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What changed in Reservoir Media, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Reservoir Media, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+295 added−378 removedSource: 10-K (2024-05-30) vs 10-K (2023-05-31)

Top changes in Reservoir Media, Inc.'s 2024 10-K

295 paragraphs added · 378 removed · 249 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

104 edited+25 added−69 removed27 unchanged
Biggest changeExamples of music that generate music publishing revenue include, among others: Performance - performance of the song to the general public ● Broadcast of musical compositions on television, radio and cable ● Live performance at a concert or other venue ( e.g. , arena concerts, nightclubs) ● Broadcast of musical compositions at sporting events, restaurants or bars ● Performance of musical compositions in staged theatrical productions Digital - licensing of recorded music in various digital formats and digital performance of musical compositions to the general public ● Streaming and download services Mechanical - sale of recorded music in various physical formats ● Vinyl, CDs and DVDs Synchronization - use of the musical composition in combination with visual images ● Films or television programs ● Television commercials ● Video games ● Merchandising, toys or novelty items Other ● Licensing of copyrights for use in printed sheet music In the U.S., mechanical royalties are collected directly by music publishers, from The Mechanical Licensing Collective (the “ MLC ”), the nonprofit organization designated by the U.S.
Biggest changePerformance royalties generate revenue through live performance and digital performance of musical compositions to the general public, including via broadcast of musical compositions on television, radio and cable, live performance at a concert or other venue ( e.g. , arena concerts, nightclubs), broadcast of musical compositions at sporting events, restaurants or bars, and the performance of musical compositions in staged theatrical productions.
Our frontline recording artists’ contracts generally provide for more favorable terms to the recording artist, entitling us to a set number of albums and an exclusive license to exploit those albums for a fixed period of time. In contrast, our catalog recording artists’ contracts typically grant us ownership for the duration of copyright.
Our frontline recording artists’ contracts generally provide more favorable terms to the recording artist, entitling us to a set number of albums and an exclusive license to exploit those albums for a fixed period of time. In contrast, our catalog recording artists’ contracts typically grant us ownership for the duration of copyright.
Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports filed, are available free of charge through the Investors section of our website as soon as reasonably practicable after such materials have been electronically filed with, or furnished to, the Securities and Exchange Commission (the “ SEC ”).
Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, and all amendments to those reports filed, are available free of charge through the Investors section of our website as soon as reasonably practicable after such materials have been electronically filed with, or furnished to, the Securities and Exchange Commission (the “ SEC ”).
Copyright Office to distribute mechanical royalties for streaming and downloads pursuant to the MMA, recorded music companies or via The Harry Fox Agency, a non-exclusive licensing agent affiliated with the Society of European Stage Authors and Composers (“ SESAC ”). Outside the U.S., mechanical royalties are collected directly by music publishers or from collecting societies.
Copyright Office to distribute mechanical royalties for streaming pursuant to the MMA, recorded music companies or via The Harry Fox Agency, a non-exclusive licensing agent affiliated with the Society of European Stage Authors and Composers (“ SESAC ”). Outside the U.S., mechanical royalties are collected directly by music publishers or from collecting societies.
In the U.S., copyright protection generally lasts for 95 years from first publication or 120 years from creation, whichever expires first, for works created on or after January 1, 1978 as “works made for hire” ( i.e. , works of employees or certain specially commissioned works).
In the U.S., copyright protection for “works made for hire” ( i.e. , works of employees or certain specially commissioned works) created on or after January 1, 1978 generally lasts for 95 years from first publication or 120 years from creation, whichever expires first.
Music Publishing The music publishing industry involves the identification and development of songwriters to create, market and promote compositions, as well as licensing and acquisition of rights in musical compositions from content owners ( e.g., publishers, songwriters, composers and other rightsholders).
Music Publishing Music Publishing Industry Overview The music publishing industry involves the identification and development of songwriters to create, market and promote compositions, as well as licensing and acquisition of rights in musical compositions from content owners ( e.g., publishers, songwriters, composers and other rightsholders).
Throughout the world, publishers collect performance royalties directly or on behalf of music publishers and songwriters by performance rights organizations and collecting societies. Key performing rights organizations and collecting societies include: ● American Society of Composers, Authors and Publishers (“ ASCAP ”), SESAC and Broadcast Music Inc.
Throughout the world, publishers collect performance royalties directly or on behalf of music publishers and songwriters by performance rights organizations and collecting societies. Key performing rights organizations and collecting societies include American Society of Composers, Authors and Publishers (“ ASCAP ”), Broadcast Music Inc.
In 2022, The National Music Publishers’ Association (“ NMPA ”), the Nashville Songwriters Association International (“ NSAI ”) and the Digital Media Association (“ DiMA ”) announced a settlement regarding the U.S. mechanical streaming rates for 2023-2027.
Also in 2022, The National Music Publishers’ Association (“ NMPA ”), the Nashville Songwriters Association International (“ NSAI ”) and the Digital Media Association (“ DiMA ”) announced a settlement regarding the U.S. mechanical streaming rates for 2023-2027.
In its first full year of operation, Fiscal 2022, ESMAA licensed several key music users for the first time, including a broad, multimillion dollar license with EXPO 2020 in Dubai.
In its first full year of operation, Fiscal 2022, ESMAA licensed several key music users for the first time including a multimillion dollar license with EXPO 2020 in Dubai.
The frontline Recorded Music business line was 12 Table of Contents established in 2019 when we acquired Chrysalis Records and relaunched it as an active frontline record label, signing and developing new talent. Our first frontline release went on to receive critical acclaim, a Mercury Award shortlist nomination and a Grammy nomination.
The frontline Recorded Music 10 Table of Contents business line was established in 2019 when we acquired Chrysalis Records and relaunched it as an active frontline record label, signing and developing new talent. Our first frontline release went on to receive critical acclaim, a Mercury Award shortlist nomination and a Grammy nomination.
The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. We include our web site address in this Annual Report on Form 10-K only as an inactive textual reference.
The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. We include our website address in this Annual Report on Form 10-K only as an inactive textual reference.
The societies pay a percentage (which is set in each country) of the performance royalties to the copyright owner(s) or administrators (i.e., the publisher(s)), referred to in the industry as the “publisher’s share”, and a percentage directly to the songwriter(s) referred to in the industry as the “writer’s share”, of the composition.
The societies pay a percentage (which is set in each country) of the performance royalties to the copyright owner(s) or administrators (i.e., the publisher(s)), referred to in the industry as the “publisher’s share,” and a percentage directly to the songwriter(s), referred to in the industry as the “writer’s share” of the composition.
As of March 31, 2023, none of our employees in the U.S. were subject to a collective bargaining agreement, although certain employees in our non-domestic subsidiaries were covered by national labor agreements.
As of March 31, 2024, none of our employees in the U.S. were subject to a collective bargaining agreement, although certain employees in our non-domestic subsidiaries were covered by national labor agreements.
The operations of our Music Publishing business are conducted through all our offices, as well as various subsidiaries and sub-publishers. We own or control rights to more than 150,000 compositions as of March 31, 2023, including numerous pop hits, American standards and motion picture and theatrical compositions.
Reservoir’s Music Publishing Business The operations of our Music Publishing business are conducted through all our offices, as well as various subsidiaries and sub-publishers. We own or control rights to more than 150,000 compositions as of March 31, 2024, including numerous pop hits, American standards, and motion picture and theatrical compositions.
In accordance with the terms of the recording artists’ contracts, the recording artists receive royalties based on sales and other uses of their music. We customarily provide up-front payments to frontline recording artists, called advances, which are recoupable by us from future amounts otherwise payable to such recording artists.
In accordance with the terms of the recording artists’ contracts, the recording artists receive royalties based on sales and other uses of their music. We customarily provide up-front payments to frontline recording artists, called “advances,” which are recoupable by us from future amounts otherwise payable to such recording artists.
We negotiate recording contracts with recording artists that define our rights to use the recording artists’ music. For recordings that we acquire as part 11 Table of Contents of a catalog acquisition, we do not have the ability to negotiate these recording artists’ contracts and, as a result, we step into the position of the previous catalog owner.
We negotiate recording contracts with recording artists that define our rights to use the recording artists’ music. For recordings that we acquire as part of a catalog acquisition, we do not have the ability to negotiate these recording artists’ contracts, and as a result, we step into the position of the previous catalog owner.
According to Music & Copyright, Sony Music Publishing, Universal Music Publishing and Warner Chappell Music accounted for approximately 60% of the global music publishing revenues in 2022. There are many smaller participants, including individual songwriters who self-publish their work, that collectively accounted for the remaining approximately 40% of the global music publishing revenues.
According to Music & Copyright, Sony Music Publishing, Universal Music Publishing Group and Warner Chappell Music accounted for approximately 60% of global music publishing revenues in 2023. There are many smaller participants, including individual songwriters who self-publish their work, that collectively accounted for the remaining approximately 40% of global music publishing revenues.
For example, we encourage recording artists to record and include our musical compositions on their recordings, offer opportunities to include our musical compositions in filmed entertainment, advertisements and digital media and advocate for the use of our musical compositions in live stage productions.
For example, we encourage recording artists to record and 6 Table of Contents include our musical compositions on their recordings, offer opportunities to include our musical compositions in filmed entertainment, advertisements and digital media, and advocate for the use of our musical compositions in live stage productions.
Our creative services, the existing roster and our value enhancement platform all contribute to our ability to attract world-class talent across genres. We remain focused on unique talent that represents diversity across a variety of genres and sounds.
Our creative services, the existing roster and our value enhancement platform all contribute to our ability to attract clients across genres. We remain focused on unique talent that represents diversity across a variety of genres and sounds.
Assembled over decades, our award-winning catalog includes over 5,000 clients as of March 31, 2023 and boasts a diverse range of genres, including pop, rock, jazz, classical, country, R&B, hip-hop, rap, reggae, Latin, folk, blues, symphonic, soul, Broadway, techno, alternative and gospel.
Our award-winning catalog includes over 5,000 clients as of March 31, 2024 and boasts a diverse range of genres, including pop, rock, jazz, classical, country, R&B, hip-hop, rap, reggae, Latin, folk, blues, symphonic, soul, Broadway, techno, alternative and gospel.
See “ Risk Factors - Risks Related to Intellectual Property and Data Security .” 15 Table of Contents Joint Ventures We have entered into various contractual joint venture arrangements pursuant to which we or certain of our subsidiaries jointly acquire publishing, administration, songwriting, recording and related rights and interests with third parties.
See “ Risk Factors - Risks Related to Intellectual Property and Data Security .” Joint Ventures We have entered into various contractual joint venture arrangements pursuant to which we or certain of our subsidiaries jointly acquire publishing, administration, recording and related rights and interests with third parties.
Copyright Royalty Board (the “ CRB ”) Also in 2018, the U.S. CRB issued an updated slate of royalty rates and terms. This ruling by the CRB included increased publishing royalty rates for musical compositions in the U.S. from 2018 through 2022.
Copyright Royalty Board (the “ CRB ”). Also in 2018, the U.S. CRB issued updated royalty rates and terms. This ruling by the CRB included increased publishing royalty rates for musical compositions in the U.S. from 2018 through 2022.
Government interventions in the U.S. and the European Union (“ EU ”) are expected to result in increased revenues for the music entertainment industry, at least in the near-term.
Government interventions in the U.S. and the European Union (“ EU ”) are expected to result in increased revenues for the music entertainment industry, at least in the near-term. Music Modernization Act (the “ MMA ”).
Many of our catalog artists continue to appeal to audiences long after they cease releasing new music. We have an efficient process for sustaining sales across our catalog releases.
Many of our catalog artists continue to appeal to audiences long after they cease releasing new music. We have a process for sustaining sales across our catalog releases.
The recorded music industry is also highly competitive and dominated by three companies. In 2022, the three largest recorded music companies - Universal Music Group, Sony Music Entertainment and Warner Music Group - accounted for approximately 70% of the global recorded music revenues, according to public company filings and the IFPI.
The recorded music industry is also highly competitive and dominated by three companies. The three largest recorded music companies - Universal Music Group, Sony Music Entertainment and Warner Music Group - account for approximately 70% of global recorded music revenues, according to public company filings and the IFPI.
Music Modernization Act (the “ MMA ”) In 2018, the U.S. enacted the MMA, which resulted in reforms to music licensing through the regulation of digital music services’ relationships to content owners.
In 2018, the U.S. enacted the MMA, which resulted in reforms to music licensing through the regulation of digital music services’ relationships to content owners.
Our frontline and catalog Recorded Music distribution is handled by a network of distribution partners that currently includes Proper, PIAS, Secretly, Alliance and MERLIN. All of these distributors market, distribute and sell products of independent labels and artists to digital music services, retail and wholesale distributors and various distribution centers and ventures operating internationally.
The distribution is handled by a network of partners that includes Proper, PIAS, Secretly, Alliance and MERLIN. All these distributors market, distribute and sell products of independent labels and artists to digital music services, retail and wholesale distributors, and various distribution centers and ventures operating internationally.
In addition, we are committed to preserving the legacies of creators, so their music is heard for generations to come. To that end, we also develop and support several educational initiatives with leading universities, through which the students learn about our legacy artists and their catalogs, ensuring that the music lives on.
In addition, we are committed to preserving the legacies of creators, so their music is heard for generations to come. To that end, we also develop and support several educational initiatives with leading universities, through which the students learn about our legacy artists and their catalogs, ensuring that the music lives on. These collaborations are ongoing at New York University.
In the past five years, we have focused on being a wholistic music company and have strategically expanded to include management services through Big Life Management and Blue Raincoat Artists in the U.K. In tandem with this diversification, we have focused on emerging markets, which are expected to be responsible for much of the future growth in the music industry.
We have focused on being a full service music company and have strategically expanded to include management services through Big Life Management and Blue Raincoat Artists in the U.K. In tandem with this diversification, we have concentrated on emerging markets, which are expected to be responsible for much of the future growth in the music industry.
Embrace Commercial Innovation with New Digital Distributors and Partners Over the past several years, we have seen significant licensing growth from in-home fitness platforms, with new licenses issued to Peloton, Hydrow and Apple Fitness+.
Embrace Commercial Innovation with New Digital Distributors and Partners Over the past several years, we have seen licensing growth from in-home fitness platforms, with licenses issued to Peloton, Equinox and Apple Fitness+, among others.
We are largely dependent on legislation in each jurisdiction in which we operate to protect our rights against unauthorized reproduction, distribution, public performance or rental. In all jurisdictions where we operate, our intellectual property receives some degree of copyright protection, although the extent of effective protection varies widely. In a number of developing countries, the protection of copyright remains inadequate.
We are largely dependent on legislation in each jurisdiction in which we operate to protect our rights against unauthorized reproduction, distribution, public performance or rental. In all jurisdictions in which we operate, our intellectual property receives some degree of copyright protection, although the extent of effective protection varies widely.
We believe these emerging music monetization platforms are now a permanent part of the music entertainment industry and have helped expand access to and listenership of music globally. 5 Table of Contents Positive Regulatory Trends Increased government intervention to curb piracy and improve monetization rates for content owners helps secure the future of the industry.
These emerging music monetization platforms are now a permanent part of the music entertainment industry and have helped expand access to and listenership of music globally. Regulatory Environment and Trends Increased government intervention to curb piracy and improve monetization rates for content owners helps secure the future of the industry.
We have Board representation at leading industry non- profits across the globe including MusiCares, Songwriters Hall of Fame, Silkroad, the National Music Publishers Association, Mechanical Licensing Collective, International Confederation of Music Publishers (“ ICMP ”), and the Independent Music Publishers International Forum, where we lead the charge on advocating for songwriter rights, artist rights and fair compensation.
We have Board representation at leading industry non-profits across the globe, including MusiCares, Songwriters Hall of Fame, Silkroad, the NMPA, the MLC, International Confederation of Music Publishers (“ ICMP ”), and the Independent Music Publishers International Forum (“ IMPF ”), where we lead the charge on advocating for songwriter rights, artist rights and fair compensation.
Platforms such as gaming, home fitness and social media are evolving in ways that integrate premium commercial music into their services – which are all accretive revenue sources to the music industry. The evolution of car entertainment systems from physical media players to streaming connectivity will help drive growth in music subscribers and digital advertising revenue for music services.
Platforms such as gaming, home fitness and social media have evolved in ways that integrate commercial music into their services – which are all accretive revenue sources to the music industry. The evolution of car entertainment systems from physical media players to streaming connectivity has driven growth in music subscribers and digital advertising revenue for music services.
The previously mentioned 2020 acquisitions of the Hearts Bluff collection of catalogs and Shapiro Bernstein, respectively brought iconic titles from the likes of Elvis, Kool & the Gang, Garth Brooks and Roy Orbison, as well as titles from the turn of the century to our portfolio.
Our 2020 acquisitions of Hearts Bluff and Shapiro Bernstein brought titles from the likes of Elvis, Kool & the Gang, Garth Brooks and Roy Orbison, as well as titles from the turn of the century to our portfolio.
We plan to continue to execute on our highly disciplined and sophisticated approach to M&A strategy of acquiring high-quality copyrights and recordings, including executing complicated transactions on an off-market basis at an attractive return and capitalizing on upside potential with our value enhancement capabilities. 8 Table of Contents Active Songwriter and Artist Roster We will continue to expand our active songwriter and artist roster.
We plan to continue to execute on our disciplined approach to M&A strategy of acquiring high-quality copyrights and recordings, including executing transactions on an off-market basis at an attractive return and capitalizing on upside potential with our value enhancement capabilities. Active Songwriter and Artist Roster We plan to continue expanding our active songwriter and artist roster.
Music publishers generally receive royalties pursuant to public performance, digital, mechanical, synchronization and other licenses. In the U.S., music publishers collect and administer mechanical royalties, and statutory rates are established pursuant to the U.S. Copyright Act of 1976, as amended, for the royalty rates applicable to musical compositions for sale and licensing of recordings embodying those musical compositions.
In the U.S., music publishers collect and administer mechanical royalties, and statutory rates are established pursuant to the U.S. Copyright Act of 1976, as amended, for the royalty rates applicable to musical compositions for sale and licensing of recordings embodying those musical compositions.
Within our Recorded Music business, we have successfully completed and integrated the acquisitions of Chrysalis Records in the U.K. and Tommy Boy Records in the U.S. and expect to be well-positioned to ingest additional master recordings into our platform resulting in operating leverage as we scale.
Within our Recorded Music business, we have completed and integrated the acquisitions of Chrysalis Records and Tommy Boy Music and believe we are well-positioned to ingest additional master recordings into our platform resulting in additional operating leverage as we scale.
Our M&A practice is committed to both catalog acquisition and strategic expansion of the roster. Our Music Publishing business contributed approximately $83.8 million to our revenues for the year ended March 31, 2023, representing approximately 69% of our revenues.
Our M&A practice is committed to both catalog acquisition and strategic expansion of the roster. Our Music Publishing business contributed approximately $96.2 million to our revenues for the year ended March 31, 2024, representing approximately 66% of our revenues.
We operate a music publishing business, a record label business, a management business and a rights management entity in the Middle East. We have two operating and reportable segments—Music Publishing and Recorded Music. We now represent over 150,000 copyrights and 36,000 master recordings with titles dating back as far as the early 1900s and hundreds of #1 releases worldwide.
We operate a music publishing business, a recorded music business, a management business and a rights management entity in the Middle East. We have two operating and reportable segments—Music Publishing and Recorded Music. We represent copyrights and master recordings dating back as far as the early 1900s through today, with hundreds of #1 releases worldwide.
Our roster of active songwriters, including Ali Tamposi, Jamie Hartman, Steven Franks and Oak Felder, has contributed to hit songs performed by the likes of Justin Bieber, Ariana Grande, BTS, Dua Lipa and more. Our Recorded Music business contributed approximately $34.8 million to our revenues for the year ended March 31, 2023, representing approximately 28% of our revenues.
Our roster of active songwriters, including Ali Tamposi, Jamie Hartman, Oak Felder, and Steph Jones, has contributed to hit songs performed by the likes of Justin Bieber, Ariana Grande, BTS, Dua Lipa and more. Our Recorded Music business contributed approximately $42.4 million to our revenues for the year ended March 31, 2024, representing approximately 29% of our revenues.
Our synchronization team is comprised of 11 people worldwide dedicated to marketing and licensing our music for use in films, trailers, television shows, advertisements and video games. For the year ended March 31, 2023, our synchronization income accounted for 15% of our total revenues.
Copyright. ” Our Competitive Strengths Value Enhancement Our synchronization team is comprised of 11 people worldwide dedicated to marketing and licensing our music for use in films, trailers, television shows, advertisements and video games. For the year ended March 31, 2024, our synchronization income accounted for 12% of our total revenues.
See “ Risk Factors - Risks Related to Intellectual Property and Data Security - Reservoir faces a potential loss of catalog to the extent that its recording artists have a right to recapture rights in their recordings under the U.S.
See “ Risk Factors - Risks Related to Intellectual Property and Data Security - We face a potential loss of catalog to the extent that our songwriters or recording artists have a right to recapture rights in their musical compositions or recordings under the U.S.
To this end, we acquired a stake in PopArabia in January 2020 with a focus on signing artists, acquiring catalogs and establishing a rights management company in the Middle East and North Africa (“ MENA ”) region. We have executed on these strategic initiatives and expect substantial growth from PopArabia in the years to come.
To this end, we acquired a stake in PopArabia in January 2020 with a focus on signing artists, acquiring catalogs, and establishing a rights management company in the Middle East and North Africa (“ MENA ”) region.
In 2019, the EU passed legislation to protect music rightsholders and recording artists. Specifically, the European Union Copyright Directive was designed to limit safe harbors from liability for copyright infringement and to ensure that rightsholders and recording artists are remunerated fairly when their music is shared online by user-uploaded content services, such as YouTube.
The legislation was designed to limit safe harbors from liability for copyright infringement and to ensure that rightsholders and recording artists are remunerated fairly when their music is shared online by user-uploaded content services. EU AI Act.
These licenses and the associated revenues are on balance accretive to our overall revenues, and we view being on the forefront of digital licensing to be a significant growth area for us.
These licenses and the associated revenues are on balance accretive to our overall revenues, and we view being on the forefront of digital licensing as a significant growth area for us. We are equally focused on our strategy of the active issuance of licenses and the pursuit of copyright infringement.
Outside of these three companies, the landscape is highly fragmented with numerous participants that collectively accounted for approximately 30% of the global recorded music market in 2022. Intellectual Property Copyrights Our business rests on our ability to maintain rights in musical compositions and sound recordings through copyright protection.
Outside of these three companies are numerous participants, including independent recorded music companies, that collectively account for approximately 30% of the global recorded music market. 11 Table of Contents Intellectual Property Copyrights Our business is dependent on our ability to maintain rights in musical compositions and sound recordings through copyright protection.
In the Recorded Music segment, during 2019, we acquired London-based Blue Raincoat Music Ltd and its label platform Chrysalis Records Ltd. This acquisition added significant recorded music operations to our business, and added the sound recordings of Sinead O’Connor, The Specials, Generation X, The Waterboys and Go West.
We acquired London-based Blue Raincoat Music Ltd and its label platform Chrysalis Records Ltd in 2019, thereby adding recorded music operations to our business, as well as the sound recordings of Sinéad O’Connor, The Specials, Generation X, The Waterboys and Go West.
No two artists are the same, and our individualized marketing plans reflect this. For our Music Publishing business, our goal is to promote our songwriters’ interest in their music, enhance the value of those copyrights and promote their work and legacies as creators.
For our Music Publishing business, our goal is to promote our songwriters’ interest in their music, enhance the value of those copyrights and promote their work and legacies as creators.
The third type is the acquisition of full or partial interests in existing record labels, sound recording catalogs or income rights to a royalty stream associated with an established recording artist or producer. Acquisition of these income participation interests is typically in connection with recordings that are owned, controlled and marketed by the major record labels.
The third type is the acquisition of full or partial interests in existing record labels, sound recording catalogs or income rights to a royalty stream associated with an established recording artist or producer.
Reservoir has sustained no management turnover since inception, creating a team that has been working together long-term, is incentivized to continue to scale the business and takes pride in their team, their clients and the company. Advocacy and Education Protecting the livelihoods of creators is at the core of our ethos.
Reservoir has sustained no executive management turnover since inception, creating a team that has been working together long-term, is incentivized to continue to scale the business and increase shareholder value, and takes pride in their team, their clients, and the Company.
Works created and published or registered in the U.S. prior to January 1, 1978 generally enjoy copyright protection for 95 years, subject to compliance with certain statutory provisions including notice and renewal.
All works that were created and published or registered in the U.S. prior to January 1, 1978 generally hold copyright protection for 95 years, subject to compliance with certain statutory provisions including notice and renewal. Additionally, the MMA extended federal copyright protection in the U.S. to sound recordings created prior to February 15, 1972.
We expect our licensing volume to increase and extend to new market entrants in this area, in addition to new digital platforms across social media, non-fungible tokens (“ NFTs ”) and other categories, such as online gaming platforms.
We expect our licensing volume to increase and extend to other new market entrants and digital platforms across social media, music education and other categories, such as online gaming platforms.
See “— Intellectual Property - Copyrights .” U.S. copyright law permits authors or their estates to terminate an assignment or license of copyright (for the U.S. only) after a set period of time.
While the duration of the administration rights under contracts may vary, some of our contracts grant us ownership and/or administration rights for the duration of copyright. See “— Intellectual Property - Copyrights. ” U.S. copyright law permits authors or their estates to terminate an assignment or license of copyright (for the U.S. only) after a set period of time.
The period of copyright protection for works created on or after January 1, 1978 that are not “works made for hire” lasts for the life of the author plus 70 years. Additionally, the MMA extended federal copyright protection in the U.S. to sound recordings created prior to February 15, 1972.
The period of copyright protection for works created on or after January 1, 1978 that are not “works made for hire” lasts for the life of the author plus 70 years.
Reservoir has also recently begun an educational program with The Door, a non-profit that provides youth development services ranging from health services, legal assistance, GED classes, job training, supportive housing, meals, and recreational activities with a focus on the arts.
In addition, Reservoir also conducted an educational program with The Door, a non-profit that provides youth development services ranging from health services, legal assistance, GED classes, job training, supportive housing, meals and recreational activities with a focus on the arts. Our Growth Strategies M&A Asset and company acquisitions have been our path to growth since inception.
Our founder and CEO Golnar Khosrowshahi lectured at Columbia Business School for the Foundations of Entrepreneurship class, while other staff members have lectured or taught at New York University, Syracuse University and Buckinghamshire New University, among others.
Our staff also lends their time at leading global educational institutions to invest in the next generation of business leaders. Our founder and CEO Golnar Khosrowshahi lectured at Columbia Business School for the Foundations of Entrepreneurship class and spoke at Oxford University, while other staff members have lectured or taught at New York University and Syracuse University, among others.
Throughout the world, each synchronization license is generally subject to negotiation with a prospective licensee, and music publishers pay a contractually required percentage of synchronization income to the songwriters or their heirs and to any co-publishers. 9 Table of Contents We acquire copyrights or portions of copyrights and administration rights from songwriters or other third-party holders of rights in musical compositions.
Throughout the world, each synchronization license is generally subject to negotiation with a prospective licensee, and music publishers pay a contractually required percentage of synchronization income to the songwriters or their heirs and to any co-publishers.
Through our distribution network, our music is being sold in physical retail outlets, as well as via online retailers, such as amazon.com, and distributed in digital form to an ever-expanding universe of digital partners including streaming services, such as Amazon, Apple, Deezer, SoundCloud, Spotify, Tencent Music Entertainment Group and YouTube, radio services, such as iHeart Radio, Pandora and SiriusXM, and download services.
Through our distribution network, our music is being sold in physical retail outlets, as well as via online retailers, and distributed in digital form to an expanding universe of digital partners including streaming services.
To a lesser extent, we compete with the way consumers use their disposable income for media and entertainment, however many of these alternatives present an opportunity for monetization for our business ( e.g. , television, motion pictures, and video games - all of which contain and license music). 14 Table of Contents The music publishing industry is highly competitive and dominated by three companies.
However, many of these alternatives present an opportunity for monetization for our business ( e.g. , television, films and video games - all of which contain and license music). The music publishing industry is highly competitive and dominated by three companies.
Most of our physical sales represent purchases by a wholesale or retail distributor. Our sale and return policies are in accordance with wholesale and retail distributor’s requirements, applicable laws and regulations, jurisdictional and customer-specific negotiations and industry practice. A&R and Creative Partnership Our staff has years of experience in identifying and contracting with recording artists who become commercially successful.
Most of our physical sales represent purchases by a wholesale or retail distributor. Our sale and return policies are in accordance with wholesale and retail distributor’s requirements, applicable laws and regulations, jurisdictional and customer-specific negotiations and industry practice. Recording Artists’ Contracts Our recording artists’ contracts define the commercial relationship between our recording artists and our record labels.
Reservoir’s stake in PopArabia has put us in a strong position to be on the frontline to capture the growth in MENA. Since we made this investment, we have already signed artists and acquired catalogs from India and the MENA region, ranging from indie tastemakers like Zeid Hamdan to regional superstars like Mohamed Ramadan.
Since we made this investment, we have signed artists and acquired catalogs from India and the MENA region, ranging from indie tastemakers like Zeid Hamdan to regional superstars like Mohamed Ramadan and Nancy Ajram.
See “ Risk Factors - Risks Related to Intellectual Property and Data Security - Reservoir faces a potential loss of catalog to the extent that its recording artists have a right to recapture rights in their recordings under the U.S. Copyright Act .” Recorded Music Our Recorded Music business consists of three types of sound recording rights ownership.
See “ Risk Factors 8 Table of Contents - Risks Related to Intellectual Property and Data Security - We face a potential loss of catalog to the extent that our songwriters or recording artists have a right to recapture rights in their musical compositions or recordings under the U.S.
Our revenues are generated in digital formats, including streaming and downloads, and the ongoing proliferation of new novel access points like video gaming and social media and physical formats such as CDs, as well as through historical formats, such as vinyl albums.
Digital formats include streaming, downloads and the ongoing proliferation of novel access points like video gaming and social media. Physical formats include CDs, as well as through historical formats, such as vinyl albums. Synchronization royalties stem from the use of the musical composition in combination with visual images.
According to Music & Copyright, the music publishing industry generated $8.1 billion in revenues worldwide in 2022, representing an increase of 17.7% from 2021, and a compound average annual growth rate of 10.5% since 2017. Music publishing royalties include, among other types, mechanical, performance, synchronization and digital.
According to Music & Copyright, the music publishing industry generated $9.0 billion in revenues worldwide in 2023, representing an increase of 10.9% from 2022, and a compound average annual growth rate of 10.4% since 2018. 5 Table of Contents Royalties & Revenue Generation Music publishers generally generate revenues by receiving royalties pursuant to public performance, digital, mechanical, synchronization and other licenses.
The Recorded Music business is home to Chrysalis Records and Philly Groove Records, representing recordings by De La Soul, Ben Harper, The Delfonics, Sinead O’Connor and Generation X, as well as Tommy Boy Records, which we acquired in June 2021 and includes artists such as Queen Latifah, House of Pain, Naughty By Nature and Coolio.
The Recorded Music business is home to Chrysalis Records, Tommy Boy Music, and Philly Groove Records, representing recordings by De La Soul, Queen Latifah, Ben Harper, The Delfonics, Sinéad O’Connor and Coolio.
Our longstanding relationships within the creative community also provide our recording artists with a wide network of collaborators, which we believe is a vital part of helping them to realize their best work. We provide the investment that supports our recording artists by providing them with the requisite time and space to experiment and flourish.
Our longstanding relationships within the creative community also provide our creators with a wide network of collaborators, which we believe is a vital part of helping them to realize their best work. Our creative and A&R teams are further complemented by our marketing services team, which provides high-touch, bespoke services.
Royalties As a copyright owner and administrator of musical compositions, we are entitled to receive royalties for the use of musical compositions. We continually add new musical compositions to our catalog and seek to acquire rights in musical compositions that will generate substantial revenues over the long term.
In return, our Music Publishing business garners a share of the revenues generated from use of those musical compositions via the royalties outlined above. We continually add new musical compositions to our catalog and seek to acquire rights in musical compositions that will generate revenues over the long term.
Composers’ and Lyricists’ Contracts We derive our rights through contracts with composers, lyricists (songwriters) or their heirs and with third-party music publishers. In some instances, those contracts grant either 100% or some lesser percentage of copyright ownership in musical compositions and/or administration rights.
We acquire copyrights or portions of copyrights and administration rights from songwriters or other third-party holders of rights in musical compositions. Composers’ and Songwriters’ Contracts We derive our rights through contracts with composers, songwriters or their heirs and with third-party music publishers.
Technological changes have focused attention on the need for new legislation that will adequately protect the rights of producers. We actively lobby in favor of industry efforts to increase copyright protection and support the efforts of organizations, such as the Recording Industry Association of America, the IFPI, the NMPA, the ICMP and the World Intellectual Property Organization.
We actively lobby in favor of industry efforts to increase copyright protection and support the efforts of organizations, such as the Recording Industry Association of America, the IFPI, the NMPA, the ICMP and the World Intellectual Property Organization. Trademarks We register our major trademarks in countries where we believe the protection of such trademarks is important for our business.
The headline rates escalate from 15.15% of total revenue in 2023 to 15.2% in 2024 and then increases in each of the next three years, peaking at 15.35% in 2027. This settlement will also change other key factors in U.S. mechanical streaming rates, including increases to per-subscriber minimums and Total Content Costs (“ TCC ”). European Union Copyright Directive.
This settlement will also change other key factors in U.S. mechanical streaming rates, including increases to per-subscriber minimums and Total Content Costs (“ TCC ”). European Union Copyright Directive. In 2019, the EU passed legislation to protect music rightsholders and recording artists.
These contractual joint venture arrangements differ from a traditional joint venture arrangement in that we typically do not form a new standalone special purpose vehicle to enter into such arrangement or hold any such assets.
These contractual joint venture arrangements differ from a traditional joint venture arrangement in that we typically do not form a new standalone special purpose vehicle to enter into such arrangement or hold any such assets. 12 Table of Contents Human Capital Resources As of March 31, 2024, we employed approximately 99 persons worldwide, including temporary and part-time employees, as well as employees that were added through acquisitions.
While this decision was vacated in part on appeal in August 2020, the case was remanded back to the CRB for further proceedings. In 2018, the CRB also significantly increased the royalty rates for sound recordings in the U.S. paid by SiriusXM from 2018 through 2022, and the MMA extended the term of this increase through 2027.
In 2018, the CRB also significantly increased the royalty rates for sound recordings in the U.S. paid by SiriusXM from 2018 through 2022, and the MMA extended the term of this increase through 2027. In 2022, songwriters and publishers won a raise in streaming headline royalty rates from 10.5% to 15.1% over the 2018-2022 period.
In 2022, Apple Music increased prices of its student plans in the U.S., the U.K. and Canada, and Amazon Music Unlimited increased the prices of both its individual and family subscriptions plans.
YouTube increased prices of its individual and family plan tiers on both YouTube Premium and YouTube Music in the United States in 2023. In 2022, Apple Music increased prices of its individual and family plans in the United States, and Amazon Music Unlimited increased the prices of both its individual and family subscription plans.
We also use certain trademarks, including those of certain subsidiaries, pursuant to perpetual license agreements. We actively monitor and protect against activities that might infringe, dilute or otherwise harm our trademarks. We also hold the rights to various internet domain names, which are subject to Internet regulatory bodies and trademark and other related laws of each applicable jurisdiction.
We also hold the rights to various internet domain names, which are subject to Internet regulatory bodies and trademark and other related laws of each applicable jurisdiction.
We continue to be focused on acquiring and developing music content in the emerging markets to capture the higher expected growth in such regions and diversify our catalog with both global and regional content. The convergence of consumers’ increased access to music and our participation in content, will allow us to maximize the emerging market opportunity.
We continue to be focused on acquiring and developing music content in the emerging markets to capture the higher expected growth in such regions and diversify our catalog with both global and regional content. Experienced Leadership Team The team is experienced in the music entertainment business, with a firm commitment to executing on its strategy on an ongoing basis.
Following the acquisition of TVT Music Publishing, we acquired Philly Groove Records, which brought in our first recorded music assets and additional publishing hits, including the Delfonics’ “Ready or Not,” which has been covered by artists ranging from The Fugees to Missy Elliot. 3 Table of Contents In 2012, we acquired the 30,000 copyright-strong Reverb Music and its roster of active songwriters.
We then acquired Philly Groove Records, which included our first recorded music assets and additional publishing hits, including the Delfonics' "Ready or Not Here I Come (Can't Hide From Love)," which has been covered by artists ranging from The Fugees to Missy Elliot.
We also acquired the FS Media collection of catalogs in 2014, thereby adding high quality American music with the catalogs of Sheryl Crow, John Denver, Billy Strayhorn, Evanescence and Creed to the repertoire.
In 2012, we acquired Reverb Music and its roster of active songwriters, diversifying holdings in the United Kingdom (“ U.K. ”) and adding film and television music. We also acquired the FS Media collection of catalogs in 2014, adding the catalogs of Sheryl Crow, John Denver, Billy Strayhorn, Evanescence and Creed.
In other instances, those contracts only convey to us rights to administer musical compositions for a period of time without conveying a copyright ownership interest. Our contracts grant us exclusive use rights in the jurisdictions concerned excepting any pre-existing arrangements. Many of our contracts grant us rights on a global basis.
In some instances, those contracts grant up to either 100% or some lesser percentage of copyright ownership in musical compositions and/or administration rights. In other instances, those contracts only convey to us rights to administer musical compositions for a period of time without conveying a copyright ownership interest.
The small size of our team allows us to be nimble and the geographic distribution enables us to look at music through a culturally relevant lens as necessitated by different regions. A Broad Universe of Opportunity Albums, singles, videos and songs are still the primary drivers for our business.
The small size of our team allows us to be nimble, and the geographic distribution enables us to look at music through a culturally relevant lens, as necessitated by different regions. Competition We believe we are competitive in the music publishing and recorded music industries because of our reputation among creators and content owners and our value enhancement capabilities.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThese risks include, but are not limited to, the following: Risks Related to Our Business and Operations ● market competition, including, among others, competition against other music publishing companies and record companies; 16 Table of Contents ● our ability to identify, sign and retain songwriters and recording artists; ● the increased expenses associated with being a public company; ● our international operations, which subject us to the trends and developments of other countries, as well as the fluctuations of the currency exchange rate; ● the impact of the COVID-19 pandemic or any other outbreak of contagious disease or other widespread natural disaster on our business, cash flows, financial condition and results of operations; ● our ability to attract and retain key personnel, as well as the ability of our management team to effectively manage our transition to a public company in accordance with SEC and Nasdaq requirements; ● risks associated with strategic acquisitions or other transactions, including, among others, business acquisitions, combinations, investments and joint ventures; ● the impact of digital music services on our marketing and distribution and the possible changes in the terms of the licensing agreements with such services, including, among others, those governing royalty rates; ● the impact of legislation that may limit or result in the unenforceability of our contracts with certain songwriters or artists; ● the possibility that streaming adoption or revenues may grow less rapidly or level off in the future; ● our ability to implement, maintain, and improve effective internal controls; Risks Related to Intellectual Property and Data Security ● our ability to obtain, maintain, protect and enforce our intellectual property rights; ● our involvement in intellectual property litigation, including, among others, any assertions or allegations of infringement or violation of intellectual property rights by third parties; ● the impact of digital piracy on our business, cash flows, financial condition and results of operations; ● our ability to maintain and protect the information security relating to our customers, employees, vendors and our music; ● the impact of evolving laws and regulations relating to, among others, data privacy, consumer protection and data protection, as well as the rights granted to songwriters and recording artists under the U.S.
Biggest changeThese risks include, but are not limited to, the following: Risks Related to Our Business and Operations ● market competition, including, among others, competition against other music publishing companies and record companies; ● our ability to successfully execute our business strategy; ● our ability to identify, sign and retain songwriters and recording artists; ● our international operations, which subject us to the trends and developments of other countries, as well as the fluctuations of the currency exchange rate; 13 Table of Contents ● the impact of a global health pandemic or any other outbreak of contagious disease or other widespread natural disaster on our business, cash flows, financial condition and results of operations; ● our ability to attract and retain key personnel; ● our ability to implement, maintain, and improve effective internal controls; ● risks associated with strategic acquisitions or other transactions, including, among others, business acquisitions, combinations, investments and joint ventures; ● the impact of legislation that may limit or result in the unenforceability of our contracts with certain songwriters or artists; ● the possibility that streaming adoption or revenues may grow less rapidly or level off in the future; ● the impact of digital music services on our marketing and distribution and the possible changes in the terms of the licensing agreements with such services, including, among others, those governing royalty rates; ● the increased expenses associated with being a public company; ● risks associated with our substantial indebtedness; Risks Related to Intellectual Property and Data Security ● our ability to obtain, maintain, protect and enforce our intellectual property rights; ● our involvement in intellectual property litigation, including, among others, any assertions or allegations of infringement or violation of intellectual property rights by third parties; ● the impact of digital piracy on our business, cash flows, financial condition and results of operations; ● our ability to maintain and protect the information security relating to our customers, employees, vendors and our music; ● the impact of evolving laws and regulations relating to, among others, data privacy, consumer protection and data protection, as well as the rights granted to songwriters and recording artists under the U.S.
Our Recorded Music business and Music Publishing business is to a significant extent dependent on technological developments, including access to and selection and viability of innovative technologies, and is subject to potential pressure from competitors as a result of their technological developments.
Our Music Publishing business and Recorded Music business is to a significant extent dependent on technological developments, including access to and selection and viability of innovative technologies, and is subject to potential pressure from competitors as a result of their technological developments.
As a result, matters impacting our internal controls over financial reporting may cause us to be unable to report our consolidated financial information on a timely basis and thereby subject us to adverse regulatory consequences, including sanctions by the SEC or violations of applicable Nasdaq listing rules, which may result in a breach of the covenants under our $450 million senior secured revolving credit facility (the “ Senior Credit Facility ”) or future financing arrangements.
Matters impacting our internal controls over financial reporting may cause us to be unable to report our consolidated financial information on a timely basis and thereby subject us to adverse regulatory consequences, including sanctions by the SEC or violations of applicable Nasdaq listing rules, which may result in a breach of the covenants under our $450 million senior secured revolving credit facility (the “ Senior Credit Facility ”) or future financing arrangements.
The market price of our Common Stock and Warrants may be highly volatile and may be subject to wide fluctuations in response to a variety of factors, including the following: ● our quarterly or annual earnings or those of other companies in our industry compared to market expectations; ● the size of our public float; ● our inability to maintain the listing of our Common Stock and Warrants on Nasdaq; ● coverage by or changes in financial estimates by securities or industry analysts or failure to meet their expectations; ● changes in accounting standards, policies, guidance, interpretations or principles; ● changes in senior management or key personnel; ● changes in applicable laws or regulations; ● risks relating to the uncertainty of our projected financial information; 30 Table of Contents ● risks related to the organic and inorganic growth of our business and the timing of expected business milestones; and ● changes in general market, economic and political conditions in the U.S. and global economies or financial markets, including those resulting from natural disasters, terrorist attacks, acts of war and responses to such events.
The market price of our Common Stock and Warrants may be highly volatile and may be subject to wide fluctuations in response to a variety of factors, including the following: ● our quarterly or annual earnings or those of other companies in our industry compared to market expectations; ● the size of our public float; ● our inability to maintain the listing of our Common Stock and Warrants on Nasdaq; ● coverage by or changes in financial estimates by securities or industry analysts or failure to meet their expectations; ● changes in accounting standards, policies, guidance, interpretations or principles; ● changes in senior management or key personnel; ● changes in applicable laws or regulations; ● risks relating to the uncertainty of our projected financial information; 26 Table of Contents ● risks related to the organic and inorganic growth of our business and the timing of expected business milestones; and ● changes in general market, economic and political conditions in the U.S. and global economies or financial markets, including those resulting from natural disasters, terrorist attacks, acts of war and responses to such events.
We increasingly rely on third-party data storage providers, including cloud storage solution providers, resulting in less direct control over our data. Such third parties may also be vulnerable to security breaches and compromised security systems, which could adversely affect our business, cash flows, financial condition and results of operations.
We rely on third-party data storage providers, including cloud storage solution providers, resulting in less direct control over our data. Such third parties may also be vulnerable to security breaches and compromised security systems, which could adversely affect our business, cash flows, financial condition and results of operations.
Furthermore, future acquisitions could pose numerous additional risks to our business, cash flows, financial condition and results of operations, including: ● potential disruption of our ongoing business and distraction of management; ● potential loss of songwriters or recording artists from our rosters; 22 Table of Contents ● difficulty integrating the acquired businesses or segregating assets to be disposed of; ● exposure to unknown and/or contingent or other liabilities, including litigation arising in connection with the acquisition, disposition and/or against any businesses we may acquire; ● reputational or other damages to our business as a result of a failure to consummate such a transaction for, among other reasons, failure to gain antitrust approval; ● changing our business profile in ways that could have unintended consequences and challenges in achieving strategic objectives, cost savings and other anticipated benefits; ● difficulty in maintaining controls, procedures and policies during the transition and integration; ● challenges in integrating the new workforce and the potential loss of key employees, particularly those of the acquired business; and ● use of substantial portions of our available cash or the incurrence of debt to consummate the acquisition.
Furthermore, future acquisitions could pose numerous additional risks to our business, cash flows, financial condition and results of operations, including: ● potential disruption of our ongoing business and distraction of management; ● potential loss of songwriters or recording artists from our rosters; ● difficulty integrating the acquired businesses or segregating assets to be disposed of; ● exposure to unknown and/or contingent or other liabilities, including litigation arising in connection with the acquisition, disposition and/or against any businesses we may acquire; ● reputational or other damages to our business as a result of a failure to consummate such a transaction for, among other reasons, failure to gain antitrust approval; ● changing our business profile in ways that could have unintended consequences and challenges in achieving strategic objectives, cost savings and other anticipated benefits; ● difficulty in maintaining controls, procedures and policies during the transition and integration; ● challenges in integrating the new workforce and the potential loss of key employees, particularly those of the acquired business; and ● use of substantial portions of our available cash or the incurrence of debt to consummate the acquisition.
Our substantial indebtedness could: ● require us to dedicate a substantial portion of cash flow from operations to payments in respect of our indebtedness, thereby reducing the availability of cash flow to fund working capital, potential acquisition opportunities and other general corporate purposes; ● increase the amount of interest that we have to pay, because most of our borrowings are at variable rates of interest, which will result in higher interest payments if interest rates increase and, if and when we are required to refinance any of our indebtedness, an increase in interest rates would also result in higher interest costs; ● increase our vulnerability to adverse general economic or industry conditions; ● require refinancing, which we may not be able to do on reasonable terms; ● limit our flexibility in planning for, or reacting to, competition and/or changes in our business or the industry in which we operate; ● limit our ability to borrow additional funds; ● restrict us from making strategic acquisitions or necessary divestitures or otherwise exploiting business opportunities; and ● place us at a competitive disadvantage compared to our competitors that have less debt and/or more financial resources.
Our substantial indebtedness could: ● require us to dedicate a substantial portion of cash flow from operations to payments in respect of our indebtedness, thereby reducing the availability of cash flow to fund working capital, potential acquisition opportunities and other general corporate purposes; ● increase the amount of interest that we have to pay, because most of our borrowings are at variable rates of interest, which will result in higher interest payments if interest rates increase and, if and when we are required to refinance any of our indebtedness, an increase in interest rates would also result in higher interest costs; 21 Table of Contents ● increase our vulnerability to adverse general economic or industry conditions; ● require refinancing, which we may not be able to do on reasonable terms; ● limit our flexibility in planning for, or reacting to, competition and/or changes in our business or the industry in which we operate; ● limit our ability to borrow additional funds; ● restrict us from making strategic acquisitions or necessary divestitures or otherwise exploiting business opportunities; and ● place us at a competitive disadvantage compared to our competitors that have less debt and/or more financial resources.
In addition, any future pandemic or outbreak of contagious disease like the COVID-19 pandemic or other widespread natural disaster could impact our business in a similar way and could have a material adverse effect on our results of operations and financial condition.
Any future pandemic or outbreak of contagious disease like the COVID-19 pandemic or other widespread natural disaster could impact our business in a similar way and could have a material adverse effect on our results of operations and financial condition.
Copyright Act; Risks Related to Our Common Stock and Warrants ● the volatility of our stock prices, which could subject us to securities class action litigation; ● negative reports published by securities or industry analysts, or the lack of research or reports published by such analysts; ● the potential exercise and/or redemption of our Warrants; and ● future sales by our stockholders. 17 Table of Contents Risks Related to Our Business and Operations We may be unable to compete successfully in the highly competitive markets in which we operate and may suffer reduced profits as a result.
Copyright Act; Risks Related to Our Common Stock and Warrants ● the volatility of our stock prices, which could subject us to securities class action litigation; ● the potential exercise and/or redemption of our Warrants; and ● negative reports published by securities or industry analysts, or the lack of research or reports published by such analysts; ● future sales by our stockholders. 14 Table of Contents Risks Related to Our Business and Operations We may be unable to compete successfully in the highly competitive markets in which we operate and may suffer reduced profits as a result.
Our results of operations and cash flows in any reporting period may be materially affected by the timing of releases and advance payments and minimum guarantees, which may result in significant fluctuations from period to period, which may have an adverse impact on the price of our Common Stock or Warrants. 31 Table of Contents Volatility in our stock price could subject us to securities class action litigation.
Our results of operations and cash flows in any reporting period may be materially affected by the timing of releases and advance payments and minimum guarantees, which may result in significant fluctuations from period to period, which may have an adverse impact on the price of our Common Stock or Warrants. 27 Table of Contents Volatility in our stock price could subject us to securities class action litigation.
Copyright Act provides authors (or their heirs) a right to terminate U.S. licenses or assignments of rights in their copyrighted works in certain circumstances.
Copyright Act. The U.S. Copyright Act provides authors (or their heirs) a right to terminate U.S. licenses or assignments of rights in their copyrighted works in certain circumstances.
Globally, many government and consumer agencies have also called 29 Table of Contents for new regulation and changes in industry practices with respect to information collected from consumers, electronic marketing and the use of third-party cookies, web beacons and similar technology for online behavioral advertising.
Globally, many government and consumer agencies have also called 25 Table of Contents for new regulation and changes in industry practices with respect to information collected from consumers, electronic marketing and the use of third-party cookies, web beacons and similar technology for online behavioral advertising.
As a result, our results of operations can be affected not only by general industry trends, but also by trends, developments or other events in individual countries, including: ● limited legal protection and enforcement of intellectual property rights; ● restrictions on the repatriation of capital; ● fluctuations in interest and foreign exchange rates; 18 Table of Contents ● differences and unexpected changes in regulatory environment, including environmental, health and safety, local planning, zoning and labor laws, rules and regulations; ● varying tax regimes which could adversely affect our results of operations or cash flows, including regulations relating to transfer pricing and withholding taxes on remittances and other payments by subsidiaries and joint ventures; ● exposure to different legal standards and enforcement mechanisms and the associated cost of compliance; ● difficulties in attracting and retaining qualified management and employees or rationalizing our workforce; ● tariffs, duties, export controls and other trade barriers; ● global economic and retail environment; ● longer accounts receivable settlement cycles and difficulties in collecting accounts receivable; ● recessionary trends, inflation and instability of the financial markets; ● higher interest rates; and ● political instability.
As a result, our results of operations can be affected not only by general industry trends, but also by trends, developments or other events in individual countries, including: ● limited legal protection and enforcement of intellectual property rights; ● restrictions on the repatriation of capital; ● fluctuations in interest rates and foreign exchange rates; ● differences and unexpected changes in regulatory environment, including environmental, health and safety, local planning, zoning and labor laws, rules and regulations; ● varying tax regimes which could adversely affect our results of operations or cash flows, including regulations relating to transfer pricing and withholding taxes on remittances and other payments by subsidiaries and joint ventures; ● exposure to different legal standards and enforcement mechanisms and the associated cost of compliance; ● difficulties in attracting and retaining qualified management and employees or rationalizing our workforce; ● tariffs, duties, export controls and other trade barriers; ● global economic and retail environment; ● longer accounts receivable settlement cycles and difficulties in collecting accounts receivable; ● recessionary trends, inflation and instability of the financial markets; and ● armed conflicts or political instability.
As of March 31, 2023, our 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 ”).
As of March 31, 2024, our 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 ”).
In addition, the need to establish the corporate infrastructure demanded of a public company may also divert management’s attention from implementing our business strategy, which could prevent us from improving our business, financial condition, cash flows and results of operations.
In addition, the need to maintain the corporate infrastructure demanded of a public company may also divert management’s attention from implementing our business strategy, which could prevent us from improving our business, financial condition, cash flows and results of operations.
Although we believe the hiring of additional accounting resources and implementation of processes and controls to better identify and manage segregation of duties will remediate the weakness with respect to insufficient personnel, there can be no assurance that the material weaknesses will be remediated on a timely basis or at all, or that additional material weaknesses will not be identified in the future.
Although we believe the hiring of additional accounting resources and implementation of processes and controls to better identify and manage segregation of 17 Table of Contents duties will remediate the weakness with respect to insufficient personnel, there can be no assurance that the material weaknesses will be remediated on a timely basis or at all, or that additional material weaknesses will not be identified in the future.
Upon any such termination, we may be required to either negotiate a new or reinstated agreement with less favorable terms or otherwise lose our rights to use the licensed trademarks. Our involvement in intellectual property litigation could adversely affect our business, cash flows, financial condition and results of operations.
Upon any such termination, we may be required to either negotiate a new or reinstated agreement with less favorable terms or otherwise lose our rights to use the licensed trademarks. 23 Table of Contents Our involvement in intellectual property litigation could adversely affect our business, cash flows, financial condition and results of operations.
The presence of these additional Founder Shares trading in the public market may have an adverse effect on the market price of our Common Stock. We are an emerging growth company, and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our Common Stock or Warrants less attractive to investors.
The presence of these additional Founder Shares trading in the public market may have an adverse effect on the market price of our Common Stock. 28 Table of Contents We are an emerging growth company, and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our Common Stock or Warrants less attractive to investors.
The Exchange Act requires that we file annual, quarterly and current reports with respect to our business, financial condition and results of operations. The Sarbanes-Oxley Act requires, among other things, that we establish and maintain effective internal control over financial reporting. As a result, we incur significant legal, accounting and other expenses that we did not previously incur.
The Exchange Act requires that we file annual, quarterly and current reports with respect to our business, financial condition and results of operations. The Sarbanes-Oxley Act requires, among other things, that we establish and maintain effective internal control over financial reporting. As a result, we incur significant legal, accounting and other expenses.
Evolving laws and regulations concerning data privacy may result in increased regulation and different industry standards, which could increase the costs of operations or limit our activities.
Evolving laws and regulations concerning data privacy may result in increased regulation and different industry standards, which could result in monetary penalties, increase the costs of operations or limit our activities.
Our management determined that material weaknesses existed in the internal controls over financial reporting while preparing our consolidated financial statements as of March 31, 2023 and 2022.
Our management determined that material weaknesses existed in the internal controls over financial reporting while preparing our consolidated financial statements as of March 31, 2024 and 2023.
We may also be unsuccessful in implementing appropriate operational, financial and management systems and controls to achieve the benefits expected to result from these transactions. Failure to effectively manage any of these transactions could result in material increases in costs or reductions in expected revenues, or both.
We may also be unsuccessful in implementing appropriate operational, financial and management systems and controls to achieve the benefits expected to result from these transactions. Failure to effectively manage any of these transactions could result in material 19 Table of Contents increases in costs or reductions in expected revenues, or both.
The reporting currency for our consolidated financial statements is the U.S. dollar. We have substantial assets, liabilities, revenues and costs denominated in currencies other than U.S. dollars, principally the British pound sterling and euro. To prepare our consolidated financial statements, we must translate those assets, liabilities, revenues and expenses into U.S. dollars at then-applicable exchange rates.
The reporting currency for our consolidated financial statements is the U.S. dollar. We have substantial assets, liabilities, revenues and costs denominated in currencies other than U.S. dollars, principally the British pound sterling and euro. To prepare our 16 Table of Contents consolidated financial statements, we must translate those assets, liabilities, revenues and expenses into U.S. dollars at then-applicable exchange rates.
If we fail to obtain appropriate relief through the judicial process or the complete enforcement of judicial decisions issued in our favor (or if judicial decisions are not in our favor), if we are unsuccessful in our efforts to lobby governments to enact and enforce stronger legal penalties for copyright infringement or if we fail to develop effective means of protecting and enforcing our intellectual property 28 Table of Contents (whether copyrights or other intellectual property rights such as patents, trademarks and trade secrets) or our music entertainment-related products or services, our results of operations, financial position and prospects may suffer.
If we fail to obtain appropriate relief through the judicial process or the complete enforcement of judicial decisions issued in our favor (or if judicial decisions are not in our favor), if we are unsuccessful in our efforts to lobby governments to enact and enforce stronger legal penalties for copyright infringement or if we fail to develop effective means of protecting and enforcing our intellectual 24 Table of Contents property (whether copyrights or other intellectual property rights such as patents, trademarks and trade secrets) or our music entertainment-related products or services, our business, cash flows, financial condition, results of operations and prospects may suffer.
If our cash flows and capital resources are insufficient to service our 26 Table of Contents indebtedness, we may be forced to reduce or delay acquisitions, sell assets, seek additional capital or restructure or refinance our indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations.
If our cash flows and capital resources are insufficient to service our indebtedness, we may be forced to reduce or delay acquisitions, sell assets, seek additional capital or restructure or refinance our indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations.
The obligations associated with being a public company involve significant expenses and require significant resources and management attention, which may divert from our business operations. As a result of the Business Combination, we became subject to the reporting requirements of the Exchange Act and the Sarbanes-Oxley Act.
The obligations associated with being a public company involve significant expenses and require significant resources and management attention, which may divert from our business operations. As a public company, we are subject to the reporting requirements of the Exchange Act and the Sarbanes-Oxley Act.
Claims or allegations that we have violated laws and regulations relating to privacy and data security could also result in negative publicity and a loss of confidence in us. We face a potential loss of catalog to the extent that our recording artists have a right to recapture rights in their recordings under the U.S. Copyright Act. The U.S.
Claims or allegations that we have violated laws and regulations relating to privacy and data security could also result in negative publicity and a loss of confidence in us. We face a potential loss of catalog to the extent that our songwriters or recording artists have a right to recapture rights in their musical compositions or recordings under the U.S.
Additionally, changes in law may be implemented, or changes in interpretation of such laws may occur, that may affect our 27 Table of Contents ability to obtain, maintain, protect or enforce our intellectual property rights.
Additionally, changes in law may be implemented, or changes in interpretation of such laws may occur, that may affect our ability to obtain, maintain, protect or enforce our intellectual property rights.
Risks Related to Intellectual Property and Data Security Failure to obtain, maintain, protect and enforce our intellectual property rights could substantially harm our business, operating results and financial condition. The success of our business depends on our ability to obtain, maintain, protect and enforce our trademarks, copyrights and other intellectual property rights.
Risks Related to Intellectual Property and Data Security Failure to obtain, maintain, protect and enforce our intellectual property rights could substantially harm our business, cash flows, financial condition and results of operations. The success of our business depends on our ability to obtain, maintain, protect and enforce our trademarks, copyrights and other intellectual property rights.
A substantial portion of our revenue comes from the distribution of music, which is potentially subject to unauthorized consumer copying and widespread digital dissemination without an economic return to us, including as a result of “stream-ripping.” In its Engaging with Music 2022 report, the IFPI surveyed 44,000 people to examine the ways in which music consumers aged 16 to 64 engaged with recorded music across 22 countries.
A substantial portion of our revenue comes from the distribution of music, which is potentially subject to unauthorized consumer copying and widespread digital dissemination without an economic return to us, including as a result of “stream-ripping.” In its Engaging with Music 2023 report, the IFPI surveyed over 43,000 people to examine the ways in which music consumers aged 16 to 64 engaged with recorded music across 26 countries.
Risks Related to Our Common Stock and Warrants The market price of our Common Stock and Warrants is likely to be highly volatile, and you may lose some or all of your investment.
Risks Related to Our Common Stock and Warrants The market price of our Common Stock and Warrants is volatile, and you may lose some or all of your investment.
Of those surveyed, 30% had used illegal or unlicensed methods to listen to or download music and 17% had used an unlicensed mobile app to illegally download music. Organized industrial piracy may also lead to decreased revenues.
Of those surveyed, 29% had used illegal or unlicensed methods to listen to or download music and 20% had used an unlicensed mobile app to illegally download music. Organized industrial piracy may also lead to decreased revenues.
State governments are engaged in similar legislative and regulatory activities (including the California Consumer Privacy Act (“CCPA”) effective on January 1, 2020, the California Privacy Rights and Enforcement Act, effective January 1, 2023 (“CPRA”) and other analogous statutes more recently in other states).
State governments are engaged in similar legislative and regulatory activities (including the California Consumer Privacy Act (“ CCPA ”) effective on January 1, 2020, the California Privacy Rights and Enforcement Act, effective January 1, 2023 (“ CPRA ”) and other analogous statutes more recently in other states).
Failure to obtain, maintain, protect or enforce our intellectual property rights could harm our brand or brand recognition and adversely affect our business, financial condition and results of operation.
Failure to obtain, maintain, protect or enforce our intellectual property rights could harm our brand or brand recognition and adversely affect our business, cash flows, financial condition and results of operations.
Even after we no longer qualify as an emerging growth company, we may continue to qualify as a “smaller reporting company,” which would allow us to take advantage of many of the same exemptions from disclosure requirements including exemption from compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in this Annual Report on Form 10-K and other periodic reports and proxy statements.
Even after we no longer qualify as an emerging growth company, we may continue to qualify as a “smaller reporting company,” which would allow us to take advantage of many of the same exemptions from disclosure requirements including reduced disclosure obligations regarding executive compensation in this Annual Report on Form 10-K and other periodic reports and proxy statements.
Copyright Act unless rates are determined through industry negotiations. It is important as revenues continue to shift from physical to diversified distribution channels that we receive fair value for all the uses of our intellectual property as our business model now depends upon multiple revenue streams from multiple sources.
It is important as revenues continue to shift from physical to diversified distribution channels that we receive fair value for all the uses of our intellectual property as our business model now depends upon multiple revenue streams from multiple sources.
Each of these initiatives also requires success in building relationships with third parties and in anticipating and keeping up with technological developments and consumer preferences and may involve the implementation of new business models or distribution platforms.
Each of these initiatives requires sustained management focus, organization and coordination over significant periods of time. Each of these initiatives also requires success in building relationships with third parties and in anticipating and keeping up with technological developments and consumer preferences and may involve the implementation of new business models or distribution platforms.
We expect to increase revenues and cash flow through a business strategy which requires us, among others, to continue to maximize the value of our music, to significantly reduce costs to maximize flexibility and adjust to new realities of the market, to continue to act to contain digital piracy and to diversify our revenue streams into growing segments of the music entertainment business by continuing to capitalize on digital distribution and emerging technologies. 19 Table of Contents Each of these initiatives requires sustained management focus, organization and coordination over significant periods of time.
We expect to increase revenues and cash flow through a business strategy which requires us, among others, to continue to maximize the value of our music, to significantly reduce costs to maximize flexibility and adjust to new realities of the market, to continue to act to contain digital piracy and to diversify our revenue streams into growing segments of the music entertainment business by continuing to capitalize on digital distribution and emerging technologies.
The Recorded Music business also faces competition from other forms of entertainment and leisure activities, such as cable and satellite television, motion pictures and video games in physical and digital formats.
The Recorded Music business also faces competition from other forms of entertainment and leisure activities, such as cable and satellite television, motion pictures and video games in physical and digital formats. We may not be able to successfully execute our business strategy.
Some songwriter and recording artist groups, particularly in Europe, are urging governments to intervene in the music streaming business in ways that could affect the terms agreed in our contracts with them.
Governments could enact new legislation or could make regulatory determinations that affect the terms of our contracts with songwriters and recording artists. Some songwriter and recording artist groups, particularly in Europe, are urging governments to intervene in the music streaming business in ways that could affect the terms agreed in our contracts with them.
Our prospects and financial results may be adversely affected if we are unable to identify, sign and retain such songwriters and recording artists under terms that are economically attractive to us. Our prospects and financial results are generally affected by the appeal of our music publishing and recorded music catalogs to consumers.
Our prospects and financial results may be adversely affected if we are unable to identify, sign and retain such songwriters and recording artists under terms that are economically attractive to us.
We will remain an emerging growth company until the earlier of (i)(x) December 15, 2025, (y) the date on which we have total annual gross revenue of at least $1.07 billion, or (z) the date on which we are deemed to be a large accelerated filer, which means the market value of shares of our Common Stock and Warrants that are held by non-affiliates exceeds $700 million as of the prior September 30th, and (ii) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. 32 Table of Contents In addition, under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies.
We will remain an emerging growth company until the earlier of (i)(x) March 31, 2026, (y) the date on which we have total annual gross revenue of at least $1.07 billion, or (z) the date on which we are deemed to be a large accelerated filer, which means the market value of shares of our Common Stock and Warrants that are held by non-affiliates exceeds $700 million as of the prior September 30th, and (ii) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.
Our inability to generate sufficient cash flow to satisfy our debt service or other obligations, or to refinance our indebtedness on commercially reasonable terms or at all, could have a material adverse effect on our business, cash flows, financial condition and results of operations.
Our inability to generate sufficient cash flow to satisfy our debt service or other obligations, or to refinance our indebtedness on commercially reasonable terms or at all, could have a material adverse effect on our business, cash flows, financial condition and results of operations. 22 Table of Contents Provisions in the Charter and Delaware law may have the effect of discouraging lawsuits against our directors and officers.
Any failure by our management team to perform as expected may have a material adverse effect on our business, cash flows, financial condition and results of operations. Our management team has limited experience in operating a public company. Our executive officers and management team have limited experience in managing a publicly traded company.
Any failure by our management team to perform as expected may have a material adverse effect on our business, cash flows, financial condition and results of operations.
Our mix of national and international songwriters and recording artists is designed to provide a significant degree of diversification. However, our music does not necessarily enjoy universal appeal and, if it does not continue to appeal in various countries, our results of operations could be adversely impacted.
However, our music does not necessarily enjoy universal appeal and, if it does not continue to appeal in various countries, our results of operations could be adversely impacted.
The impact of digital piracy on legitimate music revenues and subscriptions is hard to quantify, but we believe that illegal file sharing and other forms of unauthorized activity, including stream manipulation, have a substantial negative impact on music revenues.
The impact of digital piracy on legitimate music revenues and subscriptions is hard to quantify, but we believe that illegal file sharing and other forms of unauthorized activity, including stream manipulation, have a substantial negative impact on music revenues. As with many technological innovations, AI and machine learning technologies, also presents additional risks and challenges that could affect our business.
This could materially adversely affect our business, cash flows, financial condition and results of operations and lead to a decline in the market price of our Common Stock and Warrants. 21 Table of Contents A significant portion of our revenues are subject to rate regulation either by government entities or by local third-party collecting societies throughout the world and rates on other income streams may be set by governmental proceedings, which may limit our profitability.
A significant portion of our revenues are subject to rate regulation either by government entities or by local third-party collecting societies throughout the world and rates on other income streams may be set by governmental proceedings, which may limit our profitability.
If these services were to fail to include our music on playlists, change the position of our music on playlists or give us less marketing space, it could adversely affect our business, cash flows, financial condition and results of operations.
If these services were to fail to include our music on playlists, change the position of our music on playlists or give us less marketing space, it could adversely affect our business, cash flows, financial condition and results of operations. 20 Table of Contents Under our license agreements and relevant statutes, we receive royalties from digital music services in exchange for the rights to stream or otherwise offer our music.
Our business, cash flows, financial condition and results of operations have been adversely impacted by the COVID-19 pandemic and any future outbreak of contagious disease or other widespread natural disaster could materially and adversely affect our business. The COVID-19 pandemic has had an adverse effect on our business, cash flows, financial condition and results of operations.
From time to time, we may enter into foreign exchange contracts to hedge the risk of unfavorable foreign currency exchange rate movements. Any future outbreak of contagious disease or other widespread natural disaster could materially and adversely affect our business. The COVID-19 pandemic had an adverse effect on our business, cash flows, financial condition and results of operations.
Failure to be accurately paid our royalties may adversely affect our business, cash flows, financial condition and results of operations. 24 Table of Contents Because our success depends substantially on our ability to maintain a professional reputation, adverse publicity concerning us or our songwriters, artists or key personnel could adversely affect our business.
Because our success depends substantially on our ability to maintain a professional reputation, adverse publicity concerning us or our songwriters, artists or key personnel could adversely affect our business.
We may not be able to fully control the operations and the assets of our joint ventures, and we may not be able to make major decisions or may not be able to take timely actions with respect to our joint ventures unless our joint venture partners agree.
We may not be able to fully control the operations and the assets of our joint ventures, and we may not be able to make major decisions or may not be able to take timely actions with respect to our joint ventures unless our joint venture partners agree. 18 Table of Contents As part of our growth strategy, we intend to acquire, combine with or invest in other businesses and will face risks inherent in such transactions.
Our entire management team and many of our other employees will need to devote substantial time to compliance and may not effectively or efficiently manage our transition into a public company.
Our management team and many of our other employees need to devote substantial time to compliance and other requirements of being a public company.
The enactment of legislation limiting the terms by which an individual can be bound under a “personal services” contract could impair our ability to retain the services of key artists.
Governments, including states in the United States, have enacted or considered enacting legislation limiting the duration that an individual can be bound under a “personal services” contract, which could impair our ability to retain the services of key artists and songwriters.
If the mechanical and performance royalty rates are set too high, it may also adversely affect us by limiting our ability to increase the profitability of our Recorded Music business. In addition, the rates that our Recorded Music business receives in the U.S. for webcasting and satellite radio are set every five years by an administrative process under the U.S.
The mechanical and performance royalty rates set pursuant to such processes may adversely affect us by limiting our ability to increase the profitability of our Music Publishing business. If the mechanical and performance royalty rates are set too high, it may also adversely affect us by limiting our ability to increase the profitability of our Recorded Music business.
Our business operations in some foreign countries subject us to trends, developments or other events which may adversely affect our results of operations. We are a global company with strong local presences, which have become increasingly important as the popularity of music originating from a country’s own language and culture has increased in recent years.
We are a global company with strong local presences, which have become increasingly important as the popularity of music originating from a country’s own language and culture has increased in recent years. Our mix of national and international songwriters and recording artists is designed to provide a significant degree of diversification.
In most territories outside the U.S., mechanical royalties are based on a percentage of wholesale prices for physical product and based on a percentage of consumer prices for digital formats. The mechanical and performance royalty rates set pursuant to such processes may adversely affect us by limiting our ability to increase the profitability of our Music Publishing business.
Outside the U.S., mechanical and performance royalty rates are typically negotiated on an industry-wide basis. In most territories outside the U.S., mechanical royalties are based on a percentage of wholesale prices for physical product and based on a percentage of consumer prices for digital formats.
In addition, we cannot predict or estimate the amount of additional costs we may incur to comply with these requirements. We anticipate that these costs will continue to increase our general and administrative expenses. These rules and regulations result in our incurring legal and financial compliance costs and will make some activities more time-consuming and costly.
In addition, we cannot predict or estimate the amount of additional costs we may incur to comply with these requirements. We anticipate that these costs will continue to increase our administration expenses. Our substantial indebtedness could adversely affect our business, cash flows, financial condition and results of operations.
As a result, we may not be paid appropriately for our music.
As a result, we may not be paid appropriately for our music. Failure to be accurately paid our royalties may adversely affect our business, cash flows, financial condition and results of operations.
We are aware of a number of judicial decisions and legislative proposals that could bring about major reforms in worker classification, including the California legislature’s recent passage of California Assembly Bill 5 (“ AB 5 ”).
Government intervention in the music streaming business could have an adverse effect on our business, cash flows, financial condition and results of operations. We are aware of a number of judicial decisions and legislative proposals that could bring about major reforms in worker classification.
Any consequences resulting from inaccuracies or delays in our reported consolidated financial statements could cause our stock price to decline and could harm our business, cash flows, financial condition, and results of operations.
This could materially adversely affect our business, cash flows, financial condition and results of operations and lead to a decline in the market price of our Common Stock and Warrants.
Our substantial indebtedness could adversely affect our business, cash flows, financial condition and results of operations. We entered into an amendment to the Senior Credit Facility to, among other things, increase the revolving credit commitment to $450 million, which is scheduled to mature in December 2027.
We are borrowers under the Senior Credit Facility, which has a revolving credit commitment to $450 million and is scheduled to mature in December 2027.
Removed
In addition, from time to time, we may enter into foreign exchange contracts to hedge the risk of unfavorable foreign currency exchange rate movements. Our business may be adversely affected by competitive market conditions, and we may not be able to execute our business strategy.
Added
Our prospects and financial results are generally affected by the appeal of our music publishing and recorded music catalogs to consumers. 15 Table of Contents Our business operations in some foreign countries subject us to trends, developments or other events which may adversely affect our results of operations.
Removed
To the extent the COVID-19 pandemic continues to adversely affect our business, cash flows, financial condition or results of operations, it may also have the effect of heightening other risks described in this section.
Added
In addition, the rates that our Recorded Music business receives in the U.S. for webcasting and satellite radio are set every five years by an administrative process under the U.S. Copyright Act unless rates are determined through industry negotiations.
Removed
Our management team may not effectively or efficiently manage our transition to a public company that will be subject to significant regulatory oversight and reporting obligations under federal securities laws.
Added
AI and machine learning technologies are complex and rapidly evolving and the potential for AI-generated music has also introduced new challenges for protecting our intellectual property and other rights of our artists and songwriters.
Removed
Our management team’s limited experience in dealing with the increasingly complex laws pertaining to public companies could be a significant disadvantage in that it is likely that an increasing amount of our management team’s time may be devoted to these activities, which will result in less time being devoted to the management and growth of our business.
Added
Along with an uncertain regulatory environment these challenges include new forms of intellectual property infringement through the unauthorized reproduction of copyrighted works and the name, images, likeness and voices of our artists and songwriters to “train” AI applications and to create unauthorized derivative works.
Removed
We may not have adequate personnel with the appropriate level of knowledge, experience and training in the accounting 20 Table of Contents policies, practices or internal controls over financial reporting required of public companies in the U.S.
Added
We may be unable to maintain the listing of our securities on Nasdaq in the future.
Removed
The development and implementation of the standards and controls necessary for us to achieve the level of accounting standards required of a public company in the U.S. may require costs greater than expected.
Added
In addition, under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies.
Removed
It is possible that we will be required to expand our employee base and hire additional employees to support our operations as a public company, which will increase our operating costs in future periods.
Removed
If we are unable to recruit and retain additional finance personnel or if our finance and accounting team is unable for any reason to respond adequately to the increased demands that will result from being a public company, the quality and timeliness of our financial reporting may suffer, which could result in the identification of material weaknesses in our internal controls.
Removed
We have been a private company and, as such, we have not been subject to the internal control and financial reporting requirements applicable to a publicly traded company. Following the consummation of the Business Combination, our management has significant requirements for enhanced financial reporting and internal controls as a public company.
Removed
In June 2019, the Antitrust Division of the Department of Justice opened a review of its consent decrees with ASCAP and BMI to determine whether the decrees should be maintained in their current form, modified or terminated. Outside the U.S., mechanical and performance royalty rates are typically negotiated on an industry-wide basis.
Removed
As part of our growth strategy, we intend to acquire, combine with or invest in other businesses and will face risks inherent in such transactions.
Removed
California Labor Code Section 2855 (“ Section 2855 ”) limits the duration of time any individual can be bound under a contract for “personal services” to a maximum of seven years. In 1987, subsection (b) was added to Section 2855, which provides a limited exception to Section 2855 for recording contracts, creating a damages remedy for record companies.
Removed
Such legislation could result in certain of our existing contracts with artists being declared unenforceable or may restrict the terms under which we enter into contracts with artists in the future, either of which could adversely affect our results of operations. In March 2021, a California Assembly Member introduced a bill (AB 1385) that seeks to repeal Subsection (b).

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings We are subject to claims and contingencies in the ordinary course of business. We believe that losses resulting from these matters that existed at March 31, 2023, if any, would not have a material adverse effect on our business, cash flows, financial condition and results of operations.
Biggest changeItem 3. Legal Proceedings We are subject to claims and contingencies in the ordinary course of business. We believe that losses resulting from these matters that existed at March 31, 2024, if any, would not have a material adverse effect on our business, cash flows, financial condition and results of operations.
Given the inherent unpredictability of these types of proceedings, however, it is possible that future adverse outcomes could have a material effect on our financial results. Item 4. Mine Safety Disclosures Not applicable. ​ 33 Table of Contents PART II
Given the inherent unpredictability of these types of proceedings, however, it is possible that future adverse outcomes could have a material effect on our financial results. Item 4. Mine Safety Disclosures Not applicable. ​ 30 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 33 PART II 34 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 34 Item 6. [Reserved] 34 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 35 Item 8. Financial Statements and Supplementary Data 52
Biggest changeItem 4. Mine Safety Disclosures 30 PART II 31 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 31 Item 6. [Reserved] 31 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 32 Item 8. Financial Statements and Supplementary Data 48

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOur Warrants to purchase one share of Common Stock, each at an exercise price of $11.50 per share trades on the Nasdaq under the symbol “RSVRW” as of the same date.
Biggest changeOur Warrants to purchase one share of Common Stock, each at an exercise price of $11.50 per share trades on the Nasdaq under the symbol “RSVRW” as of the same date. On May 28, 2024, there were 17 registered holders of record of our Common Stock and Warrants.
Recent Sales of Unregistered Equity Securities There have been no other unregistered sales of equity securities during the year ended March 31, 2023, which have not been previously disclosed on a Current Report on Form 8-K.
Recent Sales of Unregistered Equity Securities There have been no other unregistered sales of equity securities during the year ended March 31, 2024, which have not been previously disclosed on a Current Report on Form 8-K.
Removed
Prior to that date, and before the completion of the Business Combination with ROCC, the units, common stock and warrants of ROCC traded on the Nasdaq under the ticker symbols “ROCCU” “ROCC” and “ROCCW,” respectively. On May 26, 2023, there were 16 registered holders of record of our Common Stock and Warrants.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeInterest Rate Swaps At March 31, 2023, 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 original scheduled principal repayments pursuant to the indenture agreement: ​ ​ ​ ​ ​ ​ ​ ​ ​ Notional ​ ​ ​ ​ Amount at ​ Pay Fixed ​ ​ Effective Date ​ March 31, 2023 ​ Rate ​ Maturity March 10, 2022 ​ $ 8,250 1.533 % September 2024 March 10, 2022 ​ $ 87,800 1.422 % September 2024 December 31, 2021 ​ $ 53,950 0.972 % September 2024 ​ On March 10, 2022, two previous interest rate swaps expired with original notional amounts of $40,228 thousand and $59,325 thousand.
Biggest changeAs of March 31, 2024, with a fixed charge coverage ratio of 3.67x and a consolidated senior debt to library value ratio less than 30%, we were in compliance with both of the financial covenants under the Senior Credit Facility. 43 Table of Contents Interest Rate Swaps At March 31, 2024, RMM had the following interest rate swaps outstanding, under which it pays a fixed rate and receives a floating interest payment from the counterparty based on SOFR with reference to notional amounts adjusted to match the original scheduled principal repayments pursuant to the indenture agreement: ​ ​ ​ ​ ​ ​ ​ ​ ​ Notional ​ ​ ​ ​ Amount at ​ Pay Fixed ​ ​ Effective Date ​ March 31, 2024 ​ Rate ​ Maturity March 10, 2022 ​ $ 7,750 1.533 % September 2024 March 10, 2022 ​ $ 87,561 1.422 % September 2024 December 31, 2021 ​ $ 54,689 ​ 0.972 % September 2024 September 30, 2024 ​ $ 100,000 ​ 2.946 % December 2027 September 30, 2024 ​ $ 50,000 3.961 % December 2027 ​ In February 2024, the Company entered into an interest rate swap in the amount of $50,000,000, which is reflected in the table above.
Reservoir’s management uses these non-GAAP financial measures to evaluate our operations, measure its performance and make strategic decisions.
GAAP. Reservoir’s management uses these non-GAAP financial measures to evaluate our operations, measure its performance and make strategic decisions.
However, our ability to continue to fund these items and to reduce debt may be affected by general economic, financial, competitive, legislative and regulatory factors, as well as other industry-specific factors such as the ability to control music piracy and the continued transition from physical to digital formats in the recorded music and music publishing industries.
However, our ability to continue to fund these items and to reduce debt may be affected by general economic, financial, competitive, legislative and regulatory factors, as well as other industry-specific factors such as the ability to control music piracy and the continued transition from physical to digital formats in the music publishing and recorded music industries.
Accounting for Royalty Costs and Royalty Advances Reservoir incurs royalty costs that are payable to our recording artists and songwriters generated from the sale or license of our music publishing copyrights and recorded music catalogue. Royalties are calculated using negotiated rates in accordance with recording artist and songwriter contracts.
Accounting for Royalty Costs and Royalty Advances Reservoir incurs royalty costs that are payable to our recording artists and songwriters generated from the sale or license of our music publishing copyrights and recorded music catalogue. Royalties are calculated using negotiated rates in accordance with songwriter and recording artist contracts.
In determining whether the advance is recoverable, Reservoir evaluates the current and past popularity of the recording artist or songwriter, the sales history of the recording artist or songwriter, 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.
In determining whether the advance is recoverable, Reservoir 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.
Recorded Music revenues are derived from four main sources: ● Digital ––the rightsholder receives revenues with respect to streaming and download services; ● Physical ––the rightsholder receives revenues with respect to sales of physical products such as vinyl, CDs and DVDs; ● Neighboring Rights –– the rightsholder also receives royalties if 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; and 36 Table of Contents ● Synchronization ––the rightsholder receives 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 The principal costs associated with our Recorded Music business are as follows: ● Artist Royalties and Other Recorded Costs ––the A&R costs associated with (i) paying royalties to recording artists, producers, songwriters, other copyright holders and trade unions, (ii) signing and developing recording artists and (iii) creating master recordings in the studio; and product costs to manufacture, package and distribute products to wholesale and retail distribution outlets; and ● Administration Expenses ––the costs associated with general overhead and other administrative expenses as well as the costs associated with the promotion and marketing of recording artists and music, including costs to produce music videos for promotional purposes and artist tour support.
Recorded Music revenues are derived from four main sources: ● Digital ––the rightsholder receives revenues with respect to streaming and download services; ● Physical ––the rightsholder receives revenues with respect to sales of physical products such as vinyl, CDs and DVDs; ● Neighboring Rights –– the rightsholder also receives royalties if 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; and ● Synchronization ––the rightsholder receives 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 33 Table of Contents The principal costs associated with our Recorded Music business are as follows: ● Artist Royalties and Other Recorded Costs ––the A&R costs associated with (i) paying royalties to recording artists, producers, songwriters, other copyright holders and trade unions, (ii) signing and developing recording artists and (iii) creating master recordings in the studio; and product costs to manufacture, package and distribute products to wholesale and retail distribution outlets; and ● Administration Expenses ––the costs associated with general overhead and other administrative expenses as well as the costs associated with the promotion and marketing of recording artists and music, including costs to produce music videos for promotional purposes and artist tour support.
Music Publishing revenues are derived from five main sources: ● Digital ––the rightsholder receives revenues with respect to musical compositions embodied in recordings distributed in streaming services, download services and other digital music services; ● Performance ––the rightsholder receives revenues if 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 music in staged theatrical productions; ● Synchronization ––the rightsholder receives revenues for the right to use the musical composition in combination with visual images such as in films or television programs, television commercials and video games; and 35 Table of Contents ● Mechanical ––the rightsholder receives revenues with respect to musical compositions embodied in recordings sold in any machine-readable format or configuration such as vinyl, CDs and DVDs; ● Other ––the rightsholder receives revenues for use in sheet music and other uses.
Music Publishing revenues are derived from five main sources: ● Digital ––the rightsholder receives revenues with respect to musical compositions embodied in recordings distributed in streaming services, download services and other digital music services; ● Performance ––the rightsholder receives revenues if 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 music in staged theatrical productions; ● Synchronization ––the rightsholder receives revenues for the right to use the musical composition in combination with visual images such as in films or television programs, television commercials and video games; and 32 Table of Contents ● Mechanical ––the rightsholder receives revenues with respect to musical compositions embodied in recordings sold in any machine-readable format or configuration such as vinyl, CDs and DVDs; ● Other ––the rightsholder receives revenues for use in sheet music and other uses.
(b) Reflects the gain on foreign exchange fluctuations. (c) Reflects the non-cash gain on the mark-to-market of interest rate swaps. (d) Reflects non-cash stock-based compensation expense related to the Reservoir Media, Inc. 2021 Omnibus Incentive Plan.
(b) Reflects the loss (gain) on foreign exchange fluctuations. (c) Reflects the non-cash loss (gain) on the mark-to-market of interest rate swaps. (d) Reflects non-cash stock-based compensation expense related to the Reservoir Media, Inc. 2021 Omnibus Incentive Plan.
In addition, Adjusted EBITDA is not the same as net income or cash flow provided by operating activities as those terms are defined by GAAP and does not necessarily indicate whether cash flows will be sufficient to fund cash needs. 43 Table of Contents Reconciliation of Operating Income to OIBDA We use OIBDA as our primary measure of financial performance.
In addition, Adjusted EBITDA is not the same as net income or cash flow provided by operating activities as those terms are defined by GAAP and does not necessarily indicate whether cash flows will be sufficient to fund cash needs. 39 Table of Contents Reconciliation of Operating Income to OIBDA We use OIBDA as our primary measure of financial performance.
We did not pay any dividends to stockholders during Fiscal 2023. Summary Management believes that funds generated from our operations, borrowings under the Senior Credit Facility and available cash and equivalents will be sufficient to fund our debt service requirements, working capital requirements and capital expenditure requirements for the foreseeable future.
We did not pay any dividends to stockholders during Fiscal 2024. Summary Management believes that funds generated from our operations, borrowings under the Senior Credit Facility and available cash and equivalents will be sufficient to fund our debt service requirements, working capital requirements and capital expenditure requirements for the foreseeable future.
In the United States, we also manage some select Catalog recorded music under our Philly Groove Records and Reservoir Records labels. We also own income participation interests in recordings by The Isley Brothers, The Commodores, Wisin and Yandel, Alabama and Travis Tritt, and an interest in the Loud Records catalog containing recordings by the Wu-Tang Clan.
We also manage some select Catalog recorded music under our Philly Groove Records and Reservoir Records labels. We also own income participation interests in recordings by The Isley Brothers, The Commodores, Wisin and Yandel, Alabama and Travis Tritt, and an interest in the Loud Records catalog containing recordings by the Wu-Tang Clan.
Loss on Early Extinguishment of Debt In connection with the Second Amendment of the RMM Credit Agreement in December 2022, the Company recorded a loss on early extinguishment of debt of $914 thousand, which reflects the write-off of a portion of unamortized debt issuance costs.
Loss on Early Extinguishment of Debt In connection with the Second Amendment of the RMM Credit Agreement in December 2022, the Company recorded a loss on early extinguishment of debt of $914 thousand in Fiscal 2023, which reflects the write-off of a portion of unamortized debt issuance costs.
Unless otherwise noted, all references to Fiscal 2023 represent the fiscal year ended March 31, 2023 and all references to Fiscal 2022 represent the fiscal year ended March 31, 2022. Business Overview We are an independent music company operating in music publishing and recorded music.
Unless otherwise noted, all references to Fiscal 2024 represent the fiscal year ended March 31, 2024 and all references to Fiscal 2023 represent the fiscal year ended March 31, 2023. Business Overview We are an independent music company operating in music publishing and recorded music.
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 music catalogs (publishing and recorded).
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. 46 Table of Contents Intangible Assets Intangible assets consist primarily of music catalogs (publishing and recorded).
The Company will pay a fixed rate of 2.946% and receive a floating interest from the counterparty based on SOFR with reference to notional amounts adjusted to match the original scheduled principal repayments pursuant to the indenture agreement. Dividends Our ability to pay dividends is restricted by covenants in the Senior Credit Facility.
The Company will pay a fixed rate of 3.961% and receive a floating interest from the counterparty based on SOFR with reference to notional amounts adjusted to match the original scheduled principal repayments pursuant to the indenture agreement. Dividends Our ability to pay dividends is restricted by covenants in the Senior Credit Facility.
The increase in income tax expense during Fiscal 2023 was driven primarily by incremental tax expense of $3,659 thousand due to the increase in the value of deferred tax liabilities arising from a change in estimate of the applicable tax rate used to measure our international deferred tax liabilities in the United Kingdom, which increased our effective tax rate by 39.0%.
The decrease in the effective income tax rate during Fiscal 2024 was driven primarily by the nonrecurrence of incremental tax expense of $3,559 thousand during Fiscal 2023 due to the increase in the value of deferred tax liabilities arising from a change in estimate of the applicable tax rate used to measure our international deferred tax liabilities in the United Kingdom, which increased our effective tax rate by 39.0% during Fiscal 2023.
Results of Operations Income Statement Our income statement was composed of the following amounts (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal 2023 ​ ​ Fiscal Fiscal vs.
Results of Operations Income Statement Our income statement was composed of the following amounts (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal 2024 ​ ​ Fiscal Fiscal vs.
Adjusted EBITDA is defined as EBITDA further adjusted to exclude items or expenses such as, among others, (1) any non-cash charges (including any impairment charges and loss on early extinguishment of debt), (2) any net gain or loss on foreign exchange, (3) any net gain or loss resulting from interest rate swaps, (4) equity-based compensation expense and (5) certain unusual or non-recurring items.
Adjusted EBITDA is defined as EBITDA further adjusted to exclude items or expenses such as, among others, (1) any non-cash charges (including any impairment charges, loss on early extinguishment of debt and to write-down an equity investment to its fair value), (2) any net gain or loss on foreign exchange, (3) any net gain or loss resulting from interest rate swaps, (4) equity-based compensation expense and (5) certain unusual or non-recurring items.
Administration Expenses Our administration expenses are composed of the following amounts (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal 2023 ​ Fiscal Fiscal vs.
Administration Expenses Our administration expenses are composed of the following amounts (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal 2024 ​ Fiscal Fiscal vs.
(3) The Company routinely enters into asset acquisition agreements and less often share purchase agreements, which can have deferred minimum funding commitments and other related obligations, which are reflected in the table above. Critical Accounting Policies We believe that the following accounting policies involve a high degree of judgment and complexity.
(3) The Company routinely enters into asset acquisition agreements, which can have deferred minimum funding commitments and other related obligations, as reflected in the table above. Critical Accounting Policies We believe that the following accounting policies involve a high degree of judgment and complexity.
See Note 2 to the Company’s consolidated financial statements for the fiscal years ended March 31, 2023 and 2022, contained in Part II, Item 8 of this Form 10-K for a description of our other significant accounting policies.
See Note 2, “ Summary of Significant Accounting Policies ” to the accompanying consolidated financial statements for the fiscal years ended March 31, 2024 and 2023, contained in Part II, Item 8 of this Form 10-K for a description of our other significant accounting policies.
The amounts involved in any such transactions, individually or in the aggregate, may be material and may be funded 48 Table of Contents from available cash or from additional borrowings or equity raises.
The amounts involved in any such transactions, individually or in the aggregate, may be material and may be funded from available cash or from additional borrowings or equity raises.
In connection with the Second Amendment, RMM recorded a loss on early extinguishment of debt of approximately $914 thousand that reflects the write-off of a portion of unamortized previous debt issuance costs and capitalized approximately $3,500 thousand in new debt issuance costs.
In connection with the Second Amendment, during Fiscal 2023, RMM recorded a loss on early extinguishment of debt of approximately $914 thousand that reflects the write-off of a portion of unamortized previous debt issuance costs and capitalized 42 Table of Contents approximately $3,500 thousand in new debt issuance costs.
New Accounting Pronouncements See Note 2, “ Significant Accounting Policies” to the accompanying consolidated financial statements for the fiscal years ended March 31, 2023 and 2022, contained in Part II, Item 8 of this Form 10-K. ​ 51 Table of Contents
New Accounting Pronouncements See Note 2, “ Summary of Significant Accounting Policies ” to the accompanying consolidated financial statements for the fiscal years ended March 31, 2024 and 2023, contained in Part II, Item 8 of this Form 10-K. ​ 47 Table of Contents
Existing Debt as of March 31, 2023 As of March 31, 2023, our outstanding debt consisted of $317,828 thousand borrowed under the Senior Credit Facility. As of March 31, 2023, remaining borrowing availability under the Senior Credit Facility was $132,172 thousand.
Existing Debt as of March 31, 2024 As of March 31, 2024, our outstanding debt consisted of $335,828 thousand borrowed under the Senior Credit Facility. As of March 31, 2024, remaining borrowing availability under the Senior Credit Facility was $114,172 thousand.
Gain on Foreign Exchange Gain on foreign exchange was $269 thousand for Fiscal 2023 compared to $331 thousand for Fiscal 2022. This change was due to fluctuations in the two foreign currencies we are directly exposed to, namely British pound sterling and euro.
(Loss) Gain on Foreign Exchange Loss on foreign exchange was $102 thousand during Fiscal 2024 compared to a gain on foreign exchange of $269 thousand during Fiscal 2023. This change was due to fluctuations in the two foreign currencies we are directly exposed to, namely British pound sterling and euro.
In April 2023, the Company added an additional interest rate swap in the amount of $100 million. This swap has an effective date of September 30, 2024, which coincides with the expiration of the Company’s existing swaps, and a maturity date of December 16, 2027, which corresponds to the maturity date of the loans advanced under the RMM Credit Agreement.
This swap has an effective date of September 30, 2024, which coincides with the expiration of the Company’s existing swaps, and a maturity date of December 16, 2027, which corresponds to the maturity date of the loans advanced under the RMM Credit Agreement.
Expressed as a percentage of revenue, Recorded Music OIBDA Margin increased to 49% during Fiscal 2023 from 46% in Fiscal 2022.
Expressed as a percentage of revenue, Recorded Music OIBDA Margin decreased to 45% during Fiscal 2024 from 49% in Fiscal 2023.
These factors were partially offset by a $1,705 thousand increase in operating income. 42 Table of Contents Non-GAAP Reconciliations We use certain financial information, such as OIBDA, OIBDA Margin, EBITDA and Adjusted EBITDA, which are non-GAAP financial measures, which means they have not been prepared in accordance with U.S. GAAP.
These factors were partially offset by a $5,290 thousand decrease in income tax expense, $3,518 thousand increase in operating income and the nonrecurrence of a $914 thousand loss on early extinguishment of debt in Fiscal 2023. 38 Table of Contents Non-GAAP Reconciliations We use certain financial information, such as OIBDA, OIBDA Margin, EBITDA and Adjusted EBITDA, which are non-GAAP financial measures, which means they have not been prepared in accordance with U.S.
Music Publishing amortization and depreciation expense increased by $2,752 thousand, or 20%, during Fiscal 2023 compared to Fiscal 2022, primarily due to the acquisition of additional music catalogs. Recorded Music amortization and depreciation increased by $308 thousand, or 6%, during Fiscal 2023 compared to Fiscal 2022, primarily due to the acquisition of Tommy Boy.
Music Publishing amortization and depreciation expense increased by $2,445 thousand, or 15%, during Fiscal 2024 compared to Fiscal 2023, primarily due to the acquisition of additional music catalogs. Recorded Music amortization and depreciation increased by $461 thousand, or 8%, during Fiscal 2024 compared to Fiscal 2023, primarily due to the acquisition of additional music catalogs.
We and our affiliates continue to evaluate opportunities to, from time to time, depending on market conditions and prices, contractual restrictions, our financial liquidity and other factors, seek to pay dividends or prepay outstanding debt or repurchase or retire our outstanding debt.
It could also be affected by the severity and duration of natural or human-made disasters, including pandemics. We and our affiliates continue to evaluate opportunities to, from time to time, depending on market conditions and prices, contractual restrictions, our financial liquidity and other factors, seek to pay dividends or prepay outstanding debt or repurchase or retire our outstanding debt.
The following table reconciles operating income to OIBDA (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ ​ ​ ​ ​ ​ ​ ​ Fiscal 2023 ​ Fiscal Fiscal vs.
The following tables reconcile operating income to OIBDA (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ ​ ​ ​ ​ ​ ​ ​ Fiscal 2024 ​ Fiscal Fiscal vs.
The primary driver of the $18,725 thousand increase in cash provided by operating activities during Fiscal 2023 as compared to Fiscal 2022 was a decrease in net cash used for working capital, primarily related to royalty advances (net of recoupments), accounts receivable and the timing of payments of accounts payable and accrued liabilities.
This change in cash provided by (used for) working capital was primarily related to royalty advances (net of recoupments), accounts receivable and the timing of payments of accounts payable and accrued liabilities. Investing Activities Cash used for investing activities was $50,553 thousand for Fiscal 2024 compared to $72,231 thousand for Fiscal 2023.
Cost of Revenues Our cost of revenues was composed of the following amounts (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal 2023 ​ Fiscal Fiscal vs.
International Recorded Music revenues represented 45% of total Recorded Music revenues for Fiscal 2024 and Fiscal 2023. Cost of Revenues Our cost of revenues was composed of the following amounts (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal 2024 ​ Fiscal Fiscal vs.
Events of Default The Senior Credit Facility includes customary events of default, including nonpayment of principal when due, nonpayment of interest or other amounts, inaccuracy of representations or warranties in any material respect, violation of covenants, certain bankruptcy or insolvency events, certain ERISA events and certain material judgments, in each case, subject to customary thresholds, notice and grace period provisions. 47 Table of Contents Covenant Compliance The Senior Credit Facility contains financial covenants that requires us, on a consolidated basis with our subsidiaries, to maintain, (i) a fixed charge coverage ratio of not less than 1.10:1.00 for each four fiscal quarter period, and (iii) a consolidated senior debt to library value ratio of no greater than 0.45:1.00, subject to certain adjustments.
Covenant Compliance The Senior Credit Facility contains financial covenants that requires us, on a consolidated basis with our subsidiaries, to maintain, (i) a fixed charge coverage ratio of not less than 1.10:1.00 for each four fiscal quarter period, and (iii) a consolidated senior debt to library value ratio of no greater than 0.45:1.00, subject to certain adjustments.
Although we believe that the estimates we use are reasonable, due to the inherent uncertainty involved in making those estimates, actual results reported in future periods could differ from those estimates. 49 Table of Contents Revenue and Cost Recognition Revenues As required by Financial Accounting Standards Board (“ FASB ”) Accounting Standards Codification (“ ASC ”) Topic 606, Revenue from Contracts with Customers (“ ASC 606 ”), Reservoir 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 Reservoir is contractually due in exchange for those services or goods.
Revenue and Cost Recognition Revenues As required by Financial Accounting Standards Board (“ FASB ”) Accounting Standards Codification (“ ASC ”) Topic 606, Revenue from Contracts with Customers (“ ASC 606 ”), Reservoir 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 Reservoir is contractually due in exchange for those services or goods. 45 Table of Contents Music Publishing Music Publishing revenues are earned from the receipt of royalties relating to the licensing of rights in musical compositions and the sale of published sheet music and songbooks.
Fiscal 2022 ​ 2023 2022 $ Change % Change Music Publishing amortization and depreciation ​ $ 16,521 ​ $ 13,769 ​ $ 2,752 20 % Recorded Music amortization and depreciation ​ 5,463 ​ 5,155 ​ 308 6 % Other amortization and depreciation ​ 90 ​ 98 ​ (8) (8) % Total amortization and depreciation ​ $ 22,075 ​ $ 19,022 ​ $ 3,053 16 % ​ Amortization and depreciation expense increased by $3,053 thousand, or 16%, during Fiscal 2023 compared to Fiscal 2022, driven by increases in both the Music Publishing and Recorded Music segments.
Fiscal 2023 ​ 2024 2023 $ Change % Change Music Publishing amortization and depreciation ​ $ 18,966 ​ $ 16,521 ​ $ 2,445 15 % Recorded Music amortization and depreciation ​ 5,925 ​ 5,463 ​ 461 8 % Other amortization and depreciation ​ 95 ​ 90 ​ 4 5 % Total amortization and depreciation ​ $ 24,986 ​ $ 22,075 ​ $ 2,911 13 % ​ Amortization and depreciation expense increased by $2,911 thousand, or 13%, during Fiscal 2024 compared to Fiscal 2023, driven by increases in both the Music Publishing and Recorded Music segments.
Fiscal 2022 ​ 2023 2022 $ Change % Change Writer royalties and other publishing costs ​ $ 38,532 ​ $ 35,475 ​ $ 3,057 9 % Artist royalties and other recorded music costs ​ ​ 9,454 ​ 8,711 ​ 743 9 % Total cost of revenue ​ $ 47,986 ​ $ 44,186 ​ $ 3,800 9 % ​ Cost of revenues increased by $3,800 thousand, or 9%, during Fiscal 2023 compared Fiscal 2022.
Fiscal 2023 ​ 2024 2023 $ Change % Change Writer royalties and other publishing costs ​ $ 41,867 ​ $ 38,532 ​ $ 3,335 9 % Artist royalties and other recorded music costs ​ ​ 13,611 ​ 9,454 ​ 4,157 44 % Total cost of revenue ​ $ 55,478 ​ $ 47,986 ​ $ 7,492 16 % ​ Cost of revenues increased by $7,492 thousand, or 16%, during Fiscal 2024 compared Fiscal 2023.
The effective income tax rate during Fiscal 2023 was 66.9% compared to 24.5% during Fiscal 2022.
Income Tax Expense Income tax expense decreased to $335 thousand during Fiscal 2024 compared to $5,625 thousand during Fiscal 2023. The effective income tax rate during Fiscal 2024 was 28.6% compared to 66.9% during Fiscal 2023.
Other administration expenses increased by $1,737 thousand, or 188%, during Fiscal 2023 compared to Fiscal 2022, primarily due to selling expenses associated with our artist management business. 41 Table of Contents Interest Expense Interest expense increased by $3,885 thousand, or 36% during Fiscal 2023 compared to Fiscal 2022.
Other administration expenses increased by $2,098 thousand, or 79%, during Fiscal 2024 compared to Fiscal 2023, primarily due to selling expenses associated with our artist management business, consisting mostly of manager compensation. 37 Table of Contents Interest Expense Interest expense increased by $6,332 thousand, or 43% during Fiscal 2024 compared to Fiscal 2023.
The preparation of our consolidated financial statements in conformity with GAAP requires us to make estimates and judgments that affect the amounts reported in those financial statements and related notes thereto. The future effects of the COVID-19 pandemic on our results of operations, cash flows and financial position are unclear.
The preparation of our consolidated financial statements in conformity with GAAP requires us to make estimates and judgments that affect the amounts reported in those financial statements and related notes thereto. We believe we have used reasonable estimates and assumptions in preparing the consolidated financial statements.
Liquidity and Capital Resources Capital Resources As of March 31, 2023, we had $311,492 thousand of debt (net of $6,337 thousand of deferred financing costs) and $14,902 thousand of cash and equivalents.
Liquidity and Capital Resources Capital Resources As of March 31, 2024, we had $330,792 thousand of debt (net of $5,037 thousand of deferred financing costs) and $18,132 thousand of cash and equivalents.
Net Income Net income decreased by $10,349 thousand, or 79%, during Fiscal 2023 compared to Fiscal 2022, driven primarily by a $5,793 thousand decrease in gain on fair value of swaps, a $3,885 thousand increase in interest expense, a $1,372 thousand increase in income tax expense and a $914 thousand loss on early extinguishment of debt in Fiscal 2023.
Net Income Net income decreased by $1,942 thousand, or 70%, during Fiscal 2024 compared to Fiscal 2023, driven primarily by a $6,332 thousand increase in interest expense, a $3,890 thousand decrease in gain on fair value of swaps and a $1,072 increase in other expense, net.
Gain on Fair Value of Swaps Gain on fair value of swaps decreased by $5,793 thousand during Fiscal 2023 compared to Fiscal 2022. This change was due to the marking to market of our interest rate swap hedges. Income Tax Expense Income tax expense increased to $5,625 thousand during Fiscal 2023 compared to $4,253 thousand during Fiscal 2022.
(Loss) Gain on Fair Value of Swaps Loss on fair value of swaps was $1,125 thousand during Fiscal 2024 compared to a gain on fair value of swaps of $2,765 thousand during Fiscal 2023. This change was due to the marking to market of our interest rate swap hedges.
Such commitments generally become due only upon delivery or release and Reservoir’s acceptance of future musical compositions by songwriters and publishers or albums from the artists.
Interest does not include amortization of deferred financing costs. (2) The Company routinely enters into long-term commitments with songwriters and recording artists for the future delivery of music. Such commitments generally become due only upon delivery or release and Reservoir’s acceptance of future musical compositions by songwriters and publishers or albums from the artists.
Fiscal 2022 ​ 2023 2022 $ Change % Change Music Publishing administration expenses ​ $ 20,088 ​ $ 17,096 ​ $ 2,992 18 % Recorded Music administration expenses ​ 8,419 ​ 7,259 ​ 1,160 16 % Other administration expenses ​ 2,661 ​ 924 ​ 1,737 188 % Total administration expenses ​ $ 31,168 ​ $ 25,279 ​ $ 5,889 23 % ​ Total administration expenses increased by $5,889 thousand, or 23%, during Fiscal 2023 compared to Fiscal 2022, reflecting increases in both the Music Publishing and Recorded Music segments, as well as an increase in Other administration expenses.
Fiscal 2023 ​ 2024 2023 $ Change % Change Music Publishing administration expenses ​ $ 25,442 ​ $ 20,088 ​ $ 5,354 27 % Recorded Music administration expenses ​ 9,615 ​ 8,419 ​ 1,196 14 % Other administration expenses ​ 4,759 ​ 2,661 ​ 2,098 79 % Total administration expenses ​ $ 39,816 ​ $ 31,168 ​ $ 8,648 28 % ​ Total administration expenses increased by $8,648 thousand, or 28%, during Fiscal 2024 compared to Fiscal 2023, reflecting increases in both the Music Publishing and Recorded Music segments, as well as an increase in Other administration expenses.
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. 50 Table of Contents Acquisitions and Business Combinations In conjunction with each acquisition transaction, Reservoir assesses whether the transaction should follow accounting guidance applicable to an asset acquisition or a business combination.
Acquisitions and Business Combinations In conjunction with each acquisition transaction, Reservoir assesses whether the transaction should follow accounting guidance applicable to an asset acquisition or a business combination.
Where non-GAAP financial measures are used, we have provided the most directly comparable measures calculated and presented in accordance with U.S. GAAP, a reconciliation to GAAP measures and a discussion of the reasons why management believes this information is useful to it and may be useful to investors.
GAAP, a reconciliation to GAAP measures and a discussion of the reasons why management believes this information is useful to it and may be useful to investors.
Music Publishing OIBDA increased by $713 thousand, or 3%, during Fiscal 2023 compared to Fiscal 2022. Expressed as a percentage of revenue, Music Publishing OIBDA Margin decreased to 30% in Fiscal 2023 from 32% in Fiscal 2022.
Expressed as a percentage of revenue, OIBDA Margin decreased to 34% for Fiscal 2024 from 35% for Fiscal 2023, primarily as a result of the Recoupable legal fee write-off. Music Publishing OIBDA increased by $3,671 thousand, or 15%, during Fiscal 2024 compared to Fiscal 2023.
GAAP ” or “ GAAP ”). However, this Management’s Discussion and Analysis of Financial Condition and Results of Operations also contains certain non-GAAP financial measures to assist readers in understanding our performance. Non-GAAP financial measures either exclude or include amounts that are not reflected in the most directly comparable measure calculated and presented in accordance with GAAP.
Use of Non-GAAP Financial Measures We prepare our financial statements in accordance with accounting principles generally accepted in the United States (“ U.S. GAAP ” or “ GAAP ”). However, this Management’s Discussion and Analysis of Financial Condition and Results of Operations also contains certain non-GAAP financial measures to assist readers in understanding our performance.
Cost of revenues as a percentage of revenues decreased to 39% for Fiscal 2023 compared to 41% for Fiscal 2022, reflecting a small margin increase for Recorded Music, as discussed below, and an increase in Other revenue. Writer royalties and other publishing costs for the Music Publishing segment increased by $3,057 thousand, or 9%, during Fiscal 2023 compared Fiscal 2022.
Cost of revenues as a percentage of revenues decreased to 38% for Fiscal 2024 compared to 39% for Fiscal 2023, reflecting a margin increase driven by Music Publishing and an increase in Other revenue, partially offset by a margin decrease for Recorded Music.
Writer royalties and other publishing costs as a percentage of Music Publishing revenues were 46% for Fiscal 2023 and Fiscal 2022. Artist royalties and other recorded music costs for the Recorded Music segment increased by $743 thousand, or 9%, during Fiscal 2023 compared to Fiscal 2022. This increase was due primarily to increased revenue from the acquisition of Tommy Boy.
Artist royalties and other recorded music costs for the Recorded Music segment increased by $4,157 thousand, or 44%, during Fiscal 2024 compared to Fiscal 2023. Artist royalties and other recorded music costs as a percentage of Recorded Music revenues increased to 32% for Fiscal 2024 compared to 27% for Fiscal 2023.
Fiscal 2022 ​ ​ 2023 ​ 2022 ​ $ Change % Change Net income ​ $ 2,780 ​ $ 13,128 ​ $ (10,348) (79) % Income tax expense ​ 5,625 ​ 4,253 ​ 1,372 32 % Interest expense ​ 14,756 ​ 10,871 ​ 3,885 36 % Amortization and depreciation ​ 22,075 ​ 19,022 ​ 3,053 16 % EBITDA ​ 45,236 ​ 47,274 ​ (2,038) (4) % Loss on early extinguishment of debt (a) ​ 914 ​ — ​ 914 NM ​ Gain on foreign exchange (b) ​ (269) ​ (331) ​ 62 (19) % Gain on fair value of swaps (c) ​ (2,765) ​ (8,558) ​ 5,793 (68) % Non-cash share-based compensation (d) ​ 3,203 ​ 2,891 ​ 312 11 % Other income (expense), net ​ 17 ​ (11) ​ 28 NM ​ Adjusted EBITDA ​ $ 46,336 ​ $ 41,265 ​ $ 5,071 12 % ​ NM - Not meaningful (a) Reflects the loss on a portion of unamortized debt issuance costs in connection with the Second Amendment to the RMM Credit Agreement.
Fiscal 2023 ​ ​ 2024 ​ 2023 ​ $ Change % Change Net income ​ $ 837 ​ $ 2,780 ​ $ (1,943) (70) % Income tax expense ​ 335 ​ 5,625 ​ (5,290) (94) % Interest expense ​ 21,088 ​ 14,756 ​ 6,332 43 % Amortization and depreciation ​ 24,986 ​ 22,075 ​ 2,911 13 % EBITDA ​ 47,246 ​ 45,236 ​ 2,010 4 % Loss on early extinguishment of debt (a) ​ — ​ 914 ​ (914) (100) % Loss (gain) on foreign exchange (b) ​ 102 ​ (269) ​ 371 (138) % Loss (gain) on fair value of swaps (c) ​ 1,125 ​ (2,765) ​ 3,890 (141) % Non-cash share-based compensation (d) ​ 3,387 ​ 3,203 ​ 184 6 % Recoupable legal fee write-off (e) ​ ​ 2,695 ​ ​ — ​ ​ 2,695 ​ NM ​ Other income (expense), net (f) ​ 1,089 ​ 17 ​ 1,072 NM ​ Adjusted EBITDA ​ $ 55,644 ​ $ 46,336 ​ $ 9,308 20 % ​ NM - Not meaningful (a) Reflects the loss on a portion of unamortized debt issuance costs in connection with the Second Amendment to the RMM Credit Agreement.
Fiscal 2022 ​ ​ 2023 ​ 2022 ​ $ Change % Change Operating income ​ $ 11,489 ​ $ 8,386 ​ $ 3,103 37 % Amortization and depreciation expenses ​ 5,463 ​ 5,155 ​ 308 6 % OIBDA ​ $ 16,952 ​ $ 13,541 ​ $ 3,411 25 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ OIBDA Margin ​ 49 % 46 % ​ ​ OIBDA Consolidated OIBDA increased by $4,758 thousand, or 12%, during Fiscal 2023 compared to Fiscal 2022, driven by a 25% increase in Recorded Music OIBDA.
Fiscal 2023 ​ ​ 2024 ​ 2023 ​ $ Change % Change Operating income ​ $ 13,216 ​ $ 11,489 ​ $ 1,727 15 % Amortization and depreciation expenses ​ 5,925 ​ 5,463 ​ 461 8 % OIBDA ​ $ 19,141 ​ $ 16,952 ​ $ 2,188 13 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ OIBDA Margin ​ 45 % 49 % ​ ​ OIBDA Consolidated OIBDA increased by $6,429 thousand, or 15%, during Fiscal 2024 compared to Fiscal 2023, driven by a $3,671 thousand increase in Music Publishing OIBDA, a $2,188 thousand increase in Recorded Music OIBDA and a $570 thousand increase in Other OIBDA related to the Company’s artist management business.
Consolidated Adjusted EBITDA increased by $5,071 thousand, or 12%, during Fiscal 2023 compared to Fiscal 2022, driven primarily by an increase in revenue, partially offset by increases in cost of revenue and administration expenses, including increased administration expenses associated with being a public company for a full year.
Consolidated Adjusted EBITDA increased by $9,308 thousand, or 20%, during Fiscal 2024 compared to Fiscal 2023, primarily as a result of revenue growth, partially offset by increases in cost of revenue and administration expenses. Adjusted EBITDA Margin was 38% for Fiscal 2024 and Fiscal 2023.
Other Revenue ​ 3,628 ​ 1,259 ​ ​ 2,369 188 % Total U.S. ​ 72,662 ​ 57,038 ​ ​ 15,624 27 % International Music Publishing ​ 33,903 ​ 37,306 ​ ​ (3,402) (9) % International Recorded Music ​ 15,721 ​ 13,497 ​ ​ 2,225 16 % Total International ​ 49,625 ​ 50,803 ​ ​ (1,178) (2) % Total Revenue $ 122,287 $ 107,840 ​ $ 14,446 13 % ​ Revenues Total revenues increased by $14,446 thousand, or 13%, during Fiscal 2023 compared to Fiscal 2022, driven by an 18% increase in Recorded Music revenue, a 9% increase in Music Publishing revenue and a 188% increase in Other revenue related to the Company’s artist management business, reflecting strong touring and merchandise revenue in a post-COVID environment.
Other Revenue ​ 6,296 ​ 3,628 ​ ​ 2,668 74 % Total U.S. ​ 85,803 ​ 72,662 ​ ​ 13,141 18 % International Music Publishing ​ 39,941 ​ 33,903 ​ ​ 6,037 18 % International Recorded Music ​ 19,112 ​ 15,721 ​ ​ 3,391 22 % Total International ​ 59,053 ​ 49,625 ​ ​ 9,428 19 % Total Revenue $ 144,856 $ 122,287 ​ $ 22,569 18 % ​ Revenues Total revenues increased by $22,569 thousand, or 18%, during Fiscal 2024 compared to Fiscal 2023, driven by a 22% increase in Recorded Music revenue, a 15% increase in Music Publishing revenue and a 74% increase in Other revenue related to the Company’s artist management business.
Fiscal 2022 ​ ​ 2023 2022 $ Change % Change ​ Revenues ​ $ 122,287 ​ $ 107,840 ​ $ 14,446 13 % Costs and expenses: ​ ​ ​ ​ ​ ​ ​ ​ Cost of revenue ​ 47,986 ​ 44,186 ​ 3,800 9 % Amortization and depreciation ​ 22,075 ​ 19,022 ​ 3,053 16 % Administration expenses ​ 31,168 ​ 25,279 ​ 5,889 23 % Total costs and expenses ​ 101,229 ​ 88,487 ​ 12,742 14 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating income ​ 21,058 ​ 19,353 ​ 1,705 9 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense ​ (14,756) ​ (10,871) ​ (3,885) 36 % Loss on early extinguishment of debt ​ (914) ​ — ​ (914) NM ​ Gain on foreign exchange ​ 269 ​ 331 ​ (61) (19) % Gain on fair value of swaps ​ 2,765 ​ 8,558 ​ (5,793) (68) % Other income (expense), net ​ (17) ​ 11 ​ (28) NM ​ Income before income taxes ​ 8,405 ​ 17,382 ​ (8,977) (52) % Income tax expense ​ 5,625 ​ 4,253 ​ 1,372 32 % Net income ​ 2,780 ​ 13,128 ​ (10,349) (79) % Net income attributable to noncontrolling interests ​ ​ (240) ​ ​ (52) ​ ​ (189) NM ​ Net income attributable to Reservoir Media, Inc. ​ $ 2,539 ​ $ 13,077 ​ $ (10,537) ​ (81) % ​ NM - Not meaningful 38 Table of Contents Revenues Our revenues were composed of the following amounts (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal 2023 ​ ​ Fiscal Fiscal vs.
Fiscal 2023 ​ ​ 2024 2023 $ Change % Change ​ Revenues ​ $ 144,856 ​ $ 122,287 ​ $ 22,569 18 % Costs and expenses: ​ ​ ​ ​ ​ ​ ​ ​ Cost of revenue ​ 55,478 ​ 47,986 ​ 7,492 16 % Amortization and depreciation ​ 24,986 ​ 22,075 ​ 2,911 13 % Administration expenses ​ 39,816 ​ 31,168 ​ 8,648 28 % Total costs and expenses ​ 120,280 ​ 101,229 ​ 19,051 19 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating income ​ 24,576 ​ 21,058 ​ 3,518 17 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense ​ (21,088) ​ (14,756) ​ (6,332) 43 % Loss on early extinguishment of debt ​ — ​ (914) ​ 914 NM ​ (Loss) gain on foreign exchange ​ (102) ​ 269 ​ (371) (138) % (Loss) gain on fair value of swaps ​ (1,125) ​ 2,765 ​ (3,890) (141) % Other income (expense), net ​ (1,089) ​ (17) ​ (1,072) NM ​ Income before income taxes ​ 1,172 ​ 8,405 ​ (7,232) (86) % Income tax expense ​ 335 ​ 5,625 ​ (5,290) (94) % Net income ​ 837 ​ 2,780 ​ (1,942) (70) % Net income attributable to noncontrolling interests ​ ​ (192) ​ ​ (240) ​ ​ 48 (20) % Net income attributable to Reservoir Media, Inc. ​ $ 645 ​ $ 2,539 ​ $ (1,894) ​ (75) % ​ NM - Not meaningful 34 Table of Contents Revenues Our revenues were composed of the following amounts (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal 2024 ​ ​ Fiscal Fiscal vs.
Music Publishing revenues represented 69% and 71% of total revenues for Fiscal 2023 and Fiscal 2022, respectively. Recorded Music revenues represented 28% and 27% of total revenues for Fiscal 2023 and Fiscal 2022, respectively. Other revenue represented 3% and 1% of total revenues for Fiscal 2023 and Fiscal 2022, respectively.
Music Publishing revenues represented 66% and 69% of total revenues for Fiscal 2024 and Fiscal 2023, respectively. Recorded Music revenues represented 29% and 28% of total revenues for Fiscal 2024 and Fiscal 2023, respectively. U.S. and international revenues represented 59% and 41% of total revenues for Fiscal 2024 and Fiscal 2023.
Artist royalties and other recorded music costs as a percentage of Recorded Music revenues decreased to 27% for Fiscal 2023 compared to 30% for Fiscal 2022. The increase in margins was due primarily to a decrease in physical revenue, which carries a higher cost of revenue than other revenue types.
Writer royalties and other publishing costs as a percentage of Music Publishing revenues decreased to 44% during Fiscal 2024 compared to 46% during Fiscal 2023, due primarily to the change in the mix of revenue by type to a higher percentage of performance revenues, which carry lower costs than other types of revenue.
Fiscal 2022 ​ ​ 2023 ​ 2022 ​ $ Change % Change Operating income ​ $ 8,692 ​ $ 10,731 ​ $ (2,039) (19) % Amortization and depreciation expenses ​ 16,521 ​ 13,769 ​ 2,752 20 % OIBDA ​ $ 25,213 ​ $ 24,500 ​ $ 713 3 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ OIBDA Margin ​ 30 % 32 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Recorded Music ​ ​ ​ ​ ​ ​ ​ ​ Fiscal 2023 ​ Fiscal Fiscal vs.
Fiscal 2023 ​ ​ 2024 ​ 2023 ​ $ Change % Change Operating income ​ $ 9,918 ​ $ 8,692 ​ $ 1,226 14 % Amortization and depreciation expenses ​ 18,966 ​ 16,521 ​ 2,445 15 % OIBDA ​ $ 28,884 ​ $ 25,213 ​ $ 3,671 15 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ OIBDA Margin ​ 30 % 30 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Recorded Music ​ ​ ​ ​ ​ ​ ​ ​ Fiscal 2024 ​ Fiscal Fiscal vs.
Contractual and Other Obligations Firm Commitments The following table summarizes Reservoir Media Management’s aggregate contractual obligations as of March 31, 2023, and the estimated timing and effect that such obligations are expected to have on liquidity and cash flow in future periods. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less Than ​ ​ ​ ​ After 5 ​ ​ Firm Commitments and Outstanding Debt ​ 1 Year ​ 2-3 Years ​ 4-5 Years ​ Years ​ Total ​ ​ (in thousands) Revolving Credit ​ $ — $ — ​ $ 317,828 ​ $ — ​ $ 317,828 Interest on Revolving Credit (1) ​ 22,248 ​ 44,496 ​ 38,096 ​ — ​ 104,840 Operating leases ​ 1,212 ​ 2,577 ​ 1,814 ​ 4,842 ​ 10,445 Artist, songwriter and co-publisher commitments (2) ​ 2,414 ​ 160 ​ — ​ — ​ 2,574 Asset acquisition and share purchase acquisition commitments (3) ​ 9,883 ​ 400 ​ 358 ​ — ​ 10,641 Total firm commitments and outstanding debt ​ $ 35,757 ​ $ 47,633 ​ $ 358,096 ​ $ 4,842 ​ $ 446,328 ​ The following is a description of our firmly committed contractual obligations as of March 31, 2023: (1) Interest obligations under the Credit Facility are presented in consideration of 5.00% as a substitute for SOFR, plus 2.00%.
In addition, from time to time, depending on market conditions and prices, contractual restrictions, our financial liquidity, and other factors, we may seek to refinance the Senior Credit Facility with existing cash and/or with funds provided from additional borrowings. 44 Table of Contents Contractual and Other Obligations Firm Commitments The following table summarizes Reservoir Media Management’s aggregate contractual obligations as of March 31, 2024, and the estimated timing and effect that such obligations are expected to have on liquidity and cash flow in future periods. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less Than ​ ​ ​ ​ After 5 ​ ​ Firm Commitments and Outstanding Debt ​ 1 Year ​ 2-3 Years ​ 4-5 Years ​ Years ​ Total ​ ​ (in thousands) Revolving Credit ​ $ — $ — ​ $ 335,828 ​ $ — ​ $ 335,828 Interest on Revolving Credit (1) ​ 24,601 ​ 49,202 ​ 17,524 ​ — ​ 91,327 Operating leases ​ 1,452 ​ 2,535 ​ 1,954 ​ 4,010 ​ 9,951 Artist, songwriter and co-publisher commitments (2) ​ 1,777 ​ 841 ​ 47 ​ — ​ 2,666 Asset acquisition and share purchase acquisition commitments (3) ​ 6,345 ​ 400 ​ 158 ​ — ​ 6,903 Total firm commitments and outstanding debt ​ $ 34,176 ​ $ 52,978 ​ $ 355,511 ​ $ 4,010 ​ $ 446,675 ​ The following is a description of our firmly committed contractual obligations as of March 31, 2024: (1) Interest obligations under the Credit Facility are based on principal amounts outstanding and interest rates in effect as of March 31, 2024.
Investing Activities Cash used in investing activities was $72,231 thousand for Fiscal 2023 compared to $196,823 thousand for Fiscal 2022. The decrease in cash used in investing activities was primarily due to decreased acquisitions of music catalogs compared to Fiscal 2022, which included the acquisition of Tommy Boy on June 2, 2021 for approximately $100 million.
The decrease in cash used for investing activities was primarily due to decreased acquisitions of music catalogs compared to Fiscal 2023. Financing Activities Cash provided by financing activities was $17,560 thousand for Fiscal 2024 compared to $38,462 thousand for Fiscal 2023.
Total digital revenues represented 55% and 52% of consolidated revenues for Fiscal 2023 and Fiscal 2022, respectively. 39 Table of Contents Music Publishing revenues increased by $6,763 thousand, or 9%, during Fiscal 2023 compared to Fiscal 2022.
The shift in mix between Music Publishing and Recorded Music was driven primarily by the significant physical sales in the Recorded Music segment during Fiscal 2024. Total digital revenues increased by $11,410 thousand, or 17%, during Fiscal 2024 compared to Fiscal 2023. Total digital revenues represented 54% and 55% of consolidated revenues for Fiscal 2024 and Fiscal 2023, respectively.
Advances vary in both amount and expected life based on the underlying recording artist or songwriter.
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.
This increase in Recorded Music revenue was driven in part by the acquisition of Tommy Boy in June 2021, which contributed $15,165 to Recorded Music revenue during Fiscal 2023 compared to $10,799 thousand during Fiscal 2022. Digital revenue increased by $4,563 thousand primarily due to the acquisition of Tommy Boy and due to the continued growth at music streaming services.
This increase in Recorded Music revenue was driven primarily by increases in digital revenue and physical revenue. Digital revenue increased by $3,955 thousand primarily due to continued growth at music streaming services and price increases at multiple music streaming services.
Fiscal 2022 ​ 2023 2022 $ Change % Change Revenue by Geographical Location ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. Music Publishing $ 49,930 $ 39,765 ​ $ 10,166 26 % U.S. Recorded Music ​ 19,104 ​ 16,014 ​ ​ 3,089 19 % U.S.
Fiscal 2023 ​ 2024 2023 $ Change % Change Revenue by Geographical Location ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. Music Publishing $ 56,253 $ 49,930 ​ $ 6,322 13 % U.S. Recorded Music ​ 23,255 ​ 19,104 ​ ​ 4,151 22 % U.S.
Fiscal 2022 ​ ​ 2023 ​ 2022 ​ $ Change % Change Operating income ​ $ 21,058 ​ $ 19,353 ​ $ 1,705 9 % Amortization and depreciation expenses ​ 22,075 ​ 19,022 ​ 3,053 16 % OIBDA ​ $ 43,133 ​ $ 38,375 ​ $ 4,758 12 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ OIBDA Margin ​ 35 % 36 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Music Publishing ​ ​ ​ ​ ​ ​ ​ ​ Fiscal 2023 ​ Fiscal Fiscal vs.
Fiscal 2023 ​ ​ 2024 ​ 2023 ​ $ Change % Change Operating income ​ $ 24,576 ​ $ 21,058 ​ $ 3,518 17 % Amortization and depreciation expenses ​ 24,986 ​ 22,075 ​ 2,911 13 % OIBDA ​ $ 49,562 ​ $ 43,133 ​ $ 6,429 15 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ OIBDA Margin ​ 34 % 35 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Music Publishing ​ ​ ​ ​ ​ ​ ​ ​ Fiscal 2024 ​ Fiscal Fiscal vs.
Expressed as a percentage of revenue, Recorded Music administration expenses decreased to 24% for Fiscal 2023 from 25% for Fiscal 2022, primarily due to taking advantage of operating leverage on the Recorded Music platform, partially offset by increased administration expenses associated with being a public company for a full year.
Expressed as a percentage of revenue, Recorded Music administration expenses decreased to 23% for Fiscal 2024 from 24% for Fiscal 2023.
This increase in Music Publishing revenue was mainly driven by acquisitions of catalogs and revenue from the existing catalog, which led to increases in digital revenue, synchronization revenue, mechanical revenue and performance revenue. These increases were partially offset by a decrease in other revenue, reflecting the nonrecurrence of revenues recognized in the prior year from Dubai Expo.
Music Publishing revenues increased by $12,359 thousand, or 15%, during Fiscal 2024 compared to Fiscal 2023. This increase in Music Publishing revenue was mainly driven by acquisitions of catalogs and revenue from the existing catalog, which benefitted from higher royalty rates and price increases at multiple music streaming services, and led to increases in digital revenue and performance revenue.
Increases in neighboring rights and synchronization revenue were also primarily due to the acquisition of Tommy Boy. The $364 thousand decrease in physical revenue primarily reflects the more significant release schedule in Fiscal 2022 than Fiscal 2023. On a geographic basis, U.S.
The $2,942 thousand increase in physical revenue was primarily due to De La Soul releases for Tommy Boy and the timing of Chrysalis’ release schedule. On a geographic basis, U.S. Recorded Music revenues represented 55% of total Recorded Music revenues for Fiscal 2024 and Fiscal 2023.
Fiscal 2022 ​ ​ 2023 2022 $ Change % Change Revenue by Type ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Digital $ 44,117 $ 37,419 ​ $ 6,698 18 % Performance ​ 16,702 ​ 15,557 ​ 1,145 7 % Synchronization ​ 15,600 ​ 13,185 ​ 2,415 18 % Mechanical ​ 3,485 ​ 3,189 ​ 296 9 % Other ​ 3,931 ​ 7,721 ​ (3,790) (49) % Total Music Publishing ​ 83,834 ​ 77,071 ​ 6,763 9 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Digital ​ 22,945 ​ 18,381 ​ 4,563 25 % Physical ​ 6,001 ​ 6,366 ​ (364) (6) % Neighboring rights ​ 3,098 ​ 2,131 ​ 968 45 % Synchronization ​ 2,780 ​ 2,633 ​ 147 6 % Total Recorded Music ​ 34,825 ​ 29,511 ​ 5,314 18 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other revenue ​ 3,628 ​ 1,259 ​ 2,369 188 % Total Revenue $ 122,287 $ 107,840 ​ $ 14,446 13 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal 2023 ​ Fiscal Fiscal vs.
Fiscal 2023 ​ ​ 2024 2023 $ Change % Change Revenue by Type ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Digital $ 51,572 $ 44,117 ​ $ 7,455 17 % Performance ​ 22,796 ​ 16,702 ​ 6,094 36 % Synchronization ​ 15,144 ​ 15,600 ​ (456) (3) % Mechanical ​ 3,428 ​ 3,485 ​ (57) (2) % Other ​ 3,254 ​ 3,931 ​ (677) (17) % Total Music Publishing ​ 96,193 ​ 83,834 ​ 12,359 15 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Digital ​ 26,900 ​ 22,945 ​ 3,955 17 % Physical ​ 8,943 ​ 6,001 ​ 2,942 49 % Neighboring rights ​ 3,611 ​ 3,098 ​ 513 17 % Synchronization ​ 2,911 ​ 2,780 ​ 131 5 % Total Recorded Music ​ 42,367 ​ 34,825 ​ 7,542 22 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other revenue ​ 6,296 ​ 3,628 ​ 2,668 74 % Total Revenue $ 144,856 $ 122,287 ​ $ 22,569 18 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal 2024 ​ Fiscal Fiscal vs.
Additionally, margins were affected by a change in the general mix of earnings by type and artists with their specific contractual royalty rates being applied to the revenues. 40 Table of Contents Amortization and Depreciation Our amortization and depreciation expenses are composed of the following amounts (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal 2023 ​ Fiscal Fiscal vs.
The increase in artist royalties and other recorded music costs and decrease in margins were due primarily to the change in the mix of sales by type to a higher percentage of physical sales, which carry higher costs than other types of revenue. 36 Table of Contents Amortization and Depreciation Our amortization and depreciation expenses are composed of the following amounts (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal 2024 ​ Fiscal Fiscal vs.
On a geographic basis, U.S. Music Publishing revenues represented 60% of total Music Publishing revenues for Fiscal 2023 compared to 52% for Fiscal 2022. International Music Publishing revenues represented 40% of total Music Publishing revenues for Fiscal 2023 compared to 48% for Fiscal 2022.
Music Publishing revenues represented 58% of total Music Publishing revenues for Fiscal 2024 compared to 60% for Fiscal 2023. International Music Publishing revenues represented 42% of total Music Publishing revenues for Fiscal 2024 compared to 40% for Fiscal 2023. Recorded Music revenues increased by $7,542 thousand, or 22%, during Fiscal 2024 compared Fiscal 2023.
This increase was driven by increased debt balances due to the use of funds in catalog acquisitions and writer signings and increases in LIBOR/SOFR. In connection with the Second Amendment of the RMM Credit Agreement on December 16, 2022, the indexed interest rate in the RMM Credit Agreement was modified from LIBOR to SOFR effective on the amendment date.
The remaining increase was primarily driven by increased debt balances due to use of funds in acquisitions of music catalogs and writer signings, as well as an increase in SOFR.
The decreases in Music Publishing OIBDA and OIBDA Margin reflect increased administration expenses associated with being a public company for a full year, partially offset by revenue growth. Recorded Music OIBDA increased by $3,411 thousand, or 25% during Fiscal 2023 compared to Fiscal 2022.
Expressed as a percentage of revenue, Music Publishing OIBDA Margin was 30% in Fiscal 2024 and Fiscal 2023, reflecting revenue growth offset by the Recoupable legal fee write-off. Recorded Music OIBDA increased by $2,188 thousand, or 13% during Fiscal 2024 compared to Fiscal 2023.
Music Publishing administration expenses increased by $2,992 thousand, or 18%, during Fiscal 2023 compared to Fiscal 2022.
Writer royalties and other publishing costs for the Music Publishing segment increased by $3,335 thousand, or 9%, during Fiscal 2024 compared to Fiscal 2023.
We used a portion of the proceeds from the Business Combination and PIPE Investment to repay $80,600 thousand of debt (amounts to related parties) associated with the Tommy Boy acquisition and $55,000 thousand of debt under the Senior Credit Facility. 45 Table of Contents Cash Flows The following table summarizes our historical cash flows (in thousands). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal ​ Fiscal ​ ​ ​ ​ 2023 2022 $ Change Cash provided by (used in): ​ ​ ​ ​ ​ ​ Operating activities ​ $ 31,204 ​ $ 12,479 ​ $ 18,725 Investing activities ​ $ (72,231) ​ $ (196,823) ​ $ 124,592 Financing activities ​ $ 38,462 ​ $ 196,534 ​ $ (158,072) ​ Operating Activities Cash provided by operating activities was $31,204 thousand for Fiscal 2023 compared to $12,479 thousand for Fiscal 2022.
Cash Flows The following table summarizes our historical cash flows (in thousands). ​ ​ Fiscal ​ Fiscal ​ ​ ​ ​ 2024 2023 $ Change Cash provided by (used for): ​ ​ ​ ​ ​ ​ Operating activities ​ $ 36,193 ​ $ 31,204 ​ $ 4,989 Investing activities ​ $ (50,553) ​ $ (72,231) ​ $ 21,678 Financing activities ​ $ 17,560 ​ $ 38,462 ​ $ (20,902) ​ 41 Table of Contents Operating Activities Cash provided by operating activities was $36,193 thousand for Fiscal 2024 compared to $31,204 thousand for Fiscal 2023.
Debt Capital Structure Since 2014, RMM has been the borrower under a revolving credit and term loan agreement (the “ Prior Credit Facility ”) with SunTrust Bank (Truist Bank) as the administrative agent and lead arranger.
Debt Capital Structure RMM is a borrower under a revolving credit agreement (the “ RMM Credit Agreement ”) governing RMM’s secured line of credit (the “ Senior Credit Facility ”), as amended and refinanced in connection with the consummation of the Business Combination.
Recorded Music administration expenses increased by $1,160 thousand, or 16%, during Fiscal 2023 compared to Fiscal 2022, primarily due to increases at Chrysalis Records and the acquisition of Tommy Boy.
Expressed as a percentage of revenues, Music Publishing administration expenses increased to 26% for Fiscal 2024 from 24% for Fiscal 2023, primarily as a result of the Recoupable legal fee write-off. Recorded Music administration expenses increased by $1,196 thousand, or 14%, during Fiscal 2024 compared to Fiscal 2023.
Removed
Business Combination On July 28, 2021 (the “ Closing Date ”), we consummated a business combination (the “ Business Combination ”) between Roth CH Acquisition II Co. (“ ROCC ”), Roth CH II Merger Sub Corp., a wholly-owned subsidiary of ROCC, and Reservoir Holdings, Inc. (“ RHI ”).

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