QUANTUM CORP /DE/
For the period ended Jun 30, 2026. Filed Aug 11, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 11, 2026
QMCO$14.47+5.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-12-31; filed 2026-02-17.
0001628280-26-008558
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-11.
0001628280-26-055417
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 108 previous paragraphs and 70 current paragraphs.
29 unchanged; 21 reworded; 18 added; 53 removed; 5 previous and 2 current paragraphs rearranged.
Tables are not compared: 23 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (18)
Current report
Overview and Highlights
Current report
In the three months ended June 30, 2026, product revenue increased $16.3 million, or 44%, as compared to the same period in fiscal 2026. The primary driver of this increase was strong demand across all secondary storage product lines including Scalar tape storage products, DXi backup appliances, and ActiveScale object storage appliances. Demand growth increased worldwide with product revenues increasing across all regions. Overall secondary storage revenue increased by $18.5 million, or 100.1% as compared to the same period in fiscal 2026. Devices and media revenues also increased by $0.4 million, or 4.2% as compared to fiscal 2026. These increases were partially offset by declines in primary storage.
Current report
Service and subscription revenue was essentially flat with a small decrease of $0.3 million, or 1%, in the three months ended June 30, 2026, compared to the same period in fiscal 2026.
Current report
Service and subscription gross margin increased 550 basis points for the three months ended June 30, 2026, as compared to fiscal 2026. This increase was primarily due to lower operational costs and efficiency gains in the support organization.
Current report
In the three months ended June 30, 2026, restructuring charges decreased $2.4 million, or 99%, as compared with fiscal 2025. This decrease is because the corporate restructuring activities are largely complete.
Current report
Other Expense, net
Current report
In the three months ended June 30, 2026, interest expense decreased by $4.4 million, or 68%, as compared to fiscal 2025. This decrease was primarily due to the restructuring and subsequent repayment of our Term Loan (as defined herein) in September 2025 and in June 2026, respectively.
Current report
Convertible note
Current report
(Loss) gain on debt extinguishment, net
Current report
In the three months ended June 30, 2026, we recorded a loss of $11.7 million on debt extinguishment, primarily related to the repayment of our Term Loan in June 2026. In the same period in fiscal 2025, the gain on debt extinguishment, net was related to the net of discount on issuance of term loans to a new lender and write-off of all unamortized debt issuance costs and fees.
Current report
Income Tax Provision
Current report
On June 1, 2026, the Company entered into Securities Purchase Agreements to issue and sell to certain accredited investors an aggregate of 10,615,712 shares of the Company’s Common Stock. After deducting placement agent fees and other offering expenses payable by the Company, the Company received net proceeds of $94.7 million. On June 4, 2026, the Company paid an aggregate of $57.8 million in connection with the termination of the Term Loan Credit Agreement. This fully paid down and extinguished our Term Loans (as defined herein). Also on June 4, 2026, the Company provided a notice to YA regarding its termination of the SEPA, effective June 11, 2026. There were no amounts owed to YA under the SEPA at the time the termination notice was provided. With the cash proceeds, after repayment of the Term Loans, we forecast that operating performance, cash and current working capital will provide us with sufficient capital to fund operations for at least one year from when the condensed consolidated financial statements are available to be issued.
Current report
Net Cash Provided By (Used In) Operating Activities
Current report
Net cash provided by operating activities increased by $17.8 million to $0.9 million for the three months ended June 30, 2026 compared to net cash used of $(16.9) million for the three months ended June 30, 2025, primarily due to non-cash fair value adjustments related to the warrant liabilities and Convertible Note and a favorable change in deferred revenue, partially offset by unfavorable changes in accrued compensation and other liabilities.
Current report
Net cash provided by financing activities was $37.8 million for the three months ended June 30, 2026 due primarily to cash proceeds from the private placement, partially offset by the repayment of the Term Loans and associated fees.
Current report
Net cash provided by financing activities was $39.0 million for the three months ended June 30, 2025 which was related primarily to borrowings on our Term Loan.
Current report
Contractual obligations are cash amounts that we are obligated to pay as part of certain contracts that we have entered into during the normal course of business.
Current report
For recently issued and adopted accounting pronouncements, see Note 1: Description of Business and Significant Accounting Policies, to our condensed consolidated financial statements.
Removed paragraphs (53)
Previous report
OVERVIEW
Previous report
In the three months ended December 31, 2025, product revenue increased $7.8 million, or 20%, as compared to the same period in fiscal 2025. The primary driver of the increase was due to higher sales across secondary storage, devices and media product lines.
Previous report
Service and subscription revenue decreased $1.2 million, or 4%, in the three months ended December 31, 2025 compared to the same period in fiscal 2025. This decrease was due to a strong quarter for support renewals and related revenue recognition.
Previous report
Service and subscription gross margins decreased by $1.4 million, or by 230 basis points, for the three months ended December 31, 2025, as compared with the same period in fiscal 2025. This decrease was primarily driven by higher service inventory and logistics costs as we rebalance spare parts supply worldwide.
Previous report
In the three months ended December 31, 2025, sales and marketing expenses increased $0.5 million, or 4%, as compared with the same period in fiscal 2025. This increase was primarily driven by higher commission expense related to product and service sales.
Previous report
In the three months ended December 31, 2025, restructuring expenses increased $0.2 million, or 14%, as compared with the same period in fiscal 2025. This increase in restructuring expenses primarily involves workforce reductions and related severance and termination benefits. These actions are part of management’s ongoing efforts to align the Company’s organizational structure and resources with its strategic priorities and to streamline operations across business units.
Previous report
The Company expects these initiatives to result in future cost savings and productivity improvements beginning in fiscal 2026. The restructuring activities are expected to be substantially completed by the end of fiscal year 2026; however, the timing and total amount of charges are subject to change as implementation progresses.
Previous report
Other Income (Expense), net
Previous report
Interest Income
Previous report
The change in interest income during the three months ended December 31, 2025 compared with the same period in fiscal 2025 was related primarily to higher average cash balances and prevailing interest rates during the three months ended December 31, 2025.
Previous report
In the three months ended December 31, 2025, interest expense decreased $0.9 million, or 13%, as compared with the same period in fiscal 2025, primarily due to the exchange of Dialectic’s portion of the Term Loan for the Convertible Note on December 18, 2025, which reduced the amount of Term Loan principal outstanding during the quarter.
Previous report
In the three months ended December 31, 2025, we recorded a non-cash gain of $1.6 million related to the change in fair value of our Convertible Note, primarily driven by changes in market inputs, including a lower stock price and updated volatility assumptions, and the December 31 exchange price reset based on the 30-day VWAP.
Previous report
Loss on Debt Extinguishment
Previous report
In the three months ended December 31, 2025, loss on debt extinguishment was related to the exchange of Dialectic’s portion of the Term Loan for the Convertible Note.
Previous report
Income Taxes
Previous report
Comparison of the Nine Months Ended December 31, 2025 and 2024
Previous report
Revenue
Previous report
Product Revenue
Previous report
In the nine months ended December 31, 2025, product revenue decreased $1.2 million, or 1%, as compared to the same period in fiscal 2025. The primary driver of the decrease was in primary storage systems with a large video surveillance order in the prior period.
Previous report
Service and Subscription Revenue
Previous report
Service and subscription revenue decreased $7.6 million, or 9%, in the nine months ended December 31, 2025 compared to the same period in fiscal 2025. This decrease was due to certain long-lived products reaching their end-of-service-life.
Previous report
Royalty Revenue
Previous report
Gross Profit and Margin
Previous report
Product Gross Margin
Previous report
Product gross margin decreased by $3.0 million, or by 70 basis points, for the nine months ended December 31, 2025, as compared with the same period in fiscal 2025. This decrease was primarily due to an inventory provision accrued for certain end-of-life products, as well as supply chain logistics costs including import tariffs.
Previous report
Service and Subscription Gross Margin
Previous report
Service and subscription gross margins decreased by $4.9 million, or by 220 basis points for the nine months ended December 31, 2025, as compared with the same period in fiscal 2025. This decrease was primarily driven by the reduction of service costs across the organization, including logistics, repair, and labor.
Previous report
Royalty Gross Margin
Previous report
Operating Expenses
Previous report
In the nine months ended December 31, 2025, general and administrative expenses decreased $14.6 million, or 30%, as compared with the same period in fiscal 2025. This decrease was primarily driven by higher expense in the prior year related to compliance focused outside services.
Previous report
In the nine months ended December 31, 2025, research and development expenses decreased $6.3 million, or 26%, as compared with the same period in fiscal 2025. This decrease was the result of efficiencies realized through improved organization design, including the consolidation of common functions.
Previous report
In the nine months ended December 31, 2025, restructuring expenses increased $4.2 million, or 145%, as compared with the same period in fiscal 2025. The increase was the result of significant changes in management structure, and overall consolidation of resources designed to improve operational efficiencies and rationalize its cost structure. These actions are part of management’s ongoing efforts to align the Company’s organizational structure and resources with its strategic priorities and to streamline operations across business units. The restructuring plan primarily involves workforce reductions and related severance and termination benefits.
Previous report
The Company expects these initiatives to result in future cost savings and productivity improvements beginning in fiscal 2026. The restructuring activities are expected to be substantially completed by the end of the fourth quarter of fiscal year 2026; however, the timing and total amount of charges are subject to change as implementation progresses.
Previous report
Other Income (Expense), net
Previous report
The change in other income (expense), net during the nine months ended December 31, 2025 compared with the same period in fiscal 2025 was related primarily to fluctuations in foreign currency exchange rates during the nine months ended December 31, 2025.
Previous report
Interest Income
Previous report
The change in interest income during the nine months ended December 31, 2025 compared with the same period in fiscal 2025 was related primarily to higher average cash balances and prevailing interest rates during the nine months ended December 31, 2025.
Previous report
Interest Expense
Previous report
In the nine months ended December 31, 2025, interest expense increased $1.9 million, or 11%, as compared with the same period in fiscal 2025 due to a higher effective interest rate on our Term Loan as well as increased amortization of deferred debt issuance costs.
Previous report
Warrant Liabilities
Showing the first 40 of 53 passages. Open the source sections for the rest.
Reworded paragraphs (21)
Previous wording
The following discussion and analysis compares the change in the condensed consolidated financial statements for quarters and nine months ended December 31, 2025 and December 31, 2024, and should be read together with our condensed consolidated financial statements and the related notes thereto included in this Quarterly Report on Form 10-Q, and the audited consolidated financial statements and notes thereto and management’s discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2025 (the “Annual Report”). In particular, the risk factors contained in Part I, Item 1A of the Annual Report under the heading “Risk Factors” may reflect trends, demands, commitments, events, or uncertainties that could materially impact our results of operations and liquidity and capital resources. For comparisons of quarters and nine months ended December 31, 2024 and December 31, 2023, see our Management's Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of our Annual Report on Form 10-K for the year ended March 31, 2025, filed with the SEC on August 26, 2025 and incorporated herein by reference. Our fiscal year ends on March 31 of each calendar year. "Fiscal 2025" refers to the fiscal year ended March 31, 2025.
Current wording
The following discussion and analysis compares the change in the condensed consolidated financial statements for the quarter ended June 30, 2026 and June 30, 2025, and should be read together with our condensed consolidated financial statements and the related notes thereto included in this Quarterly Report on Form 10-Q, and the audited consolidated financial statements and notes thereto and management’s discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2026 (the “Annual Report”). In particular, the risk factors contained in Part I, Item 1A of the Annual Report under the heading “Risk Factors” may reflect trends, demands,commitments, events, or uncertainties that could materially impact our results of operations and liquidity and capital resources. For comparisons of quarters ended June 30, 2025 and June 30, 2024, see our Management's Discussion and Analysis of Financial Condition and Results of Operations in Item 2 of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2025, filed with the SEC on September 11, 2025 and amended on September 23, 2025 and incorporated herein by reference. Our fiscal year ends on March 31 of each calendar year. "Fiscal 2027" refers to the fiscal year ending March 31, 2027, and "Fiscal 2026" refers to the fiscal year ended March 31, 2026.
Previous wording
We are a technology company whose mission is to deliver innovative solutions to organizations across the world. We design, manufacture and sell technology and services that help customers capture, create and share digital content, and protect it for decades. We emphasize innovative technology in the design and manufacture of our products to help our customers unlock the value in their video and unstructured data in new ways to solve their most pressing business challenges.
Current wording
We are a technology company whose mission is to deliver innovative solutions to forward-thinking organizations across the world. We design, manufacture and sell technology and services that help customers capture, create and share digital content, and protect it for decades. We emphasize innovative technology in the design and manufacture of our products to help our customers unlock the value in their video and unstructured data in new ways to solve their most pressing business challenges.
Previous wording
We generate revenue by designing, manufacturing, and selling technology and services. Our most significant expenses are related to compensating employees; designing, manufacturing, marketing, and selling our products and services; data center costs in support of our cloud-based services; and interest associated with our long-term debt and income taxes.
Current wording
We generate revenue by designing, manufacturing, and selling technology and services. Our most significant expenses are related to compensating employees; designing, manufacturing, marketing, and selling our products and services; data center costs in support of our cloud-based services; and income taxes.
Previous wording
We receive royalties from third parties that license our linear-tape open media patents through our membership in the linear-tape open consortium. Royalty revenue decreased $0.7 million, or 31%, in the three months ended December 31, 2025 compared to the same period in fiscal 2025 due to both lower market volume and a mix weighted towards linear-tape-open (“LTO”) types with lower royalty rates.
Current wording
We receive royalties from third parties that license our linear-tape open media patents through our membership in the linear-tape open consortium. Royalty revenue increased $0.5 million, or 25%, in the three months ended June 30, 2026, as compared to the same period in fiscal 2026, related to higher overall unit shipments.
Previous wording
Product gross margin increased by $3.1 million, or by 340 basis points, for the three months ended December 31, 2025, as compared with the same period in fiscal 2025. This increase was primarily due to sales during the quarter more heavily weighted towards higher margin products.
Current wording
Product gross margin increased by 820 basis points for the three months ended June 30, 2026, as compared to fiscal 2026. This increase was due primarily to a mix more heavily weighted towards higher margin products, as well as a temporary benefit from higher pricing.
Previous wording
In the nine months ended December 31, 2025, sales and marketing expenses decreased $1.9 million, or 5%, as compared with the same period in fiscal 2025. This decrease was primarily driven by improved operational efficiency and increased leverage of our channel.
Current wording
In the three months ended June 30, 2026, sales and marketing expenses decreased $1.6 million, or 13%, as compared with fiscal 2026. This decrease was primarily driven by an improved organizational structure following management changes in fiscal 2026.
Previous wording
In the three months ended December 31, 2025, general and administrative expenses decreased $4.1 million, or 29%, as compared with the same period in fiscal 2025. This decrease was primarily driven by higher expense in the prior year related to compliance focused outside services.
Current wording
In the three months ended June 30, 2026, general and administrative expenses decreased $4.0 million, or 29%, as compared with fiscal 2026 This decrease was primarily driven by large non-recurring projects in the prior year related to restructuring and compliance related activities. Expenses also decreased as administrative efficiency gains were realized through more streamlined functions and process automation.
Previous wording
In the three months ended December 31, 2025, research and development expenses decreased $2.1 million, or 27%, as compared with the same period in fiscal 2025. This decrease was the result of efficiencies realized through improved organization design, including the consolidation of common functions.
Current wording
In the three months ended June 30, 2026, research and development expenses decreased $0.6 million, or 10%, as compared with fiscal 2026. This decrease was the result of the efficiencies realized through improved organization design, further aligning commonalities between major products.
Previous wording
The change in other income (expense), net during the three months ended December 31, 2025 compared with the same period in fiscal 2025 was related primarily to fluctuations in foreign currency exchange rates during the three months ended December 31, 2025.
Current wording
In the three months ended June 30, 2026, the change in other expense resulted in a net increase of $0.6 million or 149%, compared to fiscal 2025. The increase was primarily related to differences in foreign currency gains and losses during each period.
Previous wording
In the nine months ended December 31, 2025, we recorded a non-cash gain of $9.1 million related to the change in fair value of our Forbearance Warrant liabilities. In the nine months ended December 31, 2024, we recorded a non-cash loss of $56.4 million related to the change in fair value of our Lender Warrant liabilities. These changes were primarily driven by fluctuations in our stock price.
Current wording
In the three months ended June 30, 2026, we recorded a non-cash loss of $16.3 million related to the change in fair value of our forbearance warrant which was issued in September 2025 and conversion warrant which was issued in June 2026. The loss was primarily driven by fluctuations in our stock price.
Previous wording
In the three months ended December 31, 2025, we recorded a non-cash gain of $7.6 million related to the change in fair value of our Forbearance Warrant liabilities. In the three months ended December 31, 2024, we recorded a non-cash loss of $61.6 million related to the change in fair value of our Lender Warrant liabilities. These changes were primarily driven by fluctuations in our stock price.
Current wording
In the three months ended June 30, 2026, we recorded a non-cash loss of $(129.7) million related to the change in fair value of our convertible note issued in December 2025. This change was primarily driven by fluctuations in our stock price and the conversion of the convertible note in June 2026.
Previous wording
The income tax provision for the three months ended December 31, 2025 and 2024 is primarily influenced by foreign and state income taxes. Due to our history of net losses in the United States, the protracted period for utilizing tax attributes in certain foreign jurisdictions, and the difficulty in predicting future results, we believe that we cannot rely on projections of future taxable income to realize most of our deferred tax assets. Accordingly, we have established a full valuation allowance against our U.S. and certain foreign net deferred tax assets. Significant management judgment is required in assessing our ability to realize any future benefit from our net deferred tax assets. We intend to maintain this valuation allowance until sufficient positive evidence exists to support its reversal. Our income tax expense recorded in the future will be reduced to the extent that sufficient positive evidence materializes to support a reversal of, or decrease in, our valuation allowance.
Current wording
Due to our history of net losses in the United States, the protracted period for utilizing tax attributes incertain foreign jurisdictions, and the difficulty in predicting future results, we believe that we cannot rely on projections of future taxable income to realize most of our deferred tax assets. Accordingly, we have established a full valuation allowance against our U.S. and certain foreign net deferred tax assets. Significant management judgment is required in assessing our ability to realize any future benefit from our net deferred tax assets. We intend to maintain this valuation allowance until sufficient positive evidence exists to support its reversal. Our income tax expense recorded in the future will be reduced to the extent that sufficient positive evidence materializes to support a reversal of, or decrease in, our valuation allowance.
Previous wording
We consider liquidity in terms of the sufficiency of internal and external cash resources to fund our operating, investing and financing activities. Our principal sources of liquidity include cash from operating and financing activities, and cash and cash equivalents on our balance sheet. We require significant cash resources to meet obligations to pay principal and interest on our outstanding debt, provide for our research and development activities, fund our working capital needs, and make capital expenditures. Our future liquidity requirements will depend on multiple factors, including our ability to raise additional capital, research and development plans and capital asset needs.
Current wording
We consider liquidity in terms of the sufficiency of internal and external cash resources to fund our operating, investing and financing activities. Our principal sources of liquidity include cash from operating activities, cash and cash equivalents on our balance sheet and proceeds from the sale of common stock. We require significant cash resources to provide for our research and development activities, fund our working capital needs, and make capital expenditures. Our future liquidity requirements will depend on multiple factors, including our research and development plans and capital investment needs.
Previous wording
We had cash and cash equivalents of $13.2 million as of December 31, 2025, which consisted primarily of bank deposits and money market accounts. As of December 31, 2025, our total outstanding Term Loan debt was $54.6 million.
Current wording
We had cash and cash equivalents of $54.4 million as of June 30, 2026, which excludes $0.1 million of short-term restricted cash. Our total outstanding Term Loan debt was fully repaid in the three months ended June 30, 2026.
Previous wording
We generated negative cash flows from operations of approximately $37.4 million and $20.3 million for the nine months ended December 31, 2025 and 2024, respectively, and generated net losses of approximately $91.5 million and $107.3 million for the nine months ended December 31, 2025 and 2024, respectively. We have funded operations through the sale of common stock, Term Loan borrowings and PNC Credit Facility borrowings described in Note 4: Debt.
Current wording
We generated cash flows from operations of approximately $0.9 million for the three months ended June 30, 2026, compared to negative cash flows of $16.9 million for the three months ended June 30, 2025. We generated net losses of approximately $155.3 million and $17.2 million for the three months ended June 30, 2026 and 2025, respectively. We have funded operations through the sale of common stock and debt borrowings as described in Note 4: Debt and Note 7 : Common Stock.
Previous wording
The following table summarizes our condensed consolidated cash flows for the periods indicated.
Current wording
The following table summarizes our consolidated cash flows for the periods indicated.
Previous wording
Net cash used in operating activities was $37.4 million for the nine months ended December 31, 2025. This use of cash was primarily attributed to the net loss and changes in working capital, partially offset by non-cash charges including loss on debt extinguishment, paid-in-kind interest, and changes in the fair value of warrant liabilities and the Convertible Note.
Current wording
Net cash used by operating activities was $16.9 million for the three months ended June 30, 2025. This use of cash was primarily attributed to lower earnings.
Previous wording
Net cash used in investing activities was $0.9 million in the nine months ended December 31, 2025, which was attributable to capital expenditures.
Current wording
Net cash used in investing activities was $0.4 million and $1.2 million for the three months ended June 30, 2026 and 2025, respectively, primarily attributable to capital expenditures.
Previous wording
Net cash provided by financing activities was $35.6 million for the nine months ended December 31, 2025, which was related primarily to net borrowings, the issuance of the Convertible Note, and proceeds from the SEPA, partially offset by repayments of long-term debt and credit facility borrowings.
Current wording
Net Cash Provided by Financing Activities
Previous wording
We are also subject to ordinary course litigation. See Note 11, Commitments and Contingencies to the unaudited condensed consolidated financial statements for a discussion of our legal matters.
Current wording
We are also subject to ordinary course of business litigation, See Note 10: Commitments and Contingencies, to our consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Previous wording
Except for the indemnification commitments described under “Commitments and Contingencies” above, we do not currently have any other off-balance sheet arrangements and do not have any holdings in variable interest entities.
Current wording
We do not currently have any other off-balance sheet arrangements and do not have any holdings in variable interest entities.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Income tax provision for the three months ended June 30, 2026 and 2025 is primarily influenced by foreign and state income taxes.
Current report — wording carried from elsewhere
Net Cash Used in Investing Activities
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
Gross profit and margin percentages are key metrics that management monitors to assess the performance of the business.
Previous report — wording carried elsewhere
We receive royalties from third parties that license our linear-tape open media patents through our membership in the linear-tape open consortium. Royalty revenue saw a decrease of $2.5 million, or 32%, in the nine months ended December 31, 2025 compared to the same period in fiscal 2025 due to both lower market volume and a mix weighted towards LTO types with lower royalty rates.
Previous report — wording carried elsewhere
Royalties do not have significant related cost of sales.
Previous report — wording carried elsewhere
The income tax provision for the nine months ended December 31, 2025 and 2024 is primarily influenced by foreign and state income taxes. Due to our history of net losses in the United States, the protracted period for utilizing tax attributes in certain foreign jurisdictions, and the difficulty in predicting future results, we believe that we cannot rely on projections of future taxable income to realize most of our deferred tax assets. Accordingly, we have established a full valuation allowance against our U.S. and certain foreign net deferred tax assets. Significant management judgment is required in assessing our ability to realize any future benefit from our net deferred tax assets. We intend to maintain this valuation allowance until sufficient positive evidence exists to support its reversal. Our income tax expense recorded in the future will be reduced to the extent that sufficient positive evidence materializes to support a reversal of, or decrease in, our valuation allowance.
Previous report — wording carried elsewhere
See Note 1 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.