QUANTUM CORP /DE/

NOTE 10: COMMITMENTS AND CONTINGENCIES

Commitments to Purchase Inventory

The Company uses contract manufacturers for its manufacturing operations. Under these arrangements, the contract manufacturer procures inventory to manufacture products based upon its forecast of customer demand. The Company has similar arrangements with certain other suppliers. The Company is responsible for the financial impact on the supplier or contract manufacturer of any reduction or product mix shift in the forecast relative to materials that the third party had already purchased under a prior forecast. Such a variance in forecasted demand could require a cash payment for inventory in excess of current customer demand or for costs of excess or obsolete inventory. As of March 31, 2025, the Company had issued non-cancelable commitments for $48.6 million to purchase inventory from its contract manufacturers and suppliers.

Litigation

On July 27, 2023, an electronics component distributor filed a lawsuit against Quantum, alleging breach of contract and breach of the covenant of good faith and fair dealing, seeking, among other things, monetary damages. On March 31, 2025, the Court found entirely in favor of Quantum and against the distributor. The Court entered judgment for Quantum on the same day. The deadline for the distributor to file an appeal has passed so that this matter is resolved in Quantum’ favor.

Leases

At the end of fiscal 2025, the Company had various non-cancelable operating leases for office facilities. Refer to Note 5: Leases for additional information regarding lease commitments.

Legal Proceedings

From time to time, we are a party to various legal proceedings and claims arising from the normal course of business activities. Based on current available information, we do not expect that the ultimate outcome of any currently pending unresolved matters, individually or in the aggregate, will have a material adverse effect on our results of operations, cash flows or financial position.