What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-05-30 compared with 2023-05-31 · 192 added, 277 removed, 702 unchanged (40% of the section changed)

3 unchanged sentences

Consolidated Statements of Income

Consolidated Statements of Comprehensive Income

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Balance Sheets

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We have audited the accompanying consolidated balance sheets of Reservoir Media, Inc.

and subsidiaries (the “Company”) as of March 31, 2023 and 2022, 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, 2023, and the related notes (collectively referred to as the “financial statements”).

and subsidiaries (the “Company”) as of March 31, 2024, and 2023, and the related consolidated statements of income, comprehensive income (loss), shareholders’ equity, and cash flows for each of the two years in the period ended March 31, 2024, 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, 2024, and 2023, and the results of its operations and its cash flows for each of the two years in the period ended March 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

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Loss on early extinguishment of debt

Gain on foreign exchange

Gain on fair value of swaps

(Loss) gain on foreign exchange

(Loss) gain on fair value of swaps

( 1,124,770 )

Other income (expense), net

( 1,089,442 )

Income before income taxes

7 unchanged sentences

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Fiscal Year Ended March 31,

Other comprehensive loss:

Other comprehensive income (loss):

Translation adjustments

( 3,657,271 )

( 3,294,416 )

Total comprehensive (loss) income

Total comprehensive income (loss)

Comprehensive income attributable to noncontrolling interests

Total comprehensive (loss) income attributable to Reservoir Media, Inc.

Total comprehensive income (loss) attributable to Reservoir Media, Inc.

( 1,118,070 )

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Operating lease liabilities, net of current portion

Fair value of swap liability

Other liabilities

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dollars, except share data)

Preferred Stock

comprehensive

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paid-in capital

income (loss)

Balance, March 31, 2022

RHI Preferred Stock Conversion

( 1,198,058 )

( 81,632,500 )

Business Combination and PIPE Investment, net of transaction costs

Share-based compensation

Issuance of common shares

Stock option exercises

Vesting of restricted stock units, net of shares withheld for employee taxes

Reclassification of liability-classified awards to equity-classified awards

Other comprehensive loss

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Reclassification of liability-classified awards to equity-classified awards

Other comprehensive loss

( 3,657,271 )

Other comprehensive income

Balance, March 31, 2024

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Loss on early extinguishment of debt

Gain on fair value of swaps

( 2,765,082 )

Loss (gain) on fair value of swaps

( 2,765,082 )

Share of earnings of equity affiliates, net of tax

Impairment of equity investment

Share of loss (earnings) of equity affiliates, net of tax

Dividend from equity affiliates

6 unchanged sentences

( 1,417,051 )

( 2,635,092 )

Royalty advances

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( 71,824,744 )

Investment in equity method and other investments

( 2,464,486 )

Investments in affilitates

Purchase of property, plant and equipment

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Cash flows from financing activities:

Proceeds from Business Combination and PIPE Investment, net of issuance costs

Proceeds from secured line of credit

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( 16,000,000 )

Repayments of secured loans

( 18,500,000 )

Proceeds from stock option exercises

2 unchanged sentences

( 3,533,254 )

( 4,377,473 )

Repayments of related party loans

( 81,203,792 )

Draws on related party loans

Net cash provided by financing activities

Foreign exchange impact on cash

( 3,585,491 )

(Decrease) increase in cash and cash equivalents

Increase (decrease) in cash and cash equivalents

( 2,912,216 )

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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:

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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.

Government-imposed restrictions and general behavioral changes in response to the pandemic adversely affected the Company’s results of operations during the fiscal years ended March 31, 2023 and 2022.

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 or intangible assets, which may be material to our consolidated financial statements.

RESERVOIR MEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 and 2022

The Recorded Music operations are primarily conducted through the Chrysalis Records platform and Tommy Boy Music, LLC (“ Tommy Boy ”), and include the ownership of over 36,000 sound recordings.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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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, 2023 and 2022, the Company was not involved with any entities identified as variable interest entities.

Use of Significant Accounting Estimates

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Actual results could differ from these estimates.

RESERVOIR MEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024 and 2023

Amounts Due to (from) 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, a sublease of office space, and re-billed services of staff who perform services across multiple entities.

Amounts due to (from) this shareholder and other affiliated entities totaled $ 0 as of March 31, 2024 and $( 22,500 ) as of March 31, 2023.

Foreign Currencies

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The Company considers all highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents.

RESERVOIR MEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 and 2022

Accounts Receivable

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Customer credit risk represents the potential for financial loss if a customer is unwilling or unable to meet its agreed upon contractual payment obligations.

Three customers accounted for approximately 43 % of total accounts receivable as of March 31, 2023 and two customers accounted for approximately 37 % of total accounts receivable as of March 31, 2022.

Two customers accounted for approximately 34 % of total accounts receivable as of March 31, 2024 and three customers accounted for approximately 43 % of total accounts receivable as of March 31, 2023.

No other single customer accounted for more than 10% of accounts receivable in either period.

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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.

These organizations seek to protect the rights of their members by licensing, collecting license fees and distributing

RESERVOIR MEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024 and 2023

royalties for the use of the members’ works.

The Company does not believe there is any significant collection risk from such societies and associations.

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Intangible assets are amortized over their expected useful lives using the straight-line method.

RESERVOIR MEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 and 2022

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.

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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.

RESERVOIR MEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024 and 2023

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.

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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.

The Company also holds investments in equity securities of unconsolidated entities in which the Company is not able to exercise significant influence, that do not have readily determinable market values.

The Company accounts for these investments using a measurement alternative that measures these securities at initial cost, minus any impairment, plus or minus changes resulting from observable price changes on a non-recurring basis.

The fair value of non-marketable equity securities that have been remeasured due to impairment are classified within Level 3 with gains or losses, if any, classified as Other income (expense), net in the consolidated statements of loss (income).

During the fiscal year ended March 31, 2024, the Company recognized an impairment charge of $ 991,105 to writedown one of these investments to its estimated fair value.

Deferred Revenue

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See Note 7, “ Secured Line of Credit ” for additional information with respect to the Company’s financing arrangements.

RESERVOIR MEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 and 2022

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.

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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.

The collecting societies submit usage reports, typically with payment for royalties due, often on a quarterly or biannual reporting period, in

RESERVOIR MEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024 and 2023

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.

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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.

RESERVOIR MEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 and 2022

Royalty Costs and Royalty Advances

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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.

RESERVOIR MEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024 and 2023

Share-Based Compensation

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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.

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.

Basic EPS is computed by dividing Net income attributable to Reservoir Media, Inc.

by weighted average common shares outstanding.

Diluted EPS is computed similarly to basic EPS, except that the denominator is increased to include the number of additional shares for potential dilutive effects of stock options, restricted stock units (“ RSU’s ”) and warrants outstanding during the period.

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

3 unchanged sentences

Expenses totaled $ 220,681 and $ 188,727 for employer contributions to the 401(k) retirement savings plan in the fiscal years ended March 31, 2024 and 2023, respectively.

RESERVOIR MEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 and 2022

Income taxes are determined using the asset and liability method of accounting.

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The Company has elected to treat taxes on GILTI as period costs and no deferred tax asset or liability is recorded.

Comprehensive Income

Comprehensive Income (Loss)

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.

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

RESERVOIR MEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024 and 2023

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

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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.

RESERVOIR MEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 and 2022

● 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.

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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 JOBS Act provides that a company

RESERVOIR MEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024 and 2023

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.

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Accounting Standards Not Yet Adopted

In June 2016, the FASB issued Accounting Standards Update (“ ASU ”) 2016-03, “ Financial Instruments-Credit Losses (Topic 326):

In December 2023, the Financial Accounting Standards Board (“ FASB ”) issued Accounting Standards Update (“ ASU ”) 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ ASU 2023-09 ”), which expands income tax disclosures, including requiring enhanced disclosures related to the rate reconciliation and income taxes paid information.

The amendments in ASU 2023-09 should be applied on a prospective basis, with retrospective application permitted.

ASU 2023-09 is effective for annual periods of public business entities for fiscal years beginning after December 15, 2024 and for annual periods of entities other than public entities beginning after December 15, 2025, with early adoption permitted.

The Company is currently evaluating the impact that adoption of ASU 2023-09 will have on its disclosures upon adoption.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ ASU 2023-07 ”), which expands segment disclosures for public entities, including requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“ CODM ”), the title and position of the CODM and an explanation of how the CODM uses reported measures of segment profit or loss in assessing segment performance and allocating resources.

ASU 2023-07 also expands disclosures about a reportable segment’s profit or loss and assets in interim periods and clarifies that a public entity may report additional measures of segment profit if the CODM uses more than one measure of a segment’s profit or loss.

ASU 2023-07 does not remove existing segment disclosure requirements or change how a public entity identifies its operating segments, aggregates those operating segments, or determines its reportable segments.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and subsequent interim periods with early adoption permitted, and requires retrospective application to all prior periods presented in the financial statements.

The Company is currently evaluating the impact that adoption of ASU 2023-07 will have on its disclosures upon adoption.

Accounting Standards Recently Adopted

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.

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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 public entities, ASU 2016-03 was effective for annual reporting periods beginning after December 15, 2019, including interim periods within that annual reporting period.

For the Company, ASU 2016-03 is effective beginning April 1, 2023, including interim periods within that fiscal year, with early adoption permitted for annual periods beginning after December 15, 2018.

The Company does not expect the adoption of ASU 2016-03 will have a material effect on the Company’s consolidated financial statements.

RESERVOIR MEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 and 2022

Accounting Standards Recently Adopted

In February 2016, the FASB issued ASU 2016-02, “ Leases (Topic 842) ” (“ ASU 2016-02 ”), which established a new ASC Topic 842, “ Leases ” (“ ASC 842 ”) that introduced 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 are classified as either finance or operating, with classification affecting the pattern of expense recognition in the consolidated statements of income.

The Company adopted the new standard beginning April 1, 2022 (the “ effective date ”), using a modified retrospective transition approach with application as of the effective date as the date of initial application without restating comparative period financial statements.

The new guidance also provides several practical expedients and policies that companies may elect.

The Company elected the package of practical expedients under which it did 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 retained 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.

Upon its transition to the new guidance, the Company recognized approximately $ 2.1 million of operating lease liabilities and corresponding ROU assets.

As the rates implicit in the Company’s leases are not readily determinable, the Company used its incremental borrowing rate based on the information available at the effective date to determine the present value of lease payments.

This rate is based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments.

The adoption of this new guidance will not have a material impact on the amount or timing of the Company’s cash flows or liquidity.

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.

The Company adopted ASU 2019-12 on April 1, 2022 and this adoption did not have a material impact to the Company’s consolidated financial statements or the Company’s disclosures.

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.

RESERVOIR MEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 and 2022

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.

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.

For the Company, ASU 2016-13 was effective beginning April 1, 2023.

The adoption of ASU 2016-13 did not have a material impact on the Company’s condensed consolidated financial statements.

REVENUE RECOGNITION

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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 $ 3,478,970 and $ 1,210,132 from performance obligations satisfied in previous periods for the fiscal years ended March 31, 2023 and 2022, respectively.

The increase in revenue recognized from performance obligations satisfied in previous periods is impacted by an updated estimate of Music Publishing royalties based on the Company’s current estimate of effects arising from the July 2022 ruling by the U.S.

Copyright Royalty Board (the “CRB”) to affirm increases to the statutory royalty rate structure for mechanical royalties in the U.S.

for the period 2018 to 2022.

For much of the period between 2018 and 2022, most digital service providers have accounted and submitted payment to the Company using the applicable 2017 rate while the remand process took place.

Royalty revenue is recognized when the subsequent sale or

RESERVOIR MEDIA, INC.

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March 31, 2024 and 2023

usage occurs using the best estimates available of the amounts that will be received by the Company.

The Company recognized revenue of $ 3,720,376 and $ 3,478,970 from performance obligations satisfied in previous periods for the fiscal years ended March 31, 2024 and 2023, respectively.

Revenue recognized from performance obligations satisfied in previous periods for the fiscal year ended March 31, 2023 was impacted by an update to estimated Music Publishing royalties based on the Company’s estimate of effects arising from the July 2022 ruling by the U.S.

Copyright Royalty Board (the “ CRB ”) to affirm increases to the statutory royalty rate structure for mechanical royalties in the U.S.

for the period 2018 to 2022.

For much of the period between 2018 and 2022, most digital service providers accounted and submitted payment to the Company using the applicable 2017 rate while the remand process took place.

Disaggregation of Revenue

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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

Music publishers receive royalties from the use of the musical

RESERVOIR MEDIA, INC.

2 unchanged sentences

March 31, 2024 and 2023

format such as vinyl, CDs and DVDs.

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 novelty items and merchandise.

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During the fiscal years ended March 31, 2024 and 2023, the Company completed such acquisitions totaling $ 46,488,896 and $ 71,501,353 , respectively, inclusive of deferred acquisition payments.

The Company did not complete any individually significant acquisition transactions during the fiscal years ended March 31, 2023.

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 ).

The Company did not complete any individually significant acquisition transactions during the fiscal years ended March 31, 2024 and 2023.

INTANGIBLE ASSETS

11 unchanged sentences

Fiscal year ending March 31:

ROYALTY ADVANCES

The Company made royalty advances totaling $ 17,290,321 and $ 22,883,884 during the fiscal years ended March 31, 2024 and 2023, respectively, recoupable from the writer’s or artist’s share of future royalties otherwise payable, in varying amounts.

RESERVOIR MEDIA, INC.

2 unchanged sentences

March 31, 2024 and 2023

ROYALTY ADVANCES

The Company made royalty advances totaling $ 22,883,884 and $ 27,952,527 during the fiscal years ended March 31, 2023 and 2022, respectively, recoupable from the writer’s or artist’s share of future royalties otherwise payable, in varying amounts.

Advances expected to be recouped within the next twelve months are classified as current assets, with the remainder classified as noncurrent assets.

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, 2024 and 2023:

10 unchanged sentences

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.

Reservoir Media Management, Inc.

(“ RMM ”), a subsidiary of RHI, is a borrower under a revolving credit agreement (the “ RMM Credit Agreement ”) governing RMM’s secured line of credit (the “ Senior Credit Facility ”), as amended and refinanced in connection with the consummation of the Business Combination.

On December 16, 2022, RMM entered into an amendment (the “ Second Amendment ”) to the RMM Credit Agreement.

The Second Amendment amended the RMM Credit Agreement to (i) increase RMM’s senior secured revolving credit facility from $ 350,000,000 to $ 450,000,000 , (ii) increase the incremental borrowing available under the facility’s accordion feature (discussed below) from $ 50,000,000 to $ 150,000,000 , (iii) extend the maturity date of the loans advanced under the RMM Credit Agreement from October 16, 2024 to December 16, 2027, (iv) modify the interest rate to be equal to either the sum of a base rate plus a margin of 1.00 % or the sum of a SOFR rate plus a margin of 2.00 %, in each case subject to a 0.25 % increase based on a consolidated net senior debt to library value ratio, (v) remove the existing total leverage ratio financial covenant of no greater than 7.50 :1.00 (net of up to $ 20,000,000 of certain cash balances) as of the end of each fiscal quarter, (vi) reduce the minimum required fixed charge coverage ratio financial covenant to 1.10 :1.00 and (vii) modify the consolidated senior debt to library value ratio financial covenant to 0.450 , subject to certain adjustments.

In connection with the Second Amendment, RMM recorded a loss on early extinguishment of debt of approximately $ 914,000 that reflects the write-off of a portion of unamortized previous debt issuance costs and capitalized approximately $ 3,500,000 in new debt issuance costs.

In connection with the Second Amendment, during the fiscal year ended March 31, 2023, RMM recorded a loss on early extinguishment of debt of approximately $ 914,000 that reflects the write-off of a portion of unamortized previous debt issuance costs and capitalized approximately $ 3,500,000 in new debt issuance costs.

RMM is 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 fixed charge coverage ratio of not less than 1.10 :1.00 for each four fiscal quarter period, and (ii) a consolidated senior debt to library value ratio of 0.45 :1.00, 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.

RESERVOIR MEDIA, INC.

2 unchanged sentences

March 31, 2024 and 2023

The Senior Credit Facility also includes an “accordion feature” that permits RMM to seek additional commitments in an amount not to exceed $ 150,000,000 that would increase the Senior Credit Facility.

1 unchanged sentence

Interest Rate Swaps

At March 31, 2023, RMM had interest rate swaps outstanding, under which it pays a fixed rate and receives a floating interest payment from the counterparty, which was originally based on LIBOR.

In January 2023, RMM modified these outstanding interest rate swaps to replace the floating rate interest payments received from the counterparty based on LIBOR to floating rate interest payments received from the counterparty based on SOFR, with corresponding adjustments to the fixed rates paid by RMM.

The change in the reference rate in these interest rate swaps from LIBOR to SOFR did not have a material impact on the Company’s consolidated financial statements.

At March 31, 2023, RMM had the following interest rate swaps outstanding with reference to notional amounts adjusted to match the original scheduled principal repayments pursuant to the indenture agreement:

At March 31, 2024, 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 SOFR with reference to notional amounts adjusted to match the amended scheduled principal repayments pursuant to the Senior Credit Facility, which was originally based on LIBOR.

Notional Amount at

7 unchanged sentences

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.

In April 2023, the Company added an additional interest rate swap in the amount of $ 100,000,000 .

September 30, 2024

December 2027

September 30, 2024

December 2027

In February 2024, the Company entered into an interest rate swap in the amount of $ 50,000,000 , which is reflected in the table above.

This swap has an effective date of September 30, 2024, which coincides with the expiration of the Company’s existing swaps, and a maturity date of December 16, 2027, which corresponds to the maturity date of the loans advanced under the RMM Credit Agreement.

The Company will pay a fixed rate of 3.961 % and receive a floating interest from the counterparty based on SOFR with reference to notional amounts adjusted to match the original scheduled principal repayments pursuant to the indenture agreement.

RESERVOIR MEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 and 2022

OTHER LIABILITIES

2 unchanged sentences

Fiscal year ending March 31:

2029 and later

The following table presents domestic and foreign income before income taxes for the fiscal years ended March 31:

( 2,167,419 )

Income before income taxes

RESERVOIR MEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024 and 2023

The provision for income taxes consists of the following for the fiscal years ended March 31:

11 unchanged sentences

A determination of an unrecognized deferred tax liability related to these earnings is not practicable.

RESERVOIR MEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 and 2022

A reconciliation of the statutory tax rate to the effective rate is as follows for the fiscal years ended March 31:

2 unchanged sentences

Foreign subsidiary earnings

Impact of change in statutory rates on deferred tax balances

Remeasurement of deferred tax balances

Return to provision adjustments

Executive compensation

Share-based compensation

Effective income tax rate

During 2022, the Company changed its estimate of the applicable tax rate used to measure its international deferred tax liabilities in the United Kingdom resulting in a significant increase in its effective tax rate for the fiscal year ended March 31, 2023.

The increase of the estimate of the applicable future tax rate from 19 % to 25 % used to measure the international deferred tax liabilities in the United Kingdom resulted in incremental tax expense of $ 3,558,874 during the fiscal year ended March 31, 2023 due to the increase in the value of deferred tax liabilities.

During the fiscal year ended March 31, 2024, the Company remeasured its state and local deferred tax liabilities in the United States due to a change in the estimated state and local effective tax rates resulting in a significant decrease in its effective tax rate.

The decrease in the estimate of the applicable future tax rates used to measure the state and local deferred tax liabilities in the United States resulted in incremental tax benefit of $ 405,229 due to the decrease in the value of deferred tax liabilities.

This benefit was partially offset by the impact of incremental tax expense of $ 247,750 during the fiscal year ended March 31, 2024 due to an impairment charge of $ 991,105 to writedown an equity investment in the United Kingdom to its estimated fair value, which is not deductible for United Kingdom income tax purposes.

During the fiscal year ended March 31, 2023, the Company changed its estimate of the applicable tax rate used to measure its international deferred tax liabilities in the United Kingdom resulting in a significant increase in its effective tax rate.

The increase in the estimate of the applicable future tax rate from 19 % to 25 % used to measure the international deferred tax liabilities in the United Kingdom resulted in incremental tax expense of $ 3,558,874 due to the increase in the value of deferred tax liabilities.

The Company’s effective tax rate also 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.

RESERVOIR MEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024 and 2023

Significant components of the Company’s deferred income tax liability as of March 31, 2024 and 2023 are as follows:

3 unchanged sentences

Lease liability

Charitable contributions

Unrealized foreign exchange losses

Equity investment

Total deferred tax assets

6 unchanged sentences

( 1,526,584 )

( 1,663,528 )

Fair value of swaps

( 1,253,279 )

( 1,553,150 )

Branch earnings

Total deferred tax liabilities

4 unchanged sentences

( 30,525,523 )

RESERVOIR MEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 and 2022

As of March 31, 2023, the Company has income tax Net operating loss carry forwards of $ 53,348,105 related to the U.S.

The Company has recorded a deferred tax asset of $ 1,594,302 reflecting the benefit of $ 53,348,105 in loss carry forwards.

Such net operating loss carry forwards will expire as follows:

As of March 31, 2024, the Company has income tax net operating loss carryforwards of $ 48,628,931 related to the U.S.

The Company has recorded a deferred tax asset of $ 597,724 reflecting the benefit of $ 48,628,931 in loss carryforwards.

Such net operating loss carryforwards will expire as follows:

No expiration date

11 unchanged sentences

The Company does not expect to settle any material tax audits in the next twelve months.

RESERVOIR MEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024 and 2023

SUPPLEMENTARY CASH FLOW INFORMATION

5 unchanged sentences

Reclassification of liability-classified awards to equity-classified awards

Conversion of RHI Preferred Stock to Common Stock

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, a sublease of office space, and re-billed services of staff who perform services across multiple entities.

Amounts due to (from) this shareholder and other affiliated entities totaled $( 22,500 ) as of March 31, 2023 and $ 0 as of March 31.

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

RESERVOIR MEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 and 2022

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.

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, 2023 and 2022, the Company had no shares of RHI Preferred Stock outstanding.

As of March 31, 2024, 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.

1 unchanged sentence

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 Warrants will expire on July 28, 2026, which is 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.

3 unchanged sentences

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.

RESERVOIR MEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 and 2022

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.

4 unchanged sentences

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.

In addition, pursuant to terms of the Merger Agreement, at the effective time of the

RESERVOIR MEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024 and 2023

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.

7 unchanged sentences

Share-based compensation expense is classified as “Administration expenses” in the accompanying consolidated statements of income.

During the fiscal year ended March 31, 2023, the Company granted restricted stock units (“RSUs”) to satisfy previous obligations to issue a variable number of equity awards based on a fixed monetary amount.

During the fiscal years ended March 31, 2024 and 2023, the Company granted restricted stock units (“ RSUs ”) to satisfy previous obligations to issue a variable number of equity awards based on a fixed monetary amount.

Prior to the issuance of these RSUs, the Company classified these awards as liabilities.

Upon issuance of the RSU’s the awards became equity-classified as they no longer met the criteria to be liability-classified and a liability of $ 1,171,428 was reclassified from accounts payable and accrued liabilities to additional paid-in capital.

Upon issuance of the RSU’s the awards became equity-classified as they no longer met the criteria to be liability-classified and liabilities of $ 744,167 and $ 1,171,428 were reclassified from accounts payable and accrued liabilities to additional paid-in capital during the fiscal years ended March 31, 2024 and 2023, respectively.

Restricted Stock Units

During the fiscal year ended March 31, 2023 and 2022, the Company granted restricted stock units (“ RSU’s ”) to certain employees and executive officers under the 2021 Incentive Plan.

During the fiscal year ended March 31, 2024 and 2023, 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, 2024, 233,783 of these RSUs vested, with the remainder scheduled to vest over the following 2.2 years.The Company records share-based compensation expense for RSUs based on their grant date fair value.

RESERVOIR MEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 and 2022

The following is a summary of RSU activity for the fiscal year ended March 31, 2024:

2 unchanged sentences

Outstanding as of March 31, 2024

Outstanding RSUs as of April 1, 2022, and RSUs vested and settled during the fiscal year ended March 31, 2023 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.

Outstanding RSUs as of March 31, 2023, include 217,864 RSUs with a fair value of $ 1,420,470 that vested on March 31, 2023 and converted to common shares in April 2023.

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, 2023 was $ 2,245,881 .

Stock Options

All stock options outstanding as of March 31, 2023 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.

● 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.

Outstanding RSUs as of April 1, 2023, and RSUs vested and settled during the fiscal year ended March 31, 2024 include 217,864 RSUs with a weighted average grant date fair value of $ 1,392,157 that vested on March 31, 2023 and converted to common shares in April 2023.

Outstanding RSUs as of March 31, 2024, include 16,722 RSUs with a weighted average grant date fair value of $ 110,833 that vested on March 31, 2024, which will convert to common shares at future dates.

RESERVOIR MEDIA, INC.

2 unchanged sentences

March 31, 2024 and 2023

● expected dividend yield of 0 % , which reflects the Company’s lack of history or expectation of declaring dividends on its common stock.

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, 2024 was $ 2,705,309 .

Stock Options

All stock options outstanding as of March 31, 2024 were granted under the Previous RHI 2019 Inventive Plan.

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.

The following table is a summary of stock option activity under the Plan for the fiscal year ended March 31, 2024:

7 unchanged sentences

Net income attributable to Reservoir Media, Inc.

income allocated to participating securities

( 1,182,247 )

Net income attributable to common shareholders

Weighted average common shares outstanding - basic

1 unchanged sentence

Diluted earnings per common share

Net income attributable to common shareholders

income allocated to participating securities

Net income attributable to Reservoir Media, Inc.

1 unchanged sentence

Weighted average effect of potentially dilutive securities:

Assumed conversion of RHI Preferred Stock

Effect of dilutive stock options and RSUs

1 unchanged sentence

Earnings per common share - diluted

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, 5,948,391 shares of Common Stock equivalents comprised of 60,891 RSUs and 5,887,500 warrants have been excluded from the diluted earnings per share calculation for the fiscal year ended March 31, 2024.

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

RESERVOIR MEDIA, INC.

2 unchanged sentences

March 31, 2024 and 2023

anti-dilutive effect, 5,914,526 shares of Common Stock equivalents comprised of 27,026 RSUs and 5,887,500 warrants have been excluded from the diluted earnings per share calculation for the fiscal year ended March 31, 2023.

FINANCIAL INSTRUMENTS

7 unchanged sentences

As described in Note 7, “ Secured Line of Credit, ” the Company entered into interest rate swap agreements to partially reduce its exposure to fluctuations in interest rates on its Credit Facilities.

The fair value of the outstanding interest rate swaps was a $ 6,756,884 asset as of March 31, 2023 and a $ 3,991,802 asset as of March 31, 2022.

The fair value of the outstanding interest rate swaps consisted of a $ 5,753,488 asset and a $ 121,374 liability at March 31, 2024, and a $ 6,756,884 asset as of March 31, 2023.

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, 2023 of $ 2,765,082 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, 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, 2024 of $ 1,124,770 was recorded as a Loss on fair value of swaps.

The change in the unrealized fair value of the swaps during the fiscal year ended March 31, 2023 of $ 2,765,082 was recorded as a Gain on fair value of swaps.

1 unchanged sentence

(d) Financial Instruments

Financial instruments not described elsewhere include cash, accounts receivable, accounts payable, accrued liabilities and borrowing under its line of credit.

Financial instruments not described elsewhere include cash, accounts receivable, accounts payable, accrued liabilities and borrowing under its secured line of credit.

The carrying values of these instruments as of March 31, 2024 and 2023 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.

5 unchanged sentences

The Company recognizes a right-of-use (“ ROU ”) asset and lease liability at lease commencement, which are measured by discounting lease payments using the Company’s incremental borrowing rate as the discount rate.

The Company determines the incremental borrowing rate applicable to each lease by reference to its outstanding secured borrowings and implied spreads over the risk-free discount rates that correspond to the term of each lease.

Subsequent amortization of the ROU asset and accretion of the lease liability for an operating lease is recognized as a single lease cost, on a straight-line basis, over the lease term.

Reductions of the ROU

The Company determines the

RESERVOIR MEDIA, INC.

2 unchanged sentences

March 31, 2024 and 2023

asset and the change in the lease liability are included in changes in Other long-term assets and liabilities in the Consolidated Statement of Cash Flows.

incremental borrowing rate applicable to each lease by reference to its outstanding secured borrowings and implied spreads over the risk-free discount rates that correspond to the term of each lease.

Subsequent amortization of the ROU asset and accretion of the lease liability for an operating lease is recognized as a single lease cost, on a straight-line basis, over the lease term.

Reductions of the ROU asset and the change in the lease liability are included in changes in Other long-term assets and liabilities in the Consolidated Statement of Cash Flows.

The Company reassesses lease classification and remeasures ROU assets and lease liabilities when a lease is modified and that modification is not accounted for as a separate contract or upon certain other events that require reassessment.

Maintenance and property tax expenses are accounted for on an accrual basis as variable lease cost.

The following is a summary of lease cost for the fiscal year ended March 31, 2023:

The following is a summary of lease cost for the fiscal years ended March 31, 2024 and 2023:

Operating lease cost

1 unchanged sentence

Total lease cost

Rent expense totaled $ 1,075,723 during the fiscal year ended March 31, 2022.

The following is a summary of supplemental cash flow information related to leases for the fiscal year ended March 31, 2023:

The following is a summary of supplemental cash flow information related to leases for the fiscal years ended March 31, 2024 and 2023:

Cash paid for amounts included in the measurement of operating lease liabilities

2 unchanged sentences

Classification

March 31, 2023

Operating lease right-of-use assets

4 unchanged sentences

Operating lease liabilities, net of current portion

The weighted average remaining lease term for the Company’s operating leases as of March 31, 2023 was 8.7 years.

The weighted average discount rate for the Company’s operating leases as of March 31, 2023 was 6.0 %.

The following is a summary of the weighted average remaining lease term and average discount rate for the Company’s operating leases as of March 31, 2024 and 2023:

Weighted-average remaining lease term (in years)

Weighted-average discount rate

RESERVOIR MEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024 and 2023

Maturities of the Company’s operating lease liabilities as of March 31, 2024 were as follows for the fiscal years ending March 31:

6 unchanged sentences

Operating lease liabilities, net of current portion

As of March 31, 2023, there have been no leases entered into that have not yet commenced.

RESERVOIR MEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 and 2022

CONTINGENCIES AND COMMITMENTS

3 unchanged sentences

(b) 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.

As discussed in Note 8, “ Other Liabilities ” the Company has obligations related to certain asset purchases and acquisitions, which are recorded as liabilities.

Some of those agreements call for additional amounts to be paid based on future performance of the assets.

5 unchanged sentences

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.

The Company was involved in a royalty dispute, which commenced in 2017, and was settled in October 2023 (the “ Royalty Dispute ”).

Under the terms of the Company’s royalty contract, the Company was indemnified for legal expenses and attorneys’ fees incurred by the Company in connection with the Royalty Dispute, including, without limitation, the right to withhold royalties or offset all such legal expenses and attorneys’ fees against royalties otherwise owed under the contract.

The Company recorded legal expenses and attorneys’ fees incurred as recoupable advances against the royalty account under such contract beginning in 2017.

In September 2023, the Company engaged in mediation sessions in an effort to reach a settlement of the Royalty Dispute.

Following such mediation and associated settlement negotiations, the Company agreed to pay previously accrued but unpaid royalties plus interest and forego its right to recoup its historical legal expenses and attorneys’ fees in order to resolve the Royalty Dispute.

Consequently, during the year ended March 31, 2024, the Company recorded approximately $ 2,700,000 of Administration expenses to write-off recoupable legal expenses and attorneys’ fees and recorded $ 620,000 of interest expense based on amounts it paid in October 2023.

RESERVOIR MEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024 and 2023

SEGMENT REPORTING

1 unchanged sentence

Music Publishing and Recorded Music.

The Company identified its Chief Executive Officer as its Chief Operating Decision Maker (“ CODM ”).

The Company identified its Chief Executive Officer as its 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 ”).

1 unchanged sentence

The Company does not have sales between segments.

RESERVOIR MEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 and 2022

The following tables present total revenue and reconciliation of OIBDA to operating income by segment for the fiscal years ended March 31, 2024 and 2023:

18 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data