5/17
|
|
10.1
|
|
|
|
10.11
|
|
|
8-K
|
|
11/9/17
|
|
10.2
|
|
|
|
10.12
|
|
|
8-K
|
|
2/20/18
|
|
10.1
|
|
|
10.13
|
|
|
8-K
|
|
5/30/18
|
|
10.1
|
|
|
|
10.14
|
|
|
8-K
|
|
5/30/18
|
|
10.2
|
|
|
|
10.15
|
|
|
8-K
|
|
6/27/18
|
|
10.1
|
|
|
|
10.16
|
|
|
8-K
|
|
6/27/18
|
|
10.2
|
|
|
|
10.17
|
|
|
8-K
|
|
12/28/18
|
|
10.1
|
|
|
|
10.18
|
|
|
8-K
|
|
12/28/18
|
|
10.2
|
|
|
|
10.19
|
|
|
8-K
|
|
5/31/19
|
|
99.2
|
|
|
|
10.20
|
|
|
10-K
|
|
8/6/19
|
|
10.68
|
|
|
|
10.21
|
|
|
10-K
|
|
8/6/19
|
|
10.75
|
|
|
|
10.22
|
|
|
10-K
|
|
8/6/19
|
|
10.76
|
|
|
|
10.23
|
|
|
10-Q
|
|
11/5/19
|
|
10.1
|
|
|
|
10.24
|
|
|
8-K
|
|
11/13/2019
|
|
10.1
|
|
|
|
10.25
|
|
|
8-K
|
|
11/13/2019
|
|
10.2
|
|
|
|
10.26
|
|
|
10-Q
|
|
1/29/2020
|
|
10.1
|
|
|
|
10.27
|
|
|
8-K
|
|
4/6/20
|
|
10.1
|
|
|
|
10.28
|
|
|
8-K
|
|
4/6/20
|
|
10.2
|
|
|
|
10.29
|
|
|
8-K
|
|
4/16/20
|
|
10.1
|
|
|
|
10.30
|
|
|
8-K
|
|
4/16/20
|
|
10.2
|
|
|
|
10.31
|
|
|
8-K
|
|
4/16/20
|
|
10.3
|
|
|
|
10.32
|
|
|
8-K
|
|
6/17/20
|
|
10.1
|
|
|
|
10.33
|
|
|
8-K
|
|
6/17/20
|
|
10.2
|
|
|
|
10.34
|
|
|
|
|
|
|
10.1
|
|
X
|
|
10.35
|
|
|
|
|
|
|
10.2
|
|
X
|
|
10.36
|
|
|
|
|
|
|
10.3
|
|
X
|
|
10.37
|
|
|
|
|
|
|
10.4
|
|
X
|
|
10.38
|
|
|
|
|
|
|
10.5
|
|
X
|
|
10.39
|
|
|
|
|
|
|
10.6
|
|
X
|
|
16.1
|
|
|
8-K
|
|
1/25/19
|
|
16.1
|
|
|
21.1
|
|
|
|
|
|
|
|
|
X
|
|
23.1
|
|
|
|
|
|
|
|
|
X
|
|
24.1
|
|
|
|
|
|
|
|
|
X
|
|
31.1
|
|
|
|
|
|
|
|
|
X
|
|
31.2
|
|
|
|
|
|
|
|
|
X
|
|
32.1
|
|
|
|
|
|
|
|
|
X
|
|
32.2
|
|
|
|
|
|
|
|
|
X
|
|
101
|
|
Interactive Data Files
|
|
|
|
|
|
|
|
X
|
104
|
|
Cover page interactive data file, submitted using XBRL (contained in Exhibit 101)
|
|
|
|
|
|
|
|
X
|
|
|
|
Quantum Corporation
|
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
June 24, 2020
|
|
/s/ J. Michael Dodson
|
|
|
(Date)
|
|
J. Michael Dodson
|
|
|
|
|
Chief Financial Officer
|
|
Signature
|
|
Title
|
|
|
|
/s/ James J. Lerner
|
|
President, Chief Executive Officer and Chairman of the Board
|
James J. Lerner
|
|
(Principal Executive Officer)
|
|
|
|
/s/ J. Michael Dodson
|
|
Chief Financial Officer
|
J. Michael Dodson
|
|
(Principal Financial Officer)
|
|
|
|
/s/ Lewis Moorehead
|
|
Chief Accounting Officer
|
Lewis Moorehead
|
|
(Principal Accounting Officer)
|
|
|
|
/s/ Raghavendra Rau
|
|
Director
|
Raghavendra Rau
|
|
|
|
|
|
/s/ Marc E. Rothman
|
|
Director
|
Marc E. Rothman
|
|
|
|
|
|
|
|
Director
|
John A. Fichthorn
|
|
|
|
|
|
/s/ Rebecca J. Jacoby
|
|
Director
|
Rebecca J. Jacoby
|
|
|
•
|
50,000 Shares will be earned, if, at any time between February 1, 2019 and May 31, 2022, the 60-Day Average Price is at least $4.00 and will vest upon the later of the LCC certification and May 31, 2019.
|
•
|
An additional 50,000 Shares will be earned, if, at any time between February 1, 2019 and May 31, 2022, the 60-Day Average Price is at least $5.00 and will vest upon the later of the LCC certification and May 31, 2020.
|
•
|
An additional 50,000 Shares will be earned, if, at any time between February 1, 2019 and May 31, 2022, the 60-Day Average Price is at least $6.00 and will vest upon the later of the LCC certification and May 31, 2021.
|
•
|
Notwithstanding the foregoing, to the extent required by the terms of the applicable stock plan, the PSU Shares will not vest earlier than the first anniversary of the Grant Date
|
Number of Restricted Stock Units:
|
|
%%TOTAL_SHARES_GRANTED,'999,999,999'%-%
|
|
Scheduled Vesting Dates:
|
|
Number of Units:
|
|
%%VEST_DATE_PERIOD1,'Month DD, YYYY'%-%
|
|
%%SHARES_PERIOD1,'999,999,999'%-%
|
|
%%VEST_DATE_PERIOD2,'Month DD, YYYY'%-%
|
|
%%decode(SHARES_PERIOD2, 0, null, SHARES_PERIOD2),'999,999,999'%-%
|
|
%%VEST_DATE_PERIOD3,'Month DD, YYYY'%-%
|
|
%%decode(SHARES_PERIOD3, 0, null, SHARES_PERIOD3),'999,999,999'%-%
|
|
%%VEST_DATE_PERIOD4,'Month DD, YYYY'%-%
|
|
%%decode(SHARES_PERIOD4, 0, null, SHARES_PERIOD4),'999,999,999'%-%
|
|
|
|
|
|
1.
|
General. The provisions of this Exhibit B apply to the Award.
|
2.
|
Definitions. As used herein, the following definition will apply:
|
Number of Restriced Stock Units:
|
|
0 - %%TOTAL_SHARES_GRANTED%-%
|
|
|
|
|
|
Vesting of Restricted Stock Units:
|
|
The Restricted Stock Units will vest upon achievement of both market goals and time-based vesting requirements, described in detail in Exhibit A.
|
|
|
|
|
|
|
|
|
|
1.
|
General. The provisions of this Exhibit C apply to the Award.
|
2.
|
Definitions. As used herein, the following definition will apply:
|
Number of Restricted Stock Units:
|
|
%%TOTAL_SHARES_GRANTED,'999,999,999'%-%
|
|
Scheduled Vesting Dates:
|
|
Number of Units:
|
|
%%VEST_DATE_PERIOD1,'Month DD, YYYY'%-%
|
|
%%SHARES_PERIOD1,'999,999,999'%-%
|
|
%%VEST_DATE_PERIOD2,'Month DD, YYYY'%-%
|
|
%%decode(SHARES_PERIOD2, 0, null, SHARES_PERIOD2),'999,999,999'%-%
|
|
%%VEST_DATE_PERIOD3,'Month DD, YYYY'%-%
|
|
%%decode(SHARES_PERIOD3, 0, null, SHARES_PERIOD3),'999,999,999'%-%
|
|
%%VEST_DATE_PERIOD4,'Month DD, YYYY'%-%
|
|
%%decode(SHARES_PERIOD4, 0, null, SHARES_PERIOD4),'999,999,999'%-%
|
|
|
|
|
|
(1)
|
The Employee’s participation in the Plan does not constitute an acquired right.
|
(2)
|
The Plan and the Employee’s participation in the Plan are offered by the Company on a wholly discretionary basis.
|
(3)
|
The Employee’s participation in the Plan is voluntary.
|
(4)
|
The Company or any Subsidiaries or affiliates of the Company are not responsible for any decrease in the value of the Restricted Stock Units or Shares issued under the Plan.
|
(1)
|
La participación del Empleado en el Plan no constituye un derecho adquirido.
|
(2)
|
El Plan y la participación en el Plan, se ofrecen por la Empresa en forma totalmente discrecional.
|
(3)
|
La participación del Empleado en el Plan es totalmente voluntaria.
|
(4)
|
La Empresa y cualquier subsidiaria o afiliada no son responsables por cualquier detrimento en el valor de las Unidades de Acciones Restringidas o Acciones emitidas en términos del Plan.
|
Number of Restriced Stock Units:
|
|
0 - %%TOTAL_SHARES_GRANTED%-%
|
|
|
|
|
|
Vesting of Restricted Stock Units:
|
|
The Restricted Stock Units will vest upon achievement of both performance goals and time-based vesting requirements, described in detail in Exhibit A.
|
|
|
|
|
|
|
|
|
|
(1)
|
The Employee’s participation in the Plan does not constitute an acquired right.
|
(2)
|
The Plan and the Employee’s participation in the Plan are offered by the Company on a wholly discretionary basis.
|
(3)
|
The Employee’s participation in the Plan is voluntary.
|
(4)
|
The Company or any Subsidiaries or affiliates of the Company are not responsible for any decrease in the value of the Restricted Stock Units or Shares issued under the Plan.
|
(1)
|
La participación del Empleado en el Plan no constituye un derecho adquirido.
|
(2)
|
El Plan y la participación en el Plan, se ofrecen por la Empresa en forma totalmente discrecional.
|
(3)
|
La participación del Empleado en el Plan es totalmente voluntaria.
|
(4)
|
La Empresa y cualquier subsidiaria o afiliada no son responsables por cualquier detrimento en el valor de las Unidades de Acciones Restringidas o Acciones emitidas en términos del Plan.
|
a.
|
The PSUs will be earned if the average closing price of a share of the Company’s Common Stock on a national securities exchange (or, if not then listed on a national securities exchange, the OTC Markets) (an “Exchange”) as quoted in the Wall Street Journal during any 100 consecutive calendar days (the “100-Day Average Price”) during the periods specified below is at least the amount per share indicated below, subject to the LCC’s certification of the achievement of the applicable performance criteria and subject to Employee’s Continuous Status as an Employee through the later of the LCC certification date and the time-based vest date as follows:
|
i.
|
5,334 PSUs will satisfy the performance criteria if, at any time between January 1, 2020 and January 1, 2030, the 100-Day Average Price is at least $6.25 and the vest date will be the later of the LCC certification date and January 1, 2021.
|
ii.
|
An additional 5,333 PSUs will satisfy the performance criteria if, at any time between January 1, 2020 and January 1, 2030, the 100-Day Average Price is at least $7.00 and the vest date will be the later of the LCC certification date and January 1, 2022.
|
iii.
|
An additional 5,333 PSUs will satisfy the performance criteria if, at any time between January 1, 2020 and January 1, 2030, the 100-Day Average Price is at least $8.00 and the vest date will be the later of the LCC certification date and January 1, 2023.
|
1.
|
General. The provisions of this Exhibit C apply to the Award.
|
2.
|
Definitions. As used herein, the following definition will apply:
|
Number of Restricted Stock Units:
|
|
%%TOTAL_SHARES_GRANTED,'999,999,999'%-%
|
|
Scheduled Vesting Dates:
|
|
Number of Units:
|
|
%%VEST_DATE_PERIOD1,'Month DD, YYYY'%-%
|
|
%%SHARES_PERIOD1,'999,999,999'%-%
|
|
%%VEST_DATE_PERIOD2,'Month DD, YYYY'%-%
|
|
%%decode(SHARES_PERIOD2, 0, null, SHARES_PERIOD2),'999,999,999'%-%
|
|
%%VEST_DATE_PERIOD3,'Month DD, YYYY'%-%
|
|
%%decode(SHARES_PERIOD3, 0, null, SHARES_PERIOD3),'999,999,999'%-%
|
|
%%VEST_DATE_PERIOD4,'Month DD, YYYY'%-%
|
|
%%decode(SHARES_PERIOD4, 0, null, SHARES_PERIOD4),'999,999,999'%-%
|
|
|
|
|
|
1
|
A.C.N. 120.786.012 Pty. Ltd., an Australian company
|
2
|
Advanced Digital Information Corporation, a Washington corporation
|
3
|
Certance (US) Holdings, Inc., a Delaware corporation
|
4
|
Certance Holdings Corporation, a Delaware corporation
|
5
|
Certance LLC, a Delaware limited liability company
|
6
|
Pancetera Software Inc., a Delaware corporation
|
7
|
Quantum Beteiligungs GmbH, a German corporation
|
8
|
Quantum Boehmenkirch GmbH & Co. KG, a German corporation
|
9
|
Quantum Engineering Australia Pty. Ltd., an Australian company
|
10
|
Quantum GmbH, a German corporation
|
11
|
Quantum India Development Center Private Ltd., an Indian company
|
12
|
Quantum International Inc., a Delaware corporation
|
13
|
Quantum Korea Co. Ltd., a Korean corporation
|
14
|
Quantum Peripherals (Europe) SARL, a Swiss corporation
|
15
|
Quantum SARL, a French corporation
|
16
|
Quantum Storage Australia Pty. Ltd., an Australian corporation
|
17
|
Quantum Storage GmbH, a Swiss corporation
|
18
|
Quantum Storage Japan Corporation, a Japanese corporation
|
19
|
Quantum Storage Singapore Pte. Ltd., a Singapore private company
|
20
|
Quantum Storage UK Ltd., a United Kingdom corporation
|
21
|
Quantum Storage Mexico S. de R.L. de C.V. a Mexican corporation
|
22
|
Quantum Middle East FZ-LLC, a United Arab Emirates corporation
|
1)
|
I have reviewed this annual report on Form 10-K of Quantum Corporation;
|
2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4)
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5)
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date
|
June 24, 2020
|
|
|
/s/ James J. Lerner
|
|
James J. Lerner
|
|
President, Chief Executive Officer and Chairman of the Board
|
|
(Principal Executive Officer)
|
1)
|
I have reviewed this annual report on Form 10-K of Quantum Corporation;
|
2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4)
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5)
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date
|
June 24, 2020
|
|
|
/s/ J. Michael Dodson
|
|
J. Michael Dodson
|
|
Chief Financial Officer
|
|
(Principal Financial Officer)
|
Date
|
June 24, 2020
|
|
|
/s/ James J. Lerner
|
|
James J. Lerner
|
|
President, Chief Executive Officer and Chairman of the Board
|
|
(Principal Executive Officer)
|
Date
|
June 24, 2020
|
|
|
/s/ J. Michael Dodson
|
|
J. Michael Dodson
|
|
Chief Financial Officer
|
|
(Principal Financial Officer)
|