Reservoir Media, Inc. 10-K

Item 8. Financial Statements and Supplementary Data Index to Financial Statements and Financial Statement Schedules Page Report of Independent Registered Accounting Firm (PCAOB ID 34 ) ​ 44 Consolidated Statements of Income ​ 45 Consolidated Statements of Comprehensive Income ​ 46 Consolidated Balance Sheets ​ 47 Consolidated Statements of Changes in Shareholders’ Equity ​ 48 Consolidated Statements of Cash Flows ​ 49 Notes to Consolidated Financial Statements ​ 50 ​ ​ ​ ​ 43 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of Reservoir Media Inc. and Subsidiaries Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Reservoir Media, Inc. and subsidiaries (the “Company”) as of March 31, 2025 and 2024, 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, 2025, 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, 2025, and 2024, and the results of its operations and its cash flows for each of the two years in the period ended March 31, 2025, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Deloitte & Touche LLP New York, New York May 28, 2025 We have served as the Company’s auditor since 2021. ​ 44 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In U.S. dollars, except share data) ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended March 31, ​ ​ 2025 2024 Revenues ​ $ 158,705,736 ​ $ 144,855,690 Costs and expenses: ​ ​ ​ Cost of revenue ​ 57,430,005 ​ 55,478,286 Amortization and depreciation ​ 26,299,233 ​ 24,985,688 Administration expenses ​ 39,915,464 ​ 39,815,892 Total costs and expenses ​ 123,644,702 ​ 120,279,866 ​ ​ ​ ​ ​ ​ ​ Operating income ​ 35,061,034 ​ 24,575,824 ​ ​ ​ ​ ​ ​ ​ Interest expense ​ ( 21,883,321 ) ​ ( 21,087,713 ) Gain (loss) on foreign exchange ​ 578,251 ​ ( 101,834 ) Loss on fair value of swaps ​ ( 4,213,819 ) ​ ( 1,124,770 ) Other income (expense), net ​ 329,976 ​ ( 1,089,442 ) Income before income taxes ​ 9,872,121 ​ 1,172,065 Income tax expense ​ 2,140,724 ​ 334,804 Net income ​ 7,731,397 ​ 837,261 Net loss (income) attributable to noncontrolling interests ​ 18,516 ​ ( 192,324 ) Net income attributable to Reservoir Media, Inc. ​ $ 7,749,913 ​ $ 644,937 ​ ​ ​ ​ ​ ​ ​ Earnings per common share (Note 13): ​ ​ ​ ​ Basic ​ $ 0.12 ​ $ 0.01 Diluted ​ $ 0.12 ​ $ 0.01 ​ ​ ​ ​ ​ ​ ​ Weighted average common shares outstanding (Note 13): ​ ​ ​ ​ Basic ​ 65,161,373 ​ 64,757,112 Diluted ​ 65,949,366 ​ 65,255,901 ​ See accompanying notes to the consolidated financial statements. ​ 45 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In U.S. dollars) ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended March 31, ​ ​ 2025 2024 Net income ​ $ 7,731,397 ​ $ 837,261 Other comprehensive income: ​ ​ ​ ​ Translation adjustments ​ 1,375,626 ​ 1,057,596 Total comprehensive income ​ 9,107,023 ​ 1,894,857 Comprehensive loss (income) attributable to noncontrolling interests ​ 18,516 ​ ( 192,324 ) Total comprehensive income attributable to Reservoir Media, Inc. ​ $ 9,125,539 ​ $ 1,702,533 ​ See accompanying notes to the consolidated financial statements. ​ 46 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In U.S. dollars, except share data) ​ ​ ​ ​ ​ ​ ​ ​ March 31, March 31, ​ ​ 2025 ​ 2024 Assets ​ ​ Current assets ​ ​ Cash and cash equivalents ​ $ 21,386,140 ​ $ 18,132,015 Accounts receivable ​ 37,848,611 ​ 33,227,382 Current portion of royalty advances ​ 15,182,463 ​ 13,248,008 Other current assets ​ 4,867,081 ​ 6,300,915 Total current assets ​ 79,284,295 ​ 70,908,320 ​ ​ ​ ​ ​ ​ ​ Intangible assets, net ​ 719,673,219 ​ 640,222,000 Equity method and other investments ​ ​ 1,100,000 ​ ​ 1,451,924 Royalty advances, net of current portion and reserves ​ 55,508,155 ​ 56,527,557 Property, plant and equipment, net ​ 406,784 ​ 551,410 Operating lease right of use assets, net ​ ​ 5,949,418 ​ ​ 6,988,340 Fair value of swap assets ​ 1,828,303 ​ 5,753,488 Other assets ​ 1,376,836 ​ 1,131,529 Total assets ​ $ 865,127,010 ​ $ 783,534,568 ​ ​ ​ ​ ​ ​ ​ Liabilities ​ ​ ​ ​ Current liabilities ​ ​ ​ ​ Accounts payable and accrued liabilities ​ $ 5,394,755 ​ $ 9,015,939 Royalties payable ​ 47,210,727 ​ 40,395,205 Accrued payroll ​ 2,588,758 ​ 2,043,772 Deferred revenue ​ 1,885,462 ​ 1,163,953 Other current liabilities ​ 7,954,208 ​ 7,313,615 Income taxes payable ​ 803,342 ​ 439,152 Total current liabilities ​ 65,837,252 ​ 60,371,636 ​ ​ ​ ​ ​ ​ ​ Secured line of credit ​ 388,134,754 ​ 330,791,607 Deferred income taxes ​ 38,228,099 ​ 30,471,978 Operating lease liabilities, net of current portion ​ 5,723,930 ​ 6,720,287 Fair value of swap liability ​ ​ 410,008 ​ ​ 121,374 Other liabilities ​ 593,185 ​ 572,705 Total liabilities ​ 498,927,228 ​ 429,049,587 ​ ​ ​ ​ ​ ​ ​ Contingencies and commitments (Note 16) ​ ​ ​ ​ ​ ​ ​ ​ ​ Shareholders’ Equity ​ ​ Preferred stock, $ 0.0001 par value 75,000,000 shares authorized, 0 shares issued and outstanding at March 31, 2025 and 2024 ​ — ​ ​ — Common stock, $ 0.0001 par value; 750,000,000 shares authorized, 65,239,735 issued and outstanding at March 31, 2025; 64,826,864 issued and outstanding at March 31, 2024 ​ 6,524 ​ 6,483 Additional paid-in capital ​ 344,145,789 ​ 341,388,351 Retained earnings ​ 23,147,570 ​ 15,397,657 Accumulated other comprehensive loss ​ ( 2,422,107 ) ​ ( 3,797,733 ) Total Reservoir Media, Inc. shareholders’ equity ​ 364,877,776 ​ 352,994,758 Noncontrolling interest ​ 1,322,006 ​ 1,490,223 Total shareholders’ equity ​ 366,199,782 ​ 354,484,981 Total liabilities and shareholders’ equity ​ $ 865,127,010 ​ $ 783,534,568 ​ See accompanying notes to the consolidated financial statements. ​ ​ 47 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (In U.S. dollars, except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ other ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ Additional ​ Retained ​ comprehensive ​ Noncontrolling ​ Shareholders’ ​ Shares Amount paid-in capital earnings loss interests equity Balance, March 31, 2023 64,441,244 ​ $ 6,444 ​ $ 338,460,789 ​ $ 14,752,720 ​ $ ( 4,855,329 ) ​ $ 1,297,899 ​ $ 349,662,523 Share-based compensation — ​ — ​ 2,584,043 ​ — ​ — ​ — ​ 2,584,043 Stock option exercises 56,466 ​ ​ 6 ​ ​ 288,537 ​ ​ — ​ ​ — ​ ​ — ​ ​ 288,543 Vesting of restricted stock units, net of shares withheld for employee taxes 329,154 ​ 33 ​ ( 689,185 ) ​ — ​ — ​ — ​ ( 689,152 ) Reclassification of liability-classified awards to equity-classified awards — ​ — ​ 744,167 ​ — ​ — ​ — ​ 744,167 Net income — ​ — ​ — ​ 644,937 ​ — ​ 192,324 ​ 837,261 Other comprehensive income — ​ — ​ — ​ — ​ 1,057,596 ​ — ​ 1,057,596 Balance, March 31, 2024 64,826,864 ​ $ 6,483 ​ $ 341,388,351 ​ $ 15,397,657 ​ $ ( 3,797,733 ) ​ $ 1,490,223 ​ $ 354,484,981 Share-based compensation — ​ — ​ 3,286,922 ​ — ​ — ​ — ​ 3,286,922 Stock option exercises 19,750 ​ 2 ​ 100,919 ​ — ​ — ​ — ​ 100,921 Vesting of restricted stock units, net of shares withheld for employee taxes 393,121 ​ 39 ​ ( 1,432,903 ) ​ — ​ — ​ — ​ ( 1,432,864 ) Reclassification of liability-classified awards to equity-classified awards — ​ — ​ 802,500 ​ — ​ — ​ — ​ 802,500 Distribution to noncontrolling interest holders ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 149,701 ) ​ ​ ( 149,701 ) Net income (loss) — ​ — ​ — ​ 7,749,913 ​ — ​ ( 18,516 ) ​ 7,731,397 Other comprehensive income — ​ — ​ — ​ — ​ 1,375,626 ​ — ​ 1,375,626 Balance, March 31, 2025 ​ 65,239,735 ​ $ 6,524 ​ $ 344,145,789 ​ $ 23,147,570 ​ $ ( 2,422,107 ) ​ $ 1,322,006 ​ $ 366,199,782 ​ See accompanying notes to the consolidated financial statements. ​ ​ 48 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In U.S. dollars) ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended March 31, ​ ​ 2025 2024 Cash flows from operating activities: ​ ​ Net income ​ $ 7,731,397 ​ $ 837,261 Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ Amortization of intangible assets ​ 26,073,069 ​ 24,743,082 Depreciation of property, plant and equipment ​ 226,164 ​ 242,606 Share-based compensation ​ 4,385,255 ​ 3,386,543 Amortization of deferred financing costs ​ 1,343,147 ​ 1,339,413 Loss on fair value of swaps ​ 4,213,819 ​ 1,124,770 Loss from equity method investment ​ ​ 100,000 ​ ​ 100,000 Impairment of equity investment ​ ​ 499,998 ​ ​ 991,105 Gain on disposition of equity investment ​ ​ ( 103,715 ) ​ ​ — Deferred income taxes ​ 467,197 ​ ( 220,936 ) Changes in operating assets and liabilities: ​ ​ ​ ​ Accounts receivable ​ ( 4,621,229 ) ​ ( 1,971,515 ) Other current assets ​ 1,496,423 ​ ( 842,393 ) Royalty advances ​ ( 777,475 ) ​ ( 2,745,666 ) Other assets and liabilities ​ 729,779 ​ 736,801 Accounts payable, accrued expenses and deferred revenue ​ ( 3,578,183 ) ​ 1,077,344 Royalties payable ​ ​ 6,729,653 ​ ​ 7,159,970 Income taxes payable ​ 364,190 ​ 234,165 Net cash provided by operating activities ​ 45,279,489 ​ 36,192,550 ​ ​ ​ ​ ​ ​ ​ Cash flows from investing activities: ​ ​ ​ Purchases of music catalogs ​ ( 96,482,556 ) ​ ( 50,127,625 ) Loan to third party ​ ​ ( 2,517,896 ) ​ ​ — Repayment of loan from third party ​ ​ 2,517,896 ​ ​ — Investments in equity affiliates ​ ( 1,100,000 ) ​ ( 200,000 ) Sale of equity investment ​ ​ 945,071 ​ ​ — Purchase of property, plant and equipment ​ ( 81,538 ) ​ ( 225,677 ) Net cash used for investing activities ​ ( 96,719,023 ) ​ ( 50,553,302 ) ​ ​ ​ ​ ​ ​ ​ Cash flows from financing activities: ​ ​ Proceeds from secured line of credit ​ 66,000,000 ​ 34,000,000 Repayments of secured line of credit ​ ( 10,000,000 ) ​ ( 16,000,000 ) Proceeds from stock option exercises ​ 100,921 ​ 288,543 Taxes paid related to net share settlement of restricted stock units ​ ​ ( 1,432,864 ) ​ ​ ( 689,152 ) Deferred financing costs paid ​ — ​ ( 39,387 ) Distribution to noncontrolling interest holders ​ ​ ( 149,701 ) ​ ​ — Net cash provided by financing activities ​ 54,518,356 ​ 17,560,004 ​ ​ ​ ​ ​ ​ ​ Foreign exchange impact on cash ​ 175,303 ​ 30,687 ​ ​ ​ ​ ​ ​ ​ Increase in cash and cash equivalents ​ 3,254,125 ​ 3,229,939 Cash and cash equivalents beginning of period ​ 18,132,015 ​ 14,902,076 Cash and cash equivalents end of period ​ $ 21,386,140 ​ $ 18,132,015 ​ See accompanying notes to the consolidated financial statements. ​ ​ 49 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In U.S. dollars) NOTE 1. DESCRIPTION OF BUSINESS Reservoir Media, Inc. (formerly known as Roth CH Acquisition II Co. (“ ROCC ”)), a Delaware corporation (the “ Company ”), is an independent music company based in New York City, New York and with offices in Los Angeles, Nashville, Toronto, London and Abu Dhabi. Following a business combination between Roth CH Acquisition II Co. (“ ROCC ”) and Reservoir Holdings, Inc., a Delaware corporation (“ RHI ”), on July 28, 2021 (the “ Business Combination ”), the Company’s legal name became “Reservoir Media, Inc.” 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 Company is a holding company that conducts substantially all of its business operations through Reservoir Media Management, Inc. (“ RMM ”) and RMM’s subsidiaries. The Company’s activities are organized into two reportable segments: Music Publishing and Recorded Music. Operations of the Music Publishing segment involve the acquisition of interests in music catalogs from which royalties are earned as well as signing songwriters to exclusive agreements which give the Company an interest in the future delivery of songs. 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. ​ NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation These consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“ U.S. GAAP ” or “ GAAP ”). In the opinion of management, all adjustments considered necessary for a fair presentation have been included. The following include significant accounting policies that have been adopted by the Company: Principles of Consolidation These consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and its majority-owned subsidiaries. The Company records a noncontrolling interest in its consolidated balance sheets and statements of operations with respect to the remaining economic interests in majority-owned subsidiaries it does not own. All intercompany transactions and balances have been eliminated upon consolidation. Use of Significant Accounting Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosure of contingent assets and liabilities. Significant estimates are used for, but not limited to, determining useful lives of intangible assets, intangible asset recoverability and impairment and accrued revenue. Actual results could differ from these estimates. 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 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, 2025 and 2024. 50 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In U.S. dollars) Foreign Currencies The Company has determined the U.S. dollar to be the functional currency of the Company and certain subsidiaries as it is the currency of the primary economic environment in which the companies operate while other subsidiaries have been determined to have the British Pound as their functional currencies. Monetary assets and liabilities denominated in foreign currencies other than the functional currency are translated into the respective functional currencies at the exchange rate in effect at the balance sheet date and non-monetary assets and liabilities at the exchange rates in effect at the time of acquisition or issue. Revenues and expenses are translated at rates approximating the exchange rates in effect at the time of the transactions. All exchange gains and losses are included in operations. Financial statements of subsidiaries with functional currencies other than the U.S. dollar are translated into U.S. dollars using the current rate method. Under this method, assets and liabilities are translated at the rate of exchange in effect at the balance sheet date. Revenue and expenses are translated at the average rate of exchange for the fiscal year. Exchange gains and losses are deferred and reflected on the balance sheet in accumulated other comprehensive income and subsequently recognized in income upon substantial disposal of the net investment in the foreign operation. Cash and Cash Equivalents The Company considers all highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents. Accounts Receivable Credit is extended to customers based upon an evaluation of the customer’s financial condition. The time between the Company’s issuance of an invoice and payment due date is not significant. Customer payments that are not collected in advance of the transfer of promised services or goods are generally due 30-60 days from the invoice date. Customer payments related to synchronization licenses often take longer to collect, but that does not typically impact the ultimate collectability. The Company monitors customer credit risk related to accounts receivable and, when deemed necessary, maintains a provision for estimated uncollectible accounts, which is estimated based on historical experience, aging trends and in certain cases, management judgments about specific customers. Based on this analysis, the Company did not record a provision for estimated uncollectible accounts as of March 31, 2025 or 2024. Concentrations of Credit Risk Customer credit risk represents the potential for financial loss if a customer is unwilling or unable to meet its agreed upon contractual payment obligations. Three customers accounted for approximately 49 % of total accounts receivable as of March 31, 2025 and two customers accounted for approximately 34 % of total accounts receivable as of March 31, 2024. No other single customer accounted for more than 10% of accounts receivable in either period. In the Music Publishing segment, the Company collects a significant portion of its royalties from global copyright collecting societies. Collecting societies and associations are generally not-for-profit organizations that represent composers, songwriters and music publishers. These organizations seek to protect the rights of their members by licensing, collecting license fees and distributing royalties for the use of the members’ works. The Company does not believe there is any significant collection risk from such societies and associations. In the Recorded Music segment, the majority of the revenue is collected from the Company’s distribution partners, rather than directly from the customers. These distribution partners primarily pay through the revenue to the Company on a monthly basis. The Company routinely assesses the financial strength of its distribution partners and the Company does not believe there is any significant collection risk. 51 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In U.S. dollars) Acquisitions and Business Combinations In conjunction with each acquisition transaction, the Company assesses whether the transaction should follow accounting guidance applicable to an asset acquisition or a business combination. This assessment requires an evaluation of whether the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, resulting in an asset acquisition or, if not, resulting in a business combination. If treated as an asset acquisition, the assets are recorded on a relative fair value basis and related acquisition costs are capitalized as part of the asset. If treated as a business combination, the Company recognizes identifiable assets acquired, liabilities assumed, and non-controlling interests at their fair values at the acquisition date. Any consideration paid in excess of the net fair value of the identifiable assets and liabilities acquired in a business combination is recorded to goodwill and acquisition-related costs are expensed as incurred. Intangible Assets Intangible assets consist primarily of publishing and recorded music catalogs. Intangible assets are recorded at fair value in a business combination and relative fair value in an asset acquisition. Intangible assets are amortized over their expected useful lives using the straight-line method. The Company periodically reviews the carrying value of its amortizable intangible assets, whenever events or changes in circumstances indicate that the carrying value may not be recoverable or that the lives assigned may no longer be appropriate. To the extent the estimated future cash inflows attributable to the asset, less estimated future cash outflows, are less than the carrying amount, an impairment loss is recognized in an amount equal to the difference between the carrying value of such asset and its fair value. If the Company determines that events and circumstances warrant a revision to the remaining period of amortization, an asset’s remaining useful life would be changed, and the remaining carrying amount of the asset would be amortized prospectively over that revised remaining useful life. Goodwill The Company had $ 402,067 of goodwill as of March 31, 2025 and 2024, which is classified as “Other assets” in the Company’s consolidated balance sheets. All of the goodwill arose in connection with an acquisition accounted for as a business combination and has been assigned to a reporting unit within the Music Publishing segment. There were no impairments, disposals or other acquisitions of goodwill in the fiscal years ended March 31, 2025 and 2024. Goodwill represents the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. The Company evaluates goodwill for potential impairment on an annual basis on the first day of the fiscal fourth quarter (January 1), or at other times during the year if events or circumstances indicate that it is more-likely-than-not (greater than 50%) that the fair value of a reporting unit is below the carrying amount. In reviewing goodwill for impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more-likely-than-not that the estimated fair value of a reporting unit is less than its carrying amount. If the Company elects to bypass the qualitative assessment for any reporting unit, or if a qualitative assessment indicates it is more-likely-than-not that the estimated fair value of a reporting unit is less than its carrying amount, the Company performs a quantitative goodwill impairment test by comparing the fair value of the reporting unit with its carrying amount. If the fair value of the reporting unit is less than its carrying amount, the Company will measure any goodwill impairment loss as the amount by which the carrying amount of a reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to that reporting unit. The Company performed its annual impairment testing of goodwill as of January 1, 2025 and no impairment was required. The Company’s impairment testing consisted of a qualitative assessment. Changes in market conditions, laws and regulations, and key assumptions could negatively impact the results of future impairment testing and could result in the recognition of an impairment charge. 52 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In U.S. dollars) Investments in Equity Affiliates The Company accounts for investments in equity affiliates using the equity method of accounting when it has the ability to exert significant influence over an investee’s operating and financial policies. The Company’s share of equity method investee’s net income or loss is classified as “Other income (expense), net” in the consolidated statements of income. The Company also holds investments in equity affiliates consisting of securities of unconsolidated entities in which the Company is not able to exercise significant influence, and that do not have readily determinable market values. The Company accounts for these equity 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 income. The Company recognized an impairment charge of $ 499,998 to write-down an equity investment to its estimated fair value during the fiscal year ended March 31, 2025. Additionally, a separate equity investment was sold during the fiscal year ended March 31, 2025, which resulted in recognition of a gain of $ 103,715 . Prior to this disposition, the Company recognized an impairment charge of $ 991,105 to write-down this equity investment to its estimated fair value during the fiscal year ended March 31, 2024. Deferred Revenue Deferred revenue principally relates to fixed fees and minimum guarantees received in advance of the Company’s performance or usage by the licensee. Reductions in deferred revenue are a result of the Company’s performance under the contract or usage by the licensee. Deferred Finance Costs Deferred finance costs are amortized on an effective interest basis over the term of the related obligation. Deferred finance charges are netted against the loans. See Note 7, “ Secured Line of Credit ” for additional information with respect to the Company’s financing arrangements. Revenues The Company recognizes revenue when, or as, control of the promised services or goods is transferred to its customers and in an amount that reflects the consideration to which the Company is expected to be entitled in exchange for those services or goods in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). Music Publishing Music Publishing revenues are earned in the form of royalties relating to the licensing of rights in musical compositions and the sale of published sheet music and songbooks and typically involve a single performance obligation. Royalties principally relate to amounts earned from the public performance of musical compositions, the mechanical reproduction of musical compositions on recorded media including digital formats and the use of musical compositions in synchronization with visual images. Music publishing royalties, except for synchronization royalties, are recognized when the sale or usage occurs in accordance with the sales or usage-based royalty exception under ASC 606. The most common form of consideration for publishing contracts is sales- and usage-based royalties. The collecting societies submit usage reports, typically with payment for royalties due, often on a quarterly or biannual reporting period, in arrears. Royalties are recognized as the sale or usage occurs based upon usage reports when these reports are available for the reporting period or estimates of royalties based on historical data, such as recent royalties reported, company-specific information with respect to changes in repertoire, industry information and other relevant trends when usage reports are not available for the reporting period. Synchronization revenue is typically recognized as revenue when the customer has a right to access the license, which is when control is transferred to the customer. 53 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In U.S. dollars) Recorded Music Revenues from the sale or license of Recorded Music products through digital distribution channels are recognized when the sale or usage occurs based on usage reports received from the customer. Digital licensing contracts are generally long-term with consideration in the form of sales- and usage-based royalties that are primarily received monthly. For certain licenses where the consideration is fixed and the intellectual property being licensed is static, revenue is recognized at the point in time when control of the licensed content is transferred to the customer. Revenues from the sale of physical Recorded Music products are recognized upon delivery, which occurs once the product has been shipped and control has been transferred. Principal versus Agent Revenue Recognition The Company reports revenue on a gross or net basis based on management’s assessment of whether the Company acts as a principal or agent in a transaction. The determination of whether the Company acts as a principal or an agent in a transaction is based on an evaluation of whether the Company controls the good or service before transfer to the customer. When the Company concludes that it controls the good or service before transfer to the customer, the Company is considered a principal in the transaction and records revenue on a gross basis. When the Company concludes that it does not control the good or service before transfer to the customer but arranges for another entity to provide the good or service, the Company acts as an agent and records revenue on a net basis in the amount it earns for its agency service. The Company is typically required to pay a specified portion of the fees, earnings, payments and revenues received from the exploitation of the underlying music compositions and recorded music to the original songwriter or recorded artist (the “ Royalty Costs ”). The Company records revenues on a gross basis reflecting its position as a principal in the transaction and any royalties payable to third parties, including the writer’s fees and recording artists, are recorded as expenses. Royalty Costs and Royalty Advances The Company incurs Royalty Costs that are payable to its songwriters and recording artists generated from the sale or license of its music publishing copyrights and recorded music catalog. Royalties are calculated using negotiated rates in accordance with the songwriter and recording artist contracts. Calculations are based on revenue earned or user/usage measures or by a combination of these calculations. There are instances where such data is not available to be processed and royalty cost calculations may be complex or involve judgments about significant volumes of data to be processed and analyzed. In some instances, the Company commits to pay its songwriters and recording artists royalties in advance of future sales. The Company accounts for these advances under the related guidance in FASB ASC Topic 928, “ Entertainment—Music ” (“ ASC 928 ”). Under ASC 928, the Company capitalizes as assets certain advances, which it believes are recoverable from future royalties to be earned by the songwriter or recording artist when paid. Recoverability is assessed upon initial commitment of the advance based upon the Company’s forecast of anticipated revenue from the sale of future and existing musical compositions or albums. Reservoir regularly updates the recoverability assessment as additional data is available. In determining whether the advance is recoverable, the Company evaluates the current and past popularity of the songwriter or recording artist, the sales history of the songwriter or recording artist, the initial or expected commercial acceptability of the product, the current and past popularity of the genre of music that the product is designed to appeal to, and other relevant factors. Advances vary in both amount and expected life based on the underlying songwriter or recording artist. To the extent that a portion of an outstanding advance is no longer deemed recoverable, that amount will be expensed in the period the determination is made. During the fiscal years ended March 31, 2025 and 2024, no expense was recognized for advances deemed unrecoverable. Share-Based Compensation Compensation expense related to the issuance of share-based awards to the Company’s employees and board of directors is measured at fair value on the grant date. Share-based compensation consists primarily of restricted stock units (“ RSUs ”) granted under the Reservoir Media, Inc. 2021 Omnibus Incentive Plan (the “ 2021 Incentive Plan ”). The Company measures compensation expense for RSUs based on the fair value of the award on the date of grant. The grant date fair value for RSUs is based on the closing market 54 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In U.S. dollars) price of the Company’s Common Stock on the date of grant. The Company uses the Black-Scholes option pricing model to value stock options. The compensation expense for awards that vest over a future service period is recognized over the requisite service period on a straight-line basis. The Company recognizes share-based award forfeitures as they occur rather than estimating by applying a forfeiture rate. Earnings Per Share The consolidated statements of income present basic and diluted earnings per share (“ EPS ”). Basic EPS is computed 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 RSUs, stock options and warrants outstanding during the period. The dilutive effects of RSUs, stock options and warrants are calculated in accordance with the treasury stock method. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. Employee Benefit Plans The Company has a 401(k) retirement savings plan open to U.S. based employees who have completed three months of eligible service. The Company contributes $ 0.60 for every $1.00 of employee contributions up to a maximum of 6 % of the employee’s salary based upon each individual participant’s election. Expenses totaled $ 247,253 and $ 220,681 for employer contributions to the 401(k) retirement savings plan in the fiscal years ended March 31, 2025 and 2024, respectively. Income Taxes Income taxes are determined using the asset and liability method of accounting. Under this method, deferred tax assets and liabilities are recognized for the differences between the accounting bases of assets and liabilities and their corresponding tax basis. Deferred taxes are measured using enacted tax rates expected to apply when the asset is realized, or the liability is settled. A deferred tax asset is recognized when it is considered more likely than not to be realized. In the normal course of business, the Company’s tax returns are subject to examination by various taxing authorities. Such examinations may result in future tax and interest assessments by these taxing jurisdictions. Accordingly, the Company accrues liabilities when it believes that it is not more likely than not that it will realize the benefits of tax positions that it has taken in its tax returns or for the amount of any tax benefit that exceeds the cumulative probability threshold in accordance with ASC 740-10. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits in income tax expense (benefit). Differences between the estimated and actual amounts determined upon ultimate resolution, individually or in the aggregate, are not expected to have a material adverse effect on the Company’s consolidated financial position but could possibly be material to the Company’s consolidated results of operations or cash flow in any given quarter or annual period. Companies subject to the Global Intangible Low-Taxed Income provision (“ GILTI ”) have the option to account for the GILTI tax as a period cost if and when incurred, or to recognize deferred taxes for outside basis temporary differences expected to reverse as GILTI. The Company has elected to treat taxes on GILTI as period costs and no deferred tax asset or liability is recorded. Comprehensive Income (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. 55 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In U.S. dollars) Derivative Financial Instruments The Company’s interest rate swaps have not been designated as a hedging instrument and, therefore, are recognized at fair value at the end of each reporting period with changes in fair value recorded in the consolidated statements of income. Fair Value Measurement and Hierarchy The Company reports in accordance with ASC Topic 820, “ Fair Value Measurements and Disclosures ” (“ ASC 820 ”). Under ASC 820, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability ( i.e. , the “exit price”) in an orderly transaction between market participants at the measurement date. ASC 820 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions as to what market participants would use in pricing the asset or liability and are based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the observability of inputs as follows: ● Level 1 ––Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment. ● Level 2 ––Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. ● Level 3 ––Valuations based on inputs that are unobservable and significant to the overall fair value measurement. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes the level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. See Note 14, “ Financial Instruments ” for additional information. Emerging Growth Company The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1993, as amended (the “ Securities Act ”), as modified by the Jumpstart Our Business Startups Act of 2012, as amended (the “ JOBS Act ”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended (the “ Sarbanes-Oxley Act ”), reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a registration statement declared effective under the Securities Act or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”)) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company that is neither an emerging growth company 56 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In U.S. dollars) nor an emerging growth company that has opted out of using the extended transition period, difficult or impossible because of the potential differences in accounting standards used. Recent Accounting Pronouncements Accounting Standards Not Yet Adopted In November 2024, the FASB issued Accounting Standards Update (“ ASU ”) 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ ASU 2024-03 ”), which will require disclosure of additional information about specific expense categories in the notes to financial statements at each interim and annual reporting period. The amendments in ASU 2024-03 are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact that adoption of ASU 2024-03 will have on its disclosures upon adoption. In December 2023, the FASB issued 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. Accounting Standards Recently Adopted 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. The Company adopted this guidance during the fiscal year ended March 31, 2025, and added necessary disclosures upon adoption as disclosed in Note 17, “ Segment Reporting .” NOTE 3. REVENUE RECOGNITION For the Company’s operating and reportable segments, Music Publishing and Recorded Music, the Company accounts for a contract when it has legally enforceable rights and obligations and collectability of consideration is probable. The Company identifies the performance obligations and determines the transaction price associated with the contract. Revenue is recognized when, or as, control of the promised services or goods is transferred to the Company’s customers, and in an amount that reflects the consideration to which the Company is expected to be entitled in exchange for those services or goods. Certain of the Company’s arrangements include licenses of intellectual property with consideration in the form of sales- and usage-based royalties. Royalty revenue is recognized when the subsequent sale or usage occurs using the best estimates available of the amounts that will be received by the Company. The Company recognized revenue of $ 4,382,721 and $ 3,720,376 from performance obligations satisfied in previous periods for the fiscal years ended March 31, 2025 and 2024, respectively. 57 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In U.S. dollars) Disaggregation of Revenue The Company’s revenue consisted of the following categories during the fiscal years ended March 31, 2025 and 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended March 31, ​ ​ 2025 2024 Revenue by Type ​ ​ Digital ​ $ 60,520,488 ​ $ 51,572,052 Performance ​ 21,090,422 ​ 22,795,559 Synchronization ​ 18,227,367 ​ 15,143,616 Mechanical ​ 3,859,467 ​ 3,427,982 Other ​ 3,714,486 ​ 3,254,100 Total Music Publishing ​ 107,412,230 ​ 96,193,309 ​ ​ ​ ​ ​ ​ ​ Digital ​ 30,738,300 ​ 26,900,363 Physical ​ 6,157,562 ​ 8,943,413 Neighboring rights ​ 4,218,410 ​ 3,611,307 Synchronization ​ 3,135,909 ​ 2,911,421 Total Recorded Music ​ 44,250,181 ​ 42,366,504 ​ ​ ​ ​ ​ ​ ​ Other revenue ​ 7,043,325 ​ 6,295,877 Total revenue ​ $ 158,705,736 ​ $ 144,855,690 ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended March 31, ​ ​ 2025 2024 Revenue by Geographical Location ​ ​ United States Music Publishing ​ $ 62,186,894 ​ $ 56,252,521 United States Recorded Music ​ 24,388,283 ​ 23,254,535 United States other revenue ​ ​ 7,043,325 ​ 6,295,877 Total United States ​ 93,618,502 ​ 85,802,933 International Music Publishing ​ 45,225,336 ​ 39,940,788 International Recorded Music ​ 19,861,898 ​ 19,111,969 Total International ​ 65,087,234 ​ 59,052,757 Total revenue ​ $ 158,705,736 ​ $ 144,855,690 ​ Only the United States represented 10 % or more of the Company’s total revenues in the fiscal years ended March 31, 2025 and 2024. Music Publishing Music publishers act as copyright owners and/or administrators of the musical compositions and generate revenues related to the exploitation of musical compositions (as opposed to recorded music). Music publishers receive royalties from the use of the musical compositions in public performances, digital and physical recordings, and through synchronization (the combination of music with visual images). 58 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In U.S. dollars) 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. Other revenues represent earnings for use in printed sheet music and other uses. Digital and synchronization revenue recognition is similar for both Recorded Music and Music Publishing, therefore refer to the discussion within Recorded Music. Included in these revenue streams, excluding synchronization and other revenues, are licenses with performing rights organizations or collecting societies ( e.g ., ASCAP, BMI, SESAC and GEMA), which are long-term contracts containing a single performance obligation, which is ongoing access to all intellectual property in an evolving content library. The most common form of consideration for these contracts is sales- and usage-based royalties. The collecting societies submit usage reports, typically with payment for royalties due, often on a quarterly or biannual reporting period, in arrears. Royalties are recognized as the sale or usage occurs based upon usage reports and, when these reports are not available, royalties are estimated based on historical data, such as recent royalties reported, company-specific information with respect to changes in repertoire, industry information and other relevant trends. The Company excludes from the measurement of transaction price all taxes assessed by governmental authorities that are both (i) imposed on and concurrent with a specific revenue-producing transaction, and (ii) collected from customers. Recorded Music Recorded Music mainly involves selling, marketing, distribution and licensing of recorded music owned by the Company. Recorded Music revenues are derived from four main sources, which include digital, physical, synchronization and neighboring rights. Digital revenues are generated from the expanded universe of digital partners, including digital streaming services and download services. Digital licensing contracts are generally long-term with consideration in the form of sales- and usage-based royalties that are typically received monthly. Additionally, for certain licenses, including synchronization licenses, where the consideration is fixed and the intellectual property being licensed is static, revenue is recognized at the point in time when control of the licensed content is transferred to the customer. Physical revenues are generated from the sale of physical products such as vinyl, CDs and DVDs. The Company uses distribution partners to facilitate the sale of physical products. Revenues from the sale of physical Recorded Music products are recognized upon transfer of control to the customer, which typically occurs once the product has been shipped and the ability to direct use and obtain substantially all of the benefit from the asset have been transferred. In accordance with industry practice and as is customary in many territories, certain products, such as CDs and DVDs, are sold to customers with the right to return unsold items. Revenues from such sales are generally recognized upon shipment based on gross sales. Synchronization revenues represent royalties or fees for the right to use sound recordings in combination with visual images such as in films or television programs, television commercials and video games. In certain territories, the Company may also receive royalties when sound recordings are performed publicly through broadcast of music on television, radio and cable and in public spaces such as shops, workplaces, restaurants, bars and clubs. These public performance royalties on sound recordings are classified as “Neighboring rights” revenue. For fixed-fee contracts, revenue is recognized at the point in time when control of the licensed content is transferred to the customer. Royalty based contracts are recognized as the underlying sales or usage occurs. 59 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In U.S. dollars) Deferred Revenue The following table reflects the change in deferred revenue during the fiscal years ended March 31, 2025 and 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended March 31, ​ 2025 2024 Balance at beginning of period ​ $ 1,163,953 ​ $ 2,151,889 Cash received during period ​ 6,697,757 ​ 3,248,918 Revenue recognized during period ​ ( 5,976,248 ) ​ ( 4,236,854 ) Balance at end of period ​ $ 1,885,462 ​ $ 1,163,953 ​ During the fiscal years ended March 31, 2025 and 2024, substantially all the deferred revenue balance at the beginning of the period was recognized as revenue during the period. ​ ​ NOTE 4. ACQUISITIONS In the ordinary course of business, the Company regularly acquires publishing and recorded music catalogs, which are typically accounted for as asset acquisitions. During the fiscal years ended March 31, 2025 and 2024, the Company completed such acquisitions totaling $ 104,252,219 and $ 46,488,896 , respectively, inclusive of deferred acquisition payments. Music catalogs acquired during the fiscal years ended March 31, 2025 and 2024 were determined to have a useful life of 30 years . NOTE 5. INTANGIBLE ASSETS Intangible assets subject to amortization consist of the following as of March 31, 2025 and 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 2024 Intangible assets subject to amortization: ​ ​ Publishing and recorded music catalogs ​ $ 875,475,723 ​ $ 769,648,966 Artist management contracts ​ 933,733 ​ 911,740 Gross intangible assets ​ 876,409,456 ​ 770,560,706 Accumulated amortization ​ ( 156,736,237 ) ​ ( 130,338,706 ) Intangible assets, net ​ $ 719,673,219 ​ $ 640,222,000 ​ Straight-line amortization expense totaled $ 26,073,069 and $ 24,743,082 in the fiscal years ended March 31, 2025 and 2024, respectively. The expected amortization expense of intangible assets for each of the five succeeding fiscal years and thereafter is as follows: ​ ​ ​ ​ ​ Fiscal year ending March 31: ​ 2026 ​ $ 29,212,916 2027 ​ 29,212,916 2028 ​ 29,212,916 2029 ​ 29,212,916 2030 ​ ​ 29,212,916 Thereafter ​ 573,586,670 Total ​ $ 719,651,251 ​ ​ ​ NOTE 6. ROYALTY ADVANCES The Company made royalty advances totaling $ 22,343,425 and $ 17,290,321 during the fiscal years ended March 31, 2025 and 2024, respectively, recoupable from the writer’s or artist’s share of future royalties otherwise payable, in varying amounts. Advances 60 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In U.S. dollars) expected to be recouped within the next twelve months are classified as current assets, with the remainder classified as noncurrent assets. The following table reflects the change in royalty advances during the fiscal years ended March 31, 2025 and 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 2024 Balance at beginning of period ​ $ 69,775,565 ​ $ 66,926,500 Additions ​ 22,343,425 ​ 17,290,321 Recoupments ​ ( 21,565,950 ) ​ ( 14,544,655 ) Foreign currency translation ​ ​ 137,578 ​ ​ 103,399 Balance at end of period ​ $ 70,690,618 ​ $ 69,775,565 ​ ​ ​ NOTE 7. SECURED LINE OF CREDIT Long-term debt consists of the following as of March 31, 2025 and 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 2024 Secured line of credit ​ $ 391,828,410 ​ $ 335,828,410 Debt issuance costs, net ​ ​ ( 3,693,656 ) ​ ​ ( 5,036,803 ) ​ ​ $ 388,134,754 ​ $ 330,791,607 ​ Credit Facilities RMM is a borrower under a revolving credit agreement (as amended or supplemented from time to time, the “ RMM Credit Agreement ”) governing RMM’s secured line of credit (the “ Senior Credit Facility ”). The maturity date of the loans advanced under the Senior Credit Facility is December 16, 2027. The interest rate on borrowings under the Senior Credit Facility is equal to, at our option, either the sum of a base rate plus a margin of 1.00 % or the sum of a Secured Overnight Financing Rate (“ 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. 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. 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. As of March 31, 2025, the Senior Credit Facility had a borrowing capacity of $ 450,000,000 , with remaining borrowing availability of $ 58,171,590 . 61 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In U.S. dollars) Interest Rate Swaps At March 31, 2025, 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Notional Amount at ​ Pay Fixed ​ ​ Effective Date March 31, 2025 Rate Maturity September 30, 2024 ​ $ 100,000,000 ​ 2.946 % December 2027 September 30, 2024 ​ $ 50,000,000 3.961 % December 2027 ​ On September 30, 2024, three previous interest rate swaps expired with original notional amounts of $ 8,875,000 , $ 88,098,862 and $ 53,030,237 . Through the expiration date of these previous interest rate swaps, RMM paid fixed rates of 1.53 %, 1.422 % and 0.972 %, respectively, to the counterparty and received a floating interest payment from the counterparty based on SOFR with reference to notional amounts adjusted to match the original scheduled principal repayments pursuant to the indenture agreement. NOTE 8. OTHER LIABILITIES The Company’s other current liabilities consist primarily of obligations related to certain asset purchases and acquisitions that are due within the next twelve months, which totaled $ 6,966,109 and $ 6,345,193 as of March 31, 2025 and 2024, respectively. As of March 31, 2025, the Company’s other non-current liabilities, which consist primarily of obligations related to certain asset purchases and acquisitions that are due more than a year in the future, are as follows: ​ ​ ​ ​ ​ Fiscal year ending March 31: ​ 2027 ​ $ 283,505 2028 ​ 239,328 2029 ​ 70,352 Total ​ $ 593,185 ​ ​ ​ NOTE 9. INCOME TAXES The following table presents domestic and foreign income before income taxes for the fiscal years ended March 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 2024 Domestic ​ $ 11,905,345 ​ $ 3,339,484 Foreign ​ ( 2,033,224 ) ​ ( 2,167,419 ) Income before income taxes ​ $ 9,872,121 ​ $ 1,172,065 ​ 62 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In U.S. dollars) The provision (benefit) for income taxes consists of the following for the fiscal years ended March 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 2024 Current income taxes: ​ ​ U.S. federal ​ $ 1,550,803 ​ $ 156,783 State and local ​ 29,563 ​ 653 Foreign ​ 93,161 ​ 398,304 Total current ​ 1,673,527 ​ 555,740 Deferred income taxes: ​ ​ ​ ​ U.S. federal ​ 1,358,671 ​ 771,223 State and local ​ 61,661 ​ ( 326,795 ) Foreign ​ ( 953,135 ) ​ ( 665,364 ) Total deferred ​ 467,197 ​ ( 220,936 ) Income tax expense ​ $ 2,140,724 ​ $ 334,804 ​ The Company has determined that undistributed earnings of certain non-U.S. subsidiaries will be reinvested for an indefinite period of time. The Company has both the intent and ability to indefinitely reinvest these earnings. Given its intent to reinvest these earnings for an indefinite period of time, the Company has not accrued a deferred tax liability on these earnings. A determination of an unrecognized deferred tax liability related to these earnings is not practicable. A reconciliation of the statutory tax rate to the effective rate is as follows for the fiscal years ended March 31: ​ ​ ​ ​ ​ ​ ​ ​ 2025 2024 Federal income tax statutory rate 21.0 % 21.0 % State and local income taxes, net of federal income tax benefit 1.6 % 5.1 % Foreign subsidiary earnings 0.1 % 15.2 % Remeasurement of deferred tax balances ​ ( 0.9 ) % ( 34.6 ) % Return to provision ( 5.9 ) % 3.6 % Executive compensation 6.7 % 15.3 % Share-based compensation ( 1.0 ) % 2.0 % Other, net 0.1 % 1.0 % Effective income tax rate 21.7 % 28.6 % ​ 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 income 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 write-down an equity investment in the United Kingdom to its estimated fair value, which was not deductible for United Kingdom income tax purposes. 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. 63 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In U.S. dollars) Significant components of the Company’s deferred income tax liability as of March 31, 2025 and 2024 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 2024 Deferred tax assets: ​ ​ Net operating loss carryforward ​ $ 683,621 ​ $ 597,724 Interest expense carryforward ​ ​ 9,533,126 ​ ​ 6,175,688 Lease liability ​ ​ 1,492,056 ​ ​ 1,680,384 Compensation ​ 318,789 ​ 547,122 Unrealized foreign exchange losses ​ ​ — ​ ​ 162,182 Equity investments ​ 155,027 ​ 22,252 Total deferred tax assets ​ 12,182,619 ​ 9,185,352 Deferred tax liabilities: ​ ​ ​ ​ Fixed assets and leasehold improvements ​ ( 68,074 ) ​ ( 85,188 ) Intangible assets ​ ( 48,528,566 ) ​ ( 36,782,047 ) Lease right of use ​ ​ ( 1,322,937 ) ​ ​ ( 1,526,584 ) Fair value of swaps ​ ( 314,107 ) ​ ( 1,253,279 ) Unrealized foreign exchange gains ​ ​ ( 82,866 ) ​ ​ — Branch earnings ​ ​ ( 94,168 ) ​ ​ ( 10,232 ) Total deferred tax liabilities ​ ( 50,410,718 ) ​ ( 39,657,330 ) Net deferred tax liabilities ​ $ ( 38,228,099 ) ​ $ ( 30,471,978 ) ​ As of March 31, 2025, the Company has income tax net operating loss carryforwards of $ 51,016,929 . The Company has recorded a deferred tax asset of $ 683,621 reflecting the benefit of $ 51,016,929 in loss carryforwards. Such net operating loss carryforwards will expire as follows: ​ ​ ​ ​ ​ ​ ​ New York $ 46,327,584 2035-2042 California ​ 2,798,679 2040-2043 Tennessee ​ ​ 1,280,023 ​ 2035-2039 United Arab Emirates ​ 610,643 No expiration date ​ Tax Uncertainties As of March 31, 2025, the Company has no t recorded any unrecognized tax benefits. Tax Audits The Company and its eligible subsidiaries file a consolidated U.S. federal income tax return and applicable state and local income tax returns and non-U.S. income tax returns. The Company is subject to examination by federal, state and local, and foreign tax authorities. RMM’s Federal income tax returns for the years 2022 through 2024 are subject to examination by the Internal Revenue Service, and RMM’s state tax returns are subject to examination by the respective tax authorities for the years 2021 through 2024. Non-U.S. tax returns are subject to examination by the respective tax authorities for the years 2021 through 2024. The Company regularly assesses the likelihood of additional assessments by each jurisdiction and have established tax reserves that the Company believes are adequate in relation to the potential for additional assessments. Examination outcomes and the timing of examination settlements are subject to uncertainty. Although the results of such examinations may have an impact on the Company’s unrecognized tax benefits, the Company does not anticipate that such impact will be material to its consolidated financial position or results of operations. The Company does not expect to settle any material tax audits in the next twelve months. 64 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In U.S. dollars) NOTE 10. SUPPLEMENTARY CASH FLOW INFORMATION Interest paid and income taxes paid for the fiscal years ended March 31, 2025 and 2024 were comprised of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 2024 Interest paid ​ $ 22,751,186 ​ $ 17,467,938 Income taxes paid ​ $ 1,402,908 ​ $ 357,946 ​ Non-cash investing and financing activities for the fiscal years ended March 31, 2025 and 2024 were comprised of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 2024 Acquired intangible assets included in other current liabilities and other liabilities ​ $ 6,223,526 ​ $ 1,110,722 Deferred income taxes associated with acquired intangible assets ​ $ 7,060,651 ​ $ — Reclassification of liability-classified awards to equity-classified awards ​ $ 802,500 ​ $ 744,167 ​ ​ NOTE 11. SHAREHOLDERS’ EQUITY Warrants As of March 31, 2025, the Company’s outstanding warrants included 5,750,000 publicly-traded warrants (the “ Public Warrants ”), which were issued during ROCC’s initial public offering on December 15, 2020, and 137,500 warrants sold in a private placement to ROCC’s sponsor (the “ Private Warrants ” and together with the Public Warrants, the “ Warrants ”), which were assumed by the Company in connection with the Business Combination and exchanged into warrants for shares of Common Stock. Each whole Warrant entitles the registered holder to purchase one whole share of Common Stock at a price of $ 11.50 per share, provided that the Company has an effective registration statement under the Securities Act covering the shares of Common Stock issuable upon exercise of the Warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder. Pursuant to the warrant agreement, a registered holder may exercise its Warrants only for a whole number of shares of Common Stock. The Warrants will expire 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. If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the warrants to do so on a cashless basis. In no event will the Company be required to net cash settle the warrant exercise. The Private Warrants are identical to the Public Warrants, except that the Private Warrants are exercisable for cash or on a cashless basis, at the holder’s option, and are non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. The Company evaluated the Warrants under ASC Topic 480, Distinguishing Liabilities from Equity (“ ASC 480 ”) and ASC Topic 815, Derivatives and Hedging (“ ASC 815 ”), and in accordance with its accounting policies, concluded they meet the criteria to be equity classified as they were determined to be indexed in the Company’s stock and meet the requirements for equity classification. NOTE 12. SHARE-BASED COMPENSATION 2021 Incentive Plan On July 28, 2021, in connection with the Business Combination, the Company adopted the 2021 Incentive Plan, which became effective on such date. 9,726,247 authorized shares of Common Stock were reserved for issuance under the 2021 Incentive Plan. In addition, at the effective time of the Business Combination, options previously granted under the Reservoir Holdings, Inc. 2019 Long Term Incentive Plan (the “ Previous RHI 2019 Incentive Plan ”) to purchase shares of RHI Common Stock were converted into options to purchase 1,494,848 shares of Common Stock pursuant to the 2021 Incentive Plan. 65 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In U.S. dollars) Beginning on April 1, 2022 and ending on March 31, 2031, the aggregate number of shares of Common Stock that may be issued under the 2021 Incentive Plan will automatically increase by the lesser of (a) 3 % of the total number of shares of Common Stock issued and outstanding on the last day of the preceding fiscal year on a fully diluted basis and assuming that all shares available for issuance under the 2021 Incentive Plan are issued and outstanding, or (b) such number of shares determined by the Board. As of the effective date of the 2021 Incentive Plan, no further stock awards have been or will be granted under the Previous RHI 2019 Incentive Plan, and the Previous RHI 2019 Incentive Plan is no longer in effect. As of March 31, 2025, 11,555,584 shares of Common Stock were available for the Company to grant under the 2021 Incentive Plan. The 2021 Incentive Plan is administered by the compensation committee of the Board (the “ Compensation Committee ”). The exercise prices, vesting and other restrictions are determined by the Board, except that the exercise price per share of a stock option may not be less than 100 % of the fair value of the Common Stock on the date of grant. Stock options awarded under the 2021 Incentive Plan typically expire 10 years after the date of the grant and generally have vesting conditions that the Compensation Committee will determine. Share-based compensation expense totaled $ 4,385,255 ($ 3,414,065 , net of taxes) and $ 3,386,543 ($ 2,632,957 , net of taxes) during the fiscal years ended March 31, 2025 and 2024, respectively. Share-based compensation expense is classified as “Administration expenses” in the accompanying consolidated statements of income. As of March 31, 2025, total unrecognized compensation cost related to share-based compensation arrangements was $ 2,275,787 , which is expected to be recognized over a weighted average period of approximately 2.9 years. During the fiscal years ended March 31, 2025 and 2024, the Company granted 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 RSUs the awards became equity-classified as they no longer met the criteria to be liability-classified and liabilities of $ 802,500 and $ 744,167 were reclassified from accounts payable and accrued liabilities to additional paid-in capital during the fiscal years ended March 31, 2025 and 2024, respectively. Restricted Stock Units During the fiscal years ended March 31, 2025 and 2024, 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. The Company records share-based compensation expense for RSUs based on their grant date fair value. The following is a summary of RSU activity for the fiscal year ended March 31, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ Total ​ Average ​ ​ Number of ​ Grant Date ​ Shares Fair Value Outstanding as of April 1, 2024 ​ 628,637 ​ $ 6.22 Granted ​ 545,783 ​ $ 7.67 Settled ( 570,936 ) ​ $ 6.46 Outstanding as of March 31, 2025 603,484 ​ $ 7.31 ​ Outstanding RSUs as of April 1, 2024, include 16,722 vested RSUs with a weighted average grant date fair value of $ 110,833 . Settled RSUs in the table above includes 9,011 of these RSUs vested as of April 1, 2024, which converted to common shares during the fiscal year ended March 31, 2025. During the fiscal year ended March 31, 2025, 566,959 RSUs vested, of which 5,034 RSUs will convert to common shares at future dates. The remaining 561,925 RSUs converted to common shares during the fiscal year ended March 31, 2024 and are reflected as Settled RSUs in the table above. Outstanding RSUs as of March 31, 2025, include 12,745 vested RSUs with a weighted average grant date fair value of $ 93,333 , which will convert to common shares at future dates. 66 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In U.S. dollars) The total fair value, determined as of the date of vesting, of RSUs vested and settled during the fiscal years ended March 31, 2025 and 2024 was $ 4,490,048 and $ 2,705,309 . Stock Options All stock options outstanding as of March 31, 2025 were granted under the Previous RHI 2019 Incentive 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. 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 of 196.06562028646 . 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 following table is a summary of stock option activity under the 2021 Incentive Plan for the fiscal year ended March 31, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average ​ ​ ​ ​ Weighted ​ ​ ​ ​ Remaining ​ ​ Total ​ Average ​ Aggregate ​ Contractual ​ ​ Number of ​ Exercise ​ Intrinsic ​ Term ​ Options Price Value (Years) Outstanding as of April 1, 2024 ​ 1,280,882 ​ $ 5.11 ​ ​ ​ ​ Granted — ​ ​ ​ ​ ​ ​ Exercised ( 19,750 ) ​ $ 5.11 ​ ​ ​ ​ Forfeited — ​ ​ ​ ​ ​ ​ ​ Outstanding as of March 31, 2025 1,261,132 ​ $ 5.11 ​ $ 3,178,053 ​ 4.1 Exercisable as of March 31, 2025 1,261,132 ​ $ 5.11 ​ $ 3,178,053 ​ ​ Vested or expected to vest as of March 31, 2025 1,261,132 ​ $ 5.11 ​ $ 3,178,053 ​ 4.1 ​ ​ NOTE 13. EARNINGS PER SHARE The following table summarizes the basic and diluted earnings per common share calculation for the fiscal years ended March 31, 2025 and 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 2024 Basic earnings per common share ​ ​ Net income attributable to Reservoir Media, Inc. ​ $ 7,749,913 ​ $ 644,937 Weighted average common shares outstanding - basic ​ 65,161,373 ​ 64,757,112 Earnings per common share - basic ​ $ 0.12 ​ $ 0.01 ​ ​ ​ ​ ​ ​ ​ Diluted earnings per common share ​ ​ Net income attributable to Reservoir Media, Inc. ​ $ 7,749,913 ​ $ 644,937 Weighted average common shares outstanding - basic ​ 65,161,373 ​ 64,757,112 Weighted average effect of potentially dilutive securities: Effect of dilutive stock options and RSUs ​ ​ 787,993 ​ ​ 498,789 Weighted average common shares outstanding - diluted ​ 65,949,366 ​ 65,255,901 Earnings per common share - diluted ​ $ 0.12 ​ $ 0.01 ​ 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, 2025. 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. 67 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In U.S. dollars) NOTE 14. FINANCIAL INSTRUMENTS The Company is exposed to the following risks related to its financial instruments: (a) Credit Risk Credit risk arises from the possibility that the Company’s debtors may be unable to fulfill their financial obligations. Revenues earned from publishing and distribution companies are concentrated in the music and entertainment industry. The Company monitors its exposure to credit risk on a regular basis. (b) Interest Rate Risk The Company is exposed to market risk from changes in interest rates on its secured line of credit. 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 consisted of a $ 1,828,303 asset and a $ 410,008 liability as of March 31, 2025 and a $ 5,753,488 asset and a $ 121,374 liability as of March 31, 2024. 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, 2025 of $ 4,213,819 was driven primarily by the September 2024 decrease in SOFR, as well as the time value of the swaps that expired on September 30, 2024, partially offset by marking to market our current interest rate swap hedges and 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, 2024 of $ 1,124,770 was recorded as a Loss on fair value of swaps. (c) Foreign Exchange Risk The Company is exposed to foreign exchange risk in fluctuations of currency rates on its revenue from royalties, writers’ fees and its subsidiaries’ operations. (d) Financial Instruments Financial instruments not described elsewhere include cash, accounts receivable, accounts payable, accrued liabilities and borrowing under its secured line of credit. The carrying values of these instruments as of March 31, 2025 and 2024 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. NOTE 15. LEASES The Company leases its business premises under operating leases which have expiration dates between 2025 – 2033. Many of the Company’s leases provide for future rent escalations and renewal options. Most of the Company’s leases also obligate the Company to pay, as lessee, variable lease cost related to an allocation of maintenance, insurance and property taxes. The Company defines lease term as the noncancellable term of the lease plus any renewals covered by renewal options that are reasonably certain of exercise based on the Company’s assessment of relevant economic factors. The noncancellable term of the lease commences on the date the lessor makes the underlying property in the lease available to the Company, irrespective of when lease payments begin under the contract. 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 68 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In U.S. dollars) 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 years ended March 31, 2025 and 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 2024 Operating lease cost ​ $ 1,520,568 ​ $ 1,502,702 Variable lease cost ​ ​ 68,278 ​ ​ 67,308 Total lease cost ​ $ 1,588,846 $ 1,570,010 ​ The following is a summary of supplemental cash flow information related to leases for the fiscal years ended March 31, 2025 and 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ 2024 Cash paid for amounts included in the measurement of operating lease liabilities ​ $ 1,455,611 ​ $ 1,215,691 Right-of-use assets received in exchange for operating lease obligations ​ $ — ​ $ 595,370 ​ Supplemental balance sheet information related to leases is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Classification 2025 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating lease right-of-use assets Operating lease right of use assets, net ​ $ 5,949,418 ​ $ 6,988,340 ​ ​ ​ ​ ​ ​ ​ ​ ​ Current portion of operating lease liabilities Other current liabilities ​ $ 988,099 ​ $ 968,420 Noncurrent portion of operating lease liabilities Operating lease liabilities, net of current portion ​ $ 5,723,930 ​ $ 6,720,287 ​ 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, 2025 and 2024: ​ ​ ​ ​ ​ ​ ​ ​ 2025 2024 Weighted-average remaining lease term (in years) 7.0 7.9 ​ Weighted-average discount rate 6.2 % 6.1 % ​ Maturities of the Company’s operating lease liabilities as of March 31, 2025 were as follows for the fiscal years ending March 31: ​ ​ ​ ​ ​ Fiscal year ended March 31: ​ 2026 ​ $ 1,397,698 2027 ​ 1,142,188 2028 ​ 952,370 2029 ​ 1,001,225 2030 ​ 896,986 Thereafter ​ ​ 3,111,506 Total lease payments ​ ​ 8,501,973 Less: imputed interest ​ ​ ( 1,789,944 ) Present value of operating lease payments ​ ​ 6,712,029 Less: current portion of operating lease liabilities ​ ​ ( 988,099 ) Operating lease liabilities, net of current portion ​ $ 5,723,930 ​ 69 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In U.S. dollars) ​ NOTE 16. CONTINGENCIES AND COMMITMENTS (a) Royalty Advances The Company has committed to make payments for additional Royalty advances totaling $ 2,382,771 through March 2026, and a further $ 2,559,700 through March 2028, subject to certain conditions. These Royalty advances are to be used to fund future music compositions and sound recordings and will be recorded as royalty advances when paid. (b) Deferred Acquisition costs 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. The Company has recorded liabilities based on its view of the future performance of those assets, but it is possible that the actual performance and resulting obligations may be different than current estimates. (c) Litigation The Company is subject to claims and contingencies in the normal course of business. To the extent the Company cannot predict the outcome of the claims and contingencies or estimate the amount of any loss that may result, no provision for any contingent liabilities has been made in the consolidated financial statements. The Company believes that losses resulting from these matters, if any, would not have a material adverse effect on the financial position, results of operations or cash flows of the Company. All such matters which the Company concludes are probable to result in a loss and for which management can reasonably estimate the amount of such loss have been accrued within these consolidated financial statements. The Company had been involved in a royalty dispute, which commenced in 2017 (the “ Royalty Dispute ”). Under the terms of the Company’s royalty contract, the Company is 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 fiscal 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, pursuant to a final settlement agreement reached on October 3, 2023 to resolve the Royalty Dispute. ​ NOTE 17. SEGMENT REPORTING The Company’s business is organized in three operating segments, one of which does not meet the quantitative thresholds for determining reportable segments and two reportable segments, consisting of Music Publishing and Recorded Music. 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 ”). The CODM regularly reviews trends in OIBDA and compares OIBDA results to budgets to evaluate the profitability of the segments. During the annual budget process, the CODM also considers OIBDA to assist in the allocation of resources to the segments. The accounting policies of the Company’s operating and reportable segments are consistent with the Company’s policies for the consolidated financial statements. The Company does not have sales between segments. The following tables present total revenue by segment, significant segment expenses, which are expenses that are included in OIBDA, significant to the segment considering qualitative and quantitative factors and regularly provided or easily computed from 70 Table of Contents RESERVOIR MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In U.S. dollars) information regularly provided to the CODM, and reconciliation of OIBDA to income before income taxes for the fiscal years ended March 31, 2025 and 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended March 31, 2025 ​ ​ Music ​ Recorded ​ ​ ​ ​ ​ ​ ​ Publishing Music Other Consolidated Total revenue ​ $ 107,412,230 ​ $ 44,250,181 ​ $ 7,043,325 ​ $ 158,705,736 Significant segment expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of revenue ​ ​ 45,161,223 ​ ​ 12,268,782 ​ ​ — ​ ​ 57,430,005 Administration expenses ​ ​ 24,906,776 ​ ​ 9,231,858 ​ ​ 5,776,830 ​ ​ 39,915,464 OIBDA ​ ​ 37,344,231 ​ ​ 22,749,541 ​ ​ 1,266,495 ​ ​ 61,360,267 Amortization and depreciation ​ ​ 18,690,668 ​ ​ 7,512,371 ​ ​ 96,194 ​ ​ 26,299,233 Operating income ​ 18,653,563 ​ 15,237,170 ​ 1,170,301 ​ 35,061,034 Interest expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 21,883,321 ) Gain on foreign exchange ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 578,251 Loss on fair value of swaps ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 4,213,819 ) Other income (expense), net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 329,976 Income before income taxes ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 9,872,121 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended March 31, 2024 ​ ​ Music ​ Recorded ​ ​ ​ ​ ​ ​ ​ Publishing Music Other Consolidated Total revenue ​ $ 96,193,309 ​ $ 42,366,504 ​ $ 6,295,877 ​ $ 144,855,690 Significant segment expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of revenue ​ ​ 41,867,372 ​ ​ 13,610,914 ​ ​ — ​ ​ 55,478,286 Administration expenses ​ ​ 25,441,297 ​ ​ 9,615,354 ​ ​ 4,759,241 ​ ​ 39,815,892 OIBDA ​ ​ 28,884,640 ​ ​ 19,140,236 ​ ​ 1,536,636 ​ ​ 49,561,512 Amortization and depreciation ​ ​ 18,966,453 ​ ​ 5,924,558 ​ ​ 94,677 ​ ​ 24,985,688 Operating income ​ ​ 9,918,187 ​ ​ 13,215,678 ​ ​ 1,441,959 ​ ​ 24,575,824 Interest expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 21,087,713 ) Loss on foreign exchange ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 101,834 ) Loss on fair value of swaps ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 1,124,770 ) Other income (expense), net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 1,089,442 ) Income before income taxes ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 1,172,065 ​ The Company’s CODM manages assets on a consolidated basis. Accordingly, segment assets are not reported to the Company’s CODM nor used to allocate resources or assess performance of the segments, and therefore, total segment assets have not been disclosed. Total long-lived assets by country are as follows as of March 31, 2025 and 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ 2024 United States ​ $ 273,366 ​ $ 339,041 United Kingdom ​ 133,418 ​ 212,369 ​ During the fiscal years ended March 31, 2025 and 2024, a single external customer accounted for 11 % of total revenues and is included in both the Music Publishing and Recorded Music segments. No other customer accounted for more than 10% of revenue. ​ ​ ​ 71 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.