Quantum says up to $60m revenues may have been improperly recognised. It is looking to complete a refinancing package that may not be completed in time to meet financial milestones.
According to an SEC filing Quantum has determined that annual reports for fy2015, fy2016 and fy2017 and many quarterly reports in these periods could not be relied upon.
The company says it conducted certain business and sales practices that may undermine its historical accounting treatment for transactions with several key distributors and at least one end customer. Transactions dating from at least the fourth quarter of fiscal 2015 through the fourth quarter of fiscal 2018 have been potentially identified.
Consequently its previous statements about these non-reliance periods, including management’s assessment of internal control over financial reporting and disclosure controls and procedures, could not be relied upon.
It recognized revenue for those transactions prior to satisfying the criteria for revenue recognition required under GAAP. It thinks that, as of September 30, 2017, approximately $25m to $35m of prematurely recognized revenue in the historical periods may be recognized in periods after September 30, 2017.
Also, as of June 30, 2018, the end of its most recently completed fiscal quarter, approximately $15m to $25m million of prematurely recognized revenue may need to be moved into future periods. That’s a maximum of $60m overall.
Quantum has not yet been able to state the specific amounts to be set forth in the restated results.
It hopes to file outstanding delayed and restated results as soon as practicable. There is no date for this.
Remedial measures for its deficient financial reporting and controls are being evaluated.
Quantum’s Board, Audit Committee and management have discussed these matters with its accountants.
It contemplates completing a refinancing by the end of calendar year 2018 but cannot guarantee its ability to do so As a result of this and its current working capital position, it has formally stated there is substantial doubt about the Company’s ability to continue as a going concern.
The Board states it has “the utmost confidence in the Company’s recently appointed CEO and CFO, each of whom were not with the Company during the time covered by the investigation and were not involved in any of the transactions identified in connection with the investigation.”
Blocks and Files understands that this statement is deeply embarrassing and may lead to changes in its accountancy arrangements. Asked about this, Molly Presley, VP Product Management, Global Marketing & Investor Relations, said; “No, we still aren’t in a position to discuss [these] details.”