Reservoir Media, Inc. 10-K

Item 8. Financial Statements and Supplementary Data Index to Financial Statements and Financial Statement Schedules Page Report of Independent Registered Accounting Firm (PCAOB ID 34 ) ​ 58 Consolidated Statements of Income ​ 59 Consolidated Statements of Comprehensive Income ​ 60 Consolidated Balance Sheets ​ 61 Consolidated Statements of Changes in Shareholders’ Equity ​ 62 Consolidated Statements of Cash Flows ​ 63 Notes to Consolidated Financial Statements ​ 64 ​ ​ ​ ​ 57 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of Reservoir Media Inc. and Subsidiaries Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Reservoir Media Inc. and subsidiaries (the “Company”) as of March 31, 2022 and 2021, and the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the two years in the period ended March 31, 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended March 31, 2022, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Deloitte & Touche LLP New York , New York June 21, 2022 We have served as the Company’s auditor since 2021 ​ 58 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In U.S. dollars, except share data) ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended March 31, ​ ​ 2022 ​ 2021 Revenues ​ $ 107,840,245 ​ $ 80,245,664 Costs and expenses: ​ ​ Cost of revenue ​ 44,185,837 ​ 32,854,453 Amortization and depreciation ​ 19,022,131 ​ 14,077,473 Administration expenses ​ 25,279,256 ​ 14,986,085 Total costs and expenses ​ 88,487,224 ​ 61,918,011 ​ ​ ​ ​ ​ ​ ​ Operating income ​ 19,353,021 ​ 18,327,653 ​ ​ ​ ​ ​ ​ ​ Interest expense ​ ( 10,870,866 ) ​ ( 8,972,100 ) Gain (loss) on foreign exchange ​ 330,582 ​ ( 910,799 ) Gain on fair value of swaps ​ 8,558,339 ​ 2,988,322 Interest and other income ​ 10,513 ​ 13,243 Income before income taxes ​ 17,381,589 ​ 11,446,319 Income tax expense ​ 4,253,192 ​ 2,146,691 Net income ​ 13,128,397 ​ 9,299,628 Net income attributable to noncontrolling interests ​ ( 51,770 ) ​ ( 46,673 ) Net income attributable to Reservoir Media, Inc. ​ $ 13,076,627 ​ $ 9,252,955 ​ ​ ​ ​ ​ ​ ​ Earnings per common share (Note 15): ​ ​ Basic ​ $ 0.23 ​ $ 0.21 Diluted ​ $ 0.22 ​ $ 0.21 ​ ​ ​ ​ ​ ​ ​ Weighted average common shares outstanding (Note 15): ​ ​ Basic ​ 52,611,175 ​ 28,370,281 Diluted ​ 58,450,019 ​ 44,545,687 ​ See accompanying notes to the consolidated financial statements. ​ 59 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In U.S. dollars) ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended March 31, ​ ​ 2022 ​ 2021 Net income ​ $ 13,128,397 ​ $ 9,299,628 Other comprehensive income (loss): ​ ​ ​ ​ Translation adjustments ​ ( 3,294,416 ) ​ 6,481,973 Total comprehensive income ​ 9,833,981 ​ 15,781,601 Comprehensive income attributable to noncontrolling interests ​ ( 51,770 ) ​ ( 46,673 ) Total comprehensive income attributable to Reservoir Media, Inc. ​ $ 9,782,211 ​ $ 15,734,928 ​ See accompanying notes to the consolidated financial statements. ​ 60 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In U.S. dollars, except share data) ​ ​ ​ ​ ​ ​ ​ ​ March 31, March 31, ​ ​ 2022 ​ 2021 Assets ​ ​ Current assets ​ ​ Cash and cash equivalents ​ $ 17,814,292 ​ $ 9,209,920 Accounts receivable ​ 25,210,936 ​ 15,813,384 Current portion of royalty advances ​ 12,375,420 ​ 12,840,855 Inventory and prepaid expenses ​ 4,041,471 ​ 1,406,379 Total current assets ​ 59,442,119 ​ 39,270,538 ​ ​ ​ ​ ​ ​ ​ Intangible assets, net ​ 571,383,855 ​ 391,149,163 Equity method and other investments ​ ​ 3,912,978 ​ ​ 1,591,179 Royalty advances, net of current portion ​ 44,637,334 ​ 28,741,225 Property, plant and equipment, net ​ 342,080 ​ 321,766 Fair value of swap assets ​ 3,991,802 ​ — Other assets ​ 559,922 ​ 781,735 Total assets ​ $ 684,270,090 ​ $ 461,855,606 ​ ​ ​ ​ ​ ​ ​ Liabilities ​ ​ Current liabilities ​ ​ Accounts payable and accrued liabilities ​ $ 4,436,943 ​ $ 3,316,768 Royalties payable ​ 21,235,815 ​ 14,656,566 Accrued payroll ​ 1,938,281 ​ 1,634,852 Deferred revenue ​ 1,103,664 ​ 1,337,987 Other current liabilities ​ 12,272,577 ​ 2,615,488 Amounts due to related parties (Note 12) ​ — ​ 290,172 Current portion of loans and secured notes payable ​ — ​ 1,000,000 Income taxes payable ​ 77,496 ​ 527,172 Total current liabilities ​ 41,064,776 ​ 25,379,005 ​ ​ ​ ​ ​ ​ ​ Loans and secured notes payable ​ 269,856,169 ​ 211,531,875 Deferred income taxes ​ 24,884,170 ​ 19,267,617 Fair value of swap liabilities ​ — ​ 4,566,537 Other liabilities ​ 1,012,651 ​ 6,739,971 Total liabilities ​ 336,817,766 ​ 267,485,005 ​ ​ ​ ​ ​ ​ ​ Contingencies and commitments (Note 17) ​ ​ ​ ​ ​ ​ ​ ​ ​ Shareholders’ Equity ​ ​ Preferred stock, $ 0.0001 par value 75,000,000 shares authorized, 0 shares issued and outstanding at March 31, 2022; 98,032,767 shares authorized, 16,175,406 shares issued and outstanding at March 31, 2021 ​ — ​ 81,632,500 Common stock, $ 0.0001 par value; 750,000,000 shares authorized, 64,150,186 issued and outstanding at March 31, 2022; 196,065,534 shares authorized, 28,539,299 shares issued and outstanding at March 31, 2021 ​ 6,415 ​ 2,854 Additional paid-in capital ​ 335,372,981 ​ 110,496,300 Retained earnings (accumulated deficit) ​ 12,213,519 ​ ( 863,108 ) Accumulated other comprehensive income (loss) ​ ( 1,198,058 ) ​ 2,096,358 Total Reservoir Media, Inc. shareholders’ equity ​ 346,394,857 ​ 193,364,904 Noncontrolling interest ​ 1,057,467 ​ 1,005,697 Total shareholders’ equity ​ 347,452,324 ​ 194,370,601 Total liabilities and shareholders’ equity ​ $ 684,270,090 ​ $ 461,855,606 ​ See accompanying notes to the consolidated financial statements. ​ ​ 61 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (In U.S. dollars, except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Retained ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ earnings ​ other ​ ​ ​ ​ ​ ​ ​ ​ Preferred Stock ​ Common Stock ​ Additional ​ (accumulated ​ comprehensive ​ Noncontrolling ​ Shareholders’ ​ Shares Amount Shares Amount paid-in capital deficit) income (loss) interests equity Balance, March 31, 2020 82,500 ​ $ 81,632,500 140,227 ​ $ 14 ​ $ 102,423,431 ​ $ ( 10,116,063 ) ​ $ ( 4,385,615 ) ​ $ 959,024 ​ $ 170,513,291 Retrospective application of reverse recapitalization 16,092,906 ​ — 27,353,454 ​ 2,735 ​ ( 2,735 ) ​ — ​ — ​ — ​ — Balance, March 31, 2020 after effect of reverse recapitalization conversion 16,175,406 ​ $ 81,632,500 27,493,681 ​ $ 2,749 ​ $ 102,420,696 ​ $ ( 10,116,063 ) ​ $ ( 4,385,615 ) ​ $ 959,024 ​ $ 170,513,291 Issuance of common shares — ​ — 1,045,618 ​ 105 ​ 7,972,904 ​ — ​ — ​ — ​ 7,973,009 Share-based compensation — ​ — — ​ — ​ 102,700 ​ — ​ — ​ — ​ 102,700 Net income — ​ — — ​ — ​ — ​ 9,252,955 ​ — ​ 46,673 ​ 9,299,628 Other comprehensive income — ​ — — ​ — ​ — ​ — ​ 6,481,973 ​ — ​ 6,481,973 Balance, March 31, 2021 16,175,406 ​ $ 81,632,500 28,539,299 ​ $ 2,854 ​ $ 110,496,300 ​ $ ( 863,108 ) ​ $ 2,096,358 ​ $ 1,005,697 ​ $ 194,370,601 RHI Preferred Stock Conversion ( 16,175,406 ) ​ ( 81,632,500 ) 16,175,406 ​ 1,618 ​ 81,630,882 ​ — ​ — ​ — ​ — Business Combination and PIPE Investment, net of transaction costs — ​ — 19,354,548 ​ 1,935 ​ 141,144,876 ​ — ​ — ​ — ​ 141,146,811 Share-based compensation — ​ — — ​ — ​ 2,100,931 ​ — ​ — ​ — ​ 2,100,931 Issuance of common shares — ​ — 80,933 ​ 8 ​ ( 8 ) ​ — ​ — ​ — ​ — Net income — ​ — — ​ — ​ — ​ 13,076,627 ​ — ​ 51,770 ​ 13,128,397 Other comprehensive loss — ​ — — ​ — ​ — ​ — ​ ( 3,294,416 ) ​ — ​ ( 3,294,416 ) Balance, March 31, 2022 ​ — ​ $ — ​ 64,150,186 ​ $ 6,415 ​ $ 335,372,981 ​ $ 12,213,519 ​ $ ( 1,198,058 ) ​ $ 1,057,467 ​ $ 347,452,324 ​ See accompanying notes to the consolidated financial statements. ​ ​ 62 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In U.S. dollars) ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended March 31, ​ ​ 2022 2021 Cash flows from operating activities ​ ​ Net income ​ $ 13,128,397 ​ $ 9,299,628 Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ Amortization of intangible assets ​ 18,839,671 ​ 13,855,068 Depreciation of property, plant and equipment ​ 182,460 ​ 222,405 Share-based compensation ​ 2,890,931 ​ 102,700 Non-cash interest charges ​ 1,646,900 ​ 795,212 Gain on fair value of swaps ​ ( 8,558,339 ) ​ ( 2,988,322 ) Share of earnings of equity affiliates, net of tax ​ ( 10,155 ) ​ ( 7,089 ) Dividend from equity affiliates ​ 27,811 ​ — Deferred income taxes ​ 4,044,661 ​ 1,619,317 Changes in operating assets and liabilities: ​ ​ ​ ​ Accounts receivable ​ ( 9,397,552 ) ​ ( 6,068,178 ) Inventory and prepaid expenses ​ ( 2,635,092 ) ​ ( 975,350 ) Royalty advances ​ ( 15,430,674 ) ​ ( 1,318,641 ) Other assets ​ 152,571 ​ 138,706 Accounts payable and accrued expenses ​ 8,046,652 ​ ( 350,861 ) Income tax payable ​ ( 449,676 ) ​ 390,226 Net cash provided by operating activities ​ 12,478,566 ​ 14,714,821 ​ ​ ​ ​ ​ ​ ​ Cash flows from investing activities: ​ ​ Purchases of music catalogs ​ ( 194,155,476 ) ​ ( 118,521,164 ) Investment in unconsolidated affiliates ​ ( 2,464,486 ) ​ ( 13,366 ) Purchase of property, plant and equipment ​ ( 202,774 ) ​ ( 79,901 ) Net cash used for investing activities ​ ( 196,822,736 ) ​ ( 118,614,431 ) ​ ​ ​ ​ ​ ​ ​ Cash flows from financing activities: ​ ​ Issuance of common shares, net of issuance costs ​ — ​ 7,973,009 Proceeds from Business Combination and PIPE Investment, net of issuance costs ​ 141,146,811 ​ — Proceeds from secured line of credit ​ 133,554,867 ​ 40,600,000 Repayments of secured line of credit ​ ( 55,000,000 ) ​ — Repayments of secured loans ​ ( 18,500,000 ) ​ ( 1,000,000 ) Deferred financing costs paid ​ ( 4,377,473 ) ​ ( 648,769 ) Repayments of related party loans ​ ( 81,203,792 ) ​ — Draws on related party loans ​ 80,913,620 ​ 295,843 Net cash provided by financing activities ​ 196,534,033 ​ 47,220,083 ​ ​ ​ ​ ​ ​ ​ Foreign exchange impact on cash ​ ( 3,585,491 ) ​ 7,649,324 ​ ​ ​ ​ ​ ​ ​ Increase (decrease) in cash and cash equivalents ​ 8,604,372 ​ ( 49,030,203 ) Cash and cash equivalents beginning of period ​ 9,209,920 ​ 58,240,123 Cash and cash equivalents end of period ​ $ 17,814,292 ​ $ 9,209,920 ​ See accompanying notes to the consolidated financial statements. ​ ​ 63 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 (In U.S. dollars) NOTE 1. DESCRIPTION OF BUSINESS Reservoir Media, Inc. (formerly known as Roth CH Acquisition II Co. (“ ROCC ”)), a Delaware corporation (the “ Company ”), is an independent music company based in New York City, New York and with offices in Los Angeles, Nashville, Toronto, London and Abu Dhabi. On July 28, 2021 (the “ Closing Date ”), ROCC consummated the acquisition of Reservoir Holdings, Inc., a Delaware corporation (“ RHI ”), pursuant to the agreement and plan of merger, dated as of April 14, 2021 (the “ Merger Agreement ”), by and among ROCC, Roth CH II Merger Sub Corp., a Delaware corporation and a wholly-owned subsidiary of ROCC (“ Merger Sub ”), and RHI. On the Closing Date, Merger Sub merged with and into RHI, with RHI surviving the merger as a wholly-owned subsidiary of ROCC (the “ Business Combination ”). In connection with the consummation of the Business Combination, “Roth CH Acquisition II Co.” was renamed “Reservoir Media, Inc.” effective as of the Closing Date. The common stock, $ 0.0001 par value per share, of the Company (the “ Common Stock ”) and warrants are traded on The Nasdaq Stock Market LLC (“ NASDAQ ”) under the ticker symbols “RSVR” and “RSVRW,” respectively. The Business Combination was accounted for as a reverse recapitalization, with RHI determined to be the accounting acquirer and the Company as the acquired company for accounting purposes. All historical financial information presented in the consolidated financial statements represents the accounts of RHI and its consolidated subsidiaries as if RHI is the predecessor to the Company. See Note 3, “ Business Combination and PIPE Investment ” for additional information with respect to the Business Combination and related transactions. The Company’s activities are organized into two operating segments: Music Publishing and Recorded Music. Operations of the Music Publishing segment involve the acquisition of interests in music catalogs from which royalties are earned as well as signing songwriters to exclusive agreements which give the Company an interest in the future delivery of songs. The publishing catalog includes ownership or control rights to more than 140,000 musical compositions that span across historic pieces, motion picture scores and current award-winning hits. Operations of the Recorded Music segment involve the acquisition of sound recording catalogs as well as the discovery and development of recording artists and the marketing, distribution, sale and licensing of the music catalog. The Recorded Music operations are primarily conducted through the Chrysalis Records platform and Tommy Boy Music, LLC (“ Tommy Boy ”), acquired in June 2021, and include the ownership of over 36,000 sound recordings. See Note 5, “ Acquisitions ” for additional information with respect to the Tommy Boy acquisition. COVID-19 Pandemic In March 2020, the World Health Organization characterized the coronavirus (“ COVID-19 ”) as a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency. The rapid spread of COVID-19 and the continuously evolving responses to combat it have had a negative impact on the global economy. The Company has evaluated and continues to evaluate the potential impact of the COVID-19 pandemic on its consolidated financial statements. Government-imposed restrictions and general behavioral changes in response to the pandemic adversely affected the Company’s results of operations for the fiscal years ended March 31, 2022 and 2021. This included performance revenue generated from retail, restaurants, bars, gyms and live shows, synchronization revenue, and the release schedule of physical product. Even as government restrictions are lifted and consumer behavior starts to return to pre-pandemic norms, it is unclear for how long and to what extent the Company’s operations will continue to be affected. Although the Company has not made material changes to any estimates or judgments that impact its consolidated financial statements as a result of COVID-19, the extent to which the COVID-19 pandemic may impact the Company will depend on future developments, which are highly uncertain and cannot be predicted. Future developments surrounding the COVID-19 pandemic could negatively affect the Company’s operating results, including reductions in revenue and cash flow and could impact the Company’s impairment assessments of accounts receivable, royalty advances or intangible assets, which may be material to our consolidated financial statements. 64 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 (In U.S. dollars) Paycheck Protection Program Loan During the fiscal year ended March 31, 2021 (“ fiscal 2021 ”), the Company borrowed $ 616,847 (the “ PPP Loan ”) under the Paycheck Protection Program (the “ PPP ”). The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act of 2020, as amended (the “ CARES Act ”), provided loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loans and accrued interest are forgivable as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. In accordance with the terms of the PPP, the Company applied for and received confirmation of loan forgiveness for the entire amount borrowed under the PPP. The Company accounted for the PPP Loan as an in-substance government grant because it expected to meet the PPP Loan eligibility criteria and concluded that the loan represented, in substance, a grant that was expected to be forgiven. Proceeds from the PPP Loan were initially recognized as a deferred income liability and presented as an operating activity within the Company’s consolidated statement of cash flows. Subsequently, the Company reduced this liability and recognized a reduction in payroll expenses on a systematic basis over the period in which the related costs for which the PPP Loan was intended were incurred. No interest for the PPP Loan was recognized in the Company’s consolidated financial statements. NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation These consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“ U.S. GAAP ”). In the opinion of management, all adjustments considered necessary for a fair presentation have been included. The following include significant accounting policies that have been adopted by the Company: Principles of Consolidation These consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and its majority-owned subsidiaries. The Company records a noncontrolling interest in its consolidated balance sheets and statements of operations with respect to the remaining economic interests in majority-owned subsidiaries it does not own. All intercompany transactions and balances have been eliminated upon consolidation. The equity method of accounting is used to account for investments in entities in which the Company has the ability to exert significant influence over the investee’s operating and financial policies. As of March 31, 2022 and 2021, the Company was not involved with any entities identified as variable interest entities. Use of Significant Accounting Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosure of contingent assets and liabilities. Significant estimates are used for, but not limited to, determining useful lives of intangible assets, intangible asset recoverability and impairment and accrued revenue. Actual results could differ from these estimates. Foreign Currencies The Company has determined the U.S. dollar to be the functional currency of the Company and certain subsidiaries as it is the currency of the primary economic environment in which the companies operate while other subsidiaries have been determined to have the British Pound as their functional currencies. 65 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 (In U.S. dollars) Monetary assets and liabilities denominated in foreign currencies other than the functional currency are translated into the respective functional currencies at the exchange rate in effect at the balance sheet date and non-monetary assets and liabilities at the exchange rates in effect at the time of acquisition or issue. Revenues and expenses are translated at rates approximating the exchange rates in effect at the time of the transactions. All exchange gains and losses are included in operations. Financial statements of subsidiaries with functional currencies other than the U.S. dollar are translated into U.S. dollars using the current rate method. Under this method, assets and liabilities are translated at the rate of exchange in effect at the balance sheet date. Revenue and expenses are translated at the average rate of exchange for the fiscal year. Exchange gains and losses are deferred and reflected on the balance sheet in accumulated other comprehensive income and subsequently recognized in income upon substantial disposal of the net investment in the foreign operation. Cash and Cash Equivalents The Company considers all highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents. Accounts Receivable Credit is extended to customers based upon an evaluation of the customer’s financial condition. The time between the Company’s issuance of an invoice and payment due date is not significant. Customer payments that are not collected in advance of the transfer of promised services or goods are generally due 30-60 days from the invoice date. Customer payments related to synchronization licenses often take longer to collect, but that does not typically impact the ultimate collectability. The Company monitors customer credit risk related to accounts receivable and, when deemed necessary, maintains a provision for estimated uncollectible accounts, which is estimated based on historical experience, aging trends and in certain cases, management judgments about specific customers. Based on this analysis, the Company did not record a provision for estimated uncollectible accounts as of March 31, 2022 or March 31, 2021. Concentrations of Credit Risk Customer credit risk represents the potential for financial loss if a customer is unwilling or unable to meet its agreed upon contractual payment obligations. Two customers accounted for approximately 37 % of total accounts receivable as of March 31, 2022 and two customers accounted for approximately 43 % of total accounts receivable as of March 31, 2021. No other single customer accounted for more than 10% of accounts receivable in either period. In the Music Publishing segment, the Company collects a significant portion of its royalties from global copyright collecting societies. Collecting societies and associations are generally not-for-profit organizations that represent composers, songwriters and music publishers. These organizations seek to protect the rights of their members by licensing, collecting license fees and distributing royalties for the use of the members’ works. The Company does not believe there is any significant collection risk from such societies and associations. In the Recorded Music segment, the majority of the revenue is collected from the Company’s distribution partners, rather than directly from the customers. These distribution partners primarily pay through the revenue to the Company on a monthly basis. The Company routinely assesses the financial strength of its distribution partners and the Company does not believe there is any significant collection risk. Acquisitions and Business Combinations In conjunction with each acquisition transaction, the Company assesses whether the transaction should follow accounting guidance applicable to an asset acquisition or a business combination. This assessment requires an evaluation of whether the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, resulting in an asset acquisition or, if not, resulting in a business combination. 66 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 (In U.S. dollars) If treated as an asset acquisition, the assets are recorded on a relative fair value basis in accordance with the Company’s accounting policies and related acquisition costs are capitalized as part of the asset. In a business combination, the Company recognizes identifiable assets acquired, liabilities assumed, and non-controlling interests at their fair values at the acquisition date. Any consideration paid in excess of the net fair value of the identifiable assets and liabilities acquired in a business combination is recorded to goodwill and acquisition-related costs are expensed as incurred. Intangible Assets Intangible assets consist primarily of publishing and recorded music catalogs. Intangible assets are recorded at fair value in a business combination and relative fair value in an asset acquisition. Intangible assets are amortized over their expected useful lives using the straight-line method. The Company periodically reviews the carrying value of its amortizable intangible assets, whenever events or changes in circumstances indicate that the carrying value may not be recoverable or that the lives assigned may no longer be appropriate. To the extent the estimated future cash inflows attributable to the asset, less estimated future cash outflows, are less than the carrying amount, an impairment loss is recognized in an amount equal to the difference between the carrying value of such asset and its fair value. If the Company determines that events and circumstances warrant a revision to the remaining period of amortization, an asset’s remaining useful life would be changed, and the remaining carrying amount of the asset would be amortized prospectively over that revised remaining useful life. Goodwill The Company had $ 402,067 of goodwill as of March 31, 2022 and 2021, which is classified with “Other assets” in the Company’s consolidated balance sheets. All of the goodwill arose in connection with an acquisition in 2019 and has been assigned to a reporting unit within the Music Publishing segment. There were no impairments, disposals or other acquisitions of goodwill in the fiscal years ended March 31, 2022 and 2021. Goodwill represents the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. The Company evaluates goodwill for potential impairment on an annual basis on the first day of the fiscal fourth quarter (January 1), or at other times during the year if events or circumstances indicate that it is more-likely-than-not (greater than 50%) that the fair value of a reporting unit is below the carrying amount. In reviewing goodwill for impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more-likely-than-not that the estimated fair value of a reporting unit is less than its carrying amount. If the Company elects to bypass the qualitative assessment for any reporting unit, or if a qualitative assessment indicates it is more-likely-than-not that the estimated fair value of a reporting unit is less than its carrying amount, the Company performs a quantitative goodwill impairment test by comparing the fair value of the reporting unit with its carrying amount. If the fair value of the reporting unit is less than its carrying amount, the Company will measure any goodwill impairment loss as the amount by which the carrying amount of a reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to that reporting unit. The Company performed its annual impairment testing of goodwill as of January 1, 2022 and no impairment was required. The Company’s impairment testing consisted of a qualitative assessment. Changes in market conditions, laws and regulations, and key assumptions could negatively impact the results of future impairment testing and could result in the recognition of an impairment charge. 67 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 (In U.S. dollars) Investments in Equity Affiliates The Company accounts for investments in affiliates using the equity method of accounting when it has significant influence over an affiliate’s operations. The Company’s share of investee’s net income or loss and basis difference amortization is classified as “Interest and other income” in the consolidated statements of income. Deferred Revenue Deferred revenue principally relates to fixed fees and minimum guarantees received in advance of the Company’s performance or usage by the licensee. Reductions in deferred revenue are a result of the Company’s performance under the contract or usage by the licensee. Deferred Finance Costs Deferred finance costs are amortized on an effective interest basis over the term of the related obligation. Deferred finance charges are netted against the loans. See Note 8, “ Loans ” for additional information with respect to the Company’s financing arrangements. Revenues The Company recognizes revenue when, or as, control of the promised services or goods is transferred to its customers and in an amount that reflects the consideration the Company is contractually due in exchange for those services or goods. Music Publishing Music Publishing revenues are earned in the form of royalties relating to the licensing of rights in musical compositions and the sale of published sheet music and songbooks. Royalties principally relate to amounts earned from the public performance of musical compositions, the mechanical reproduction of musical compositions on recorded media including digital formats and the use of musical compositions in synchronization with visual images. Music publishing royalties, except for synchronization royalties, are recognized when the sale or usage occurs. The most common form of consideration for publishing contracts is sales- and usage-based royalties. The collecting societies submit usage reports, typically with payment for royalties due, often on a quarterly or biannual reporting period, in arrears. Royalties are recognized as the sale or usage occurs based upon usage reports when these reports are available for the reporting period or estimates of royalties based on historical data, such as recent royalties reported, company-specific information with respect to changes in repertoire, industry information and other relevant trends when usage reports are not available for the reporting period. Synchronization revenue is recognized as revenue when control of the license is transferred to the customer. Recorded Music Revenues from the sale or license of Recorded Music products through digital distribution channels are recognized when the sale or usage occurs based on usage reports received from the customer. Digital licensing contracts are generally long-term with consideration in the form of sales- and usage-based royalties that are primarily received monthly. For certain licenses where the consideration is fixed and the intellectual property being licensed is static, revenue is recognized at the point in time when control of the licensed content is transferred to the customer. Revenues from the sale of physical Recorded Music products are recognized upon delivery, which occurs once the product has been shipped and control has been transferred. 68 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 (In U.S. dollars) Principal versus Agent Revenue Recognition The Company reports revenue on a gross or net basis based on management’s assessment of whether the Company acts as a principal or agent in a transaction. The determination of whether the Company acts as a principal or an agent in a transaction is based on an evaluation of whether the Company controls the good or service before transfer to the customer. When the Company concludes that it controls the good or service before transfer to the customer, the Company is considered a principal in the transaction and records revenue on a gross basis. When the Company concludes that it does not control the good or service before transfer to the customer but arranges for another entity to provide the good or service, the Company acts as an agent and records revenue on a net basis in the amount it earns for its agency service. The Company is typically required to pay a specified portion of the fees, earnings, payments and revenues received from the exploitation of the underlying music compositions and recorded music to the original songwriter or recorded artist (the “ Royalty Costs ”). The Company records revenues on a gross basis reflecting its position as a principal in the transaction and any royalties payable to third parties, including the writer’s fees and recording artists, are recorded as expenses. Royalty Costs and Royalty Advances The Company incurs Royalty Costs that are payable to its songwriters and recording artists generated from the sale or license of its music publishing copyrights and recorded music catalog. Royalties are calculated using negotiated rates in accordance with the songwriter and recording artist contracts. Calculations are based on revenue earned or user/usage measures or a combination of these. There are instances where such data is not available to be processed and royalty cost calculations may be complex or involve judgments about significant volumes of data to be processed and analyzed. In some instances, the Company commits to pay its songwriters and recording artists royalties in advance of future sales. The Company accounts for these advances under the related guidance in the Financial Accounting Standards Board (the “ FASB ”) Accounting Standards Codification (“ ASC ”) Topic 928, “ Entertainment—Music ” (“ ASC 928 ”). Under ASC 928, the Company capitalizes as assets certain advances, which it believes are recoverable from future royalties to be earned by the songwriter or recording artist when paid. Recoverability is assessed upon initial commitment of the advance based upon the Company’s forecast of anticipated revenue from the sale of future and existing musical compositions or albums. Reservoir regularly updates the recoverability assessment as additional data is available. In determining whether the advance is recoverable, the Company evaluates the current and past popularity of the songwriter or recording artist, the sales history of the songwriter or recording artist, the initial or expected commercial acceptability of the product, the current and past popularity of the genre of music that the product is designed to appeal to, and other relevant factors. Advances vary in both amount and expected life based on the underlying songwriter or recording artist. To the extent that a portion of an outstanding advance is no longer deemed recoverable, that amount will be expensed in the period the determination is made. Share-Based Compensation Compensation expense related to the issuance of share-based awards to the Company’s employees and board of directors is measured at fair value on the grant date. The Company uses the Black-Scholes option pricing model to value stock options. The compensation expense for awards that vest over a future service period is recognized over the requisite service period on a straight-line basis. The Company recognizes share-based award forfeitures as they occur rather than estimating by applying a forfeiture rate. Earnings Per Share The consolidated statements of income present basic and diluted earnings per share (“ EPS ”). Basic EPS is computed using the two-class method, which includes the weighted average number of shares of Common Stock outstanding during the period and other securities that participate in dividends (the “ participating securities ”). Under the two-class method, all earnings, both distributed and undistributed, are allocated to shares of Common Stock and participating securities based on their respective rights to receive dividends. 69 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 (In U.S. dollars) Diluted EPS is computed similar to basic EPS, except that the denominator is increased to include the number of additional shares for potential dilutive effects of the RHI Preferred Stock (as defined below), stock options, restricted stock units (“ RSU’s ”) and warrants outstanding during the period. The dilutive effects of the RHI Preferred Stock were calculated in accordance with the if-converted method, or two-class method, whichever was more dilutive. The dilutive effects of stock options, RSU’s and warrants are calculated in accordance with the treasury stock method. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As a result of the reverse recapitalization, the Company has retroactively adjusted the weighted average shares outstanding prior to the Closing Date to give effect to the Exchange Ratio (as defined in the Merger Agreement) to determine the number of shares of Common Stock into which they were converted. Employee Benefit Plans The Company has a 401(k) retirement savings plan open to U.S. based employees who have completed three months of eligible service. The Company contributes $ 0.60 for every $1.00 of employee contributions up to a maximum of 6 % of the employee’s salary based upon each individual participant’s election. Expenses totaled $ 143,937 and $ 109,265 for employer contributions to the 401(k) retirement savings plan in the fiscal years ended March 31, 2022 and 2021, respectively. Income Taxes Income taxes are determined using the asset and liability method of accounting. Under this method, deferred tax assets and liabilities are recognized for the differences between the accounting bases of assets and liabilities and their corresponding tax basis. Deferred taxes are measured using enacted tax rates expected to apply when the asset is realized, or the liability is settled. A deferred tax asset is recognized when it is considered more likely than not to be realized. In the normal course of business, the Company’s tax returns are subject to examination by various taxing authorities. Such examinations may result in future tax and interest assessments by these taxing jurisdictions. Accordingly, the Company accrues liabilities when it believes that it is not more likely than not that it will realize the benefits of tax positions that it has taken in its tax returns or for the amount of any tax benefit that exceeds the cumulative probability threshold in accordance with ASC 740-10. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits in income tax expense (benefit). Differences between the estimated and actual amounts determined upon ultimate resolution, individually or in the aggregate, are not expected to have a material adverse effect on the Company’s consolidated financial position but could possibly be material to the Company’s consolidated results of operations or cash flow in any given quarter or annual period. Companies subject to the Global Intangible Low-Taxed Income provision (“ GILTI ”) have the option to account for the GILTI tax as a period cost if and when incurred, or to recognize deferred taxes for outside basis temporary differences expected to reverse as GILTI. The Company has elected to treat taxes on GILTI as period costs and no deferred tax asset or liability is recorded. Comprehensive Income The Company reports in accordance with ASC Topic 220, “ Comprehensive Income ” (“ ASC 220 ”). ASC 220 requires companies to classify items of other comprehensive income (loss) by their nature in the financial statements and display the accumulated balance of other comprehensive income (loss) separately from capital stock and retained earnings in the shareholders’ equity section of a statement of financial position. Derivative Financial Instruments The Company’s interest rate swaps have not been designated as a hedging instrument and, therefore, are recognized at fair value at the end of each reporting period with changes in fair value recorded in the consolidated statements of income. 70 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 (In U.S. dollars) Fair Value Measurement and Hierarchy The Company reports in accordance with ASC Topic 820, “ Fair Value Measurements and Disclosures ” (“ ASC 820 ”). Under ASC 820, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability ( i.e. , the “exit price”) in an orderly transaction between market participants at the measurement date. ASC 820 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions as to what market participants would use in pricing the asset or liability and are based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the observability of inputs as follows: ● Level 1 ––Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment. ● Level 2 ––Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. ● Level 3 ––Valuations based on inputs that are unobservable and significant to the overall fair value measurement. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes the level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. See Note 16, “ Financial Instruments ” for additional information. Emerging Growth Company The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1993, as amended (the “ Securities Act ”), as modified by the Jumpstart Our Business Startups Act of 2012, as amended (the “ JOBS Act ”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended (the “ Sarbanes-Oxley Act ”), reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a registration statement declared effective under the Securities Act or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”)) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period, difficult or impossible because of the potential differences in accounting standards used. 71 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 (In U.S. dollars) Recent Accounting Pronouncements Accounting Standards Not Yet Adopted In February 2016, the FASB issued Accounting Standards Update (“ ASU ”) 2016-02, “ Leases (Topic 842) ” (“ ASU 2016-02 ”), which establishes a right-of-use (“ ROU ”) model that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases with terms longer than twelve months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the consolidated statements of income. Under ASU 2020-05, “ Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842) ,” the new standard is effective for the Company beginning April 1, 2022. ASU 2016-02 requires a modified retrospective transition approach with application in all comparative periods presented (the “ comparative method ”), or alternatively, as of the effective date as the date of initial application without restating comparative period financial statements (the “ effective date method ”). The new guidance also provides several practical expedients and policies that companies may elect under either transition method. The Company elected to apply the effective date method and elected the package of practical expedients under which it will not reassess the classification of its existing leases, reevaluate whether any expired or existing contracts are or contain leases or reassess initial direct costs under the new guidance. Rather, the Company will retain the conclusions reached for these items under ASC Topic 840, Leases . Additionally, the Company elected a practical expedient to not separate non-lease components, such as common area maintenance, from lease components. The Company did not elect the practical expedient that permits a reassessment of lease terms for existing leases. The Company performed an analysis of the impact of the new lease guidance and is in the process of completing the final phase of a comprehensive plan for its implementation of the new guidance. The project plan includes analyzing the impact of the new guidance on its current lease contracts, reviewing the completeness of its existing lease portfolio, comparing its accounting policies under current accounting guidance to the new accounting guidance and identifying potential differences from applying the requirements of the new guidance to its lease contracts. Upon its transition to the new guidance, the Company currently expects to recognize approximately $ 2,268,681 of operating lease liabilities. Additionally, the Company expects to record right-of-use assets in a corresponding amount, net of amounts reclassified from other assets and liabilities, as specified by the new lease guidance. The Company does not expect the adoption of this new guidance will have a material impact on the amount or timing of the Company’s cash flows or liquidity. In June 2016, the FASB issued ASU 2016-13, “ Financial Instruments–Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ” (“ ASU 2016-13 ”), which replaces the incurred loss impairment methodology in current US GAAP with a methodology that reflects expected credit losses. Subsequent to ASU 2016-13, the FASB has issued several related ASUs amending the original ASU 2016-13. The updates are intended to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. For the Company, ASU 2016-13 is effective beginning April 1, 2023. The Company is currently evaluating the effect that ASU 2016-13 will have on the Company’s consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, “ Simplifying the Accounting for Income Taxes ” (“ ASU 2019-12 ”). ASU 2019-12 simplifies the accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. For the Company, ASU 2019-12 is effective beginning April 1, 2022 and interim periods beginning April 1, 2023. Early adoption of ASU 2019-12 is permitted. The adoption of ASU 2019-12 will not have a material impact on the Company’s consolidated financial statements or the Company’s disclosures. 72 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 (In U.S. dollars) In April 2020, the FASB issued ASU 2020-04, “ Reference Rate Reform (Topic 848) ” (“ ASU 2020-04 ”), which provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting; particularly as it relates to the risk of cessation of LIBOR. The amendments in ASU 2020-04 apply only to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by ASU 2020-04 do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The discontinuation of LIBOR will impact the Senior Credit Facility as well as the Interest Rate Swaps which will be outstanding as of the effective date of the discontinuation. The Company is currently evaluating the effect that ASU 2020-04 will have on the Company’s consolidated financial statements, but does not expect it will have a material effect. In October 2021, the FASB issued ASU 2021-08, “ Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers ” (“ ASU 2021-08 ”). ASU 2021-08 provides guidance to help improve the accounting for acquired revenue contracts with customers in a business combination by requiring acquired contract assets and contract liabilities (i.e., unearned revenue) to be recognized and measured in accordance with revenue from contracts with customers guidance. For the Company, the amendments in ASU 2021-08 are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted. The Company early adopted this guidance on January 1, 2022, and retrospectively applied the standard to acquisitions that have taken place since April 1, 2021. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements. NOTE 3. BUSINESS COMBINATION AND PIPE INVESTMENT As discussed in Note 1, “ Description of Business ,” on the Closing Date, the Company consummated the Business Combination pursuant to the terms of the Merger Agreement. The Business Combination was accounted for as a reverse recapitalization in accordance with U.S. GAAP, primarily because former shareholders of RHI continue to control the Company upon closing of the Business Combination. Under this method of accounting, the Company is treated as the “acquired” company for accounting purposes and the Business Combination is treated as the equivalent of RHI issuing stock for the net assets of the Company, accompanied by a recapitalization. The net assets of the Company are stated at historical cost, with no goodwill or intangible assets recorded. In addition, all historical financial information presented in the consolidated financial statements represents the accounts of RHI and its consolidated subsidiaries as if RHI is the predecessor to the Company. Immediately prior to the consummation of the Business Combination, each share of Series A preferred stock, par value $ 0.00001 per share, of RHI (the “ RHI Preferred Stock ”) that was issued and outstanding was automatically converted into a number of shares of common stock, par value $ 0.00001 per share, of RHI (the “ RHI Common Stock ”) at the then-effective conversion rate as calculated pursuant RHI’s second amended and restated certificate of incorporation (the “ RHI Preferred Stock Conversion ”). Additionally, each share of RHI Common Stock (including the RHI Common Stock resulting from the RHI Preferred Stock Conversion) that was issued and outstanding immediately prior to the consummation of the Business Combination was canceled and converted into the right to receive 196.06562028646 (the “ Exchange Ratio ”) shares of Common Stock. Furthermore, each option to acquire a share of RHI Common Stock that was outstanding immediately prior to the consummation of the Business Combination became fully vested in accordance with the original terms of the awards and was converted into an option to purchase shares of Common Stock (each option, an “ RMI Exchanged Option ”), with the number of shares of Common Stock subject to the options and exercise price of each RMI Exchanged Option adjusted commensurately with the Exchange Ratio. In connection with the Business Combination, ROCC entered into subscription agreements with certain accredited investors (the “ PIPE Investors ”), pursuant to which ROCC issued 15,000,000 shares of common stock, par value $ 0.0001 per share, of ROCC (the “ ROCC Common Stock ”) at a purchase price of $ 10.00 per share for an aggregate purchase price of $ 150.0 million (the “ PIPE Investment ”). ROCC consummated the PIPE Investment immediately prior to the consummation of the Business Combination. Approximately $ 20,900,000 of transaction fees and expenses were incurred in connection with the closing of the Business Combination and the PIPE Investment, which have been accounted for as a reduction in proceeds. 73 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 (In U.S. dollars) A portion of the proceeds from the Business Combination and the PIPE Investment was used to pay transaction fees and expenses, and approximately $ 81,300,000 was used to retire the Tommy Boy Related Party Notes (as defined below) and related accrued interest, repay the secured loan outstanding in an amount of $ 18,250,000 and make a payment totaling $ 36,750,000 on the secured line of credit in connection with a refinancing of the Previous Credit Facilities. See Note 8, “ Loans ” for additional information with respect to the Company’s financing arrangements. On the Closing Date, the Company also amended and restated its certificate of incorporation to adjust the number of its authorized shares of capital stock to 750,000,000 shares of Common Stock and 75,000,000 shares of preferred stock. NOTE 4. REVENUE RECOGNITION For the Company’s operating segments, Music Publishing and Recorded Music, the Company accounts for a contract when it has legally enforceable rights and obligations and collectability of consideration is probable. The Company identifies the performance obligations and determines the transaction price associated with the contract. Revenue is recognized when, or as, control of the promised services or goods is transferred to the Company’s customers, and in an amount that reflects the consideration the Company is contractually due in exchange for those services or goods. Certain of the Company’s arrangements include licenses of intellectual property with consideration in the form of sales- and usage-based royalties. Royalty revenue is recognized when the subsequent sale or usage occurs using the best estimates available of the amounts that will be received by the Company. The Company recognized revenue of $ 1,210,132 and $ 2,263,778 from performance obligations satisfied in previous periods for the fiscal years ended March 31, 2022 and 2021, respectively. 74 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 (In U.S. dollars) Disaggregation of Revenue The Company’s revenue consisted of the following categories during the fiscal years ended March 31, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Revenue by Type ​ ​ Performance ​ $ 15,556,648 ​ $ 16,318,823 Digital ​ 37,418,935 ​ 34,842,482 Mechanical ​ 3,189,026 ​ 2,998,465 Synchronization ​ 13,185,079 ​ 9,322,048 Other ​ 7,720,948 ​ 2,592,316 Total Music Publishing ​ 77,070,636 ​ 66,074,134 ​ ​ ​ ​ ​ ​ ​ Digital ​ 18,381,439 ​ 7,271,432 Physical ​ 6,365,613 ​ 3,854,852 Synchronization ​ 2,633,306 ​ 451,765 Neighboring rights ​ 2,130,624 ​ 1,501,298 Total Recorded Music ​ 29,510,982 ​ 13,079,347 ​ ​ ​ ​ ​ ​ ​ Other revenue ​ 1,258,627 ​ 1,092,183 Total revenue ​ $ 107,840,245 ​ $ 80,245,664 ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Revenue by Geographical Location ​ ​ United States Music Publishing ​ $ 39,764,683 ​ $ 34,007,515 United States Recorded Music ​ 16,014,204 ​ 4,599,570 United States other revenue ​ ​ 1,258,627 ​ 1,092,183 Total United States ​ 57,037,514 ​ 39,699,268 International Music Publishing ​ 37,305,953 ​ 32,066,619 International Recorded Music ​ 13,496,778 ​ 8,479,777 Total International ​ 50,802,731 ​ 40,546,396 Total revenue ​ $ 107,840,245 ​ $ 80,245,664 ​ Only the United States represented 10% or more of the Company’s total revenues in the fiscal years ended March 31, 2022 and 2021. Music Publishing Music publishers act as copyright owners and/or administrators of the musical compositions and generate revenues related to the exploitation of musical compositions (as opposed to recorded music). Music publishers receive royalties from the use of the musical compositions in public performances, digital and physical recordings, and through synchronization (the combination of music with visual images). Performance revenues are received when the musical composition is performed publicly through broadcast of music on television, radio and cable and in retail locations ( e.g. , bars and restaurants), live performance at a concert or other venue ( e.g. , arena concerts and nightclubs) and performance of musical compositions in staged theatrical productions. Digital revenues are derived from musical compositions being embodied in recordings licensed to digital streaming services and digital download services and for digital performance. Mechanical revenues are generated with respect to the musical compositions embodied in recordings sold in any physical format such as vinyl, CDs and DVDs. Synchronization revenues represent the right to use the composition in combination with visual images such as in films or television programs, television commercials and video games as well as from other uses such as in toys or 75 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 (In U.S. dollars) novelty items and merchandise. Other revenues represent earnings for use in printed sheet music and other uses. Digital and synchronization revenue recognition is similar for both Recorded Music and Music Publishing, therefore refer to the discussion within Recorded Music. Included in these revenue streams, excluding synchronization and other revenues, are licenses with performing rights organizations or collecting societies ( e.g ., ASCAP, BMI, SESAC and GEMA), which are long-term contracts containing a single performance obligation, which is ongoing access to all intellectual property in an evolving content library. The most common form of consideration for these contracts is sales- and usage-based royalties. The collecting societies submit usage reports, typically with payment for royalties due, often on a quarterly or biannual reporting period, in arrears. Royalties are recognized as the sale or usage occurs based upon usage reports and, when these reports are not available, royalties are estimated based on historical data, such as recent royalties reported, company-specific information with respect to changes in repertoire, industry information and other relevant trends. The Company excludes from the measurement of transaction price all taxes assessed by governmental authorities that are both (i) imposed on and concurrent with a specific revenue-producing transaction, and (ii) collected from customers. Recorded Music Recorded Music mainly involves selling, marketing, distribution and licensing of recorded music owned by the Company. Recorded Music revenues are derived from four main sources, which include digital, physical, synchronization and neighboring rights. Digital revenues are generated from the expanded universe of digital partners, including digital streaming services and download services. Digital licensing contracts are generally long-term with consideration in the form of sales- and usage-based royalties that are typically received monthly. Additionally, for certain licenses, including synchronization licenses, where the consideration is fixed and the intellectual property being licensed is static, revenue is recognized at the point in time when control of the licensed content is transferred to the customer. Physical revenues are generated from the sale of physical products such as vinyl, CDs and DVDs. The Company uses distribution partners to facilitate the sale of physical products. Revenues from the sale of physical Recorded Music products are recognized upon transfer of control to the customer, which typically occurs once the product has been shipped and the ability to direct use and obtain substantially all of the benefit from the asset have been transferred. In accordance with industry practice and as is customary in many territories, certain products, such as CDs and DVDs, are sold to customers with the right to return unsold items. Revenues from such sales are generally recognized upon shipment based on gross sales. Synchronization revenues represent royalties or fees for the right to use sound recordings in combination with visual images such as in films or television programs, television commercials and video games. In certain territories, the Company may also receive royalties when sound recordings are performed publicly through broadcast of music on television, radio and cable and in public spaces such as shops, workplaces, restaurants, bars and clubs. These public performance royalties on sound recordings are classified as “Neighboring rights” revenue. For fixed-fee contracts, revenue is recognized at the point in time when control of the licensed content is transferred to the customer. Royalty based contracts are recognized as the underlying sales or usage occurs. Deferred Revenue The following table reflects the change in deferred revenue during the fiscal years ended March 31, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Balance at beginning of period ​ $ 1,337,987 ​ $ 473,022 Cash received during period ​ 5,029,810 ​ 6,716,569 Revenue recognized during period ​ ( 5,264,133 ) ​ ( 5,851,604 ) Balance at end of period ​ $ 1,103,664 ​ $ 1,337,987 ​ ​ ​ 76 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 (In U.S. dollars) NOTE 5. ACQUISITIONS In the ordinary course of business, the Company regularly acquires publishing and recorded music catalogs, which are typically accounted for as asset acquisitions. During the fiscal years ended March 31, 2022 and 2021, the Company completed such acquisitions totaling $ 202,067,308 and $ 115,227,517 , respectively, inclusive of deferred acquisition payments. Significant acquisition transactions, all of which have been accounted for as asset acquisitions, completed during the fiscal years ended March 31, 2022 and 2021 included the following: ● On June 2, 2021, the Company acquired U.S. based record label and music publishing company Tommy Boy for approximately $ 100 million. Two members of the Company’s board of directors (the “ Board ”) were also members of Tommy Boy’s board of managers and had an equity interest in both companies. The acquisition of Tommy Boy was accounted for as an asset acquisition as a result of the significant concentration of the fair value of gross assets acquired in a recorded music catalog intangible asset (weighted average useful life of 30 years ). ● On April 13, 2020, the Company acquired all of the copyrights to the musical compositions owned by Shapiro, Bernstein & Co., Inc. (“ SBI ”), one of the oldest music publishers in the United States. The transaction was accounted for as an asset acquisition as a result of the significant concentration of the fair value of gross assets acquired in a publishing catalog intangible asset (weighted average useful life of 30 years ). NOTE 6. INTANGIBLE ASSETS Intangible assets subject to amortization consist of the following as of March 31, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Intangible assets subject to amortization: ​ ​ Publishing and recorded music catalogs ​ $ 654,284,671 ​ $ 455,637,385 Artist management contracts ​ 947,723 ​ 995,464 Gross intangible assets ​ 655,232,394 ​ 456,632,849 Accumulated amortization ​ ( 83,848,539 ) ​ ( 65,483,686 ) Intangible assets, net ​ $ 571,383,855 ​ $ 391,149,163 ​ Straight-line amortization expense totaled $ 18,839,671 and $ 13,855,068 in the fiscal years ended March 31, 2022 and 2021, respectively. The expected amortization expense of intangible assets for each of the five succeeding fiscal years and thereafter is as follows: ​ ​ ​ ​ ​ Fiscal year ended March 31: ​ 2023 ​ $ 21,180,868 2024 ​ 21,180,868 2025 ​ 21,180,275 2026 ​ 21,146,020 2027 ​ 21,146,020 Thereafter ​ 465,527,837 Total ​ $ 571,361,888 ​ ​ ​ NOTE 7. ROYALTY ADVANCES The Company made royalty advances totaling $ 27,952,527 and $ 14,474,288 during the fiscal years ended March 31, 2022 and 2021, respectively, recoupable from the writer’s or artist’s share of future royalties otherwise payable, in varying amounts. Advances 77 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 (In U.S. dollars) expected to be recouped within the next twelve months are classified as current assets, with the remainder classified as noncurrent assets. The following table reflects the change in royalty advances during the fiscal years ended March 31, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Balance at beginning of period ​ $ 41,582,080 ​ $ 40,263,439 Additions ​ 27,952,527 ​ 14,474,288 Recoupments ​ ( 12,521,853 ) ​ ( 13,155,647 ) Balance at end of period ​ $ 57,012,754 ​ $ 41,582,080 ​ ​ ​ NOTE 8. LOANS Long-term debt consists of the following as of March 31, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Secured loan bearing interest at LIBOR plus a spread ​ $ — ​ $ 18,500,000 Secured line of credit bearing interest at LIBOR plus a spread ​ 275,645,715 ​ 197,090,848 Debt issuance costs, net ​ ​ ( 5,789,546 ) ​ ​ ( 3,058,973 ) ​ ​ 269,856,169 ​ 212,531,875 Less: short term portion of secured loan ​ ​ — ​ ​ 1,000,000 ​ ​ $ 269,856,169 ​ $ 211,531,875 ​ Credit Facilities On December 19, 2014, Reservoir Media Management, Inc. (“ RMM ”), a subsidiary of RHI, entered into a credit agreement (the “ RMM Credit Agreement ”) governing RMM’s secured term loan (the “ Secured Loan ”) and secured revolving credit facility (the “ Secured Line of Credit ” and together with the Secured Loan, the “ Credit Facilities ”). The Credit Facilities were subsequently amended multiple times and were refinanced in July 2021 in connection with the consummation of the Business Combination, pursuant to that certain Fourth Amended and Restated Credit Agreement, dated as of July 28, 2021 (the “ Debt Refinancing ”). On December 7, 2021, RMM entered into an amendment (the “First Amendment” ) to the RMM Credit Agreement. The First Amendment amended the RMM Credit Agreement to increase RMM’s senior secured revolving credit facility from $ 248,750,000 to an aggregate amount of $ 350,000,000 (the “ Senior Credit Facility ”) and modified certain covenants (discussed below). The Senior Credit Facility has a scheduled maturity date of October 16, 2024. Borrowings under the Senior Credit Facility bear interest at a rate equal to either the sum of a base rate plus a margin of 1.25 % or the sum of a LIBO rate plus a margin of 2.25 %. RMM is also required to pay an unused fee in respect of unused commitments under the Senior Credit Facility, if any, at a rate of 0.25 % per annum. Substantially all tangible and intangible assets of the Company, RHI, RMM and the other subsidiary guarantors are pledged as collateral to secure the obligations of RMM under the RMM Credit Agreement. The RMM Credit Agreement contains customary covenants limiting the ability of the Company, RHI, RMM and certain of its subsidiaries to, among other things, incur debt or liens, merge or consolidate with others, make investments, make cash dividends, redeem or repurchase capital stock, dispose of assets, enter into transactions with affiliates or enter into certain restrictive agreements. In addition, the Company, on a consolidated basis with its subsidiaries, must comply with financial covenants requiring the Company to maintain (i) a total leverage ratio (net of up to $ 20,000,000 of certain cash balances) of no greater than 7.50 :1.00 as of the end of each fiscal quarter, (ii) a fixed charge coverage ratio of not less than 1.25 :1.00 for each four fiscal quarter period, and (iii) a consolidated senior debt to library value ratio of 0.475 , subject to certain adjustments. If RMM does not comply with the covenants in the RMM Credit Agreement, the lenders may, subject to customary cure rights, require the immediate payment of all amounts outstanding under the Senior Credit Facility. 78 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 (In U.S. dollars) The Senior Credit Facility also includes an “accordion feature” that permits RMM to seek additional commitments in an amount not to exceed $ 50,000,000 that would increase the Senior Credit Facility. As of March 31, 2022, the Senior Credit Facility had a borrowing capacity of $ 350,000,000 , with remaining borrowing availability of $ 74,354,285 . Interest Rate Swaps At March 31, 2022, RMM had the following interest rate swaps outstanding, under which it pays a fixed rate and receives a floating interest payment from the counterparty based on LIBOR with reference to notional amounts adjusted to match the original scheduled principal repayments pursuant to the indenture agreement: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Notional ​ ​ ​ ​ Amount at ​ ​ ​ ​ ​ ​ March 31, ​ Pay Fixed ​ ​ Effective Date ​ 2022 ​ Rate ​ Maturity March 10, 2022 ​ $ 8,750,000 ​ 1.602 % September 2024 March 10, 2022 ​ $ 88,039,137 ​ 1.492 % September 2024 December 31, 2021 ​ $ 53,210,863 1.042 % September 2024 ​ On March 10, 2022, two previous interest rate swaps expired with original notional amounts of $ 40,228,152 and $ 59,325,388 . Through the expiration date of these previous interest rate swaps, RMM paid fixed rates of 2.812 % and 2.972 %, respectively, to the counterparty and received a floating interest payment from the counterparty based on LIBOR with reference to notional amounts adjusted to match the original scheduled principal repayments pursuant to the indenture agreement. NOTE 9. OTHER NON-CURRENT LIABILITIES As of March 31, 2022, the Company’s other non-current liabilities, which consist primarily of obligations related to certain asset purchases and acquisitions that are due more than a year in the future, are as follows: ​ ​ ​ ​ ​ Fiscal year ended March 31: ​ 2024 ​ $ 213,122 2025 ​ 213,122 2026 ​ 213,122 2027 ​ 213,122 2028 and later ​ 160,163 Total ​ $ 1,012,651 ​ ​ ​ NOTE 10. INCOME TAXES The following table presents domestic and foreign income before income taxes for the fiscal years ended March 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Domestic ​ $ 18,369,088 ​ $ 9,782,622 Foreign ​ ( 987,499 ) ​ 1,663,697 Income before income taxes ​ $ 17,381,589 ​ $ 11,446,319 ​ 79 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 (In U.S. dollars) The provision for income taxes consists of the following for the fiscal years ended March 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Current income taxes: ​ ​ U.S. federal ​ $ — ​ $ ( 62,685 ) State and local ​ 6,860 ​ 8,827 Foreign ​ 201,671 ​ 581,232 Total current ​ 208,531 ​ 527,374 Deferred income taxes: ​ ​ ​ ​ U.S. federal ​ 3,950,871 ​ 1,759,503 State and local ​ 509,130 ​ 226,568 Foreign ​ ( 415,340 ) ​ ( 366,754 ) Total deferred ​ 4,044,661 ​ 1,619,317 Income tax expense ​ $ 4,253,192 ​ $ 2,146,691 ​ The Company has determined that undistributed earnings of certain non-U.S. subsidiaries will be reinvested for an indefinite period of time. The Company has both the intent and ability to indefinitely reinvest these earnings. Given its intent to reinvest these earnings for an indefinite period of time, The Company has not accrued a deferred tax liability on these earnings. A determination of an unrecognized deferred tax liability related to these earnings is not practicable. A reconciliation of the statutory tax rate to the effective rate is as follows for the fiscal years ended March 31: ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Federal income tax statutory rate 21.0 % 21.0 % State and local income taxes, net of federal income tax benefit 2.3 % 1.7 % Foreign subsidiary earnings 0.8 % 2.4 % Return to provision adjustments ( 1.4 ) % ( 5.5 ) % Executive compensation 1.8 % 0.3 % Other, net 0.0 % ( 1.1 ) % Effective income tax rate 24.5 % 18.8 % ​ The Company’s effective tax rate may vary from period to period depending on, among other factors, the geographic and business mix of earnings and losses. These same and other factors, including history of pre-tax earnings and losses, are taken into account in assessing the ability to realize deferred tax assets. 80 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 (In U.S. dollars) Significant components of the Company’s deferred income tax liability as of March 31, 2022 and 2021are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Deferred tax assets: ​ ​ Net operating loss carryforward ​ $ 1,964,261 ​ $ 1,239,173 Fair value of swaps ​ — ​ 1,046,459 Compensation ​ 187,541 ​ 44,375 Charitable contributions ​ 13,249 ​ 8,951 Unrealized foreign exchange losses ​ ​ 61,044 ​ ​ 51,924 Legal fees ​ 24,873 ​ — Total deferred tax assets ​ 2,250,968 ​ 2,390,882 Deferred tax liabilities: ​ ​ ​ ​ Fixed assets and leasehold improvements ​ ( 63,871 ) ​ ( 44,393 ) Intangible assets ​ ( 26,156,253 ) ​ ( 21,614,106 ) Fair value of swaps ​ ( 915,014 ) ​ — Total deferred tax liabilities ​ ( 27,135,138 ) ​ ( 21,658,499 ) Net deferred tax liabilities ​ $ ( 24,884,170 ) ​ $ ( 19,267,617 ) ​ As of March 31, 2022, the Company has income tax Net operating loss carry forwards of $ 55,343,261 related to the U.S. operations. The Company has recorded a deferred tax asset of $ 1,964,261 reflecting the benefit of $ 55,343,261 in loss carry forwards. Such net operating loss carry forwards will expire as follows: ​ ​ ​ ​ ​ ​ ​ Federal $ 7,118,325 No expiration date New York ​ 47,116,842 2035 – 2040 California ​ 674,133 2040 – 2042 Tennessee ​ 433,961 2035 – 2037 ​ Tax Uncertainties As of March 31, 2022, the Company has no t recorded any unrecognized tax benefits. Tax Audits The Company and its eligible subsidiaries file a consolidated U.S. federal income tax return and applicable state and local income tax returns and non-U.S. income tax returns. The Company is subject to examination by federal, state and local, and foreign tax authorities. RMM’s Federal income tax returns for the years 2019 through 2021 are subject to examination by the Internal Revenue Service, and RMM’s state tax returns are subject to examination by the respective tax authorities for the years 2018 through 2021. Non-U.S. tax returns are subject to examination by the respective tax authorities for the years 2018 through 2021. The Company regularly assesses the likelihood of additional assessments by each jurisdiction and have established tax reserves that the Company believes are adequate in relation to the potential for additional assessments. Examination outcomes and the timing of examination settlements are subject to uncertainty. Although the results of such examinations may have an impact on the Company’s unrecognized tax benefits, the Company does not anticipate that such impact will be material to its consolidated financial position or results of operations. The Company does not expect to settle any material tax audits in the next twelve months. 81 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 (In U.S. dollars) NOTE 11. SUPPLEMENTARY CASH FLOW INFORMATION Interest paid and income taxes paid for the fiscal years ended March 31, 2022 and 2021 were comprised of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Interest paid ​ $ 9,223,410 ​ $ 8,176,888 Income taxes paid ​ $ 693,170 ​ $ 131,414 ​ Non-cash investing and financing activities for the fiscal years ended March 31, 2022 and 2021 were comprised of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Acquired intangible assets included in other liabilities ​ $ 5,463,665 ​ $ 2,416,635 Conversion of RHI Preferred Stock to Common Stock ​ $ 81,632,500 ​ $ — ​ ​ NOTE 12. AMOUNTS DUE TO RELATED PARTIES The Company has various shared services agreements with a shareholder and other affiliated entities under the control of its shareholder. These agreements cover services such as IT support and re-billed services of staff who perform services across multiple entities. Amounts due to this shareholder and other affiliated entities totaled $ 0 as of March 31, 2022 and $ 290,172 as of March 31, 2021. The acquisition of Tommy Boy was financed using cash on hand and borrowings from related parties (the “ Tommy Boy Related Party Notes ”). The Tommy Boy Related Party Notes bore interest of 4.66 % per year and were payable upon the earlier of the consummation of the Business Combination and December 21, 2021. The Tommy Boy Related Party Notes and accrued interest were paid on the Closing Date. See Note 3, “ Business Combination and PIPE Investment ” for additional information with respect to the consummation of the Business Combination. NOTE 13. SHAREHOLDERS’ EQUITY The consolidated statements of shareholders’ equity reflect the reverse capitalization as of the Closing Date. Because RHI was deemed to be the accounting acquirer in the reverse capitalization with ROCC, all periods prior to the Closing Date reflect the balances and activity of RHI. The consolidated balances, share activity and per share amounts in these consolidated statements of equity were retroactively adjusted, where applicable, using the Exchange Ratio. See Note 1, “ Description of Business ” and Note 3, “ Business Combination and PIPE Investment ” for additional information. RHI Preferred Stock Prior to the Business Combination, RHI had 16,175,406 shares of RHI Preferred Stock outstanding. The RHI Preferred Stock was convertible into an equal number of shares of RHI Common Stock at the option of the preferred shareholder and was mandatorily converted into an equal number of shares of RHI Common Stock upon a qualified public offering of RHI Common Stock. Immediately prior to the effective time of the Business Combination, each share of RHI Preferred Stock that was issued and outstanding was automatically converted into a number of shares of RHI Common Stock pursuant to the RHI Preferred Stock Conversion. See Note 3, “ Business Combination and PIPE Investment ” for additional information with respect to the RHI Preferred Stock Conversion. While outstanding, the RHI Preferred Stock participated in dividends declared on common shares, if any, on the basis as if the shares of RHI Preferred Stock were converted into shares of RHI Common Stock. The Company did not declare any dividends subsequent to the issuance of RHI Preferred Stock through the RHI Preferred Stock Conversion. As of March 31, 2022, the Company had no shares of RHI Preferred Stock outstanding. 82 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 (In U.S. dollars) RHI Common Stock Issuance During the fiscal year ended March 31, 2021, RHI issued 1,045,617 shares of RHI Common Stock for an aggregate consideration of $ 8,000,009 to existing shareholders to fund its publishing and recorded music catalog acquisitions. RHI incurred $ 27,000 of issuance costs in connection with this issuance, which RHI accounted for as a reduction in the proceeds from the RHI Common Stock. Warrants As of March 31, 2022, the Company’s outstanding warrants included 5,750,000 publicly-traded warrants (the “ Public Warrants ”), which were issued during ROCC’s initial public offering on December 15, 2020, and 137,500 warrants sold in a private placement to ROCC’s sponsor (the “ Private Warrants ” and together with the Public Warrants, the “ Warrants ”), which were assumed by the Company in connection with the Business Combination and exchanged into warrants for shares of Common Stock. Each whole Warrant entitles the registered holder to purchase one whole share of Common Stock at a price of $ 11.50 per share, provided that the Company has an effective registration statement under the Securities Act covering the shares of Common Stock issuable upon exercise of the Warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder. Pursuant to the warrant agreement, a registered holder may exercise its Warrants only for a whole number of shares of Common Stock. The Warrants will expire five years after the completion of the Business Combination, or earlier upon redemption or liquidation. The Company may redeem the outstanding Public Warrants in whole, but not in part, at a price of $ 0.01 per warrant upon a minimum of 30 days ’ prior written notice of redemption, if and only if the last sale price of Common Stock equals or exceeds $ 18.00 per share for any 20 -trading days within a 30 -trading day period ending three business days before the Company sends the notice of redemption to the registered holders. If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the warrants to do so on a cashless basis. In no event will the Company be required to net cash settle the warrant exercise. The Private Warrants are identical to the Public Warrants, except that the Private Warrants are exercisable for cash or on a cashless basis, at the holder’s option, and are non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. The Company evaluated the Warrants under ASC Topic 480, Distinguishing Liabilities from Equity (“ ASC 480 ”) and ASC Topic 815, Derivatives and Hedging (“ ASC 815 ”), and in accordance with its accounting policies, concluded they meet the criteria to be equity classified as they were determined to be indexed in the Company’s stock and meet the requirements for equity classification. NOTE 14. SHARE-BASED COMPENSATION 2021 Incentive Plan On July 28, 2021, in connection with the Business Combination, the Company adopted the Reservoir Media, Inc. 2021 Omnibus Incentive Plan (the “ 2021 Incentive Plan ”), which became effective on such date. 9,726,247 authorized shares of Common Stock were reserved for issuance under the 2021 Incentive Plan. In addition, pursuant to terms of the Merger Agreement, at the effective time of the Business Combination, options previously granted under the Reservoir Holdings, Inc. 2019 Long Term Incentive Plan (the “ Previous RHI 2019 Incentive Plan ”) to purchase shares of RHI Common Stock were converted into options to purchase 1,494,848 shares of Common Stock pursuant to the 2021 Incentive Plan. 83 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 (In U.S. dollars) Beginning on April 1, 2022 and ending on March 31, 2031, the aggregate number of shares of Common Stock that may be issued under the 2021 Incentive Plan will automatically increase by the lesser of (a) 3 % of the total number of shares of Common Stock issued and outstanding on the last day of the preceding fiscal year on a fully diluted basis and assuming that all shares available for issuance under the 2021 Incentive Plan are issued and outstanding, or (b) such number of Shares determined by the Board. As of the effective date of the 2021 Incentive Plan, no further stock awards have been or will be granted under the Previous RHI 2019 Incentive Plan, and the Previous RHI 2019 Incentive Plan is no longer in effect. As of March 31, 2022, 7,984,354 shares of Common Stock were available for the Company to grant under the 2021 Incentive Plan. The 2021 Incentive Plan is administered by the compensation committee of the Board (the “ Compensation Committee ”). The exercise prices, vesting and other restrictions are determined by the Board, except that the exercise price per share of a stock option may not be less than 100 % of the fair value of the Common Stock on the date of grant. Stock options awarded under the 2021 Incentive Plan typically expire 10 years after the date of the grant and generally have vesting conditions that the Compensation Committee will determine. Share-based compensation expense totaled $ 2,890,931 ($ 2,228,263 , net of taxes) and $ 102,700 ($ 79,165 , net of taxes) during the fiscal years ended March 31, 2022 and 2021, respectively. Share-based compensation expense is classified as “Administration expenses” in the accompanying consolidated statements of income. The increase in share-based compensation expense during the fiscal year ended March 31, 2022 reflects the accelerated vesting of stock options and new grants of restricted stock units (“ RSU’s ”), as discussed below. Additionally, share-based compensation expense for the fiscal year ended March 31, 2022, includes $ 240,000 to record a liability for a variable number of awards to be granted to non-employee directors based on a fixed dollar amount during the fiscal year ending March 31, 2023. Stock Options All stock options outstanding as of March 31, 2022 were granted under the Previous RHI 2019 Inventive Plan. As discussed in Note 3, “ Business Combination and PIPE Investment ,” each option to acquire a share of RHI Common Stock issued under the Previous RHI 2019 Incentive Plan that was outstanding immediately prior to the consummation of the Business Combination became fully vested in accordance with the original terms of the awards. Each fully vested option was then converted into an option to purchase shares of Common Stock, with the number of shares of Common Stock subject to the options and exercise price adjusted commensurately with the Exchange Ratio. Prior to vesting, the Company recorded share-based compensation expense for stock options based on the estimated fair value of the stock options on the date of the grant using the Black-Scholes option-pricing model. The absence of a public market for the Company’s common stock on the grant date required the Company’s board of directors to estimate the fair value of its common stock for purposes of granting options and for determining share-based compensation expense by considering several objective and subjective factors, including third-party valuations, actual and forecasted operating and financial results, market conditions and performance of comparable publicly traded companies, developments and milestones in the Company, the rights and preferences of common and then-outstanding convertible preferred stock, and transactions involving the Company’s stock. The fair value of the Company’s common stock was determined in accordance with applicable elements of the American Institute of Certified Public Accountants guide, Valuation of Privately Held Company Equity Securities Issued as Compensation. The following assumptions were used in the Black-Scholes option-pricing model to determine the fair value of stock option awards at the grant date: ● risk-free interest rate of 1.74 % — 2.41 % , based on the U.S. Treasury bond yield with a remaining term equal to the expected option life assumed at the date of grant. ● expected term (in years) of 8 ; which is based on consideration of the contractual terms of the stock-based awards, vesting schedules, and expectations of future employee behavior. 84 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 (In U.S. dollars) ● expected volatility of 39.1 % to 57.7 % determined by using an average of historical volatilities of selected companies deemed to be comparable to the Company corresponding to the expected term of the awards. ● expected dividend yield of 0 % , which reflects the Company’s lack of history or expectation of declaring dividends on its common stock. The following table is a summary of stock option activity under the Plan for the fiscal year ended March 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average ​ ​ ​ ​ Weighted ​ ​ ​ ​ Remaining ​ ​ Total ​ Average ​ ​ Aggregate ​ Contractual ​ ​ Number of ​ Exercise ​ ​ Intrinsic ​ Term ​ ​ Options ​ Price ​ ​ Value ​ (Years) Outstanding as of April 1, 2021 ​ 1,494,848 ​ $ 5.11 ​ ​ ​ Granted — ​ ​ Exercised — ​ $ — ​ Forfeited — ​ $ — ​ Outstanding as of March 31, 2022 1,494,848 ​ $ 5.11 ​ $ 7,055,683 7.1 Exercisable as of March 31, 2022 1,494,848 ​ $ 5.11 ​ $ 7,055,683 Vested or expected to vest as of March 31, 2022 1,494,848 ​ $ 5.11 ​ $ 7,055,683 7.1 ​ Restricted Stock Units During the fiscal year ended March 31, 2022, the Company granted RSUs to certain employees and executive officers under the 2021 Incentive Plan. RSUs are not entitled to dividends or dividend equivalents and are not considered to be participating securities. During the fiscal year ended March 31, 2022, 183,474 of these RSUs vested, with the remainder scheduled to vest over the following two years . The Company records share-based compensation expense for RSUs based on their grant date fair value. The following is a summary of RSU activity for the fiscal year ended March 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ Total ​ Average ​ ​ Number of ​ Grant Date ​ ​ Shares ​ Fair Value Outstanding as of April 1, 2021 ​ — ​ $ — Granted ​ 247,045 ​ $ 8.97 Vested and settled ( 80,933 ) ​ $ 8.97 Forfeited — ​ $ — Outstanding as of March 31, 2022 166,112 ​ $ 8.97 ​ The total fair value, determined as of the date of vesting, of RSUs vested and converted to common shares of the Company during the fiscal year ended March 31, 2022 was $ 741,492 . Outstanding RSUs as of March 31, 2022, include 102,541 RSUs with a fair value of $ 1,007,978 that vested on March 31, 2022 and converted to common shares in April 2022. 85 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 (In U.S. dollars) NOTE 15. EARNINGS PER SHARE The following table summarizes the basic and diluted earnings per common share calculation for the fiscal years ended March 31, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Basic earnings per common share ​ ​ Net income attributable to Reservoir Media, Inc. ​ $ 13,076,627 ​ $ 9,252,955 Less: income allocated to participating securities ​ ( 1,182,247 ) ​ ( 3,359,927 ) Net income attributable to common shareholders ​ $ 11,894,380 ​ $ 5,893,028 Weighted average common shares outstanding - basic ​ 52,611,175 ​ 28,370,281 Earnings per common share - basic ​ $ 0.23 ​ $ 0.21 ​ ​ ​ ​ ​ ​ ​ Diluted earnings per common share ​ ​ Net income attributable to common shareholders ​ $ 11,894,380 ​ $ 5,893,028 Add: income allocated to participating securities ​ 1,182,247 ​ 3,359,927 Net income attributable to Reservoir Media, Inc. ​ $ 13,076,627 ​ $ 9,252,955 ​ ​ ​ ​ ​ ​ ​ Weighted average common shares outstanding - basic ​ 52,611,175 ​ 28,370,281 Weighted average effect of potentially dilutive securities: ​ ​ Assumed conversion of RHI Preferred Stock ​ 5,229,309 ​ 16,175,406 Effect of dilutive stock options and RSUs ​ 609,535 ​ — Weighted average common shares outstanding - diluted ​ 58,450,019 ​ 44,545,687 Earnings per common share - diluted ​ $ 0.22 ​ $ 0.21 ​ Prior to the RHI Preferred Stock Conversion in connection with the Business Combination, shares of the RHI Preferred Stock were considered participating securities. Because of their anti-dilutive effect, 5,887,500 shares of Common Stock equivalents comprised of warrants have been excluded from the diluted earnings per share calculation for the fiscal year ended March 31, 2022. Because of their anti-dilutive effect, 1,494,848 shares of Common Stock equivalents comprised of stock options have been excluded from the diluted earnings per share calculation for the fiscal year ended March 31, 2021. NOTE 16. FINANCIAL INSTRUMENTS The Company is exposed to the following risks related to its financial instruments: (a) Credit Risk Credit risk arises from the possibility that the Company’s debtors may be unable to fulfill their financial obligations. Revenues earned from publishing and distribution companies are concentrated in the music and entertainment industry. The Company monitors its exposure to credit risk on a regular basis. (b) Interest Rate Risk The Company is exposed to market risk from changes in interest rates on its secured loan. As described in Note 8, “ Loans, ” the Company entered into interest rate swap agreements to partially reduce its exposure to fluctuations in interest rates on its Credit Facilities. 86 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 (In U.S. dollars) The fair value of the outstanding interest rate swaps was a $ 3,991,802 asset as of March 31, 2022 and a $ 4,566,537 liability as of March 31, 2021. Fair value is determined using Level 2 inputs, which are based on quoted prices and market observable data of similar instruments. The change in the unrealized fair value of the swaps during the fiscal year ended March 31, 2022 of $ 8,558,339 was recorded as a gain on changes in fair value of derivative instruments. The change in the unrealized fair value of the swaps during the fiscal year ended March 31, 2021 of $ 2,988,322 was recorded as a gain on changes in fair value of derivative instruments. (c) Foreign Exchange Risk The Company is exposed to foreign exchange risk in fluctuations of currency rates on its revenue from royalties, writers’ fees and its subsidiaries’ operations. (d) Financial Instruments Financial instruments not described elsewhere include cash, accounts receivable, accounts payable, accrued liabilities and borrowing under its line of credit. The carrying values of these instruments as of March 31, 2022 and 2021 do not differ materially from their respective fair values due to the immediate or short-term duration of these items or their bearing market-related rates of interest. The fair value of amounts owed to related parties at March 31, 2021 are impracticable to determine due to the related party nature of such amounts and the lack of readily determinable secondary market. NOTE 17. CONTINGENCIES AND COMMITMENTS (a) Lease Commitments The Company leases its business premises under operating leases which have expiration dates between 2022 – 2027. Rent expense totaled $ 1,075,723 and $ 962,224 during the fiscal years ended March 31, 2022 and 2021, respectively. Future minimum lease payments as of March 31, 2022 are as follows: ​ ​ ​ ​ ​ Fiscal year ended March 31: ​ 2023 ​ $ 758,688 2024 ​ 582,659 2025 ​ 501,160 2026 ​ 416,106 2027 ​ 229,547 Total ​ $ 2,488,160 ​ (b) Royalty Advances The Company has committed to make payments for additional Royalty advances totaling $ 2,913,415 through March 2023, and a further $ 1,250,000 through March 2024, subject to certain conditions. These Royalty advances are to be used to fund future music compositions and sound recordings and will be recorded as royalty advances when paid. (c) Deferred Acquisition costs As discussed in Note 9, the Company has obligations related to certain asset purchases and business acquisitions, which are recorded as liabilities. Some of those agreements call for additional amounts to be paid based on future performance of the assets. The Company has recorded liabilities based on its view of the future performance of those assets, but it is possible that the actual performance and resulting obligations may be different than current estimates. 87 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 (In U.S. dollars) (d) Litigation On September 8, 2020, an action was filed in the U.S. District Court for the Southern District of New York against a consolidated subsidiary of the Company and certain prior owners (the “ Prior Owners ”) of certain music copyrights acquired by such consolidated subsidiary of the Company. The legal action asserts that in 2000, the plaintiff entered into certain engagement letters (the “ Engagement Letters ”) with certain of the Prior Owners, which purportedly gave the plaintiff, among other things, an exclusive right to broker any future sale by the Prior Owners of the music copyrights acquired by such consolidated subsidiary of the Company, as well as a commission fee. Based on the Engagement Letters’ alleged grant of a security interest in such music copyrights, the plaintiff filed UCC financing statements and various notices of liens in the amount of $ 2,651,125 in the U.S. Copyright Office between 2000 and 2018. The plaintiff alleges, among other things, that the Prior Owners breached the Engagement Letters by consummating a purchase agreement with a consolidated subsidiary of the Company in 2018 without involving the plaintiff; that a consolidated subsidiary of the Company tortiously interfered with the Engagement Letters; and that the plaintiff is permitted to foreclose on the liens, including foreclosing on those music copyrights acquired by a consolidated subsidiary of the Company under the 2018 purchase agreement. Effective January 10, 2022, the plaintiff, the Prior Owners, and such consolidated subsidiary of the Company entered into a settlement agreement and mutual release which required the Prior Owners to pay a settlement amount to the plaintiff, which amount was paid by the Prior Owners prior to the stipulated deadline. On January 26, 2022, the plaintiff filed an agreed-upon stipulation of dismissal with prejudice with the U.S. District Court for the Southern District of New York. As a result, all liens granted by the Prior Owners were terminated. As of January 31, 2022, the consolidated subsidiary of the Company has terminated all filings made by the Prior Owner with respect to such liens. Neither the Company nor its consolidated subsidiary named in the action were required to pay any portion of the settlement amounts pursuant to such settlement agreement and mutual release. In addition to the foregoing, the Company is subject to claims and contingencies in the normal course of business. To the extent the Company cannot predict the outcome of the claims and contingencies or estimate the amount of any loss that may result, no provision for any contingent liabilities has been made in the consolidated financial statements. The Company believes that losses resulting from these matters, if any, would not have a material adverse effect on the financial position, results of operations or cash flows of the Company. All such matters which the Company concludes are probable to result in a loss and for which management can reasonably estimate the amount of such loss have been accrued for within these consolidated financial statements. NOTE 18. SEGMENT REPORTING The Company’s business is organized in two reportable segments: Music Publishing and Recorded Music. The Company identified its Chief Executive Officer as its Chief Operating Decision Maker (“ CODM ”). The Company’s CODM evaluates financial performance of its segments based on several factors, of which the primary financial measure is operating income before depreciation and amortization (“ OIBDA ”). The accounting policies of the Company’s business segments are consistent with the Company’s policies for the consolidated financial statements. The Company does not have sales between segments. The following tables present total revenue and reconciliation of OIBDA to operating income by segment for the fiscal years ended March 31, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended March 31, 2022 ​ ​ Music ​ Recorded ​ ​ ​ ​ ​ ​ ​ ​ Publishing Music Other Consolidated Total revenue ​ $ 77,070,636 ​ $ 29,510,982 ​ $ 1,258,627 ​ $ 107,840,245 Reconciliation of OIBDA to operating income: ​ ​ ​ ​ ​ Operating income (a) ​ 10,730,584 ​ 8,386,143 ​ 236,294 ​ 19,353,021 Amortization and depreciation ​ 13,769,188 ​ 5,154,612 ​ 98,331 ​ 19,022,131 OIBDA ​ $ 24,499,772 ​ $ 13,540,755 ​ $ 334,625 ​ $ 38,375,152 ​ 88 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 (In U.S. dollars) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended March 31, 2021 ​ ​ Music ​ Recorded ​ ​ ​ ​ ​ ​ ​ ​ Publishing Music Other Consolidated Total revenue ​ $ 66,074,134 ​ $ 13,079,347 ​ $ 1,092,183 ​ $ 80,245,664 Reconciliation of OIBDA to operating income: ​ ​ ​ ​ Operating income (a) ​ 15,278,593 ​ 2,786,566 ​ 262,494 ​ 18,327,653 Amortization and depreciation ​ 11,749,031 ​ 2,222,272 ​ 106,170 ​ 14,077,473 OIBDA ​ $ 27,027,624 ​ $ 5,008,838 ​ $ 368,664 ​ $ 32,405,126 ​ (a) During the fourth quarter the fiscal year ended March 31, 2022, the Company revised the methodology it uses to allocate corporate general and administrative expenses to its operating segments to better align usage of corporate resources allocated to the Company segments. The updated allocation methodology had no impact on the Company’s consolidated statements of operations. This change was applied retrospectively, and segment OIBDA for all comparative periods has been updated to reflect this change. The Company’s CODM manages assets on a consolidated basis. Accordingly, segment assets are not reported to the Company’s CODM, used to allocate resources or assess performance of the segments, and therefore, total segment assets have not been disclosed. Total long-lived assets by country are as follows as of March 31, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 United States ​ $ 247,653 ​ $ 187,861 United Kingdom ​ 94,427 ​ 133,905 ​ During the fiscal years ended March 31, 2022 and 2021, a single external customer accounted for 11 % and 12 %, respectively, of total revenues, and is included in both the Music Publishing and Recorded Music segments. No other customer accounted for more than 10% of revenue. NOTE 19. CORRECTION OF PRIOR PERIOD ERRORS During the current fiscal year-end financial reporting process, the Company identified prior period accounting errors that the Company has concluded are not material to the Company’s previously reported consolidated financial statements and unaudited interim condensed consolidated financial statements. The financial reporting periods affected by these errors include the Company’s previously reported consolidated financial statements for the fiscal years ended March 31, 2020, and 2021, and the Company’s previously reported unaudited interim condensed consolidated financial information for each of the quarterly and fiscal year-to-date periods ended December 31, 2020, and 2021 (collectively the “previously reported financial statements”). Based on management’s evaluation of the accounting errors in consideration of the SEC Staff’s Accounting Bulletins Nos. 99 (“SAB 99”) and 108 (“SAB 108”) and interpretations therewith, the Company concluded the errors are not material, on an individual or aggregate basis, to the Company’s previously reported financial statements. However, the Company further concluded the accounting errors cannot be corrected as an out-of-period adjustment in the Company’s current period consolidated financial statements as of and for the year ended March 31, 2022, because to do so would cause a material misstatement in those financial statements. Accordingly, the Company referred to the guidance prescribed by SAB 108 which specifies that the errors must be corrected the next time the previously reported financial statements are filed. Therefore, the Company has corrected these accounting errors in the accompanying consolidated financial statements as of and for the fiscal years ended March 31, 2022, and 2021 as an immaterial revision of these financial statements. In addition, the Company plans to correct the accounting errors in its previously reported interim condensed consolidated financial information for the three-month period ended June 30, 2021, the three- and six-month periods ended September 30, 2021, and the three- and nine-month periods ended December 31, 2021, as an immaterial revision of those financial statements upon filing of the Company’s fiscal year 2023 Quarterly Reports on Form 10-Q. The following is a description of the accounting errors and their impact on the Company’s previously reported financial statements: 89 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 (In U.S. dollars) The Company identified certain accounting errors that originated in the fourth quarter of fiscal year 2020 related to the recognition of royalty revenue associated with royalties generated from the pre-acquisition usage of intellectual property rights that the Company acquired in certain of its music catalog acquisitions for which the Company was entitled to collect pre-acquisition royalties from the sellers for a specified period prior to the closing date of these acquisitions. The Company’s historical accounting practice with respect to pre-acquisition royalties was to recognize revenue upon closing of the acquisitions. Upon further review, the Company concluded that the pre-acquisition royalties should have been accounted for as reduction of the purchase price of the acquired music catalogs, as prescribed by ASC 805-50, Business Combinations – Related Issues (“ASC 805-50”) rather than recognized as revenue under ASC 606, Revenue from Contracts with Customers (“ASC 606”). As part of its review, the Company further concluded that certain royalty revenue generated from pre-acquisition usage that remained uncollected at closing, as well as the related royalties due to certain artists or songwriters associated with each of the acquired music catalogs, should have been recognized as accounts receivable and royalties payable, respectively, on the closing date of the acquired music catalog based on the Company’s best estimate of the uncollected royalties due to the Company and payables due to the artists or songwriters on the closing date. The Company’s historical accounting practice associated with these uncollected royalties and royalties payable was to recognize the uncollected royalties as revenue under ASC 606 as they were collected after the closing date, and to recognize cost of revenue as the royalties due to the artists or songwriters when the related royalty revenue was collected. The Company also concluded that the acquired accounts receivable and royalties payable assumed on the date of closing should have been included in the purchase price allocation of the Company’s acquired music catalogs, as prescribed by ASC 805-50. The financial tables below present the impact of correcting the accounting errors on the Company’s previously reported financial statements. Annual Periods: The following table presents the impact of correcting the accounting errors on the Company’s previously reported consolidated statements of income for the fiscal years ended March 31, 2021, and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended March 31, 2021 ​ Fiscal Year Ended March 31, 2020 ​ ​ As ​ ​ ​ ​ ​ ​ ​ As ​ ​ ​ ​ ​ ​ ​ Reported Adjustment Revised Reported Adjustment Revised Revenues ​ $ 81,777,789 ​ $ ( 1,532,125 ) ​ $ 80,245,664 ​ $ 63,238,672 ​ $ ( 767,851 ) ​ $ 62,470,821 Cost of revenue ​ 32,991,979 ​ ( 137,526 ) ​ 32,854,453 ​ 27,305,489 ​ ( 9,675 ) ​ 27,295,814 Amortization and depreciation ​ 14,128,604 ​ ( 51,131 ) ​ 14,077,473 ​ 8,423,197 ​ ( 12,798 ) ​ 8,410,399 Total costs and expenses ​ 62,106,668 ​ ( 188,657 ) ​ 61,918,011 ​ 47,761,359 ​ ( 22,473 ) ​ 47,738,886 Operating income ​ 19,671,121 ​ ( 1,343,468 ) ​ 18,327,653 ​ 15,477,313 ​ ( 745,378 ) ​ 14,731,935 Income before income taxes ​ 12,789,787 ​ ( 1,343,468 ) ​ 11,446,319 ​ 14,209,908 ​ ( 745,378 ) ​ 13,464,530 Income tax expense ​ 2,454,153 ​ ( 307,462 ) ​ 2,146,691 ​ 4,199,141 ​ ( 166,781 ) ​ 4,032,360 Net income ​ 10,335,634 ​ ( 1,036,006 ) ​ 9,299,628 ​ 10,010,767 ​ ( 578,597 ) ​ 9,432,170 Net income attributable to Reservoir Media, Inc. ​ 10,288,961 ​ ( 1,036,006 ) ​ 9,252,955 ​ 10,057,794 ​ ( 578,597 ) ​ 9,479,197 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earnings per common share - basic ​ $ 0.23 ​ $ ( 0.02 ) ​ $ 0.21 ​ $ 0.26 ​ $ ( 0.01 ) ​ $ 0.25 Earnings per common share - diluted ​ $ 0.23 ​ $ ( 0.02 ) ​ $ 0.21 ​ $ 0.26 ​ $ ( 0.01 ) ​ $ 0.25 ​ 90 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 (In U.S. dollars) The following table presents the impact of correcting the accounting errors on the Company’s previously reported consolidated statements of comprehensive income for the fiscal years ended March 31, 2021, and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended March 31, 2021 ​ Fiscal Year Ended March 31, 2020 ​ ​ As ​ ​ ​ ​ ​ ​ ​ As ​ ​ ​ ​ ​ ​ ​ Reported Adjustment Revised Reported Adjustment Revised Net income ​ $ 10,335,634 ​ $ ( 1,036,006 ) ​ $ 9,299,628 ​ $ 10,010,767 ​ $ ( 578,597 ) ​ $ 9,432,170 Total comprehensive income ​ 16,817,607 ​ ( 1,036,006 ) ​ 15,781,601 ​ 8,029,014 ​ ( 578,597 ) ​ 7,450,417 Total comprehensive income attributable to Reservoir Holdings, Inc. ​ 16,770,934 ​ ( 1,036,006 ) ​ 15,734,928 ​ 8,076,041 ​ ( 578,597 ) ​ 7,497,444 ​ The following table presents the impact of correcting the accounting errors on the Company’s previously reported consolidated balance sheet and consolidated statements of changes in shareholders’ equity as of March 31, 2021, and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2021 ​ March 31, 2020 ​ ​ As ​ ​ ​ ​ ​ ​ ​ As ​ ​ ​ ​ ​ ​ ​ Reported Adjustment Revised Reported Adjustment Revised Intangible assets, net ​ $ 393,238,010 ​ $ ( 2,088,847 ) ​ $ 391,149,163 ​ $ 285,109,108 ​ $ ( 745,378 ) ​ $ 284,363,730 Total assets ​ 463,944,453 ​ ( 2,088,847 ) ​ 461,855,606 ​ 396,591,203 ​ ( 745,378 ) ​ 395,845,825 Income taxes payable ​ 533,495 ​ ( 6,323 ) ​ 527,172 ​ 297,112 ​ ( 160,166 ) ​ 136,946 Deferred income taxes ​ 19,735,537 ​ ( 467,920 ) ​ 19,267,617 ​ 16,415,239 ​ ( 6,615 ) ​ 16,408,624 Total liabilities ​ 267,959,248 ​ ( 474,243 ) ​ 267,485,005 ​ 225,499,314 ​ ( 166,781 ) ​ 225,332,533 Retained earnings (accumulated deficit) ​ 751,496 ​ ( 1,614,604 ) ​ ( 863,108 ) ​ ( 9,537,465 ) ​ ( 578,597 ) ​ ( 10,116,062 ) Total Reservoir Media, Inc. shareholders’ equity ​ 194,979,508 ​ ( 1,614,604 ) ​ 193,364,904 ​ 170,132,865 ​ ( 578,597 ) ​ 169,554,268 Total shareholders’ equity ​ 195,985,205 ​ ( 1,614,604 ) ​ 194,370,601 ​ 171,091,888 ​ ( 578,597 ) ​ 170,513,291 Total liabilities and shareholders’ equity ​ 463,944,453 ​ ( 2,088,847 ) ​ 461,855,606 ​ 396,591,202 ​ ( 745,378 ) ​ 395,845,824 ​ The following table presents the impact of correcting the accounting errors on the Company’s previously reported consolidated statements of cash flows for the fiscal years ended March 31, 2021, and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended March 31, 2021 ​ Fiscal Year Ended March 31, 2020 ​ ​ As ​ ​ ​ ​ ​ ​ ​ As ​ ​ ​ ​ ​ ​ ​ Reported Adjustment Revised Reported Adjustment Revised Net income ​ $ 10,335,634 ​ $ ( 1,036,006 ) ​ $ 9,299,628 ​ $ 10,010,767 ​ $ ( 578,597 ) ​ $ 9,432,170 Amortization of intangible assets ​ 13,906,199 ​ ( 51,131 ) ​ 13,855,068 ​ 8,250,305 ​ ( 12,798 ) ​ 8,237,507 Accounts payable and accrued expenses ​ ( 213,335 ) ​ ( 137,526 ) ​ ( 350,861 ) ​ 1,684,961 ​ ( 9,675 ) ​ 1,675,286 Income taxes payable ​ 236,383 ​ 153,843 ​ 390,226 ​ 182,911 ​ ( 160,166 ) ​ 22,745 Deferred income taxes ​ 2,080,622 ​ ( 461,305 ) ​ 1,619,317 ​ 3,651,234 ​ ( 6,615 ) ​ 3,644,619 Net cash provided by operating activities ​ 16,246,946 ​ ( 1,532,125 ) ​ 14,714,821 ​ 11,881,542 ​ ( 767,851 ) ​ 11,113,691 Purchases of music catalogs ​ ( 120,053,289 ) ​ 1,532,125 ​ ( 118,521,164 ) ​ ( 106,841,628 ) ​ 767,851 ​ ( 106,073,777 ) Net cash used for investing activities ​ ( 120,146,556 ) ​ 1,532,125 ​ ( 118,614,431 ) ​ ( 107,806,381 ) ​ 767,851 ​ ( 107,038,530 ) ​ 91 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 (In U.S. dollars) Unaudited Fiscal Year 2022 Interim Periods: ​ The following table presents the impact of correcting the accounting errors on the Company’s previously reported unaudited condensed consolidated statements of income for the three-month periods ended June 30, 2021, September 30, 2021, and December 31, 2021, the six-month period ended September 30, 2021, and the nine-month period ended December 31, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30, 2021 ​ Three Months Ended September 30, 2021 ​ Three Months Ended December 31, 2021 ​ ​ As ​ ​ ​ ​ ​ ​ ​ As ​ ​ ​ ​ ​ ​ ​ As ​ ​ ​ ​ ​ ​ ​ Reported Adjustment Revised Reported Adjustment Revised Reported Adjustment Revised Revenues ​ $ 16,718,150 ​ $ ( 85,519 ) ​ $ 16,632,631 ​ $ 30,435,488 ​ $ ( 162,324 ) ​ $ 30,273,164 ​ $ 27,127,779 ​ $ ( 1,315,223 ) ​ $ 25,812,556 Amortization and depreciation ​ 4,079,245 ​ ( 19,522 ) ​ 4,059,723 ​ 4,777,683 ​ ( 20,555 ) ​ 4,757,128 ​ 4,981,748 ​ ( 26,712 ) ​ 4,955,036 Total costs and expenses ​ 16,436,462 ​ ( 19,522 ) ​ 16,416,940 ​ 22,524,426 ​ ( 20,555 ) ​ 22,503,871 ​ 23,149,881 ​ ( 26,712 ) ​ 23,123,169 Operating income ​ 281,688 ​ ( 65,997 ) ​ 215,691 ​ 7,911,062 ​ ( 141,769 ) ​ 7,769,293 ​ 3,977,898 ​ ( 1,288,511 ) ​ 2,689,387 Income (loss) before income taxes ​ ( 1,968,129 ) ​ ( 65,997 ) ​ ( 2,034,126 ) ​ 6,053,514 ​ ( 141,769 ) ​ 5,911,745 ​ 3,093,763 ​ ( 1,288,511 ) ​ 1,805,252 Income tax expense (benefit) ​ ( 510,646 ) ​ ( 16,499 ) ​ ( 527,145 ) ​ 1,575,325 ​ ( 35,442 ) ​ 1,539,883 ​ 717,379 ​ ( 322,128 ) ​ 395,251 Net income (loss) ​ ( 1,457,483 ) ​ ( 49,498 ) ​ ( 1,506,981 ) ​ 4,478,189 ​ ( 106,327 ) ​ 4,371,862 ​ 2,376,384 ​ ( 966,383 ) ​ 1,410,001 Net income (loss) attributable to Reservoir Media, Inc. ​ ( 1,403,500 ) ​ ( 49,498 ) ​ ( 1,452,998 ) ​ 4,555,697 ​ ( 106,327 ) ​ 4,449,370 ​ 2,149,454 ​ ( 966,383 ) ​ 1,183,071 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earnings (loss) per common share - basic ​ $ ( 0.05 ) ​ $ — ​ $ ( 0.05 ) ​ $ 0.08 ​ $ — ​ $ 0.08 ​ $ 0.03 ​ $ ( 0.01 ) ​ $ 0.02 Earnings (loss) per common share - diluted ​ $ ( 0.05 ) ​ $ — ​ $ ( 0.05 ) ​ $ 0.08 ​ $ — ​ $ 0.08 ​ $ 0.03 ​ $ ( 0.01 ) ​ $ 0.02 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended September 30, 2021 ​ Nine Months Ended December 31, 2021 ​ ​ As ​ ​ ​ ​ ​ ​ ​ As ​ ​ ​ ​ ​ ​ ​ Reported Adjustment Revised Reported Adjustment Revised Revenues ​ $ 47,153,638 ​ $ ( 247,843 ) ​ $ 46,905,795 ​ $ 74,281,417 ​ $ ( 1,563,066 ) ​ $ 72,718,351 Amortization and depreciation ​ 8,856,928 ​ ( 40,077 ) ​ 8,816,851 ​ 13,838,676 ​ ( 66,789 ) ​ 13,771,887 Total costs and expenses ​ 38,960,888 ​ ( 40,077 ) ​ 38,920,811 ​ 62,110,769 ​ ( 66,789 ) ​ 62,043,980 Operating income ​ 8,192,750 ​ ( 207,766 ) ​ 7,984,984 ​ 12,170,648 ​ ( 1,496,277 ) ​ 10,674,371 Income before income taxes ​ 4,085,385 ​ ( 207,766 ) ​ 3,877,619 ​ 7,179,148 ​ ( 1,496,277 ) ​ 5,682,871 Income tax expense ​ 1,064,679 ​ ( 51,941 ) ​ 1,012,738 ​ 1,782,058 ​ ( 374,069 ) ​ 1,407,989 Net income ​ 3,020,706 ​ ( 155,825 ) ​ 2,864,881 ​ 5,397,090 ​ ( 1,122,208 ) ​ 4,274,882 Net income attributable to Reservoir Media, Inc. ​ 3,152,197 ​ ( 155,825 ) ​ 2,996,372 ​ 5,301,651 ​ ( 1,122,208 ) ​ 4,179,443 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earnings per common share - basic ​ $ 0.06 ​ $ — ​ $ 0.06 ​ $ 0.10 ​ $ ( 0.03 ) ​ $ 0.07 Earnings per common share - diluted ​ $ 0.06 ​ $ — ​ $ 0.06 ​ $ 0.09 ​ $ ( 0.02 ) ​ $ 0.07 ​ 92 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 (In U.S. dollars) The following table presents the impact of correcting the accounting errors on the Company’s previously reported unaudited condensed consolidated statements of comprehensive income (loss) for the three-month periods ended June 30, 2021, September 30, 2021, and December 31, 2021, the six-month period ended September 30, 2021, and the nine-month period ended December 31, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30, 2021 ​ Three Months Ended September 30, 2021 ​ Three Months Ended December 31, 2021 ​ ​ As ​ ​ ​ ​ ​ ​ ​ As ​ ​ ​ ​ ​ ​ ​ As ​ ​ ​ ​ ​ ​ ​ Reported Adjustment Revised Reported Adjustment Revised Reported Adjustment Revised Net income ​ $ ( 1,457,483 ) ​ $ ( 49,498 ) ​ $ ( 1,506,981 ) ​ $ 4,478,189 ​ $ ( 106,327 ) ​ $ 4,371,862 ​ $ 2,376,384 ​ $ ( 966,383 ) ​ $ 1,410,001 Total comprehensive income (loss) ​ ( 1,242,341 ) ​ ( 49,498 ) ​ ( 1,291,839 ) ​ 2,698,752 ​ ( 106,327 ) ​ 2,592,425 ​ 2,531,476 ​ ( 966,383 ) ​ 1,565,093 Total comprehensive income (loss) attributable to Reservoir Holdings, Inc. ​ ( 1,188,358 ) ​ ( 49,498 ) ​ ( 1,237,856 ) ​ 2,776,260 ​ ( 106,327 ) ​ 2,669,933 ​ 2,304,546 ​ ( 966,383 ) ​ 1,338,163 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended September 30, 2021 ​ Nine Months Ended December 31, 2021 ​ ​ As ​ ​ ​ ​ ​ ​ ​ As ​ ​ ​ ​ ​ ​ ​ Reported Adjustment Revised Reported Adjustment Revised Net income ​ $ 3,020,706 ​ $ ( 155,825 ) ​ $ 2,864,881 ​ $ 5,397,090 ​ $ ( 1,122,208 ) ​ $ 4,274,882 Total comprehensive income (loss) ​ 1,456,411 ​ ( 155,825 ) ​ 1,300,586 ​ 3,987,887 ​ ( 1,122,208 ) ​ 2,865,679 Total comprehensive income (loss) attributable to Reservoir Holdings, Inc. ​ 1,587,902 ​ ( 155,825 ) ​ 1,432,077 ​ 3,892,448 ​ ( 1,122,208 ) ​ 2,770,240 ​ The following table presents the impact of correcting the accounting errors on the Company’s previously reported unaudited condensed consolidated balance sheet and consolidated statements of changes in shareholders’ equity as of June 30, 2021, September 30, 2021, and December 31, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2021 ​ September 30, 2021 ​ December 31, 2021 ​ ​ As ​ ​ ​ ​ ​ ​ ​ As ​ ​ ​ ​ ​ ​ ​ As ​ ​ ​ ​ ​ ​ ​ Reported Adjustment Revised Reported Adjustment Revised Reported Adjustment Revised Intangible assets, net ​ $ 500,591,041 ​ $ ( 2,154,844 ) ​ $ 498,436,197 ​ $ 511,091,322 ​ $ ( 2,296,613 ) ​ $ 508,794,709 ​ $ 538,787,661 ​ $ ( 3,585,124 ) ​ $ 535,202,537 Total assets ​ 580,983,613 ​ ( 2,154,844 ) ​ 578,828,769 ​ 601,704,401 ​ ( 2,296,613 ) ​ 599,407,788 ​ 633,057,023 ​ ( 3,585,124 ) ​ 629,471,899 Income taxes payable ​ ​ 533,937 ​ ​ ( 6,323 ) ​ ​ 527,614 ​ ​ 490,713 ​ ​ ( 6,323 ) ​ ​ 484,390 ​ ​ 524,442 ​ ​ ( 6,323 ) ​ ​ 518,119 Deferred income taxes ​ 19,772,056 ​ ( 484,419 ) ​ 19,287,637 ​ 20,569,924 ​ ( 519,861 ) ​ 20,050,063 ​ 20,599,049 ​ ( 841,989 ) ​ 19,757,060 Total liabilities ​ 386,215,074 ​ ( 490,742 ) ​ 385,724,332 ​ 262,898,821 ​ ( 526,184 ) ​ 262,372,637 ​ 290,511,282 ​ ( 848,312 ) ​ 289,662,970 Retained earnings (accumulated deficit) ​ ( 652,004 ) ​ ( 1,664,102 ) ​ ( 2,316,106 ) ​ 3,903,693 ​ ( 1,770,429 ) ​ 2,133,264 ​ 6,053,147 ​ ( 2,736,812 ) ​ 3,316,335 Total Reservoir Media, Inc, shareholders' equity ​ 193,816,825 ​ ( 1,664,102 ) ​ 192,152,723 ​ 337,931,374 ​ ( 1,770,429 ) ​ 336,160,945 ​ 341,444,605 ​ ( 2,736,812 ) ​ 338,707,793 Total shareholders' equity ​ 194,768,539 ​ ( 1,664,102 ) ​ 193,104,437 ​ 338,805,580 ​ ( 1,770,429 ) ​ 337,035,151 ​ 342,545,741 ​ ( 2,736,812 ) ​ 339,808,929 Total liabilities and shareholders' equity ​ 580,983,613 ​ ( 2,154,844 ) ​ 578,828,769 ​ 601,704,401 ​ ( 2,296,613 ) ​ 599,407,788 ​ 633,057,023 ​ ( 3,585,124 ) ​ 629,471,899 ​ The following table presents the impact of correcting the accounting errors on the Company’s previously reported unaudited condensed consolidated statements of cash flows for the three-month period ended June 30, 2021, the six-month period ended September 30, 2021, and the nine-month period ended December 31, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30, 2021 ​ Six Months Ended September 30, 2021 ​ Nine Months Ended December 31, 2021 ​ ​ As ​ ​ ​ ​ ​ ​ ​ As ​ ​ ​ ​ ​ ​ ​ As ​ ​ ​ ​ ​ ​ ​ Reported Adjustment Revised Reported Adjustment Revised Reported Adjustment Revised Net income (loss) ​ $ ( 1,457,483 ) ​ $ ( 49,498 ) ​ $ ( 1,506,981 ) ​ $ 3,020,706 ​ $ ( 155,825 ) ​ $ 2,864,881 ​ $ 5,397,090 ​ $ ( 1,122,208 ) ​ $ 4,274,882 Amortization of intangible assets ​ 4,047,966 ​ ( 19,522 ) ​ 4,028,444 ​ 8,780,146 ​ ( 40,077 ) ​ 8,740,069 ​ 13,713,202 ​ ( 66,789 ) ​ 13,646,413 Deferred income taxes ​ 36,519 ​ ( 16,499 ) ​ 20,020 ​ 834,387 ​ ( 51,941 ) ​ 782,446 ​ 863,512 ​ ( 374,069 ) ​ 489,443 Net cash provided by operating activities ​ 3,827,380 ​ ( 85,519 ) ​ 3,741,861 ​ 1,712,965 ​ ( 247,843 ) ​ 1,465,122 ​ 14,414,357 ​ ( 1,563,066 ) ​ 12,851,291 Purchases of music catalogs ​ ( 112,308,497 ) ​ 85,519 ​ ( 112,222,978 ) ​ ( 125,902,112 ) ​ 247,843 ​ ( 125,654,269 ) ​ ( 157,555,894 ) ​ 1,563,066 ​ ( 155,992,828 ) Net cash used for investing activities ​ ( 112,785,355 ) ​ 85,519 ​ ( 112,699,836 ) ​ ( 128,395,338 ) ​ 247,843 ​ ( 128,147,495 ) ​ ( 160,143,142 ) ​ 1,563,066 ​ ( 158,580,076 ) ​ 93 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 (In U.S. dollars) Unaudited Fiscal Year 2021 Interim Periods: ​ For the nine-month period ended December 31, 2020, the impact of correcting the accounting errors on the Company’s previously reported revenue, operating income, and net income was a reduction of $ 376,662 , $ 206,120 , and $ 160,000 , respectively ​ NOTE 20. SUBSEQUENT EVENT In April 2022, the Company entered into an agreement for its new headquarter office facility consisting of 12,470 square feet of leased office space at 200 Varick Street, Suite 801A, New York, NY (the “ New HQ Lease ”). Pursuant to the New HQ Lease agreement, the lease term is estimated to commence during the Company’s third or fourth quarter of the fiscal year ending March 31, 2023. The total commitment of approximately $ 8.4 million is payable monthly with escalating rental payments over the 130 -month lease term. ​ ​ 94 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.