Item 9A. Controls and Procedures
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. In making this evaluation, management considered the material weakness in our internal controls over financial reporting described below. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2023, the period covered in this report, our disclosure controls and procedures were not effective.
Notwithstanding the assessment that our disclosure controls and procedures are not effective and that material weaknesses existed as of March 31, 2024, we believe that we have performed sufficient supplementary procedures to ensure that the consolidated financial statements contained in this filing fairly present our financial position, results of operations and cash flows for the reporting periods covered herein in all material respects.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f) of the Exchange Act). Our internal control system was designed to provide reasonable assurance to our management and Board of Directors regarding the preparation and fair presentation of published financial statements.
Management assessed the effectiveness of our internal control over financial reporting as of March 31, 2024. In making this assessment, management used the criteria established by the Committee of Sponsoring Organizations of the Treadway Commission (“ COSO ”) in Internal Control-Integrated Framework (2013). Based on this assessment, management has concluded that, as of March 31, 2024, our internal control over financial reporting was not effective due to the material weaknesses described below.
Under the rules and regulations of the SEC, our independent registered public accounting firm will not be required to report on the effectiveness of our internal control over financial reporting pursuant to Section 404 until we are no longer an “emerging growth company” as defined in the JOBS Act.
Material Weaknesses in Internal Control over Financial Reporting
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
We previously disclosed in our Annual Report on Form 10-K for the period ended March 31, 2023 as well as in our Quarterly Reports on Form 10-Q for each interim period in fiscal 2024, a material weakness in our internal control over financial reporting relating to (i) an ineffective control environment due to improper segregation of duties and a lack of qualified personnel to address certain complex accounting transactions, and (ii) an ineffective risk assessment process resulting in improper design of control activities to address certain risks of material misstatement. As described below, we have made progress in addressing these weaknesses during the current fiscal year. However, we have not yet fully remediated the material weaknesses as of March 31, 2024.
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Remediation Efforts and Status of Material Weakness
During fiscal 2024, we continued to take significant steps to remediate the material weaknesses described above as follows:
(i)
an ineffective control environment due to improper segregation of duties and a lack of qualified personnel to address certain complex accounting transactions
● Enhanced our segregation of duties by reassigning certain responsibilities, further restricting privileged access to our Enterprise Resource Planning (ERP) and other systems, establishing automated workflow within our ERP to enforce segregation of duties between preparation and review / approval of journal entries for most legal entities with plans to implement this common control for the remainder of the entities
● Improved our knowledge of complex accounting transactions by retaining third party specialists on complex technical accounting issues and taxes, as well as previously hired additional accounting personnel with the requisite experience to improve our general accounting and financial reporting processes
(ii)
an ineffective risk assessment process resulting in improper design of control activities to address certain risks of material misstatement.
● Conducted a financial statement line-item risk assessment to identify significant entities, accounts, assertions, risks, business processes, business applications, and service providers that could have a material impact on the accuracy and completeness of our financial statements. This risk assessment served as the foundation of our fiscal year 2024 Sarbanes-Oxley compliance program
● Conducted a fraud risk assessment in accordance with COSO Internal Control – Integrated Framework Principle 8: Assesses Fraud Risk
● Expanded and enhanced our process-level risk and control documentation, as well as the design of controls and documentation supporting control execution for multiple material account balances, including entity level controls and information technology general controls
● Provided training to process and control owners
● Enhanced relevant policies, procedures, guidelines, and documentation templates
We continue to improve our processes and control activities, and are testing the design and operating effectiveness of our newly implemented and enhanced controls as remediation progresses.
While the Company has made significant progress this year, we will not be able to fully remediate these material weaknesses until we have implemented the remaining planned corrective actions and the applicable controls operate effectively for a sufficient period of time. Our management will continue to monitor the effectiveness of our remediation plans in future periods and will make the changes we determine to be appropriate.
Changes in Internal Control over Financial Reporting
Other than the specific remediation activities noted above, there have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Limitations on Controls and Procedures
In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs. The design of any disclosure controls and procedures is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Item 9B. Other Information
Rule 10b5-1 and Non-Rule 10b5-1 Trading Arrangements
None of our directors or officers (as defined in Rule 16a-1 (f) under the Exchange Act) adopted, modified , or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (each as defined in Item 408 of Regulation S-K) during the period covered by this Annual Report on Form 10-K.
Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections
Not applicable.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information required by this item will be included in our definitive Proxy Statement pertaining to our 2024 Annual Meeting of Stockholders, which will be filed with the SEC pursuant to Regulation 14A not later than 120 days after the end of the 2024 fiscal year, and is herein incorporated by reference.
Code of Ethics
We have adopted a Code of Ethics, which is applicable to all directors, officers and employees, including our Chief Executive Officer and Chief Financial Officer. Our Code of Ethics is posted on our Investor Relations website at https://investors.reservoir-media.com/ on the Corporate Governance page of the website. To the extent required by SEC rules, we intend to disclose any amendments to our Code of Ethics, and any waiver of a provision of the Code of Ethics with respect to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, on our website referred to above following any such amendment or waiver.
Item 11. Executive Compensation
The information required by this item will be included in our definitive Proxy Statement pertaining to our 2024 Annual Meeting of Stockholders, which will be filed with the SEC pursuant to Regulation 14A not later than 120 days after the end of the 2024 fiscal year, and is herein incorporated by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this item will be included in our definitive Proxy Statement pertaining to our 2024 Annual Meeting of Stockholders, which will be filed with the SEC pursuant to Regulation 14A not later than 120 days after the end of the 2024 fiscal year, and is herein incorporated by reference.
Item 13. Certain Relationships and Related Transactions, Director Independence
The information required by this item will be included in our definitive Proxy Statement pertaining to our 2024 Annual Meeting of Stockholders, which will be filed with the SEC pursuant to Regulation 14A not later than 120 days after the end of the 2024 fiscal year, and is herein incorporated by reference.
Item 14. Principal Accounting Fees and Services
The information required by this item will be included in our definitive Proxy Statement pertaining to our 2024 Annual Meeting of Stockholders, which will be filed with the SEC pursuant to Regulation 14A not later than 120 days after the end of the 2024 fiscal year, and is herein incorporated by reference.
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Part IV
Item 15. Exhibits and Financial Statement Schedules
(a) The following documents are filed as a part of this Annual Report:
1) Financial Statements. Our financial statements are included in Part II, Item 8 of this Annual Report.
2) Financial Statements Schedules. All schedules are omitted either because they are not applicable, not required, or the information required to be set forth therein is included under Part II, Item 8 of this Annual Report.
3) Exhibits. The exhibits listed in the Exhibit Index immediately below are filed as part of this Annual Report.
EXHIBIT INDEX
Exhibit
Number
Exhibit Description
2.1
Agreement and Plan of Merger, dated as of April 14, 2021, by and among Roth CH Acquisition II Co., Roth CH II Merger Sub Corp. and Reservoir Holdings, Inc. (incorporated by reference to Exhibit 2.1 to Reservoir Media, Inc.’s Current Report on Form 8 K filed with the SEC on July 28, 2021).
3.1
Second Amended and Restated Certificate of Incorporation of Reservoir Media, Inc. (incorporated by reference to Exhibit 3.1 to Reservoir Media, Inc.’s Current Report on Form 8 K filed with the SEC on July 28, 2021).
3.2
Amended and Restated Bylaws of Reservoir Media, Inc. (incorporated by reference to Exhibit 3.2 to Reservoir Media, Inc.’s Current Report on Form 8 K filed with the SEC on July 28, 2021).
4.1
Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.2 to the Amendment No. 1 to Roth CH Acquisition II Co.’s Registration Statement on Form S 1 filed with the SEC on December 7, 2020).
4.2
Specimen Warrant Certificate (incorporated by reference to Exhibit 4.3 to the Amendment No. 1 to Roth CH Acquisition II Co.’s Registration Statement on Form S 1 filed with the SEC on December 7, 2020).
4.3
Warrant Agreement, dated as of December 10, 2020, by and between Continental Stock Transfer & Trust Company and Roth CH Acquisition II Co. (incorporated by reference to Exhibit 4.1 to Roth CH Acquisition II Co.’s Current Report on Form 8 K filed with the SEC on December 16, 2020).
4.4
Stockholders Agreement, dated as of April 14, 2021, by and among Roth CH Acquisition II Co., Reservoir Holdings, Inc. and CHLM Sponsor 1 LLC (incorporated by reference to Exhibit 10.5 to Roth CH Acquisition II Co.’s Current Report on Form 8 K filed with the SEC on April 15, 2021).
4.5
Description of Securities (incorporated by reference to Exhibit 4.6 to Reservoir Media Inc’s Annual Report on Form 10-K filed with the SEC on June 21, 2022).
10.1
Amended and Restated Registration Rights Agreement, dated as of April 14, 2021, by and among Roth CH Acquisition II Co., Roth CH Acquisition II Co.’s executive officers, directors and securityholders and Reservoir Holdings, Inc.’s securityholders (incorporated by reference to Exhibit 10.6 to Roth CH Acquisition II Co.’s Current Report on Form 8 K filed with the SEC on April 15, 2021).
10.2
Form of Registration Rights Agreement, dated as of April 14, 2021, entered into by Roth CH Acquisition II Co. in connection with the PIPE Investment (incorporated by reference to Exhibit 10.4 to Roth CH Acquisition II Co.’s Current Report on Form 8 K filed with the SEC on April 15, 2021).
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Exhibit
Number
Exhibit Description
10.3†
Fourth Amended and Restated Credit Agreement, dated as of July 28, 2021, by and among Reservoir Media Management, Inc., Reservoir Media, Inc., the lenders party thereto from time to time and Truist Bank, as administrative agent (incorporated by reference to Exhibit 10.6 to Reservoir Media, Inc.’s Current Report on Form 8 K filed with the SEC on July 28, 2021).
10.4†
First Amendment to the Fourth Amended and Restated Credit Agreement, dated as of December 7, 2021, by and among Reservoir Media Management, Inc., Reservoir Media, Inc., the other loan parties party thereto from time to time, the lenders party thereto from time to time and Truist Bank, as administrative agent (incorporated by reference to Exhibit 10.1 to Reservoir Media, Inc.’s Current Report on Form 8 K filed with the SEC on December 7, 2021).
10.5
Second Amendment to the Fourth Amended and Restated Credit Agreement, dated as of December 16, 2022, by and among Reservoir Media Management, Inc., Reservoir Media, Inc., the other loan parties party thereto from time to time, the lenders party thereto from time to time and Truist Bank, as administrative agent (incorporated by reference to Exhibit 10.1 to Reservoir Media, Inc.’s Current Report on Form 8-K filed with the SEC on December 20, 2022).
10.6+
Reservoir Media, Inc. 2021 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to Reservoir Media, Inc.’s Registration Statement on Form S 8 filed with the SEC on October 14, 2021).
10.7+
Form of Indemnification Agreement (incorporated by reference to Exhibit 10.9 to Reservoir Media, Inc.’s Annual Report on Form 10-K filed with the SEC on June 21, 2022).
10.8+
Form of Non-Employee Director Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.2 to Reservoir Media, Inc.’s Registration Statement on Form S 8 filed with the SEC on October 14, 2021).
10.9+
Form of Nonqualified Stock Option Award Agreement (incorporated by reference to Exhibit 10.3 to Reservoir Media, Inc.’s Registration Statement on Form S 8 filed with the SEC on October 14, 2021).
10.10+
Form of Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.4 to Reservoir Media, Inc.’s Registration Statement on Form S 8 filed with the SEC on October 14, 2021).
10.11+
Form of Stock Award Agreement (incorporated by reference to Exhibit 10.5 to Reservoir Media, Inc.’s Registration Statement on Form S 8 filed with the SEC on October 14, 2021).
10.12+
Amended & Restated Letter of Employment, dated June 29, 2023, by and between Reservoir Media Management, Inc. and Golnar Khosrowshahi (incorporated by reference to Exhibit 10.1 to Reservoir Media Inc’s Quarterly Report on Form 10-Q filed with the SEC on August 2, 2023).
10.13+
Amended and Restated Letter of Employment, dated April 1, 2021, by and between Reservoir Media Management, Inc. and Rell Lafargue (incorporated by reference to Exhibit 10.14 to Roth CH Acquisition II Co.’s Registration Statement on Form S 1 filed with the SEC on July 1, 2021).
10.14+
Amended and Restated Letter of Employment, dated May 26, 2022, by and between Reservoir Media Management, Inc. and Jim Heindlmeyer (incorporated by reference to Exhibit 10.16 to Reservoir Media Inc’s Annual Report on Form 10-K filed with the SEC on June 21, 2022).
21.1**
Subsidiaries of Reservoir Media, Inc.
23.1*
Consent of Deloitte & Touche LLP, independent registered public accounting firm.
31.1*
Certification of Chief Executive Officer Pursuant to Securities Exchange Act Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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Exhibit
Number
Exhibit Description
31.2*
Certification of Chief Financial Officer Pursuant to Securities Exchange Act Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
97.1*
Clawback Policy of Reservoir Media, Inc.
101.INS*
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH*
Inline XBRL Taxonomy Extension Schema Document
101.CAL*
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*
Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE*
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*
Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit)
*
Filed herewith.
**
Furnished herewith.
†
Portions of this exhibit have been omitted pursuant to Item 601(a)(v) of Regulation S-K.
+
Indicates a management contract or compensatory plan or agreement.
Item 16. Form 10-K Summary
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: May 30, 2024
RESERVOIR MEDIA, INC.
By:
/s/ Golnar Khosrowshahi
Name: Golnar Khosrowshahi
Title: Chief Executive Officer (Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Golnar Khosrowshahi
Chief Executive Officer and Director
May 30, 2024
Golnar Khosrowshahi
(Principal Executive Officer)
/s/ Jim Heindlmeyer
Chief Financial Officer
May 30, 2024
Jim Heindlmeyer
(Principal Financial and Accounting Officer)
/s/ Rell Lafargue
President, Chief Operating Officer and Director
May 30, 2024
Rell Lafargue
/s/ Stephen M. Cook
Director
May 30, 2024
Stephen M. Cook
/s/ Helima Croft
Director
May 30, 2024
Helima Croft
/s/ Ezra S. Field
Chair of the Board of Directors
May 30, 2024
Ezra S. Field
/s/ Neil de Gelder
Director
May 30, 2024
Neil de Gelder
/s/ Jennifer G. Koss
Director
May 30, 2024
Jennifer G. Koss
/s/ Adam Rothstein
Director
May 30, 2024
Adam Rothstein
/s/ Ryan P. Taylor
Ryan P. Taylor
Director
May 30, 2024
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