Accounting investigations at Quantum, assailed by financial reporting problems and Nasdaq delisting woes, discovered more revenues and extra profits for the affected 2022 and 2023 fiscal years. it was revealed yesterday when the company issued an update on accounting matters.
Under the financial management of a new CFO, Ken Gianella, Quantum discovered problems in reporting Q2 of its fiscal 2024’s financial results concerning the reconciliation of standalone selling prices for components it sold in product bundles. These affected the reporting of its Q3 and Q4 results as well. It started an accounting investigation and had to ask for a reporting extension from the Nasdaq stock exchange, where its shares are listed.
Separately Quantum’s stock price fell below an average $1.00 value required by Nasdaq and it faces a delisting threat because of that.
Now the accounting review has been completed, and company states it will “release financial results for its full year fiscal 2024 ended March 31, 2024 on Monday, June 17, 2024 after markets close.”
The review, supported by outside experts, has found that reported revenue and profit numbers for the first three quarters of fiscal years 2022 and 2023 will be increased, as will those for the first fiscal 2024 quarter.
Quantum states that the adjustment “does not impact the Company’s invoicing, cash, or contractual obligations to its customers.” Also, during the review “the Company found no evidence of fraud or intentional misconduct associated with its revenue recognition process.”
There is more good news, for investors at least. During the investigation Quantum identified a series of outstanding warrant agreements issued to its prior and current lenders in 2018, 2020, and 2023. It needs to assess the impact of revised liabilities for these warrants in fy 2022 and 2023 and Q1 fy2024. Quantum said: “The impact from the revised liability accounting treatment for outstanding warrants is estimated to increase net income in all restated periods.” More profits in other words.
Quantum also announced a revised agreement with its lenders to amend the company’s existing term loan and revolving credit agreements.
All in all this is a good result. The stock price rose 5.1 percent to $0.45 at the end of trading on May 29 as a result. We think chairman and CEO Jamie Lerner and CFO Gianella will address the Nasdaq delisting issue on June 17.
