10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to

Commission file number: 001-39795

RESERVOIR MEDIA, INC.

(Exact name of registrant as specified in its charter)

Delaware	83-3584204
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

200 Varick Street

Suite 801A

New York, New York 10014

(Address of principal executive offices, including zip code)

(212) 675-0541

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value per share (the “Common Stock”)	RSVR	The Nasdaq Stock Market LLC
Warrants to purchase one share of Common Stock, each at an exercise price of $11.50 per share	RSVRW	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No ☒

As of February 6, 2023, there were 64,385,198 shares of Common Stock of Reservoir Media, Inc. issued and outstanding.

RESERVOIR MEDIA, INC.

FORM 10-Q FOR THE QUARTER ENDED DECEMBER 31, 2022

TABLE OF CONTENTS

	Page
Part I. Financial Information	1
Item 1. Financial Statements	1
Condensed Consolidated Statements of Income (Loss) for the Three and Nine Months Ended December 31, 2022 and 2021 (unaudited)	1
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended December 31, 2022 and 2021 (unaudited)	2
Condensed Consolidated Balance Sheets as of December 31, 2022 and March 31, 2022 (unaudited)	3
Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Three and Nine Months Ended December 31, 2022 and 2021 (unaudited)	4
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2022 and 2021 (unaudited)	5
Notes to Condensed Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3. Quantitative and Qualitative Disclosures About Market Risk	42
Item 4. Controls and Procedures	43
Part II. Other Information	44
Item 1. Legal Proceedings	44
Item 1A. Risk Factors	44
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 3. Defaults Upon Senior Securities	44
Item 4. Mine Safety Disclosures	44
Item 5. Other Information	44
Item 6. Exhibits	45
Part III. Signatures	46

i

PART I - FINANCIAL INFORMATION

Item 1. Interim Financial Statements.

RESERVOIR MEDIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(In U.S. dollars, except share data)

(Unaudited)

	Three Months Ended December 31,				Nine Months Ended December 31,
	2022		2021		2022		2021
Revenues	$	29,931,413	$	25,812,556	$	87,475,894	$	72,718,351
Costs and expenses:
Cost of revenue		11,750,296		11,436,180		35,665,462		31,220,470
Amortization and depreciation		5,546,301		4,955,036		16,292,145		13,771,887
Administration expenses		8,035,758		6,731,953		23,031,248		17,051,623
Total costs and expenses		25,332,355		23,123,169		74,988,855		62,043,980
Operating income		4,599,058		2,689,387		12,487,039		10,674,371
Interest expense		(4,098,910)		(2,499,576)		(10,579,788)		(8,007,453)
Loss on early extinguishment of debt		(914,040)		—		(914,040)		—
Gain (loss) on foreign exchange		56,973		(48,304)		337,659		126,635
(Loss) gain on fair value of swaps		(179,573)		1,663,743		4,323,207		2,888,961
Interest and other income		43		2		90		357
(Loss) income before income taxes		(536,449)		1,805,252		5,654,167		5,682,871
Income tax expense		3,529,984		395,251		5,217,691		1,407,989
Net (loss) income		(4,066,433)		1,410,001		436,476		4,274,882
Net income attributable to noncontrolling interests		(340,190)		(226,930)		(230,127)		(95,439)
Net (loss) income attributable to Reservoir Media, Inc.	$	(4,406,623)	$	1,183,071	$	206,349	$	4,179,443
(Loss) earnings per common share (Note 15):
Basic	$	(0.07)	$	0.02	$	—	$	0.07
Diluted	$	(0.07)	$	0.02	$	—	$	0.07
Weighted average common shares outstanding (Note 15):
Basic		64,379,536		64,106,963		64,316,532		48,836,288
Diluted		64,379,536		64,716,756		64,765,381		56,405,487

See accompanying notes to the condensed consolidated financial statements.

1

RESERVOIR MEDIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In U.S. dollars)

(Unaudited)

	Three Months Ended December 31,				Nine Months Ended December 31,
	2022		2021		2022		2021
Net (loss) income	$	(4,066,433)	$	1,410,001	$	436,476	$	4,274,882
Other comprehensive income (loss):
Translation adjustments		4,652,084		155,092		(5,283,489)		(1,409,203)
Total comprehensive income (loss)		585,651		1,565,093		(4,847,013)		2,865,679
Comprehensive income attributable to noncontrolling interests		(340,190)		(226,930)		(230,127)		(95,439)
Total comprehensive income (loss) attributable to Reservoir Media, Inc.	$	245,461	$	1,338,163	$	(5,077,140)	$	2,770,240

See accompanying notes to the condensed consolidated financial statements.

2

RESERVOIR MEDIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In U.S. dollars, except share data)

(Unaudited)

	December 31,		March 31,
	2022		2022
Assets
Current assets
Cash and cash equivalents	$	17,022,824	$	17,814,292
Accounts receivable		26,846,808		25,210,936
Current portion of royalty advances		14,362,383		12,375,420
Inventory and prepaid expenses		5,854,743		4,041,471
Total current assets		64,086,758		59,442,119
Intangible assets, net		587,826,761		571,383,855
Equity method and other investments		2,267,036		3,912,978
Royalty advances, net of current portion		48,522,430		44,637,334
Property, plant and equipment, net		512,652		342,080
Operating lease right of use assets, net		7,578,783		—
Fair value of swap assets		8,315,009		3,991,802
Other assets		1,169,546		559,922
Total assets	$	720,278,975	$	684,270,090
Liabilities
Current liabilities
Accounts payable and accrued liabilities	$	5,908,549	$	4,436,943
Royalties payable		32,089,550		21,235,815
Accrued payroll		1,011,721		1,938,281
Deferred revenue		2,743,424		1,103,664
Other current liabilities		3,698,396		12,272,577
Income taxes payable		1,625,607		77,496
Total current liabilities		47,077,247		41,064,776
Secured line of credit		292,158,064		269,856,169
Deferred income taxes		28,056,203		24,884,170
Operating lease liabilities, net of current portion		7,333,559		—
Other liabilities		799,516		1,012,651
Total liabilities		375,424,589		336,817,766
Contingencies and commitments (Note 17)
Shareholders’ Equity
Preferred stock, $0.0001 par value 75,000,000 shares authorized, 0 shares issued and outstanding at December 31, 2022 and March 31, 2022		—		—
Common stock, $0.0001 par value; 750,000,000 shares authorized, 64,385,198 issued and outstanding at December 31, 2022; 64,150,186 issued and outstanding at March 31, 2022		6,438		6,415
Additional paid-in capital		337,622,033		335,372,981
Retained earnings		12,419,868		12,213,519
Accumulated other comprehensive loss		(6,481,547)		(1,198,058)
Total Reservoir Media, Inc. shareholders’ equity		343,566,792		346,394,857
Noncontrolling interest		1,287,594		1,057,467
Total shareholders’ equity		344,854,386		347,452,324
Total liabilities and shareholders’ equity	$	720,278,975	$	684,270,090

See accompanying notes to the condensed consolidated financial statements.

3

RESERVOIR MEDIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(In U.S. dollars, except share data)

(Unaudited)

	For the Three and Nine Months Ended December 31, 2022
	Preferred Stock			Common Stock							Accumulated
							Additional				other
							paid-in		Retained		comprehensive		Noncontrolling		Shareholders’
	Shares	Amount		Shares	Amount		capital		earnings		income (loss)		interests		equity
Balance, March 31, 2022	—	$	—	64,150,186	$	6,415	$	335,372,981	$	12,213,519	$	(1,198,058)	$	1,057,467	$	347,452,324
Share-based compensation	—		—	—		—		359,461		—		—		—		359,461
Vesting of restricted stock units, net of shares withheld for employee taxes	—		—	140,138		14		(475,872)		—		—		—		(475,858)
Reclassification of liability-classified awards to equity-classified awards	—		—	—		—		961,429		—		—		—		961,429
Net income (loss)	—		—	—		—		—		76,039		—		(59,218)		16,821
Other comprehensive loss	—		—	—		—		—		—		(5,011,563)		—		(5,011,563)
Balance, June 30, 2022	—	$	—	64,290,324	$	6,429	$	336,217,999	$	12,289,558	$	(6,209,621)	$	998,249	$	343,302,614
Share-based compensation	—		—	—		—		596,184		—		—		—		596,184
Vesting of restricted stock units	—		—	83,580		8		(8)		—		—		—		—
Reclassification of liability-classified awards to equity-classified awards	—		—	—		—		145,000		—		—		—		145,000
Net income (loss)	—		—	—		—		—		4,536,933		—		(50,845)		4,486,088
Other comprehensive loss	—		—	—		—		—		—		(4,924,010)		—		(4,924,010)
Balance, September 30, 2022	—	$	—	64,373,904	$	6,437	$	336,959,175	$	16,826,491	$	(11,133,631)	$	947,404	$	343,605,876
Share-based compensation	—		—	—		—		605,146		—		—		—		605,146
Stock option exercises	—		—	11,294		1		57,712		—		—		—		57,713
Net (loss) income	—		—	—		—		—		(4,406,623)		—		340,190		(4,066,433)
Other comprehensive income	—		—	—		—		—		—		4,652,084		—		4,652,084
Balance, December 31, 2022	—	$	—	64,385,198	$	6,438	$	337,622,033	$	12,419,868	$	(6,481,547)	$	1,287,594	$	344,854,386

	For the Three and Nine Months Ended December 31, 2021
	Preferred Stock			Common Stock					Retained		Accumulated
							Additional		earnings		other
							paid-in		(Accumulated		comprehensive		Noncontrolling		Shareholders’
	Shares	Amount		Shares	Amount		capital		deficit)		income (loss)		interests		equity
Balance, March 31, 2021	16,175,406	$	81,632,500	28,539,299	$	2,854	$	110,496,300	$	(863,108)	$	2,096,358	$	1,005,697	$	194,370,601
Share-based compensation	—		—	—		—		25,675		—		—		—		25,675
Net loss	—		—	—		—		—		(1,452,998)		—		(53,983)		(1,506,981)
Other comprehensive income	—		—	—		—		—		—		215,142		—		215,142
Balance, June 30, 2021	16,175,406	$	81,632,500	28,539,299	$	2,854	$	110,521,975	$	(2,316,106)	$	2,311,500	$	951,714	$	193,104,437
RHI Preferred Stock Conversion	(16,175,406)		(81,632,500)	16,175,406		1,618		81,630,882		—		—		—		—
Business Combination and PIPE Investment, net of transaction costs	—		—	19,354,548		1,935		141,144,876		—		—		—		141,146,811
Share-based compensation	—		—	—		—		191,478		—		—		—		191,478
Net income (loss)	—		—	—		—		—		4,449,370		—		(77,508)		4,371,862
Other comprehensive loss	—		—	—		—		—		—		(1,779,437)		—		(1,779,437)
Balance, September 30, 2021	—	$	—	64,069,253	$	6,407	$	333,489,211	$	2,133,264	$	532,063	$	874,206	$	337,035,151
Share-based compensation	—		—	—		—		1,208,685		—		—		—		1,208,685
Issuance of shares	—		—	69,386		7		(7)		—		—		—		—
Net income	—		—	—		—		—		1,183,071		—		226,930		1,410,001
Other comprehensive income	—		—	—		—		—		—		155,092		—		155,092
Balance, December 31, 2021	—	$	—	64,138,639	$	6,414	$	334,697,889	$	3,316,335	$	687,155	$	1,101,136	$	339,808,929

See accompanying notes to the condensed consolidated financial statements.

4

RESERVOIR MEDIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In U.S. dollars)

(Unaudited)

	Nine Months Ended December 31,
	2022		2021
Cash flows from operating activities:
Net income	$	436,476	$	4,274,882
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of intangible assets		16,152,354		13,646,413
Depreciation of property, plant and equipment		139,791		125,474
Share-based compensation		2,408,677		1,425,838
Non-cash interest charges		1,738,414		1,067,946
Loss on early extinguishment of debt		914,040		—
Gain on fair value of swaps		(4,323,207)		(2,888,961)
Share of earnings of equity affiliates, net of tax		(34,131)		—
Dividend from equity affiliates		62,304		17,584
Deferred income taxes		3,658,643		489,443
Changes in operating assets and liabilities:
Accounts receivable		(1,635,872)		(2,734,615)
Inventory and prepaid expenses		(1,813,272)		(3,136,275)
Royalty advances		(5,872,059)		(9,880,464)
Other assets and liabilities		(483,961)		345,682
Accounts payable and accrued liabilities		13,307,088		10,107,397
Income taxes payable		1,548,111		(9,053)
Net cash provided by operating activities		26,203,396		12,851,291
Cash flows from investing activities:
Purchases of music catalogs		(45,099,964)		(155,992,828)
Investment in equity method and other investments		—		(2,464,486)
Purchase of property, plant and equipment		(310,363)		(122,762)
Net cash used for investing activities		(45,410,327)		(158,580,076)
Cash flows from financing activities:
Proceeds from Business Combination and PIPE Investment, net of issuance costs		—		141,146,811
Proceeds from secured line of credit		23,182,694		89,554,866
Repayments of secured line of credit		—		(55,000,000)
Repayments of secured loans		—		(18,500,000)
Proceeds from stock option exercises		57,713		—
Taxes paid related to net share settlement of restricted stock units		(475,858)		—
Deferred financing costs paid		(3,533,253)		(4,377,473)
Repayments of related party loans		—		(81,203,792)
Draws on related party loans		—		80,913,620
Net cash provided by financing activities		19,231,296		152,534,032
Foreign exchange impact on cash		(815,833)		(1,382,372)
(Decrease) Increase in cash and cash equivalents		(791,468)		5,422,875
Cash and cash equivalents beginning of period		17,814,292		9,209,920
Cash and cash equivalents end of period	$	17,022,824	$	14,632,795

See accompanying notes to the condensed consolidated financial statements.

5

RESERVOIR MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

(Unaudited)

NOTE 1. DESCRIPTION OF BUSINESS

Reservoir Media, Inc. (formerly known as Roth CH Acquisition II Co. (“ROCC”)), a Delaware corporation (the “Company”), is an independent music company based in New York City, New York and with offices in Los Angeles, Nashville, Toronto, London and Abu Dhabi.

On July 28, 2021 (the “Closing Date”), ROCC consummated the acquisition of Reservoir Holdings, Inc., a Delaware corporation (“RHI”), pursuant to the agreement and plan of merger, dated as of April 14, 2021 (the “Merger Agreement”), by and among ROCC, Roth CH II Merger Sub Corp., a Delaware corporation and a wholly-owned subsidiary of ROCC (“Merger Sub”), and RHI. On the Closing Date, Merger Sub merged with and into RHI, with RHI surviving the merger as a wholly-owned subsidiary of ROCC (the “Business Combination”). In connection with the consummation of the Business Combination, “Roth CH Acquisition II Co.” was renamed “Reservoir Media, Inc.” effective as of the Closing Date. The common stock, $0.0001 par value per share, of the Company (the “Common Stock”) and warrants are traded on The Nasdaq Stock Market LLC (“NASDAQ”) under the ticker symbols “RSVR” and “RSVRW,” respectively.

The Business Combination was accounted for as a reverse recapitalization, with RHI determined to be the accounting acquirer and the Company as the acquired company for accounting purposes. All historical financial information presented in the unaudited condensed consolidated financial statements represents the accounts of RHI and its consolidated subsidiaries as if RHI is the predecessor to the Company. See Note 4, “Business Combination and PIPE Investment” for additional information with respect to the Business Combination and related transactions.

The Company’s activities are organized into two operating segments: Music Publishing and Recorded Music. Operations of the Music Publishing segment involve the acquisition of interests in music catalogs from which royalties are earned as well as signing songwriters to exclusive agreements which give the Company an interest in the future delivery of songs. The publishing catalog includes ownership or control rights to more than 140,000 musical compositions that span across historic pieces, motion picture scores and current award-winning hits. Operations of the Recorded Music segment involve the acquisition of sound recording catalogs as well as the discovery and development of recording artists and the marketing, distribution, sale and licensing of the music catalog. The Recorded Music operations are primarily conducted through the Chrysalis Records platform and Tommy Boy Music, LLC (“Tommy Boy”), acquired in June 2021, and include the ownership of over 36,000 sound recordings. See Note 6, “Acquisitions” for additional information with respect to the Tommy Boy acquisition.

COVID-19 Pandemic

In March 2020, the World Health Organization characterized the coronavirus (“COVID-19”) as a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency. Government-imposed restrictions and general behavioral changes in response to the pandemic adversely affected the Company’s results of operations for the three and nine months ended December  31, 2022 and 2021. This included performance revenue generated from retail, restaurants, bars, gyms and live shows, synchronization revenue, and the release schedule of physical product. Even as government restrictions are lifted and consumer behavior starts to return to pre-pandemic norms, it is unclear for how long and to what extent the Company’s operations will continue to be affected.

Although the Company has not made material changes to any estimates or judgments that impact its consolidated financial statements as a result of COVID-19, the extent to which the COVID-19 pandemic may impact the Company will depend on future developments, which are highly uncertain and cannot be predicted. Future developments surrounding the COVID-19 pandemic could negatively affect the Company’s operating results, including reductions in revenue and cash flow and could impact the Company’s impairment assessments of accounts receivable or intangible assets, which may be material to our consolidated financial statements.

6

RESERVOIR MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

(Unaudited)

NOTE 2. BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and its majority-owned subsidiaries and have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information. All intercompany transactions and balances have been eliminated in these condensed consolidated financial statements. Certain information and note disclosures typically included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s audited financial statements as of and for the fiscal years ended March 31, 2022 and 2021.

The condensed consolidated balance sheet of the Company as of March 31, 2022, included herein, was derived from the audited financial statements as of that date, but does not include all disclosures, including certain notes required by US GAAP on an annual reporting basis.

In the opinion of management, the accompanying condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations and cash flows for the interim periods. The results for the three and nine months ended December 31, 2022 are not necessarily indicative of the results to be expected for any subsequent quarter, the fiscal year ending March 31, 2023 or any other period.

The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosure of contingent assets and liabilities. Significant estimates are used for, but not limited to, determining useful lives of intangible assets, intangible asset recoverability and impairment and accrued revenue. Actual results could differ from these estimates.

NOTE 3. RECENT ACCOUNTING PRONOUNCEMENTS

Accounting Standards Not Yet Adopted

In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-03, “Financial Instruments–Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-03”), which replaces the incurred loss impairment methodology in current US GAAP with a methodology that reflects expected credit losses. Subsequent to ASU 2016-03, the FASB has issued several related ASUs amending the original ASU 2016-03. The updates are intended to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. For public entities, ASU 2016-03 was effective for annual reporting periods beginning after December 15, 2019, including interim periods within that annual reporting period. For the Company, ASU 2016-03 is effective beginning April 1, 2023, including interim periods within that fiscal year, with early adoption permitted for annual periods beginning after December 15, 2018. The Company does not expect the adoption of ASU 2016-03 will have a material effect on the Company’s consolidated financial statements.

7

RESERVOIR MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

(Unaudited)

In April 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848)” (“ASU 2020-04”), which provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting; particularly as it relates to the risk of cessation of LIBOR. The amendments in ASU 2020-04 apply only to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. In December 2022, the FASB issued ASU 2022-06, “Deferral of the Sunset Date of Topic 848” (“ASU 2022-06”) which deferred the sunset date of ASU 2020-04.  Following the issuance of ASU 2022-06, the expedients and exceptions provided by ASU 2020-04 do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2024, except for hedging relationships existing as of December 31, 2024, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. As discussed in Note 9 “Secured Line of Credit” the Senior Credit Facility was amended on December 16, 2022, including the modification of the indexed interest rate from LIBOR to SOFR effective on the amendment date.  Additionally, in January 2023, RMM modified its outstanding interest rate swaps to replace the floating rate interest payments received from the counterparty based on LIBOR to floating rate interest payments received from the counterparty based on SOFR, with corresponding adjustments to the fixed rates paid by RMM.  Consequently, ASU 2020-04 will not have a material effect on the Company’s consolidated financial statements.

Accounting Standards Recently Adopted

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which established a new ASC Topic 842, “Leases” (“ASC 842”) that introduced a right-of-use (“ROU”) model that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases with terms longer than twelve months. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the consolidated statements of income. The Company adopted the new standard beginning April 1, 2022 (the “effective date”), using a modified retrospective transition approach with application as of the effective date as the date of initial application without restating comparative period financial statements.

The new guidance also provides several practical expedients and policies that companies may elect. The Company elected the package of practical expedients under which it did not reassess the classification of its existing leases, reevaluate whether any expired or existing contracts are or contain leases or reassess initial direct costs under the new guidance. Rather, the Company retained the conclusions reached for these items under ASC Topic 840, Leases. Additionally, the Company elected a practical expedient to not separate non-lease components, such as common area maintenance, from lease components. The Company did not elect the practical expedient that permits a reassessment of lease terms for existing leases.

Upon its transition to the new guidance, the Company recognized approximately $2.1 million of operating lease liabilities and corresponding ROU assets. As the rates implicit in the Company’s leases are not readily determinable, the Company used its incremental borrowing rate based on the information available at the effective date to determine the present value of lease payments. This rate is based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments. The adoption of this new guidance will not have a material impact on the amount or timing of the Company’s cash flows or liquidity.

In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes” (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. The Company adopted ASU 2019-12 on April 1, 2022 and this adoption did not have a material impact to the Company’s consolidated financial statements or the Company’s disclosures.

8

RESERVOIR MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

(Unaudited)

NOTE 4. BUSINESS COMBINATION AND PIPE INVESTMENT

As discussed in Note 1, “Description of Business,” on the Closing Date, the Company consummated the Business Combination pursuant to the terms of the Merger Agreement. The Business Combination was accounted for as a reverse recapitalization in accordance with US GAAP, primarily because former shareholders of RHI continue to control the Company upon closing of the Business Combination. Under this method of accounting, the Company is treated as the “acquired” company for accounting purposes and the Business Combination is treated as the equivalent of RHI issuing stock for the net assets of the Company, accompanied by a recapitalization. The net assets of the Company are stated at historical cost, with no goodwill or intangible assets recorded. In addition, all historical financial information presented in the unaudited condensed consolidated financial statements represents the accounts of RHI and its consolidated subsidiaries as if RHI is the predecessor to the Company.

Immediately prior to the consummation of the Business Combination, each share of Series A preferred stock, par value $0.00001 per share, of RHI (the “RHI Preferred Stock”) that was issued and outstanding was automatically converted into a number of shares of common stock, par value $0.00001 per share, of RHI (the “RHI Common Stock”) at the then-effective conversion rate as calculated pursuant RHI’s second amended and restated certificate of incorporation (the “RHI Preferred Stock Conversion”). Additionally, each share of RHI Common Stock (including the RHI Common Stock resulting from the RHI Preferred Stock Conversion) that was issued and outstanding immediately prior to the consummation of the Business Combination was canceled and converted into the right to receive 196.06562028646 (the “Exchange Ratio”) shares of Common Stock. Furthermore, each option to acquire a share of RHI Common Stock that was outstanding immediately prior to the consummation of the Business Combination became fully vested in accordance with the original terms of the awards and was converted into an option to purchase shares of Common Stock (each option, an “RMI Exchanged Option”), with the number of shares of Common Stock subject to the options and exercise price of each RMI Exchanged Option adjusted commensurately with the Exchange Ratio.

In connection with the Business Combination, ROCC entered into subscription agreements with certain accredited investors (the “PIPE Investors”), pursuant to which ROCC issued 15,000,000 shares of common stock, par value $0.0001 per share, of ROCC (the “ROCC Common Stock”) at a purchase price of $10.00 per share for an aggregate purchase price of $150.0 million (the “PIPE Investment”). ROCC consummated the PIPE Investment immediately prior to the consummation of the Business Combination.

Approximately $20,900,000 of transaction fees and expenses were incurred in connection with the closing of the Business Combination and the PIPE Investment, which have been accounted for as a reduction in proceeds.

A portion of the proceeds from the Business Combination and the PIPE Investment was used to pay transaction fees and expenses, and approximately $81,300,000 was used to retire the Tommy Boy Related Party Notes (as defined below) and related accrued interest, repay the secured loan outstanding in an amount of $18,250,000 and make a payment totaling $36,750,000 on the secured line of credit in connection with a refinancing of the Previous Credit Facilities. See Note 9, “Secured Line of Credit” for additional information with respect to the Company’s financing arrangements.

On the Closing Date, the Company also amended and restated its certificate of incorporation to adjust the number of its authorized shares of capital stock to 750,000,000 shares of Common Stock and 75,000,000 shares of preferred stock.

9

RESERVOIR MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

(Unaudited)

NOTE 5. REVENUE RECOGNITION

For the Company’s operating segments, Music Publishing and Recorded Music, the Company accounts for a contract when it has legally enforceable rights and obligations and collectability of consideration is probable. The Company identifies the performance obligations and determines the transaction price associated with the contract. Revenue is recognized when, or as, control of the promised services or goods is transferred to the Company’s customers, and in an amount that reflects the consideration the Company is contractually due in exchange for those services or goods. Certain of the Company’s arrangements include licenses of intellectual property with consideration in the form of sales- and usage-based royalties. Royalty revenue is recognized when the subsequent sale or usage occurs using the best estimates available of the amounts that will be received by the Company. The Company recognized revenue of $3,478,970 and $1,210,132 from performance obligations satisfied in previous periods for the nine months ended December 31, 2022 and 2021, respectively. The increase in revenue recognized from performance obligations satisfied in previous periods is impacted by an updated estimate of Music Publishing royalties based on the Company’s current estimate of effects arising from the July 2022 ruling by the U.S. Copyright Royalty Board (the “CRB”) to affirm increases to the statutory royalty rate structure for mechanical royalties in the U.S. for the period 2018 to 2022.  For much of the period between 2018 and 2022, most digital service providers have accounted and submitted payment to the Company using the applicable 2017 rate while the remand process took place.

Disaggregation of Revenue

The Company’s revenue consisted of the following categories during the three and nine months ended December 31, 2022 and 2021:

	Three Months Ended December 31,				Nine Months Ended December 31,
	2022		2021		2022		2021
Revenue by Type
Digital	$	10,717,506	$	8,331,669	$	32,428,357	$	26,503,799
Performance		4,407,361		3,454,835		12,355,228		10,461,131
Synchronization		3,670,065		2,426,601		11,382,565		8,513,259
Mechanical		589,209		741,649		2,104,190		2,108,872
Other		770,990		2,734,586		2,394,879		4,386,722
Total Music Publishing		20,155,131		17,689,340		60,665,219		51,973,783
Digital		5,246,986		4,499,408		16,122,688		12,002,943
Physical		1,104,207		1,254,258		3,252,740		4,739,055
Neighboring rights		822,106		573,036		2,248,387		1,363,710
Synchronization		388,305		1,181,661		2,402,179		1,588,658
Total Recorded Music		7,561,604		7,508,363		24,025,994		19,694,366
Other revenue		2,214,678		614,853		2,784,681		1,050,202
Total revenue	$	29,931,413	$	25,812,556	$	87,475,894	$	72,718,351

10

RESERVOIR MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

(Unaudited)

	Three Months Ended December 31,				Nine Months Ended December 31,
	2022		2021		2022		2021
Revenue by Geographical Location
United States Music Publishing	$	11,187,010	$	8,676,305	$	35,946,459	$	26,266,349
United States Recorded Music		4,188,061		3,574,200		12,958,074		10,143,238
United States other revenue		2,214,678		614,853		2,784,681		1,050,202
Total United States		17,589,749		12,865,358		51,689,214		37,459,789
International Music Publishing		8,968,121		9,013,035		24,718,760		25,707,434
International Recorded Music		3,373,543		3,934,163		11,067,920		9,551,128
Total International		12,341,664		12,947,198		35,786,680		35,258,562
Total revenue	$	29,931,413	$	25,812,556	$	87,475,894	$	72,718,351

Only the United States represented 10% or more of the Company’s total revenues in the three and nine months ended December 31, 2022 and 2021.

Deferred Revenue

The following table reflects the change in deferred revenue during the nine months ended December 31, 2022 and 2021:

	Nine Months Ended December 31,
	2022		2021
Balance at beginning of period	$	1,103,664	$	1,337,987
Cash received during period		4,977,624		3,891,627
Revenue recognized during period		(3,337,864)		(3,591,297)
Balance at end of period	$	2,743,424	$	1,638,317

NOTE 6. ACQUISITIONS

In the ordinary course of business, the Company regularly acquires publishing and recorded music catalogs, which are typically accounted for as asset acquisitions. During the nine months ended December 31, 2022 and 2021, the Company completed such acquisitions totaling $36,264,222 and $159,003,542, respectively, inclusive of deferred acquisition payments.

The Company did not complete any individually significant acquisition transactions during the nine months ended December 31, 2022. On June 2, 2021, the Company acquired U.S. based record label and music publishing company Tommy Boy for approximately $100 million, which was the most significant acquisition transaction during the nine months ended December 31, 2021. Two members of the Company’s board of directors (the “Board”) were also members of Tommy Boy’s board of managers and had an equity interest in both companies. The acquisition of Tommy Boy was accounted for as an asset acquisition as a result of the significant concentration of the fair value of gross assets acquired in a recorded music catalog intangible asset (weighted average useful life of 30 years).

11

RESERVOIR MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

(Unaudited)

NOTE 7. INTANGIBLE ASSETS

Intangible assets subject to amortization consist of the following as of December 31, 2022 and March 31, 2022:

	December 31, 2022		March 31, 2022
Intangible assets subject to amortization:
Publishing and recorded music catalogs	$	685,503,750	$	654,284,671
Artist management contracts		1,773,787		947,723
Gross intangible assets		687,277,537		655,232,394
Accumulated amortization		(99,450,776)		(83,848,539)
Intangible assets, net	$	587,826,761	$	571,383,855

Straight-line amortization expense totaled $5,496,020 and $4,906,344 in the three months ended December 31, 2022 and 2021, respectively. Straight-line amortization expense totaled $16,152,354 and $13,646,413 in the nine months ended December 31, 2022 and 2021, respectively.

NOTE 8. ROYALTY ADVANCES

The Company made royalty advances totaling $15,706,783 and $17,888,739 during the nine months ended December 31, 2022 and 2021, respectively, recoupable from the writer’s or artist’s share of future royalties otherwise payable, in varying amounts. Advances expected to be recouped within the next twelve months are classified as current assets, with the remainder classified as noncurrent assets.

	Nine Months Ended
	December 31,
	2022		2021
Balance at beginning of period	$	57,012,754	$	41,582,080
Additions		15,706,783		17,888,739
Recoupments		(9,834,724)		(8,008,275)
Balance at end of period	$	62,884,813	$	51,462,544

NOTE 9. SECURED LINE OF CREDIT

Long-term debt consists of the following:

	December 31, 2022		March 31, 2022
Secured line of credit	$	298,828,409	$	275,645,715
Debt issuance costs, net		(6,670,345)		(5,789,546)
	$	292,158,064	$	269,856,169

Credit Facilities

On December 19, 2014, Reservoir Media Management, Inc. (“RMM”), a subsidiary of RHI, entered into a credit agreement (the “RMM Credit Agreement”) governing RMM’s secured term loan (the “Secured Loan”) and secured revolving credit facility (the “Secured Line of Credit” and together with the Secured Loan, the “Credit Facilities”). The Credit Facilities were subsequently amended multiple times and were refinanced in July 2021 in connection with the consummation of the Business Combination, pursuant to that certain Fourth Amended and Restated Credit Agreement, dated as of July 28, 2021 (the “Debt Refinancing”). On December 7, 2021, RMM entered into an amendment (the “First Amendment”) to the RMM Credit Agreement. The First Amendment amended the RMM Credit Agreement to increase RMM’s senior secured revolving credit facility from $248,750,000 to an aggregate amount of $350,000,000 (the “Senior Credit Facility”) and modified certain covenants.

12

RESERVOIR MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

(Unaudited)

On December 16, 2022, RMM entered into an amendment (the "Second Amendment") to the RMM Credit Agreement. The Second Amendment amended the RMM Credit Agreement to (i) increase RMM's senior secured revolving credit facility from $350,000,000 to $450,000,000, (ii) increase the incremental borrowing available under the facility's accordion feature (discussed below) from $50,000,000 to $150,000,000, (iii) extend the maturity date of the loans advanced under the RMM Credit Agreement from October 16, 2024 to December 16, 2027, (iv) modify the interest rate to be equal to either the sum of a base rate plus a margin of 1.00% or the sum of a SOFR rate plus a margin of 2.00%, in each case subject to a 0.25% increase based on a consolidated net senior debt to library value ratio, (v) remove the existing total leverage ratio financial covenant of no greater than 7.50:1.00 (net of up to $20,000,000 of certain cash balances) as of the end of each fiscal quarter, (vi) reduce the minimum required fixed charge coverage ratio financial covenant to 1.10:1.00 and (vii) modify the consolidated senior debt to library value ratio financial covenant to 0.450, subject to certain adjustments. In connection with the Second Amendment, RMM recorded a loss on early extinguishment of debt of approximately $914,000 that reflects the write-off of a portion of unamortized previous debt issuance costs and capitalized approximately $3,500,000 in new debt issuance costs.

RMM is required to pay an unused fee in respect of unused commitments under the Senior Credit Facility, if any, at a rate of 0.25% per annum. Substantially all tangible and intangible assets of the Company, RHI, RMM and the other subsidiary guarantors are pledged as collateral to secure the obligations of RMM under the RMM Credit Agreement.

The RMM Credit Agreement contains customary covenants limiting the ability of the Company, RHI, RMM and certain of its subsidiaries to, among other things, incur debt or liens, merge or consolidate with others, make investments, make cash dividends, redeem or repurchase capital stock, dispose of assets, enter into transactions with affiliates or enter into certain restrictive agreements. In addition, the Company, on a consolidated basis with its subsidiaries, must comply with financial covenants requiring the Company to maintain (i) a fixed charge coverage ratio of not less than 1.10:1.00 for each four fiscal quarter period, and (ii) a consolidated senior debt to library value ratio of 0.45:1.00, subject to certain adjustments. If RMM does not comply with the covenants in the RMM Credit Agreement, the lenders may, subject to customary cure rights, require the immediate payment of all amounts outstanding under the Senior Credit Facility.

The Senior Credit Facility also includes an “accordion feature” that permits RMM to seek additional commitments in an amount not to exceed $150,000,000 that would increase the Senior Credit Facility. As of December 31, 2022, the Senior Credit Facility had a borrowing capacity of $450,000,000, with remaining borrowing availability of $151,171,591.

Interest Rate Swaps

At December 31, 2022, RMM had the following interest rate swaps outstanding, under which it pays a fixed rate and receives a floating interest payment from the counterparty based on LIBOR with reference to notional amounts adjusted to match the original scheduled principal repayments pursuant to the indenture agreement:

	Notional
	Amount at		Pay
	December 31,		Fixed
Effective Date	2022		Rate		Maturity
March 10, 2022	$	8,375,000	1.602	%	September 2024
March 10, 2022	$	87,859,962	1.492	%	September 2024
December 31, 2021	$	53,765,038	1.042	%	September 2024

In January 2023, RMM modified these outstanding interest rate swaps to replace the floating rate interest payments received from the counterparty based on LIBOR to floating rate interest payments received from the counterparty based on SOFR, with corresponding adjustments to the fixed rates paid by RMM.  The change in the reference rate in these interest rate swaps from LIBOR to SOFR did not have a material impact on the Company’s consolidated financial statements.

13

RESERVOIR MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

(Unaudited)

On March 10, 2022, two previous interest rate swaps expired with original notional amounts of $40,228,152 and $59,325,388. Through the expiration date of these previous interest rate swaps, RMM paid fixed rates of 2.812% and 2.972%, respectively, to the counterparty and received a floating interest payment from the counterparty based on LIBOR with reference to notional amounts adjusted to match the original scheduled principal repayments pursuant to the indenture agreement.

NOTE 10. INCOME TAXES

Income tax expense for the three months ended December 31, 2022 and 2021 was $3,529,984 and $395,251, respectively. Income tax expense for the nine months ended December 31, 2022 and 2021 was $5,217,691 and $1,407,989, respectively.

During the three months ended December 31, 2022, the Company changed its estimate of the applicable tax rate used to measure its international deferred tax liabilities in the United Kingdom resulting in a significant increase in its effective tax rate for the three and nine months ended December 31, 2022. The increase of the estimate of the applicable future tax rate from 19% to 25% used to measure the international deferred tax liabilities in the United Kingdom resulted in incremental tax expense of $3,658,643 during the three and nine months ended December 31, 2022 due to the increase in the value of deferred tax liabilities.

NOTE 11. SUPPLEMENTARY CASH FLOW INFORMATION

Interest paid and income taxes paid for the nine months ended December 31, 2022 and 2021 were comprised of the following:

	2022		2021
Interest paid	$	8,006,819	$	6,939,505
Income taxes paid	$	43,446	$	727,431

Non-cash investing and financing activities for the nine months ended December 31, 2022 and 2021 were comprised of the following:

	2022		2021
Acquired intangible assets included in other liabilities	$	2,748,436	$	4,625,990
Reclassification of liability-classified awards to equity-classified awards	$	1,106,429	$	—
Conversion of RHI Preferred Stock to Common Stock	$	—	$	81,632,500

NOTE 12. AMOUNTS DUE TO / (FROM) RELATED PARTIES

The acquisition of Tommy Boy was financed using cash on hand and borrowings from related parties (the “Tommy Boy Related Party Notes”). The Tommy Boy Related Party Notes bore interest of 4.66% per year and were payable upon the earlier of the consummation of the Business Combination and December 21, 2021. The Tommy Boy Related Party Notes and accrued interest were paid on the Closing Date. See Note 4, “Business Combination and PIPE Investment” for additional information with respect to the consummation of the Business Combination.

NOTE 13. SHAREHOLDERS’ EQUITY

The condensed consolidated statements of shareholders’ equity reflect the reverse capitalization as of the Closing Date. Because RHI was deemed to be the accounting acquirer in the reverse capitalization with ROCC, all periods prior to the Closing Date reflect the balances and activity of RHI. The consolidated balances, share activity and per share amounts in these condensed consolidated statements of equity were retroactively adjusted, where applicable, using the Exchange Ratio. See Note 1, “Description of Business” and Note 4, “Business Combination and PIPE Investment” for additional information.

14

RESERVOIR MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

(Unaudited)

RHI Preferred Stock

Prior to the Business Combination, RHI had 16,175,406 shares of RHI Preferred Stock outstanding. The RHI Preferred Stock was convertible into an equal number of shares of RHI Common Stock at the option of the preferred shareholder and was mandatorily converted into an equal number of shares of RHI Common Stock upon a qualified public offering of RHI Common Stock. Immediately prior to the effective time of the Business Combination, each share of RHI Preferred Stock that was issued and outstanding was automatically converted into a number of shares of RHI Common Stock pursuant to the RHI Preferred Stock Conversion. See Note 4, “Business Combination and PIPE Investment” for additional information with respect to the RHI Preferred Stock Conversion.

While outstanding, the RHI Preferred Stock participated in dividends declared on common shares, if any, on the basis as if the shares of RHI Preferred Stock were converted into shares of RHI Common Stock. The Company did not declare any dividends subsequent to the issuance of RHI Preferred Stock through the RHI Preferred Stock Conversion.

As of December 31, 2022 and March 31, 2022, the Company had no shares of RHI Preferred Stock outstanding.

Warrants

As of December 31, 2022, the Company’s outstanding warrants included 5,750,000 publicly-traded warrants (the “Public Warrants”), which were issued during ROCC’s initial public offering on December 15, 2020, and 137,500 warrants sold in a private placement to ROCC’s sponsor (the “Private Warrants” and together with the Public Warrants, the “Warrants”), which were assumed by the Company in connection with the Business Combination and exchanged into warrants for shares of Common Stock. Each whole Warrant entitles the registered holder to purchase one whole share of Common Stock at a price of $11.50 per share, provided that the Company has an effective registration statement under the Securities Act covering the shares of Common Stock issuable upon exercise of the Warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder. Pursuant to the warrant agreement, a registered holder may exercise its Warrants only for a whole number of shares of Common Stock. The Warrants will expire five years after the completion of the Business Combination, or earlier upon redemption or liquidation.

The Company may redeem the outstanding Public Warrants in whole, but not in part, at a price of $0.01 per warrant upon a minimum of 30 days’ prior written notice of redemption, if and only if the last sale price of Common Stock equals or exceeds $18.00 per share for any 20-trading days within a 30-trading day period ending three business days before the Company sends the notice of redemption to the registered holders. If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the warrants to do so on a cashless basis. In no event will the Company be required to net cash settle the warrant exercise. The Private Warrants are identical to the Public Warrants, except that the Private Warrants are exercisable for cash or on a cashless basis, at the holder’s option, and are non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

The Company evaluated the Warrants under ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC Topic 815, Derivatives and Hedging (“ASC 815”), and in accordance with its accounting policies, concluded they meet the criteria to be equity classified as they were determined to be indexed in the Company’s stock and meet the requirements for equity classification.

15

RESERVOIR MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

(Unaudited)

NOTE 14. SHARE-BASED COMPENSATION

2021 Incentive Plan

On July 28, 2021, in connection with the Business Combination, the Company adopted the Reservoir Media, Inc. 2021 Omnibus Incentive Plan (the “2021 Incentive Plan”), which became effective on such date. In addition, pursuant to terms of the Merger Agreement, at the effective time of the Business Combination, options previously granted under the Reservoir Holdings, Inc. 2019 Long Term Incentive Plan (the “Previous RHI 2019 Incentive Plan”) to purchase shares of RHI Common Stock were converted into options to purchase 1,494,848 shares of Common Stock pursuant to the 2021 Incentive Plan. As of the effective date of the 2021 Incentive Plan, no further stock awards have been or will be granted under the Previous RHI 2019 Incentive Plan, and the Previous RHI 2019 Incentive Plan is no longer in effect.

Share-based compensation expense totaled $791,187 ($609,829, net of taxes) and $1,208,685 ($931,705, net of taxes) during the three months ended December 31, 2022 and 2021, respectively. Share-based compensation expense totaled $2,408,677 ($1,856,553, net of taxes) and $1,425,838 ($1,099,096, net of taxes) during the nine months ended December 31, 2022 and 2021, respectively. Share-based compensation expense is classified as “Administration expenses” in the accompanying condensed consolidated statements of income (loss).

During the three and nine months ended December 31, 2022, the Company granted restricted stock units (“RSUs”) to satisfy previous obligations to issue a variable number of equity awards based on a fixed monetary amount. Prior to the issuance of these RSUs, the Company classified these awards as liabilities. Upon issuance of the RSU’s the awards became equity-classified as they no longer met the criteria to be liability-classified and a liability of $1,106,429 was reclassified from accounts payable and accrued liabilities to additional paid-in capital.

16

RESERVOIR MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

(Unaudited)

NOTE 15. EARNINGS PER SHARE

The following table summarizes the basic and diluted earnings per common share calculation for the three and nine months ended December 31, 2022 and 2021:

		Three Months Ended			Nine Months Ended
		December 31,			December 31,
		2022	2021		2022		2021
Basic (loss) earnings per common share
Net (loss) income attributable to Reservoir Media, Inc.	$	(4,406,623)	$	1,183,071	$	206,349	$	4,179,443
Less: income allocated to participating securities		—		—		—		(520,077)
Net (loss) income attributable to common shareholders	$	(4,406,623)	$	1,183,071	$	206,349	$	3,659,366
Weighted average common shares outstanding - basic		64,379,536		64,106,963		64,316,532		48,836,288
(Loss) earnings per common share - basic	$	(0.07)	$	0.02	$	—	$	0.07
Diluted (loss) earnings per common share
Net (loss) income attributable to common shareholders	$	(4,406,623)	$	1,183,071	$	206,349	$	3,659,366
Add: income allocated to participating securities		—		—		—		520,077
Net (loss) income attributable to Reservoir Media, Inc.	$	(4,406,623)	$	1,183,071	$	206,349	$	4,179,443
Weighted average common shares outstanding - basic		64,379,536		64,106,963		64,316,532		48,836,288
Weighted average effect of potentially dilutive securities:
Assumed conversion of RHI Preferred Stock		—		—		—		6,940,720
Effect of dilutive stock options and RSUs		—		609,793		448,849		628,479
Weighted average common shares outstanding - diluted		64,379,536		64,716,756		64,765,381		56,405,487
(Loss) earnings per common share - diluted	$	(0.07)	$	0.02	$	—	$	0.07

Because of their anti-dilutive effect, 7,830,870 shares of Common Stock equivalents, comprised of 1,483,554 stock options, 459,816 RSUs and 5,887,500 warrants, have been excluded from the diluted earnings per share calculation for the three months ended December 31, 2022. Because of their anti-dilutive effect, 5,922,218 shares of Common Stock equivalents, comprised of 34,718 RSUs and 5,887,500 warrants, have been excluded from the diluted earnings per share calculation for the nine months ended December 31, 2022. Because of their anti-dilutive effect, 5,887,500 shares of Common Stock equivalents comprised of warrants have been excluded from the diluted earnings per share calculation for the three and nine months ended December 31, 2021.

Prior to the RHI Preferred Stock Conversion in connection with the Business Combination, shares of the RHI Preferred Stock were considered participating securities.

NOTE 16. FINANCIAL INSTRUMENTS

The Company is exposed to the following risks related to its financial instruments:

(a) Credit Risk

Credit risk arises from the possibility that the Company’s debtors may be unable to fulfill their financial obligations. Revenues earned from publishing and distribution companies are concentrated in the music and entertainment industry. The Company monitors its exposure to credit risk on a regular basis.

17

RESERVOIR MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

(Unaudited)

(b) Interest Rate Risk

The Company is exposed to market risk from changes in interest rates on its secured line of credit. As described in Note 9, “Secured Line of Credit,” the Company entered into interest rate swap agreements to partially reduce its exposure to fluctuations in interest rates on its Credit Facilities.

The fair value of the outstanding interest rate swaps was a $8,315,009 asset as of December 31, 2022 and a $3,991,802 asset as of March 31, 2022. Fair value is determined using Level 2 inputs, which are based on quoted prices and market observable data of similar instruments. The change in the unrealized fair value of the swaps during the three months ended December 31, 2022 of $179,573 was recorded as a loss on changes in fair value of derivative instruments. The change in the unrealized fair value of the swaps during the nine months ended December 31, 2022 of $4,323,207 was recorded as a gain on changes in fair value of derivative instruments. The change in the unrealized fair value of the swaps during the three and nine months ended December 31, 2021 of $1,663,743 and $2,888,961, respectively, was recorded as a gain on changes in fair value of derivative instruments.

(c) Foreign Exchange Risk

The Company is exposed to foreign exchange risk in fluctuations of currency rates on its revenue from royalties, writers’ fees and its subsidiaries’ operations.

(d) Financial Instruments

Financial instruments not described elsewhere include cash, accounts receivable, accounts payable, accrued liabilities and borrowings under its secured line of credit. The carrying values of these instruments as of December 31, 2022 do not differ materially from their respective fair values due to the immediate or short-term duration of these items or their bearing market-related rates of interest.

NOTE 17. CONTINGENCIES AND COMMITMENTS

(a) Leases

The Company leases its business premises under operating leases which have expiration dates between 2022 – 2033. The Company determines if an arrangement is or contains a lease at inception of the contract. Beginning April 1, 2022, the Company recognizes on the balance sheet a lease liability for its obligation to make lease payments arising from the lease and a corresponding ROU asset representing its right to use the underlying asset over the period of use based on the present value of lease payments over the lease term as of the lease commencement date in accordance with ASC 842.

Certain leases contain fixed rent escalations and/or renewal options. None of the Company’s operating leases include variable lease payments. Subsequent amortization of the ROU asset and accretion of the lease liability for an operating lease is recognized as a single lease cost, on a straight-line basis, over the lease term. Reductions of the ROU asset and the change in the lease liability are included in changes in Other assets and liabilities in the Consolidated Statement of Cash Flows.

During the three and nine months ended December 31, 2022, the Company obtained right-of-use assets in exchange for new operating lease obligations totaling $5,789,681 and $6,146,064, respectively, including a right-of-use asset totaling approximately $5.8 million in exchange for a new operating lease obligation for its new headquarter office facility consisting of 12,470 square feet of leased office space at 200 Varick Street, Suite 801A, New York, NY (the “New HQ Lease”). The total commitment under the New HQ Lease is approximately $8.4 million, which is payable monthly with escalating rental payments over a 130-month lease term.

18

RESERVOIR MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

(Unaudited)

(b) Litigation

The Company is subject to claims and contingencies in the normal course of business. To the extent the Company cannot predict the outcome of the claims and contingencies or estimate the amount of any loss that may result, no provision for any contingent liabilities has been made in the consolidated financial statements. The Company believes that losses resulting from these matters, if any, would not have a material adverse effect on the financial position, results of operations or cash flows of the Company. All such matters which the Company concludes are probable to result in a loss and for which management can reasonably estimate the amount of such loss have been accrued for within these condensed consolidated financial statements.

NOTE 18. SEGMENT REPORTING

The Company’s business is organized in two reportable segments: Music Publishing and Recorded Music. The Company identified its Chief Executive Officer as its Chief Operating Decision Maker (“CODM”). The Company’s CODM evaluates financial performance of its segments based on several factors, of which the primary financial measure is operating income before depreciation and amortization (“OIBDA”). The accounting policies of the Company’s business segments are consistent with the Company’s policies for the consolidated financial statements. The Company does not have sales between segments.

The following tables present total revenue and reconciliation of OIBDA to operating income by segment for the three and nine months ended December 31, 2022 and 2021:

	Three Months Ended December 31, 2022
	Music		Recorded
	Publishing		Music		Other		Consolidated
Total revenue	$	20,155,131	$	7,561,604	$	2,214,678	$	29,931,413
Reconciliation of OIBDA to operating income:
Operating income		1,659,409		2,278,413		661,236		4,599,058
Amortization and depreciation		4,165,456		1,358,898		21,947		5,546,301
OIBDA	$	5,824,865	$	3,637,311	$	683,183	$	10,145,359

	Nine Months Ended December 31, 2022
	Music		Recorded
	Publishing		Music		Other		Consolidated
Total revenue	$	60,665,219	$	24,025,994	$	2,784,681	$	87,475,894
Reconciliation of OIBDA to operating income:
Operating income		4,472,540		7,336,090		678,409		12,487,039
Amortization and depreciation		12,129,949		4,096,356		65,840		16,292,145
OIBDA	$	16,602,489	$	11,432,446	$	744,249	$	28,779,184

19

RESERVOIR MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

(Unaudited)

	Three Months Ended December 31, 2021
	Music		Recorded
	Publishing		Music			Other	Consolidated
Total revenue	$	17,689,340	$	7,508,363	$	614,853	$	25,812,556
Reconciliation of OIBDA to operating income:
Operating income(a)		1,109,455		1,257,675		322,257		2,689,387
Amortization and depreciation		3,522,472		1,408,248		24,316		4,955,036
OIBDA	$	4,631,927	$	2,665,923	$	346,573	$	7,644,423

	Nine Months Ended December 31, 2021
	Music		Recorded
	Publishing		Music		Other		Consolidated
Total revenue	$	51,973,783	$	19,694,366	$	1,050,202	$	72,718,351
Reconciliation of OIBDA to operating income:
Operating income(a)		6,707,074		3,569,121		398,176		10,674,371
Amortization and depreciation		10,000,876		3,696,820		74,191		13,771,887
OIBDA	$	16,707,950	$	7,265,941	$	472,367	$	24,446,258

^(a)During the fourth quarter of the fiscal year ended March 31, 2022, the Company revised the methodology it uses to allocate corporate general and administrative expenses to its operating segments to better align usage of corporate resources allocated to the Company segments. The updated allocation methodology had no impact on the Company’s consolidated statements of operations. This change was applied retrospectively, and segment OIBDA for all comparative periods has been updated to reflect this change.

NOTE 19. CORRECTION OF PRIOR PERIOD ERRORS

As previously disclosed in Note 19 to the Company’s consolidated financial statements as of and for the fiscal year ended March 31, 2022, the Company identified prior period accounting errors that the Company has concluded are not material to the Company’s previously reported consolidated financial statements and unaudited interim condensed consolidated financial statements.

Based on management’s evaluation of the accounting errors in consideration of the SEC Staff’s Accounting Bulletins Nos. 99 (“SAB 99”) and 108 (“SAB 108”) and interpretations therewith, the Company concluded the errors are not material, on an individual or aggregate basis, to the Company’s previously reported annual and interim consolidated financial statements affected by the errors, which includes the Company’s previously reported unaudited interim condensed consolidated financial information for the three and nine months ended December 31, 2021 (the “previously reported financial statements”).  However, the Company further concluded the accounting errors cannot be corrected as an out-of-period adjustment in the Company’s consolidated financial statements as of and for the year ended March 31, 2022, because to do so would cause a material misstatement in those financial statements.  Accordingly, the Company referred to the guidance prescribed by SAB 108 which specifies that the errors must be corrected the next time the previously reported financial statements are filed.  Therefore, the Company corrected the accounting errors in all of the Company’s previously reported annual and interim consolidated financial statements impacted by the errors, which includes the accompanying unaudited condensed consolidated financial statements as of and for the three and nine months ended December 31, 2021.

20

RESERVOIR MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

(Unaudited)

The following is a description of the accounting errors and their impact on the Company’s previously reported financial statements:

The Company identified certain accounting errors that originated in the fourth quarter of fiscal year 2020 related to the recognition of royalty revenue associated with royalties generated from the pre-acquisition usage of intellectual property rights that the Company acquired in certain of its music catalog acquisitions for which the Company was entitled to collect pre-acquisition royalties from the sellers for a specified period prior to the closing date of these acquisitions. The Company’s historical accounting practice with respect to pre-acquisition royalties was to recognize revenue upon closing of the acquisitions. Upon further review, the Company concluded that the pre-acquisition royalties should have been accounted for as reduction of the purchase price of the acquired music catalogs, as prescribed by ASC 805-50, Business Combinations – Related Issues (“ASC 805-50”) rather than recognized as revenue under ASC 606, Revenue from Contracts with Customers (“ASC 606”).

As part of its review, the Company further concluded that certain royalty revenue generated from pre-acquisition usage that remained uncollected at closing, as well as the related royalties due to certain artists or songwriters associated with each of the acquired music catalogs, should have been recognized as accounts receivable and royalties payable, respectively, on the closing date of the acquired music catalog based on the Company’s best estimate of the uncollected royalties due to the Company and payables due to the artists or songwriters on the closing date. The Company’s historical accounting practice associated with these uncollected royalties and royalties payable was to recognize the uncollected royalties as revenue under ASC 606 as they were collected after the closing date, and to recognize cost of revenue as the royalties due to the artists or songwriters when the related royalty revenue was collected. The Company also concluded that the acquired accounts receivable and royalties payable assumed on the date of closing should have been included in the purchase price allocation of the Company’s acquired music catalogs, as prescribed by ASC 805-50. The financial tables below present the impact of correcting the accounting errors on the Company’s previously reported financial statements.

The following table presents the impact of correcting the accounting errors on the Company’s previously reported unaudited condensed consolidated statement of income for the three and nine months ended December 31, 2021:

	Three Months Ended December 31, 2021						Nine Months Ended December 31, 2021
	As Reported		Adjustment		Revised		As Reported		Adjustment		Revised
Revenues	$	27,127,779	$	(1,315,223)	$	25,812,556	$	74,281,417	$	(1,563,066)	$	72,718,351
Amortization and depreciation		4,981,748		(26,712)		4,955,036		13,838,676		(66,789)		13,771,887
Total costs and expenses		23,149,881		(26,712)		23,123,169		62,110,769		(66,789)		62,043,980
Operating income		3,977,898		(1,288,511)		2,689,387		12,170,648		(1,496,277)		10,674,371
Income before income taxes		3,093,763		(1,288,511)		1,805,252		7,179,148		(1,496,277)		5,682,871
Income tax expense		717,379		(322,128)		395,251		1,782,058		(374,069)		1,407,989
Net income		2,376,384		(966,383)		1,410,001		5,397,090		(1,122,208)		4,274,882
Net income attributable to Reservoir Media, Inc.		2,149,454		(966,383)		1,183,071		5,301,651		(1,122,208)		4,179,443
Earnings per common share - basic	$	0.03	$	(0.01)	$	0.02	$	0.10	$	(0.03)	$	0.07
Earnings per common share - diluted	$	0.03	$	(0.01)	$	0.02	$	0.09	$	(0.02)	$	0.07

The following table presents the impact of correcting the accounting errors on the Company’s previously reported unaudited condensed consolidated statement of comprehensive income for the three and nine months ended December 31, 2021:

	Three Months Ended December 31, 2021						Nine Months Ended December 31, 2021
	As Reported		Adjustment		Revised		As Reported		Adjustment		Revised
Net income	$	2,376,384	$	(966,383)	$	1,410,001	$	5,397,090	$	(1,122,208)	$	4,274,882
Total comprehensive income (loss)		2,531,476		(966,383)		1,565,093		3,987,887		(1,122,208)		2,865,679
Total comprehensive income (loss) attributable to Reservoir Holdings, Inc.		2,304,546		(966,383)		1,338,163		3,892,448		(1,122,208)		2,770,240

21

RESERVOIR MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

(Unaudited)

The following table presents the impact of correcting the accounting errors on the Company’s previously reported unaudited condensed consolidated balance sheet and consolidated statement of changes in shareholders’ equity as of December 31, 2021:

	December 31, 2021
	As Reported		Adjustment		Revised
Intangible assets, net	$	538,787,661	$	(3,585,124)	$	535,202,537
Total assets		633,057,023		(3,585,124)		629,471,899
Income taxes payable		524,442		(6,323)		518,119
Deferred income taxes		20,599,049		(841,989)		19,757,060
Total liabilities		290,511,282		(848,312)		289,662,970
Retained earnings		6,053,147		(2,736,812)		3,316,335
Total Reservoir Media, Inc, shareholders’ equity		341,444,605		(2,736,812)		338,707,793
Total shareholders’ equity		342,545,741		(2,736,812)		339,808,929
Total liabilities and shareholders’ equity		633,057,023		(3,585,124)		629,471,899

The following table presents the impact of correcting the accounting errors on the Company’s previously reported unaudited condensed consolidated statement of cash flows for the nine months ended December 31, 2021:

	Nine Months Ended December 31, 2021
	As Reported		Adjustment		Revised
Net income	$	5,397,090	$	(1,122,208)	$	4,274,882
Amortization of intangible assets		13,713,202		(66,789)		13,646,413
Deferred income taxes		863,512		(374,069)		489,443
Net cash provided by operating activities		14,414,357		(1,563,066)		12,851,291
Purchases of music catalogs		(157,555,894)		1,563,066		(155,992,828)
Net cash used for investing activities		(160,143,142)		1,563,066		(158,580,076)

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of Reservoir Media, Inc.’s financial condition and results of operations should be read in conjunction with Reservoir Media, Inc.’s condensed consolidated financial statements, including the accompanying notes thereto contained elsewhere in this Quarterly Report on Form 10-Q (this “Quarterly Report”). Certain statements contained in the discussion and analysis set forth below include forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. Unless the context otherwise requires, the terms “we,” “us,” “our,” the “Company” and “Reservoir” refer collectively to Reservoir Media, Inc. and its consolidated subsidiaries.

As disclosed in Note 19, “Correction of Prior Period Errors” to our consolidated financial statements, the Company’s consolidated financial statements as of and for the three and nine months ended December 31, 2021, have been revised to give effect to the correction of certain accounting errors identified during the financial reporting process as of and for the fiscal year ended March 31, 2022. As a result, the Management’s Discussion and Analysis of the Company’s Financial Condition and Results of Operations set forth below has been revised to give effect to the correction of these errors.

Special Note Regarding Forward-Looking Statements

This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are not historical facts, and are intended to be covered by the safe harbor created thereby. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “predict,” “project,” “target,” “goal,” “intend,” “continue,” “could,” “may,” “might,” “shall,” “should,” “will,” “would,” “plan,” “possible,” “potential,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. In addition, any statements that refer to expectations, projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current expectations, projections and beliefs based on information currently available. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about the Company that may cause its actual business, financial condition, results of operations, performance and/or achievements to be materially different from any future business, financial condition, results of operations, performance and/or achievements expressed or implied by these forward-looking statements. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described under “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in the Company’s Annual Report on Form 10-K (the “Annual Report”) filed with the U.S. Securities and Exchange Commission (the “SEC”) on June 21, 2022 and the Company’s other filings with the SEC. The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Introduction

We are a holding company that conducts substantially all of our business operations through Reservoir Media Management, Inc. (“RMM”) and RMM’s subsidiaries. Our activities are generally organized into two operating segments: Music Publishing and Recorded Music. Operations of the Music Publishing segment involve the acquisition of interests in music catalogs from which royalties are earned as well as signing songwriters to exclusive agreements, which gives us an interest in the future delivery of songs. Operations of the Recorded Music segment involve the acquisition of sound recording catalogs as well as the discovery and development of recording artists and the marketing, distribution, sale and licensing of the music catalogs.

Business Overview

We are an independent music company operating in music publishing and recorded music. We represent over 140,000 copyrights in our publishing business and over 36,000 master recordings in our recorded music business. Both of our business areas are populated with hit songs dating back to the early 1900s representing an array of artists across genre and geography. Consistent with how we classify and operate our business, the Company is organized in two operating and reportable segments: Music Publishing and Recorded Music. A brief description of each segment’s operations is presented below.

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Music Publishing Segment

Music Publishing is an intellectual property business focused on generating revenue from uses of the musical composition itself. In return for promoting, placing, marketing and administering the creative output of a songwriter or engaging in those activities for other rightsholders, our Music Publishing business garners a share of the revenues generated from use of the musical compositions.

The operations of our Music Publishing business are conducted principally through RMM, our global music publishing company headquartered in New York City, with operations in multiple countries through various subsidiaries, affiliates and non-affiliated licensees and sub-publishers. We own or control rights to more than 140,000 musical compositions, including numerous pop hits, American standards, folk songs and motion picture and theatrical compositions. Assembled over many years, our current award-winning active songwriters exceed 100, while the catalog includes over 5,000 clients representing 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.

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;

● 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; and

● Other––the rightsholder receives revenues for use in sheet music and other uses.

The principal costs associated with our Music Publishing business are as follows:

● Writer Royalties and Other Publishing Costs––the artist and repertoire (“A&R”) costs associated with (i) paying royalties to songwriters, co-publishers and other copyright holders in connection with income generated from the uses of their works and (ii) signing and developing songwriters; and

● Administration Expenses––the costs associated with general overhead, and other administrative expenses, as well as selling and marketing.

Recorded Music Segment

Our Recorded Music business consists of three primary areas of sound recording ownership. First is the active marketing, promotion, distribution, sale and licensing of newly created frontline sound recordings from Current Artists that we own and control. This is a new area of focus for us and does not yet produce significant revenue. The second is the active marketing, promotion, distribution, sale and license of previously recorded and subsequently acquired Catalog recordings. The third is 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 contract in connection with existing sound recordings. Acquisition of these income participation interests are typically in connection with recordings that are owned, controlled, and marketed by other record labels.

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Our Current Artist and Catalog recorded music businesses are both primarily handled by our Chrysalis Records label based in London and our Tommy Boy record label based in New York City. 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. Our core Catalog includes recordings under the Chrysalis Records label by artists such as Sinéad O’Connor, The Specials, Generation X and The Waterboys, and De La Soul, as well as recordings under the Tommy Boy record label by artists such as House of Pain, Naughty By Nature, and Queen Latifah.

Our Current Artist and Catalog recorded music distribution is handled by a network of distribution partners. Chrysalis Records current artist releases are distributed through PIAS while our Chrysalis Records and Tommy Boy catalogs are distributed via our membership with MERLIN, AMPED, Proper and other partners.

Through our distribution network, our music is being sold in physical retail outlets as well as in physical form to online physical retailers, such as amazon.com, and distributed in digital form to an 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 and SiriusXM, and download services. We also license music digitally to fitness platforms such as Apple Fitness+, Equinox, Hydrow and Peloton and social media outlets, such as Facebook, Instagram, TikTok and Snap.

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.

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.

Business Combination

On July 28, 2021 (the “Closing Date”), we consummated a business combination (the “Business Combination”) between Roth CH Acquisition II Co. (“ROCC”) and Reservoir Holdings, Inc. (“RHI”). On the Closing Date, Merger Sub merged with and into RHI, with RHI surviving as a wholly-owned subsidiary of ROCC (the “Business Combination”). In connection with the Business Combination, “Roth CH Acquisition II Co.” was renamed “Reservoir Media, Inc.”  Our common stock, $0.0001 par value per share (the “Common Stock”) and warrants are traded on The Nasdaq Stock Market LLC (“NASDAQ”) under the ticker symbols “RSVR” and “RSVRW,” respectively.

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The Business Combination was accounted for as a reverse capitalization. Under this method of accounting, ROCC was treated as the “acquired” company for accounting purposes, and the Business Combination was accounted as the equivalent of RHI issuing stock for the net assets of ROCC, accompanied by a recapitalization. RHI is deemed to be the accounting predecessor of the combined business and the successor SEC registrant, meaning that RHI’s financial statements for periods prior to the closing date are disclosed in periodic reports filed with the SEC. See Note 4, “Business Combination and PIPE Investment” to the accompanying unaudited condensed consolidated financial statements for additional information with respect to the Business Combination and related transactions.

COVID-19 Pandemic

The COVID-19 pandemic that emerged in 2020 has disrupted physical and manufacturing supply chains and required the closures of physical retailers. Additionally, stay-at-home orders, limited indoor and outdoor gatherings and other restrictions have negatively affected our business in other ways, such as, making it impossible to hold live concert tours, delaying the release of new recordings and disrupting the production and release of motion pictures and television programs. However, the disruption from the COVID-19 pandemic may have accelerated growth of other revenue streams such as fitness and interactive gaming (including augmented reality and virtual reality).

Factors Affecting Results of Operations and Comparability

Throughout our history, we have constantly acquired new assets and subsidiaries and signed new writers and more recently new recording artists. These investing activities have had the largest impact on our growth over time. We have also invested in our operations to create a platform for the Music Publishing and Recorded Music segments to scale and grow. We did not complete any individually significant acquisition transactions during the nine months ended December 31, 2022.  On June 2, 2021, we acquired, through a membership interest purchase agreement, Tommy Boy Music, LLC ("Tommy Boy"), a 40-year-old record label, which included a diverse catalog of primarily recorded music rights and some music publishing rights.

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. 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. 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.

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Results of Operations

Income Statement

Our income statement was composed of the following amounts (in thousands):

	For the Three Months								For the Nine Months
	Ended December 31,				2022 vs. 2021				Ended December 31,				2022 vs. 2021
	2022		2021		$ Change		% Change		2022		2021		$ Change		% Change
Revenues	$	29,931	$	25,813	$	4,119	16	%	$	87,476	$	72,718	$	14,758	20	%
Costs and expenses:
Cost of revenue		11,750		11,436		314	3	%		35,665		31,220		4,445	14	%
Amortization and depreciation		5,546		4,955		591	12	%		16,292		13,772		2,520	18	%
Administration expenses		8,036		6,732		1,304	19	%		23,031		17,052		5,980	35	%
Total costs and expenses		25,332		23,123		2,209	10	%		74,989		62,044		12,945	21	%
Operating income		4,599		2,689		1,910	71	%		12,487		10,674		1,813	17	%
Interest expense		(4,099)		(2,500)		(1,599)	64	%		(10,580)		(8,007)		(2,572)	32	%
Loss on early extinguishment of debt		(914)		—		(914)	NM			(914)		—		(914)	NM
Gain (loss) on foreign exchange		57		(48)		105	(218)	%		338		127		211	167	%
(Loss) gain on fair value of swaps		(180)		1,664		(1,843)	(111)	%		4,323		2,889		1,434	50	%
(Loss) income before income taxes		(536)		1,805		(2,342)	(130)	%		5,654		5,683		(28)	(1)	%
Income tax expense		3,530		395		3,135	793	%		5,218		1,408		3,810	271	%
Net (loss) income		(4,066)		1,410		(5,476)	(388)	%		436		4,275		(3,838)	(90)	%
Net income attributable to noncontrolling interests		(340)		(227)		(113)	50	%		(230)		(95)		(135)	141	%
Net (loss) income attributable to Reservoir Media, Inc.	$	(4,407)	$	1,183	$	(5,590)	(472)	%	$	206	$	4,179	$	(3,973)	(95)	%

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Revenues

Our revenues were composed of the following amounts (in thousands):

	For the Three Months								For the Nine Months
	Ended December 31,				2022 vs. 2021				Ended December 31,				2022 vs. 2021
	2022		2021		$ Change		% Change		2022		2021		$ Change		% Change
Revenue by Type
Digital	$	10,718	$	8,332	$	2,386	29	%	$	32,428	$	26,504	$	5,925	22	%
Performance		4,407		3,455		953	28	%		12,355		10,461		1,894	18	%
Synchronization		3,670		2,427		1,243	51	%		11,383		8,513		2,869	34	%
Mechanical		589		742		(152)	(21)	%		2,104		2,109		(5)	0	%
Other		771		2,735		(1,964)	(72)	%		2,395		4,387		(1,992)	(45)	%
Total Music Publishing		20,155		17,689		2,466	14	%		60,665		51,974		8,691	17	%
Digital		5,247		4,499		748	17	%		16,123		12,003		4,120	34	%
Physical		1,104		1,254		(150)	(12)	%		3,253		4,739		(1,486)	(31)	%
Neighboring rights		822		573		249	43	%		2,248		1,364		885	65	%
Synchronization		388		1,182		(793)	(67)	%		2,402		1,589		814	51	%
Total Recorded Music		7,562		7,508		53	1	%		24,026		19,694		4,332	22	%
Other revenue		2,215		615		1,600	260	%		2,785		1,050		1,734	165	%
Total Revenue	$	29,931	$	25,813	$	4,119	16	%	$	87,476	$	72,718	$	14,758	20	%

	For the Three Months								For the Nine Months
	Ended December 31,				2022 vs. 2021				Ended December 31,				2022 vs. 2021
	2022		2021		$ Change		% Change		2022		2021		$ Change		% Change
Revenue by Geographical Location
U.S. Music Publishing	$	11,187	$	8,676	$	2,511	29	%	$	35,946	$	26,266	$	9,680	37	%
U.S. Recorded Music		4,188		3,574		614	17	%		12,958		10,143		2,815	28	%
U.S. Other Revenue		2,215		615		1,600	260	%		2,785		1,050		1,734	165	%
Total U.S.		17,590		12,865		4,724	37	%		51,689		37,460		14,229	38	%
International Music Publishing		8,968		9,013		(45)	0	%		24,719		25,707		(989)	(4)	%
International Recorded Music		3,374		3,934		(561)	(14)	%		11,068		9,551		1,517	16	%
Total International		12,342		12,947		(606)	(5)	%		35,787		35,259		528	1	%
Total Revenue	$	29,931	$	25,813	$	4,119	16	%	$	87,476	$	72,718	$	14,758	20	%

Revenues

Three Months Ended December 31, 2022 vs. Three Months Ended December 31, 2021

Total revenues increased by $4,119 thousand, or 16%, during the three months ended December 31, 2022 compared to the three months ended December 31, 2021, driven by a 14% increase in Music Publishing revenue and an 260% increase in Other revenue related to the Company’s artist management business, reflecting strong touring and merchandise revenue in a post-COVID environment. Music Publishing revenues represented 67% and 69% of total revenues for the three months ended December 31, 2022 and the three months ended December 31, 2021, respectively. Recorded Music revenues represented 25% and 29% of total revenues for the three months ended December 31, 2022 and the three months ended December 31, 2021, respectively.  Other revenue represented 7% and 2% of total revenues for the three months ended December 31, 2022 and the three months ended December 31, 2021, respectively. U.S. and international revenues represented 59% and 41%, respectively of total revenues for the three months ended December 31, 2022. U.S. and international revenues each represented 50% of total revenues for the three months ended December 31, 2021. The shift in geographic mix toward the U.S. is primarily the result of an increase in U.S. mechanical revenue as well as strong U.S. performance of the Recorded Music catalogs.

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Total digital revenues increased by $3,133 thousand, or 24%, during the three months ended December 31, 2022 compared to the three months ended December 31, 2021. Total digital revenues represented 53% and 50% of consolidated revenues for the three months ended December 31, 2022 and the three months ended December 31, 2021, respectively.

Music Publishing revenues increased by $2,466 thousand, or 14%, during the three months ended December 31, 2022 compared to the three months ended December 31, 2021. This increase in Music Publishing revenue was mainly driven by strong organic growth on streaming platforms, as well as acquisitions of catalogs and revenue from the existing catalog, which led to increases in digital revenue, synchronization revenue and performance revenue. These increases were partially offset by a decrease in other revenues reflecting the nonrecurrence of revenues recognized in the prior year from Dubai Expo.

On a geographic basis, U.S. Music Publishing revenues represented 56% of total Music Publishing revenues for the three months ended December 31, 2022 compared to 49% for the three months ended December 31, 2021. International Music Publishing revenues represented 44% of total Music Publishing revenues for the three months ended December 31, 2022 compared to 51% for the three months ended December 31, 2021. The shift in geographic mix is primarily the result of an increase in U.S. mechanical royalties and an increase in synchronization revenue attributed to the U.S.

Recorded Music revenues increased by $53 thousand, or 1%, during the three months ended December 31, 2022 compared to the three months ended December 31, 2021. Digital revenue increased by $748 thousand, or 17%, primarily due to recent acquisitions of various Recorded Music catalogs and the continued growth at music streaming services.  The $150 thousand decrease in physical revenue is related to lower revenue on artist royalty associated with physical sales from third-party record labels.  Synchronization revenue decreased by $793 thousand as a result of fewer licenses being placed in the three months ended December 31, 2022 compared to the three months ended December 31, 2021.  The $249 thousand increase in neighboring rights revenue was primarily due to recent acquisitions of various Recorded Music catalogs.

On a geographic basis, U.S. Recorded Music revenues represented 55% of total Recorded Music revenues for the three months ended December 31, 2022 compared to 48% for the three months ended December 31, 2021. International Recorded Music revenues represented 45% of total Recorded Music revenues for the three months ended December 31, 2022 compared to 52% for the three months ended December 31, 2021. This shift in Recorded Music geographic mix was driven primarily by improved strong domestic performance of various owned Recorded Music catalogs, partially offset by an unfavorable impact on Chrysalis revenue from the change in the GBP to U.S. dollar exchange rate.

Nine Months Ended December 31, 2022 vs. Nine Months Ended December 31, 2021

Total revenues increased by $14,758 thousand, or 20%, during the nine months ended December 31, 2022 compared to the nine months ended December 31, 2021, driven by an 17% increase in Music Publishing revenue, a 22% increase in Recorded Music revenue and a 165% increase in Other revenue related to the Company’s artist management business, reflecting strong touring and merchandise revenue in a post-COVID environment. Music Publishing revenues represented 69% and 71% of total revenues for the nine months ended December 31, 2022 and the nine months ended December 31, 2021, respectively. Recorded Music revenues represented 27% and 27% of total revenues for the nine months ended December 31, 2022 and the nine months ended December 31, 2021, respectively.  Other revenue represented 3% and 1% of total revenues for the nine months ended December 31, 2022 and the nine months ended December 31, 2021, respectively. U.S. and international revenues represented 59% and 41%, respectively of total revenues for the nine months ended December 31, 2022. U.S. and international revenues represented 52% and 48%, respectively of total revenues for the nine months ended December 31, 2021. The shift in mix between Music Publishing and Recorded Music and the shift in geographic mix are both primarily attributable to the Tommy Boy Acquisition.  Additionally, the shift in geographic mix is partly the result of an updated estimate of U.S. mechanical royalties related to the recent CRB ruling and an unfavorable impact on Chrysalis revenue from the change in the GBP to U.S. dollar exchange rate.

Total digital revenues increased by $10,044 thousand, or 26%, during the nine months ended December 31, 2022 compared to the nine months ended December 31, 2021. Total digital revenues represented 56% and 53% of consolidated revenues for the nine months ended December 31, 2022 and the nine months ended December 31, 2021, respectively.

Music Publishing revenues increased by $8,691 thousand, or 17%, during the nine months ended December 31, 2022 compared to the nine months ended December 31, 2021. 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 and performance revenue. These increases were partially offset by a decrease in other revenue and mechanical revenue.

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On a geographic basis, U.S. Music Publishing revenues represented 59% of total Music Publishing revenues for the nine months ended December 31, 2022 compared to 51% for the nine months ended December 31, 2021. International Music Publishing revenues represented 41% of total Music Publishing revenues for the nine months ended December 31, 2022 compared to 49% for the nine months ended December 31, 2021. The shift in geographic mix is primarily the result of an updated estimate of U.S. mechanical royalties related to the recent CRB ruling, as well as an increase in U.S. synchronization revenue.

Recorded Music revenues increased by $4,332 thousand, or 22%, during the nine months ended December 31, 2022 compared to the nine months ended December 31, 2021. The increase in Recorded Music revenue was driven in part by the acquisition of Tommy Boy in June 2021, which contributed $10,539 thousand to Recorded Music revenue during the nine months ended December 31, 2022 compared to $7,473 thousand during the nine months ended December 31, 2021. Digital revenue increased by $4,120 thousand primarily due to the acquisition of Tommy Boy and the continued growth at music streaming services. Increases in synchronization revenue and neighboring rights revenue were also primarily due to the acquisition of Tommy Boy. The $1,486 thousand decrease in physical revenue reflects the more significant release schedule in the prior year period than the current year period.

On a geographic basis, U.S. Recorded Music revenues represented 54% of total Recorded Music revenues for the nine months ended December 31, 2022 compared to 52% for the nine months ended December 31, 2021. International Recorded Music revenues represented 46% of total Recorded Music revenues for the nine months ended December 31, 2022 compared to 48% for the nine months ended December 31, 2021.

Cost of Revenues

Our cost of revenues was composed of the following amounts (in thousands):

	For the Three Months								For the Nine Months
	Ended December 31,				2022 vs. 2021				Ended December 31,				2022 vs. 2021
	2022		2021		$ Change		% Change		2022		2021		$ Change		% Change
Writer royalties and other publishing costs	$	9,599	$	8,471	$	1,128	13	%	$	29,204	$	24,214	$	4,990	21	%
Artist royalties and other recorded music costs		2,151		2,965		(814)	(27)	%		6,461		7,007		(546)	(8)	%
Total cost of revenue	$	11,750	$	11,436	$	314	3	%	$	35,665	$	31,220	$	4,445	14	%

Three Months Ended December 31, 2022 vs. Three Months Ended December 31, 2021

Cost of revenues increased by $314 thousand, or 3%, during the three months ended December 31, 2022 compared to the three months ended December 31, 2021. Cost of revenues as a percentage of revenues decreased to 39% for the three months ended December 31, 2022 from 44% for the three months ended December 31, 2021.

Writer royalties and other publishing costs for the Music Publishing segment increased by $1,128 thousand, or 13%, during the three months ended December 31, 2022 compared to the three months ended December 31, 2021. Writer royalties and other publishing costs as a percentage of Music Publishing revenues were 48% for the three months ended December 31, 2022 and 2021.

Artist royalties and other recorded music costs for the Recorded Music segment decreased by $814 thousand, or 27%, during the three months ended December 31, 2022 compared to the three months ended December 31, 2021. Artist royalties and other recorded music costs as a percentage of recorded music revenues decreased to 28% for the three months ended December 31, 2022 from 39% for the three months ended December 31, 2021. The decrease in artist royalties and other recorded music costs and increase in margins were due primarily to the increase in digital revenue and neighboring rights, which carry a lower cost of revenue than other revenue types.  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.

Nine Months Ended December 31, 2022 vs. Nine Months Ended December 31, 2021

Cost of revenues increased by $4,445 thousand, or 14%, during the nine months ended December 31, 2022 compared to the nine months ended December 31, 2021. Cost of revenues as a percentage of revenues decreased to 41% for the nine months ended December 31, 2022 from 43% for the nine months ended December 31, 2021.

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Writer royalties and other publishing costs for the Music Publishing segment increased by $4,990 thousand, or 21%, during the nine months ended December 31, 2022 compared to the nine months ended December 31, 2021. Writer royalties and other publishing costs as a percentage of Music Publishing revenues increased to 48% for the nine months ended December 31, 2022 from 47% for the nine months ended December 31, 2021. The decrease in margins was due primarily to the royalty expenses associated with the updated estimate of mechanical royalties related to the recent CRB ruling, which carry a higher royalty expense than other revenue types. Additionally, margins were affected by a change in the general mix of earnings by type and songwriting clients with their specific contractual royalty rates being applied to the revenues.

Artist royalties and other recorded music costs for the Recorded Music segment decreased by $546 thousand, or 8%, during the nine months ended December 31, 2022 compared to the nine months ended December 31, 2021. This decrease was due primarily to lower physical revenue. Artist royalties and other recorded music costs as a percentage of recorded music revenues decreased to 27% for the nine months ended December 31, 2022 from 36% for the nine months ended December 31, 2021. The increase in margins was due primarily to a decrease in physical revenue, which carries a higher cost of revenue than other revenue types.  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.

Amortization and Depreciation

Our amortization and depreciation expenses are composed of the following amounts (in thousands):

	For the Three Months								For the Nine Months
	Ended December 31,					2022 vs. 2021			Ended December 31,				2022 vs. 2021
	2022		2021		$ Change		% Change		2022		2021		$ Change		% Change
Music Publishing amortization and depreciation	$	4,165	$	3,522	$	643	18	%	$	12,130	$	10,001	$	2,129	21	%
Recorded Music amortization and depreciation		1,359		1,408		(49)	(4)	%		4,096		3,697		400	11	%
Other amortization and depreciation		22		24		(2)	(10)	%		66		74		(8)	(11)	%
Total amortization and depreciation	$	5,546	$	4,955	$	591	12	%	$	16,292	$	13,772	$	2,520	18	%

Three Months Ended December 31, 2022 vs. Three Months Ended December 31, 2021

Amortization and depreciation expense increased by $591 thousand, or 12%, during the three months ended December 31, 2022 compared to the three months ended December 31, 2021, driven by an increase in the Music Publishing segment. Music Publishing amortization and depreciation expense increased by $643 thousand, or 18%, during the three months ended December 31, 2022 compared to the three months ended December 31, 2021, primarily due to the acquisition of additional music catalogs. Recorded Music amortization and depreciation decreased by $49 thousand, or 4%, during the three months ended December 31, 2022 compared to the three months ended December 31, 2021, primarily due to a favorable impact on Chrysalis amortization from the change in the GBP to U.S. dollar exchange rate, partially offset by the acquisition of additional music catalogs.

Nine Months Ended December 31, 2022 vs. Nine Months Ended December 31, 2021

Amortization and depreciation expense increased by $2,520 thousand, or 18%, during the nine months ended December 31, 2022 compared to the nine months ended December 31, 2021, driven by increases in both the Music Publishing and Recorded Music segments. Music Publishing amortization and depreciation expense increased by $2,129 thousand, or 21%, during the nine months ended December 31, 2022 compared to the nine months ended December 31, 2021, primarily due to the acquisition of additional music catalogs. Recorded Music amortization and depreciation increased by $400 thousand, or 11%, during the nine months ended December 31, 2022 compared to the nine months ended December 31, 2021, primarily due to the acquisition of Tommy Boy, partially offset by a favorable impact on Chrysalis amortization from the change in the GBP to U.S. dollar exchange rate.

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Administration Expenses

Our administration expenses are composed of the following amounts (in thousands):

	For the Three Months								For the Nine Months
	Ended December 31,				2022 vs. 2021				Ended December 31,				2022 vs. 2021
	2022		2021		$ Change		% Change		2022		2021		$ Change		% Change
Music Publishing administration expenses	$	4,732	$	4,587	$	145	3	%	$	14,858	$	11,052	$	3,806	34	%
Recorded Music administration expenses		1,774		1,877		(103)	(5)	%		6,133		5,422		711	13	%
Other administration expenses		1,530		268		1,262	471	%		2,040		578		1,462	253	%
Total administration expenses	$	8,036	$	6,732	$	1,304	19	%	$	23,031	$	17,052	$	5,979	35	%

Three Months Ended December 31, 2022 vs. Three Months Ended December 31, 2021

Total administration expenses increased by $1,304 thousand, or 19%, during the three months ended December 31, 2022 compared to the three months ended December 31, 2021, driven by increases in the Music Publishing segment and Other administration expenses. Expressed as a percentage of revenues, administration expenses increased to 27% for the three months ended December 31, 2022 from 26% for the three months ended December 31, 2021, primarily due to administration expenses associated with our artist management business.  This increase was partially offset by a decrease in Recorded Music administration expenses as a result of a favorable impact from the change in the GBP to U.S. dollar exchange rate.

Music Publishing administration expenses increased by $145 thousand, or 3%, during the three months ended December 31, 2022 compared to the three months ended December 31, 2021. Expressed as a percentage of revenues, Music Publishing administration expenses decreased to 23% for the three months ended December 31, 2022 from 26% for the three months ended December 31, 2021, which reflects operating leverage in the segment.

Recorded Music administration expenses decreased by $103 thousand, or 5%, during the three months ended December 31, 2022 compared to the three months ended December 31, 2021, primarily due to a favorable impact on Chrysalis administration expenses from the change in the GBP to U.S. dollar exchange rate. Expressed as a percentage of revenue, Recorded Music administration expenses decreased to 23% for the three months ended December 31, 2022 from 25% for the three months ended December 31, 2021, primarily due to taking advantage of operating leverage on the Recorded Music platform.

Other administration expenses increased by $1,262 thousand, or 471%, during the three months ended December 31, 2022 compared to the three months ended December 31, 2021, primarily due to selling expenses associated with the Company’s artist management business.

Nine Months Ended December 31, 2022 vs. Nine Months Ended December 31, 2021

Total administration expenses increased by $5,979 thousand, or 35%, during the nine months ended December 31, 2022 compared to the nine months ended December 31, 2021, reflecting increases in both the Music Publishing and Recorded Music segments, as well as an increase in Other administration expenses. Expressed as a percentage of revenues, administration expenses increased to 26% for the nine months ended December 31, 2022 from 23% for the nine months ended December 31, 2021, due to administration expenses associated with being a public company, an increase in share-based compensation expense and increased costs related to establishing a U.S. Recorded Music platform due to the acquisition of Tommy Boy.

Music Publishing administration expenses increased by $3,806 thousand, or 34%, during the nine months ended December 31, 2022 compared to the nine months ended December 31, 2021. Expressed as a percentage of revenues, Music Publishing administration expenses increased to 24% for the nine months ended December 31, 2022 from 21% for the nine months ended December 31, 2021, driven primarily by new administration expenses associated with being a public company and an increase in share-based compensation expense.

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Recorded Music administration expenses increased by $711 thousand, or 13%, during the nine months ended December 31, 2022 compared to the nine months ended December 31, 2021, primarily due to the acquisition of Tommy Boy, partially offset by a favorable impact on Chrysalis administration expenses from the change in the GBP to U.S. dollar exchange rate. Expressed as a percentage of revenue, Recorded Music administration expenses decreased to 26% for the nine months ended December 31, 2022 from 28% for the nine months ended December 31, 2021, primarily due to taking advantage of operating leverage on the Recorded Music platform, partially offset by new administration expenses associated with being a public company.

Other administration expenses increased by $1,462 thousand, or 253%, during the nine months ended December 31, 2022 compared to the nine months ended December 31, 2021, primarily due to selling expenses associated with our artist management business.

Interest Expense

Three Months Ended December 31, 2022 vs. Three Months Ended December 31, 2021

Interest expense increased by $1,599 thousand, or 64%, during the three months ended December 31, 2022 compared to the three months ended December 31, 2021. This increase was driven by increased debt balances due to use of funds in catalog and business acquisitions and writer signings and increases in LIBOR. 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.

Nine Months Ended December 31, 2022 vs. Nine Months Ended December 31, 2021

Interest expense increased by $2,572 thousand, or 32%, during the nine months ended December 31, 2022 compared to the nine months ended December 31, 2021. This increase was driven by increased debt balances due to use of funds in catalog and business acquisitions and writer signings and increases in LIBOR.

Loss on Early Extinguishment of Debt

In connection with the Second Amendment of the RMM Credit Agreement during the three months ended December 31, 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.

Gain (Loss) on Foreign Exchange

Three Months Ended December 31, 2022 vs. Three Months Ended December 31, 2021

Gain on foreign exchange totaled $57 thousand for the three months ended December 31, 2022 compared to a Loss on foreign exchange of $48 thousand for the three months ended December 31, 2021. This change was due to fluctuations in the two foreign currencies we are directly exposed to, namely British pound sterling and euro.

Nine Months Ended December 31, 2022 vs. Nine Months Ended December 31, 2021

Gain on foreign exchange increased to $338 thousand for the nine months ended December 31, 2022 compared to $127 thousand for the nine months ended December 31, 2021. 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 Fair Value of Swaps

Three Months Ended December 31, 2022 vs. Three Months Ended December 31, 2021

Loss on fair value of swaps totaled $180 thousand during the three months ended December 31, 2022 compared to a gain on fair value of swaps of $1,664 thousand for the three months ended December 31, 2021. This change was due to a falling forward yield curve for LIBOR and the marking to market of our interest rate swap hedges.

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Nine Months Ended December 31, 2022 vs. Nine Months Ended December 31, 2021

Gain on fair value of swaps increased by $1,434 thousand during the nine months ended December 31, 2022 compared to the nine months ended December 31, 2021. This change was due to a rising forward yield curve for LIBOR and the marking to market of our interest rate swap hedges.

Income Tax Expense

Three Months Ended December 31, 2022 vs. Three Months Ended December 31, 2021

Income tax expense increased to $3,530 thousand during the three months ended December 31, 2022 compared to $395 thousand during the three months ended December 31, 2021. The increase in income tax expense and effective tax rate during the three months ended December 31, 2022 was driven 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.

Nine Months Ended December 31, 2022 vs. Nine Months Ended December 31, 2021

Income tax expense increased to $5,218 thousand during the nine months ended December 31, 2022 compared to $1,408 thousand during the nine months ended December 31, 2021. The increase in income tax expense and effective tax rate during the nine months ended December 31, 2022 was driven 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.

Net (Loss) Income

Three Months Ended December 31, 2022 vs. Three Months Ended December 31, 2021

Net loss was $4,066 thousand during the three months ended December 31, 2022 compared to net income of $1,410 thousand during the three months ended December 31, 2021. This change was driven primarily by a $3,135 increase in income tax expense, a $1,843 thousand decrease in gain (loss) on fair value of swaps, a $1,599 thousand increase in interest expense and a $914 thousand loss on early extinguishment of debt, partially offset by a $1,910 thousand increase in operating income.

Nine Months Ended December 31, 2022 vs. Nine Months Ended December 31, 2021

Net income decreased to $436 thousand during the nine months ended December 31, 2022 compared to $4,275 thousand during the nine months ended December 31, 2021. The $3,838 thousand decrease in net income was driven primarily by a $3,810 thousand increase in income tax expense, a $2,572 thousand increase in interest expense, and $914 thousand loss on early extinguishment of debt, partially offset by a $1,813 thousand increase in operating income and a $1,434 thousand increase in gain on fair value of swaps.

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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. Reservoir’s management uses these non-GAAP financial measures to evaluate our operations, measure its performance and make strategic decisions. We believe that the use of these non-GAAP financial measures provides useful information to investors and others in understanding our results of operations and trends in the same manner as our management and in evaluating our financial measures as compared to the financial measures of other similar companies, many of which present similar non-GAAP financial measures. However, these non-GAAP financial measures are subject to inherent limitations as they reflect the exercise of judgments by our management about which items are excluded or included in determining these non-GAAP financial measures and, therefore, should not be considered as a substitute for net income, operating income or any other operating performance measures calculated in accordance with GAAP. Using such non-GAAP financial measures in isolation to analyze our business would have material limitations because the calculations are based on the subjective determination of our management regarding the nature and classification of events and circumstances. In addition, although other companies in our industry may report measures titled OIBDA, OIBDA margin and Adjusted EBITDA, or similar measures, such non-GAAP financial measures may be calculated differently from how we calculate such non-GAAP financial measures, which reduces their overall usefulness as comparative measures. Because of these limitations, such non-GAAP financial measures should be considered alongside other financial performance measures and other financial results presented in accordance with GAAP. Reconciliations of OIBDA to operating income and EBITDA and Adjusted EBITDA to net income are provided below.

We consider operating income before non-cash depreciation of tangible assets and non-cash amortization of intangible assets (“OIBDA”) to be an important indicator of the operational strengths and performance of our businesses and believe this non-GAAP financial measure provides useful information to investors because it removes the significant impact of amortization from our results of operations and represents our measure of segment income. However, a limitation of the use of OIBDA as a performance measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in our businesses and other non-operating income. Accordingly, OIBDA should be considered in addition to, not as a substitute for, operating income, net income attributable to us and other measures of financial performance reported in accordance with GAAP. In addition, our definition of OIBDA may differ from similarly titled measures used by other companies. OIBDA Margin is defined as OIBDA as a percentage of revenue.

EBITDA is defined as earnings (net income or loss) before net interest expense, income tax (benefit) expense, non-cash depreciation of tangible assets and non-cash amortization of intangible assets and is used by management to measure operating performance of the business. 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 a key measure used by our management to understand and evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. However, certain limitations on the use of Adjusted EBITDA include, among others, (1) it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenue for our business, (2) it does not reflect the significant interest expense or cash requirements necessary to service interest or principal payments on our indebtedness and (3) it does not reflect every cash expenditure, future requirements for capital expenditures or contractual commitments. In particular, Adjusted EBITDA measure adds back certain non-cash, unusual or non-recurring charges that are deducted in calculating net income; however, these are expenses that may recur, vary greatly and are difficult to predict. 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.

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Reconciliation of Operating Income to OIBDA

We use OIBDA as our primary measure of financial performance. The following tables reconcile operating income to OIBDA (in thousands):

	Consolidated
	For the Three Months										For the Nine Months
	Ended December 31,						2022 vs. 2021				Ended December 31,						2022 vs. 2021
	2022			2021			$ Change		% Change		2022			2021			$ Change		% Change
Operating income	$	4,599		$	2,689		$	1,910	71	%	$	12,487		$	10,674		$	1,813	17	%
Amortization and depreciation expenses		5,546			4,955			591	12	%		16,292			13,772			2,520	18	%
OIBDA	$	10,145		$	7,644		$	2,501	33	%	$	28,779		$	24,446		$	4,333	18	%
OIBDA Margin		34	%		30	%						33	%		34	%

	Music Publishing
	For the Three Months											For the Nine Months
	Ended December 31,							2022 vs. 2021				Ended December 31,						2022 vs. 2021
	2022			2021			$ Change		% Change		2022			2021			$ Change		% Change
Operating income	$	1,659		$	1,109		$	550	50	%	$	4,473		$	6,707		$	(2,234)	(33)	%
Amortization and depreciation expenses		4,165			3,522			643	18	%		12,130			10,001			2,129	21	%
OIBDA	$	5,824		$	4,631		$	1,193	26	%	$	16,603		$	16,708		$	(105)	(1)	%
OIBDA Margin		29	%		26	%						27	%		32	%

	Recorded Music
	For the Three Months										For the Nine Months Ended
	Ended December 31,						2022 vs. 2021				December 31,						2022 vs. 2021
	2022			2021			$ Change		% Change		2022			2021			$ Change		% Change
Operating income	$	2,278		$	1,258		$	1,020	81	%	$	7,336		$	3,569		$	3,767	106	%
Amortization and depreciation expenses		1,359			1,408			(49)	(4)	%		4,096			3,697			400	11	%
OIBDA	$	3,637		$	2,666		$	971	36	%	$	11,432		$	7,266		$	4,167	57	%
OIBDA Margin		48	%		36	%						48	%		37	%

OIBDA

Three Months Ended December 31, 2022 vs. Three Months Ended December 31, 2021

Consolidated OIBDA increased by $2,501 thousand, or 33%, during the three months ended December 31, 2022 compared to the three months ended December 31, 2021, driven by an 26% increase in Music Publishing OIBDA and a 36% increase in Recorded Music OIBDA. Additionally, Other OIBDA related to the Company’s artist management business increased by $337 thousand during the three months ended December 31, 2022 compared to the three months ended December 31, 2021, driven by strong touring and merchandise revenue.  Expressed as a percentage of revenue, OIBDA Margin increased to 34% for the three months ended December 31, 2022 from 30% for the three months ended December 31, 2021, primarily as a result of improved operating leverage.

Music Publishing OIBDA increased by $1,193 thousand, or 26%, during the three months ended December 31, 2022 compared to the three months ended December 31, 2021. Expressed as a percentage of revenue, Music Publishing OIBDA Margin increased to 29% in the three months ended December 31, 2022 from 26% in the three months ended December 31, 2021. The increases in Music Publishing OIBDA and OIBDA Margin reflect the operating leverage of the segment.

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Recorded Music OIBDA increased by $971 thousand, or 36% during the three months ended December 31, 2022 compared to the three months ended December 31, 2021. Expressed as a percentage of revenue, Recorded Music OIBDA Margin increased to 48% during the three months ended December 31, 2022 from 36% in the three months ended December 31, 2021. These increases reflect improved operating leverage on the Recorded Music platform as a result of growth and a decrease in physical revenue, which carries a higher cost of revenue than other revenue types.

Nine Months Ended December 31, 2022 vs. Nine Months Ended December 31, 2021

Consolidated OIBDA increased by $4,333 thousand, or 18%, during the nine months ended December 31, 2022 compared to the nine months ended December 31, 2021, driven by a 57% increase in Recorded Music OIBDA.  Additionally, Other OIBDA related to the Company’s artist management business increased by $272 thousand during the nine months ended December 31, 2022 compared to the nine months ended December 31, 2021, driven by strong touring and merchandise revenue. Expressed as a percentage of revenue, OIBDA Margin decreased to 33% during the nine months ended December 31, 2022 from 34% during the nine months ended December 31, 2021, primarily as a result of increased administration expenses associated with operating as a public company, an increase in share-based compensation expense and increased costs related to acquisitions, partially offset by revenue growth.

Music Publishing OIBDA decreased by $105 thousand, or 1%, during the nine months ended December 31, 2022 compared to the nine months ended December 31, 2021. Expressed as a percentage of revenue, Music Publishing OIBDA Margin decreased to 27% during the nine months ended December 31, 2022 from 32% during the nine months ended December 31, 2021. The decreases in Music Publishing OIBDA and OIBDA Margin reflect increases in administration expenses associated with operating as a public company and higher writers’ royalties, primarily due to an updated estimate of mechanical royalties related to the recent CRB ruling, partially offset by revenue growth.

Recorded Music OIBDA increased by $4,167 thousand, or 57% during the nine months ended December 31, 2022 compared to the nine months ended December 31, 2021. Expressed as a percentage of revenue, Recorded Music OIBDA Margin increased to 48% during the nine months ended December 31, 2022 from 37% during the nine months ended December 31, 2021. These increases reflect the acquisition of Tommy Boy, improved operating leverage on the Recorded Music platform as a result of growth and a decrease in physical revenue, which carries a higher cost of revenue that other revenue types, partially offset by increases in administration expenses associated with operating as a public company.

Reconciliation of Net (Loss) Income to EBITDA and Adjusted EBITDA

The following table reconciles net (loss) income to EBITDA and Adjusted EBITDA (in thousands):

	For the Three Months								For the Nine Months
	Ended December 31,				2022 vs. 2021				Ended December 31,				2022 vs. 2021
	2022		2021		$ Change		% Change		2022		2021		$ Change		% Change
Net (loss) income	$	(4,066)	$	1,410	$	(5,476)	(388)	%	$	436	$	4,275	$	(3,839)	(90)	%
Income tax expense		3,530		395		3,135	NM			5,218		1,408		3,810	271	%
Interest expense		4,099		2,500		1,599	64	%		10,580		8,007		2,573	32	%
Amortization and depreciation		5,546		4,955		591	12	%		16,292		13,772		2,520	18	%
EBITDA		9,109		9,260		(151)	(2)	%		32,526		27,462		5,064	18	%
Loss on early extinguishment of debt(a)		914		—		914	NM			914		—		914	NM
(Gain) loss on foreign exchange(b)		(57)		48		(105)	(219)	%		(338)		(127)		(211)	166	%
Loss (gain) on fair value of swaps(c)		180		(1,664)		1,844	NM			(4,323)		(2,889)		(1,434)	NM
Non-cash share-based compensation(d)		792		1,209		(417)	(34)	%		2,409		1,426		983	69	%
Adjusted EBITDA	$	10,938	$	8,853	$	2,085	24	%	$	31,188	$	25,872	$	5,316	21	%

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.

(b)Reflects the gain on foreign exchange fluctuations.

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(c)Reflects the non-cash gain on the mark-to-market of interest rate swaps.

(d)Reflects non-cash share-based compensation expense related to the Reservoir Media, Inc. 2021 Omnibus Incentive Plan.

Three Months Ended December 31, 2022 vs. Three Months Ended December 31, 2021

Consolidated Adjusted EBITDA increased by $2,085 thousand, or 24%, during the three months ended December 31, 2022 compared to the three months ended December 31, 2021, driven primarily by an increase in revenue, partially offset by increases in cost of revenue and administration expenses, including administration expenses associated with operating as a public company.  Expressed as a percentage of revenue, Adjusted EBITDA Margin increased to 37% for the three months ended December 31, 2022 from 34% for the three months ended December 31, 2021, primarily as a result of improved operating leverage.

Nine Months Ended December 31, 2022 vs. Nine Months Ended December 31, 2021

Consolidated Adjusted EBITDA increased by $5,316 thousand, or 21%, during the nine months ended December 31, 2022 compared to the nine months ended December 31, 2021, driven primarily by an increase in revenue, partially offset by increases in cost of revenue and administration expenses, including administration expenses associated with operating as a public company. Expressed as a percentage of revenue, Adjusted EBITDA Margin was 36% for the nine months ended December 31, 2022 and December 31, 2021, which is the net result of improved operating leverage offset by nine months of public company costs in the current year with only five months of public company costs in the prior year.

Liquidity and Capital Resources

Capital Resources

As of December 31, 2022, we had $292,158 thousand of debt (net of $6,670 thousand of deferred financing costs) and $17,023 thousand of cash and cash equivalents.

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.

Cash Flows

The following table summarizes our historical cash flows (in thousands).

	For the Nine Months Ended
	December 31,
	2022		2021		$ Change
Cash provided by (used in):
Operating activities	$	26,203	$	12,851	$	13,352
Investing activities	$	(45,410)	$	(158,580)	$	113,170
Financing activities	$	19,231	$	152,534	$	(133,303)

Operating Activities

Cash provided by operating activities was $26,203 thousand for the nine months ended December 31, 2022 compared to $12,851 thousand for the nine months ended December 31, 2021. The primary drivers of the $13,352 thousand increase in cash provided by operating activities during the nine months ended December 31, 2022 as compared to the nine months ended December 31, 2021 were a decrease in cash used for working capital, primarily used for royalty advances (net of recoupments), and an increase in earnings, net of non-cash expenses.

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Investing Activities

Cash used in investing activities was $45,410 thousand for the nine months ended December 31, 2022 compared to $158,580 thousand for the nine months ended December, 2021. The decrease in cash used in investing activities was primarily due to decreased acquisitions of music catalogs compared to 2021, which included the acquisition of Tommy Boy on June 2, 2021 for approximately $100 million.

Financing Activities

Cash provided by financing activities was $19,231 thousand for the nine months ended December 31, 2022 compared to $152,534 thousand for the nine months ended December 31, 2021. The decrease in cash provided by financing activities in the nine months ended December 31, 2022 primarily reflects the Business Combination and PIPE Investment that occurred in the prior year period.

Liquidity

Our primary sources of liquidity are the cash flows generated from our subsidiaries’ operations, available cash and cash equivalents and funds available for drawing under our Senior Credit Facility (as described below). These sources of liquidity are needed to fund our debt service requirements, working capital requirements, strategic acquisitions and investments, capital expenditures and other investing and financing activities we may elect to make in the future.

We believe that our primary sources of liquidity will be sufficient to support our existing operations over the next twelve months.

Existing Debt as of December 31, 2022

As of December 31, 2022, our outstanding debt consisted of $298,828 thousand borrowed under the Senior Credit Facility. As of December 31, 2022, remaining borrowing availability under the Senior Credit Facility was $151,172 thousand.

We use cash generated from operations to service outstanding debt, consisting primarily of interest payments through maturity, and we expect to continue to refinance and extend maturity on the Senior Credit Facility for the foreseeable future.

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. The Prior Credit Facility has been amended and restated a number of times since 2014, generally leading to extensions of maturity dates and increases in the facility size.

On July 28, 2021, in connection with the consummation of the Business Combination, RMM amended and restated the Prior Credit Facility by entering the Fourth Amended and Restated Credit Agreement (the “RMM Credit Agreement”), providing RMM with a senior secured credit facility in an aggregate amount of $248,750 thousand.  On December 7, 2021, RMM entered into an amendment (the “First Amendment”) to the RMM Credit Agreement. The First Amendment amended the RMM Credit Agreement to increase RMM’s senior secured revolving credit facility from $248,750 thousand to an aggregate amount of $350,000 thousand (the “Senior Credit Facility”).

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On December 16, 2022, RMM entered into an amendment (the “Second Amendment”) to the RMM Credit Agreement.  The Second Amendment amended the RMM Credit Agreement to (i) increase RMM’s senior secured revolving credit facility from $350,000 thousand to $450,000 thousand, (ii) increase the incremental borrowing available under the facility’s accordion feature from $50,000 thousand to $150,000 thousand , (iii) extend the maturity date of the loans advanced under the RMM Credit Agreement from October 16, 2024 to December 16, 2027, (iv) modify the interest rate to be equal to either the sum of a base rate plus a margin of 1.00% or the sum of a SOFR rate plus a margin of 2.00%, in each case subject to a 0.25% increase based on a consolidated net senior debt to library value ratio, (v) remove the existing total leverage ratio financial covenant of no greater than 7.50:1.00 (net of up to $20,000 thousand of certain cash balances) as of the end of each fiscal quarter, (vi) reduce the minimum required fixed charge coverage ratio financial covenant to 1.10:1.00 and (vii) modify the consolidated senior debt to library value ratio financial covenant to 0.450, subject to certain adjustments. In connection with the Second Amendment, RMM recorded a loss on early extinguishment of debt of approximately $914 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.  RMM is also required to pay an unused fee in respect of unused commitments under the Senior Credit Facility, if any, at a rate of 0.25% per annum.

Subject to market conditions, we expect to continue to take opportunistic steps to extend our maturity dates and reduce related interest expense. From time to time, we may incur additional indebtedness for, among other things, working capital, repurchasing, redeeming or tendering for existing indebtedness and acquisitions or other strategic transactions.

Certain terms of the Senior Credit Facility are described below.

Guarantees and Security

The obligations under the Senior Credit Facility are guaranteed by us, RHI and subsidiaries of RMM. Substantially all of our, RHI’s, RMM’s and other subsidiary guarantors’ tangible and intangible assets are pledged as collateral to secure the obligations of RMM under the Senior Credit Facility, including accounts receivable, cash and cash equivalents, deposit accounts, securities accounts, commodities accounts, inventory and certain intercompany debt owing to us or our subsidiaries.

Covenants, Representations and Warranties

The Senior Credit Facility contains customary representations and warranties and customary affirmative and negative covenants. The negative covenants contained in the Senior Credit Facility limit the ability our, RHI’s, RMM’s and certain of its subsidiaries ability to, among other things, incur debt or liens, merge or consolidate with others, make investments, make cash dividends, redeem or repurchase capital stock, dispose of assets, enter into transactions with affiliates or enter into certain restrictive agreements.

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.

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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.

Non-compliance with the fixed charge coverage ratio and consolidated senior debt to library value ratio could result in the lenders, subject to customary cure rights, requiring the immediate payment of all amounts outstanding under the Senior Credit Facility, which could have a material adverse effect on our business, cash flows, financial condition and results of operations. As of December 31, 2022, with a fixed charge coverage ratio of 5.2x and a consolidated senior debt to library value ratio less than 30.3%, we were in compliance with both of the financial covenants under the Senior Credit Facility.

Interest Rate Swaps

At December 31, 2022, RMM had the following interest rate swaps outstanding, under which it pays a fixed rate and receives a floating interest payment from the counterparty based on LIBOR with reference to notional amounts adjusted to match the original scheduled principal repayments pursuant to the indenture agreement:

	Notional
	Amount at
	December 31,		Pay Fixed
Effective Date	2022		Rate		Maturity
March 10, 2022	$	8,375	1.602	%	September 2024
March 10, 2022	$	87,860	1.492	%	September 2024
December 31, 2021	$	53,765	1.042	%	September 2024

In January 2023, RMM modified these outstanding interest rate swaps to replace the floating rate interest payments received from the counterparty based on LIBOR to floating rate interest payments received from the counterparty based on SOFR, with corresponding adjustments to the fixed rates paid by RMM.  The change in the reference rate in these interest rate swaps from LIBOR to SOFR did not have a material impact on the Company’s consolidated financial statements.

On March 10, 2022, two previous interest rate swaps expired with original notional amounts of $40,228 thousand and $59,325 thousand. Those interest rate swaps were replaced by two new swaps with original notional amounts of $88,090 thousand and $8,875 thousand which add to a third interest rate swap with an original notional amount of $53,030 thousand.  All three current interest rate swaps mature on September 30, 2024, and RMM pays fixed rates of 1.492%, 1.602% and 1.042%, respectively, to the counterparty and received a floating interest payment from the counterparty based on LIBOR with reference to notional amounts adjusted to match the original scheduled principal repayments pursuant to the indenture agreement.

Dividends

Our ability to pay dividends is restricted by covenants in the Senior Credit Facility. We did not pay any dividends to stockholders during the three and nine months ended December 31, 2022.

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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. 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. It could also be affected by the severity and duration of natural or man-made disasters, including pandemics such as the COVID-19 pandemic. 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 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 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.

Contractual and Other Obligations

As of December 31, 2022, there have been no material changes, outside the ordinary course of business, in our contractual obligations since March 31, 2022. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Contractual and Other Obligations” in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on June 21, 2022 for information regarding our contractual obligations.

Critical Accounting Policies

As of December 31, 2022, there have been no material changes to our critical accounting policies since March 31, 2022. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies” in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on June 21, 2022 for information regarding our critical accounting policies. We believe that our accounting policies involve a high degree of judgment and complexity. Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of our operations. The preparation of our condensed consolidated financial statements in conformity with US GAAP requires us to make estimates and judgments that affect the amounts reported in those condensed consolidated financial statements and the accompanying notes thereto. The future effects of the COVID-19 pandemic on our results of operations, cash flows and financial position are unclear. However, we believe we have used reasonable estimates and assumptions in preparing the condensed consolidated financial statements. 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.

Off-Balance Sheet Arrangements

As of December 31, 2022, we had no off-balance sheet arrangements.

New Accounting Pronouncements

See Note 3, “Recent Accounting Pronouncements” to the accompanying unaudited condensed consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this Item 3, “Quantitative and Qualitative Disclosures About Market Risk.”

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Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of December 31, 2022, as such term is defined in Rules 13a-15(e) and 15(d)-15(e) under the Exchange Act.

Based on this evaluation, our principal executive officer and principal financial and accounting officer have concluded that during the period covered by this Quarterly Report, our disclosure controls and procedures were not effective due to the material weaknesses in internal control over financial reporting identified in the Annual Report. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. Our previously identified material weaknesses in internal control over financial reporting relate to (i) an ineffective control environment due to improper segregation of duties and a lack of qualified personnel to address certain complex accounting transactions, and (ii) an ineffective risk assessment process resulting in improper design of control activities to address certain risks of material misstatement. These material weaknesses resulted in immaterial misstatements in our previously reported consolidated financial statements for the fiscal years ended March 31, 2020, and 2021, and unaudited interim condensed consolidated financial information for each of the quarterly and fiscal year-to-date periods ended December 31, 2020, and 2021, related to the accounting for the acquisition of certain music catalogs, which were corrected prior to issuance of our consolidated financial statements for the fiscal year ended March 31, 2022. Notwithstanding these material weaknesses, management has concluded that the consolidated financial statements included in this Quarterly Report are fairly stated in all material respects in accordance with U.S. GAAP.

We continue to take steps to remediate the material weaknesses described above by hiring additional qualified accounting personnel and further evolving our accounting processes. We will not be able to fully remediate these material weaknesses until these steps have been completed and we have been operating effectively for a sufficient period of time.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the three months ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Controls and Procedures

Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all cases of error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

We may, from time to time, become involved in various legal and administrative proceedings, claims, lawsuits and/or other actions incidental to the conduct of our business. Some of these legal and administrative proceedings, claims, lawsuits and/or other actions may be material and involve highly complex issues that are subject to substantial uncertainties and could result in damages, fines, penalties, non-monetary sanctions or relief. We recognize provisions for claims or pending litigation when we determine that an unfavorable outcome is probable and the amount of loss can be reasonably estimated. Due to the inherently uncertain nature of litigation, the ultimate outcome or actual cost of settlement may materially vary from estimates. As of the date of this Quarterly Report, we are not involved in any legal proceedings that we believe could have a material adverse effect on our business, financial condition and/or results of operations.

Item 1A. Risk Factors.

There have been no material changes in the Company’s risk factors from those disclosed in Part I, Item 1A to the Company’s Annual Report for the year ended March 31, 2022. The risk factors disclosed in the Annual Report, in addition to the other information set forth in this report, could materially affect our business, financial condition or results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

There have been no other unregistered sales of equity securities during the three months ended December 31, 2022, which have not been previously disclosed on a Current Report on Form 8-K.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

44

Item 6. Exhibits

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report.

No.	Description of Exhibit
10.1	Second Amendment to the Fourth Amended and Restated Credit Agreement, dated as of December 16, 2022 by and among Reservoir Media Management, Inc., Reservoir Media, Inc., the other loan parties party thereto from time to time, the lenders party thereto from time to time and Truist Bank, as administrative agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on December 20, 2022)
31.1*	Certification of Chief Executive Officer Pursuant to Securities Exchange Act Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer Pursuant to Securities Exchange Act Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	Inline XBRL Instance Document.
101.SCH*	Inline XBRL Taxonomy Extension Schema Document.
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*	Inline XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

† Certain of the schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant hereby undertakes to furnish copies of any of the omitted schedules or exhibits upon request by the SEC.

* Filed herewith.

** Furnished herewith.

45

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	RESERVOIR MEDIA, INC.
Date: February 8, 2023	By:	/s/ Golnar Khosrowshahi
		Name: Golnar Khosrowshahi
		Title: Chief Executive Officer (Principal Executive Officer)
Date: February 8, 2023	By:	/s/ Jim Heindlmeyer
		Name: Jim Heindlmeyer
		Title: Chief Financial Officer
		(Principal Financial and Accounting Officer)

46

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13A-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Golnar Khosrowshahi, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Reservoir Media, Inc. (the “registrant”);

2. Based on my knowledge, this Quarterly Report on Form 10-Q does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Quarterly Report on Form 10-Q;

3. Based on my knowledge, the financial statements, and other financial information included in this Quarterly Report on Form 10-Q, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Quarterly Report on Form 10-Q;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Securities Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) (Paragraph omitted pursuant to SEC Release Nos. 33-8238/34-47986 and 33-8392/34-49313);

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Quarterly Report on Form 10-Q our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Quarterly Report on Form 10-Q based on such evaluation; and

d) Disclosed in this Quarterly Report on Form 10-Q any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 8, 2023
	By:	/s/ Golnar Khosrowshahi
		Name: Golnar Khosrowshahi
		Title: Chief Executive Officer (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO RULE 13A-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jim Heindlmeyer, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Reservoir Media, Inc. (the “registrant”);

2. Based on my knowledge, this Quarterly Report on Form 10-Q does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Quarterly Report on Form 10-Q;

3. Based on my knowledge, the financial statements, and other financial information included in this Quarterly Report on Form 10-Q, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Quarterly Report on Form 10-Q;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Securities Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) (Paragraph omitted pursuant to SEC Release Nos. 33-8238/34-47986 and 33-8392/34-49313);

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Quarterly Report on Form 10-Q our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Quarterly Report on Form 10-Q based on such evaluation; and

d) Disclosed in this Quarterly Report on Form 10-Q any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 8, 2023
	By:	/s/ Jim Heindlmeyer
		Name: Jim Heindlmeyer
		Title: Chief Financial Officer
		(Principal Financial and Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Reservoir Media, Inc. (the “Company”) for the period ended December 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Golnar Khosrowshahi, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended, that:

● the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

● the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: February 8, 2023
	By:	/s/ Golnar Khosrowshahi
		Name: Golnar Khosrowshahi
		Title: Chief Executive Officer (Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Reservoir Media, Inc. (the “Company”) for the period ended December 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jim Heindlmeyer, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended, that:

● the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

● the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: February 8, 2023
	By:	/s/ Jim Heindlmeyer
		Name: Jim Heindlmeyer
		Title: Chief Financial Officer
		(Principal Financial and Accounting Officer)

XML

Document and Entity Information - shares	9 Months Ended
	Dec. 31, 2022	Feb. 06, 2023
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Dec. 31, 2022
Document Transition Report	false
Entity File Number	001-39795
Entity Registrant Name	RESERVOIR MEDIA, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	83-3584204
Entity Address, Address Line One	200 Varick Street
Entity Address, Address Line Two	Suite 801A
Entity Address, City or Town	NY
Entity Address State Or Province	NY
Entity Address, Postal Zip Code	10014
City Area Code	212
Local Phone Number	675-0541
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		64,385,198
Entity Central Index Key	0001824403
Current Fiscal Year End Date	--03-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q3
Amendment Flag	false
Common Stock
Title of 12(b) Security	Common Stock, $0.0001 par value per share (the “Common Stock”)
Trading Symbol	RSVR
Security Exchange Name	NASDAQ
Warrants to purchase one share of Class A common stock, each at an exercise price of $11.50 per share
Title of 12(b) Security	Warrants to purchase one share of CommonStock, each at an exercise price of $11.50 per share
Trading Symbol	RSVRW
Security Exchange Name	NASDAQ

XML

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) - USD ($)	3 Months Ended		9 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
Revenues	$ 29,931,413	$ 25,812,556	$ 87,475,894	$ 72,718,351
Costs and expenses:
Cost of revenue	11,750,296	11,436,180	35,665,462	31,220,470
Amortization and depreciation	5,546,301	4,955,036	16,292,145	13,771,887
Administration expenses	8,035,758	6,731,953	23,031,248	17,051,623
Total costs and expenses	25,332,355	23,123,169	74,988,855	62,043,980
Operating income	4,599,058	2,689,387	12,487,039	10,674,371
Interest expense	(4,098,910)	(2,499,576)	(10,579,788)	(8,007,453)
Loss on early extinguishment of debt	(914,040)		(914,040)
Gain (loss) on foreign exchange	56,973	(48,304)	337,659	126,635
(Loss) gain on fair value of swaps	(179,573)	1,663,743	4,323,207	2,888,961
Interest and other income	43	2	90	357
(Loss) income before income taxes	(536,449)	1,805,252	5,654,167	5,682,871
Income tax expense	3,529,984	395,251	5,217,691	1,407,989
Net (loss) income	(4,066,433)	1,410,001	436,476	4,274,882
Net income attributable to noncontrolling interests	(340,190)	(226,930)	(230,127)	(95,439)
Net (loss) income attributable to Reservoir Media, Inc.	$ (4,406,623)	$ 1,183,071	$ 206,349	$ 4,179,443
(Loss) earnings per common share (Note 15):
Basic	$ (0.07)	$ 0.02		$ 0.07
Diluted	$ (0.07)	$ 0.02		$ 0.07
Weighted average common shares outstanding (Note 15):
Basic	64,379,536	64,106,963	64,316,532	48,836,288
Diluted	64,379,536	64,716,756	64,765,381	56,405,487

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($)	3 Months Ended		9 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Net (loss) income	$ (4,066,433)	$ 1,410,001	$ 436,476	$ 4,274,882
Other comprehensive income (loss):
Translation adjustments	4,652,084	155,092	(5,283,489)	(1,409,203)
Total comprehensive income (loss)	585,651	1,565,093	(4,847,013)	2,865,679
Comprehensive income attributable to noncontrolling interests	(340,190)	(226,930)	(230,127)	(95,439)
Total comprehensive income (loss) attributable to Reservoir Media, Inc.	$ 245,461	$ 1,338,163	$ (5,077,140)	$ 2,770,240

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Dec. 31, 2022	Mar. 31, 2022
Current assets
Cash and cash equivalents	$ 17,022,824	$ 17,814,292
Accounts receivable	26,846,808	25,210,936
Current portion of royalty advances	14,362,383	12,375,420
Inventory and prepaid expenses	5,854,743	4,041,471
Total current assets	64,086,758	59,442,119
Intangible assets, net	587,826,761	571,383,855
Equity method and other investments	2,267,036	3,912,978
Royalty advances, net of current portion	48,522,430	44,637,334
Property, plant and equipment, net	512,652	342,080
Operating lease right of use assets, net	7,578,783
Fair value of swap assets	8,315,009	3,991,802
Other assets	1,169,546	559,922
Total assets	720,278,975	684,270,090
Current liabilities
Accounts payable and accrued liabilities	5,908,549	4,436,943
Royalties payable	32,089,550	21,235,815
Accrued payroll	1,011,721	1,938,281
Deferred revenue	2,743,424	1,103,664
Other current liabilities	3,698,396	12,272,577
Income taxes payable	1,625,607	77,496
Total current liabilities	47,077,247	41,064,776
Secured line of credit	292,158,064	269,856,169
Deferred income taxes	28,056,203	24,884,170
Operating lease liabilities, net of current portion	7,333,559
Other liabilities	799,516	1,012,651
Total liabilities	375,424,589	336,817,766
Contingencies and commitments (Note 17)
Shareholders' Equity
Preferred stock, $0.0001 par value 75,000,000 shares authorized, 0 shares issued and outstanding at December 31, 2022 and March 31, 2022
Common stock, $0.0001 par value; 750,000,000 shares authorized, 64,385,198 issued and outstanding at December 31, 2022; 64,150,186 issued and outstanding at March 31, 2022	6,438	6,415
Additional paid-in capital	337,622,033	335,372,981
Retained earnings	12,419,868	12,213,519
Accumulated other comprehensive loss	(6,481,547)	(1,198,058)
Total Reservoir Media, Inc. shareholders' equity	343,566,792	346,394,857
Noncontrolling interest	1,287,594	1,057,467
Total shareholders' equity	344,854,386	347,452,324
Total liabilities and shareholders' equity	$ 720,278,975	$ 684,270,090

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2022	Mar. 31, 2022
CONDENSED CONSOLIDATED BALANCE SHEETS
Preferred stock, par value, (per share)	$ 0.0001	$ 0.0001
Preferred stock, shares, authorized	75,000,000	75,000,000
Preferred stock, shares, issued	0	0
Preferred stock, shares, outstanding	0	0
Common shares, par value (per share)	$ 0.0001	$ 0.0001
Common stock, shares, authorized	750,000,000	750,000,000
Common stock, shares, issued	64,385,198	64,150,186
Common stock, shares, outstanding	64,385,198	64,150,186

XML

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($)	Preferred Stock	Common Stock	Additional paid-in capital	Retained earnings (Accumulated deficit)	Accumulated other comprehensive income (loss)	Noncontrolling interests	Total
Beginning balance at Mar. 31, 2021	$ 81,632,500	$ 2,854	$ 110,496,300	$ (863,108)	$ 2,096,358	$ 1,005,697	$ 194,370,601
Beginning balance (in shares) at Mar. 31, 2021	16,175,406	28,539,299
Increase (Decrease) in Stockholders' Equity
Share-based compensation			25,675				25,675
Net (loss) income				(1,452,998)		(53,983)	(1,506,981)
Other comprehensive loss					215,142		215,142
Ending balance at Jun. 30, 2021	$ 81,632,500	$ 2,854	110,521,975	(2,316,106)	2,311,500	951,714	193,104,437
Ending balance (in shares) at Jun. 30, 2021	16,175,406	28,539,299
Beginning balance at Mar. 31, 2021	$ 81,632,500	$ 2,854	110,496,300	(863,108)	2,096,358	1,005,697	194,370,601
Beginning balance (in shares) at Mar. 31, 2021	16,175,406	28,539,299
Increase (Decrease) in Stockholders' Equity
Net (loss) income							4,274,882
Ending balance at Dec. 31, 2021		$ 6,414	334,697,889	3,316,335	687,155	1,101,136	339,808,929
Ending balance (in shares) at Dec. 31, 2021		64,138,639
Beginning balance at Jun. 30, 2021	$ 81,632,500	$ 2,854	110,521,975	(2,316,106)	2,311,500	951,714	193,104,437
Beginning balance (in shares) at Jun. 30, 2021	16,175,406	28,539,299
Increase (Decrease) in Stockholders' Equity
Share-based compensation			191,478				191,478
RHI Preferred Stock Conversion	$ (81,632,500)	$ 1,618	81,630,882
RHI Preferred Stock Conversion (in shares)	(16,175,406)	16,175,406
Business Combination and PIPE Investment, net of transaction costs		$ 1,935	141,144,876				141,146,811
Business Combination and PIPE Investment, net of transaction costs (in shares)		19,354,548
Net (loss) income				4,449,370		(77,508)	4,371,862
Other comprehensive loss					(1,779,437)		(1,779,437)
Ending balance at Sep. 30, 2021		$ 6,407	333,489,211	2,133,264	532,063	874,206	337,035,151
Ending balance (in shares) at Sep. 30, 2021		64,069,253
Increase (Decrease) in Stockholders' Equity
Share-based compensation			1,208,685				1,208,685
Issuance of common shares		$ 7	(7)
Issuance of common shares (in shares)		69,386
Net (loss) income				1,183,071		226,930	1,410,001
Other comprehensive loss					155,092		155,092
Ending balance at Dec. 31, 2021		$ 6,414	334,697,889	3,316,335	687,155	1,101,136	339,808,929
Ending balance (in shares) at Dec. 31, 2021		64,138,639
Beginning balance at Mar. 31, 2022		$ 6,415	335,372,981	12,213,519	(1,198,058)	1,057,467	347,452,324
Beginning balance (in shares) at Mar. 31, 2022		64,150,186
Increase (Decrease) in Stockholders' Equity
Share-based compensation			359,461				359,461
Vesting of restricted stock units, net of shares withheld for employee taxes		$ 14	(475,872)				(475,858)
Vesting of restricted stock units, net of shares withheld for employee taxes (in shares)		140,138
Reclassification of liability-classified awards to equity-classified awards			961,429				961,429
Net (loss) income				76,039		(59,218)	16,821
Other comprehensive loss					(5,011,563)		(5,011,563)
Ending balance at Jun. 30, 2022		$ 6,429	336,217,999	12,289,558	(6,209,621)	998,249	343,302,614
Ending balance (in shares) at Jun. 30, 2022		64,290,324
Beginning balance at Mar. 31, 2022		$ 6,415	335,372,981	12,213,519	(1,198,058)	1,057,467	347,452,324
Beginning balance (in shares) at Mar. 31, 2022		64,150,186
Increase (Decrease) in Stockholders' Equity
Net (loss) income							436,476
Ending balance at Dec. 31, 2022		$ 6,438	337,622,033	12,419,868	(6,481,547)	1,287,594	344,854,386
Ending balance (in shares) at Dec. 31, 2022		64,385,198
Beginning balance at Jun. 30, 2022		$ 6,429	336,217,999	12,289,558	(6,209,621)	998,249	343,302,614
Beginning balance (in shares) at Jun. 30, 2022		64,290,324
Increase (Decrease) in Stockholders' Equity
Share-based compensation			596,184				596,184
Vesting of restricted stock units, net of shares withheld for employee taxes		$ 8	(8)
Vesting of restricted stock units, net of shares withheld for employee taxes (in shares)		83,580
Reclassification of liability-classified awards to equity-classified awards			145,000				145,000
Net (loss) income				4,536,933		(50,845)	4,486,088
Other comprehensive loss					(4,924,010)		(4,924,010)
Ending balance at Sep. 30, 2022		$ 6,437	336,959,175	16,826,491	(11,133,631)	947,404	343,605,876
Ending balance (in shares) at Sep. 30, 2022		64,373,904
Increase (Decrease) in Stockholders' Equity
Share-based compensation			605,146				605,146
Stock option exercises		$ 1	57,712				57,713
Stock option exercises (in shares)		11,294
Net (loss) income				(4,406,623)		340,190	(4,066,433)
Other comprehensive loss					4,652,084		4,652,084
Ending balance at Dec. 31, 2022		$ 6,438	$ 337,622,033	$ 12,419,868	$ (6,481,547)	$ 1,287,594	$ 344,854,386
Ending balance (in shares) at Dec. 31, 2022		64,385,198

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	9 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Cash flows from operating activities:
Net income	$ 436,476	$ 4,274,882
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of intangible assets	16,152,354	13,646,413
Depreciation of property, plant and equipment	139,791	125,474
Share-based compensation	2,408,677	1,425,838
Non-cash interest charges	1,738,414	1,067,946
Loss on early extinguishment of debt	914,040
Gain on fair value of swaps	(4,323,207)	(2,888,961)
Share of earnings of equity affiliates, net of tax	(34,131)
Dividend from equity affiliates	62,304	17,584
Deferred income taxes	3,658,643	489,443
Changes in operating assets and liabilities:
Accounts receivable	(1,635,872)	(2,734,615)
Inventory and prepaid expenses	(1,813,272)	(3,136,275)
Royalty advances	(5,872,059)	(9,880,464)
Other assets and liabilities	(483,961)	345,682
Accounts payable and accrued liabilities	13,307,088	10,107,397
Income taxes payable	1,548,111	(9,053)
Net cash provided by operating activities	26,203,396	12,851,291
Cash flows from investing activities:
Purchases of music catalogs	(45,099,964)	(155,992,828)
Investment in equity method and other investments		(2,464,486)
Purchase of property, plant and equipment	(310,363)	(122,762)
Net cash used for investing activities	(45,410,327)	(158,580,076)
Cash flows from financing activities:
Proceeds from Business Combination and PIPE Investment, net of issuance costs		141,146,811
Proceeds from secured line of credit	23,182,694	89,554,866
Repayments of secured line of credit		(55,000,000)
Repayments of secured loans		(18,500,000)
Proceeds from stock option exercises	57,713
Taxes paid related to net share settlement of restricted stock units	(475,858)
Deferred financing costs paid	(3,533,253)	(4,377,473)
Repayments of related party loans		(81,203,792)
Draws on related party loans		80,913,620
Net cash provided by financing activities	19,231,296	152,534,032
Foreign exchange impact on cash	(815,833)	(1,382,372)
(Decrease) Increase in cash and cash equivalents	(791,468)	5,422,875
Cash and cash equivalents beginning of period	17,814,292	9,209,920
Cash and cash equivalents end of period	$ 17,022,824	$ 14,632,795

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DESCRIPTION OF BUSINESS

9 Months Ended

Dec. 31, 2022

DESCRIPTION OF BUSINESS

DESCRIPTION OF BUSINESS

NOTE 1. DESCRIPTION OF BUSINESS

Reservoir Media, Inc. (formerly known as Roth CH Acquisition II Co. (“ROCC”)), a Delaware corporation (the “Company”), is an independent music company based in New York City, New York and with offices in Los Angeles, Nashville, Toronto, London and Abu Dhabi.

On July 28, 2021 (the “Closing Date”), ROCC consummated the acquisition of Reservoir Holdings, Inc., a Delaware corporation (“RHI”), pursuant to the agreement and plan of merger, dated as of April 14, 2021 (the “Merger Agreement”), by and among ROCC, Roth CH II Merger Sub Corp., a Delaware corporation and a wholly-owned subsidiary of ROCC (“Merger Sub”), and RHI. On the Closing Date, Merger Sub merged with and into RHI, with RHI surviving the merger as a wholly-owned subsidiary of ROCC (the “Business Combination”). In connection with the consummation of the Business Combination, “Roth CH Acquisition II Co.” was renamed “Reservoir Media, Inc.” effective as of the Closing Date. The common stock, $0.0001 par value per share, of the Company (the “Common Stock”) and warrants are traded on The Nasdaq Stock Market LLC (“NASDAQ”) under the ticker symbols “RSVR” and “RSVRW,” respectively.

The Business Combination was accounted for as a reverse recapitalization, with RHI determined to be the accounting acquirer and the Company as the acquired company for accounting purposes. All historical financial information presented in the unaudited condensed consolidated financial statements represents the accounts of RHI and its consolidated subsidiaries as if RHI is the predecessor to the Company. See Note 4, “Business Combination and PIPE Investment” for additional information with respect to the Business Combination and related transactions.

The Company’s activities are organized into two operating segments: Music Publishing and Recorded Music. Operations of the Music Publishing segment involve the acquisition of interests in music catalogs from which royalties are earned as well as signing songwriters to exclusive agreements which give the Company an interest in the future delivery of songs. The publishing catalog includes ownership or control rights to more than 140,000 musical compositions that span across historic pieces, motion picture scores and current award-winning hits. Operations of the Recorded Music segment involve the acquisition of sound recording catalogs as well as the discovery and development of recording artists and the marketing, distribution, sale and licensing of the music catalog. The Recorded Music operations are primarily conducted through the Chrysalis Records platform and Tommy Boy Music, LLC (“Tommy Boy”), acquired in June 2021, and include the ownership of over 36,000 sound recordings. See Note 6, “Acquisitions” for additional information with respect to the Tommy Boy acquisition.

COVID-19 Pandemic

In March 2020, the World Health Organization characterized the coronavirus (“COVID-19”) as a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency. Government-imposed restrictions and general behavioral changes in response to the pandemic adversely affected the Company’s results of operations for the three and nine months ended December  31, 2022 and 2021. This included performance revenue generated from retail, restaurants, bars, gyms and live shows, synchronization revenue, and the release schedule of physical product. Even as government restrictions are lifted and consumer behavior starts to return to pre-pandemic norms, it is unclear for how long and to what extent the Company’s operations will continue to be affected.

Although the Company has not made material changes to any estimates or judgments that impact its consolidated financial statements as a result of COVID-19, the extent to which the COVID-19 pandemic may impact the Company will depend on future developments, which are highly uncertain and cannot be predicted. Future developments surrounding the COVID-19 pandemic could negatively affect the Company’s operating results, including reductions in revenue and cash flow and could impact the Company’s impairment assessments of accounts receivable or intangible assets, which may be material to our consolidated financial statements.

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BASIS OF PRESENTATION

9 Months Ended

Dec. 31, 2022

BASIS OF PRESENTATION

BASIS OF PRESENTATION

NOTE 2. BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and its majority-owned subsidiaries and have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information. All intercompany transactions and balances have been eliminated in these condensed consolidated financial statements. Certain information and note disclosures typically included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s audited financial statements as of and for the fiscal years ended March 31, 2022 and 2021.

The condensed consolidated balance sheet of the Company as of March 31, 2022, included herein, was derived from the audited financial statements as of that date, but does not include all disclosures, including certain notes required by US GAAP on an annual reporting basis.

In the opinion of management, the accompanying condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations and cash flows for the interim periods. The results for the three and nine months ended December 31, 2022 are not necessarily indicative of the results to be expected for any subsequent quarter, the fiscal year ending March 31, 2023 or any other period.

The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosure of contingent assets and liabilities. Significant estimates are used for, but not limited to, determining useful lives of intangible assets, intangible asset recoverability and impairment and accrued revenue. Actual results could differ from these estimates.

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RECENT ACCOUNTING PRONOUNCEMENTS

9 Months Ended

Dec. 31, 2022

RECENT ACCOUNTING PRONOUNCEMENTS

RECENT ACCOUNTING PRONOUNCEMENTS

NOTE 3. RECENT ACCOUNTING PRONOUNCEMENTS

Accounting Standards Not Yet Adopted

In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-03, “Financial Instruments–Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-03”), which replaces the incurred loss impairment methodology in current US GAAP with a methodology that reflects expected credit losses. Subsequent to ASU 2016-03, the FASB has issued several related ASUs amending the original ASU 2016-03. The updates are intended to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. For public entities, ASU 2016-03 was effective for annual reporting periods beginning after December 15, 2019, including interim periods within that annual reporting period. For the Company, ASU 2016-03 is effective beginning April 1, 2023, including interim periods within that fiscal year, with early adoption permitted for annual periods beginning after December 15, 2018. The Company does not expect the adoption of ASU 2016-03 will have a material effect on the Company’s consolidated financial statements.

In April 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848)” (“ASU 2020-04”), which provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting; particularly as it relates to the risk of cessation of LIBOR. The amendments in ASU 2020-04 apply only to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. In December 2022, the FASB issued ASU 2022-06, “Deferral of the Sunset Date of Topic 848” (“ASU 2022-06”) which deferred the sunset date of ASU 2020-04.  Following the issuance of ASU 2022-06, the expedients and exceptions provided by ASU 2020-04 do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2024, except for hedging relationships existing as of December 31, 2024, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. As discussed in Note 9 “Secured Line of Credit” the Senior Credit Facility was amended on December 16, 2022, including the modification of the indexed interest rate from LIBOR to SOFR effective on the amendment date.  Additionally, in January 2023, RMM modified its outstanding interest rate swaps to replace the floating rate interest payments received from the counterparty based on LIBOR to floating rate interest payments received from the counterparty based on SOFR, with corresponding adjustments to the fixed rates paid by RMM.  Consequently, ASU 2020-04 will not have a material effect on the Company’s consolidated financial statements.

Accounting Standards Recently Adopted

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which established a new ASC Topic 842, “Leases” (“ASC 842”) that introduced a right-of-use (“ROU”) model that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases with terms longer than twelve months. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the consolidated statements of income. The Company adopted the new standard beginning April 1, 2022 (the “effective date”), using a modified retrospective transition approach with application as of the effective date as the date of initial application without restating comparative period financial statements.

The new guidance also provides several practical expedients and policies that companies may elect. The Company elected the package of practical expedients under which it did not reassess the classification of its existing leases, reevaluate whether any expired or existing contracts are or contain leases or reassess initial direct costs under the new guidance. Rather, the Company retained the conclusions reached for these items under ASC Topic 840, Leases. Additionally, the Company elected a practical expedient to not separate non-lease components, such as common area maintenance, from lease components. The Company did not elect the practical expedient that permits a reassessment of lease terms for existing leases.

Upon its transition to the new guidance, the Company recognized approximately $2.1 million of operating lease liabilities and corresponding ROU assets. As the rates implicit in the Company’s leases are not readily determinable, the Company used its incremental borrowing rate based on the information available at the effective date to determine the present value of lease payments. This rate is based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments. The adoption of this new guidance will not have a material impact on the amount or timing of the Company’s cash flows or liquidity.

In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes” (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. The Company adopted ASU 2019-12 on April 1, 2022 and this adoption did not have a material impact to the Company’s consolidated financial statements or the Company’s disclosures.

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BUSINESS COMBINATION AND PIPE INVESTMENT

9 Months Ended

Dec. 31, 2022

BUSINESS COMBINATION AND PIPE INVESTMENT

BUSINESS COMBINATION AND PIPE INVESTMENT

NOTE 4. BUSINESS COMBINATION AND PIPE INVESTMENT

As discussed in Note 1, “Description of Business,” on the Closing Date, the Company consummated the Business Combination pursuant to the terms of the Merger Agreement. The Business Combination was accounted for as a reverse recapitalization in accordance with US GAAP, primarily because former shareholders of RHI continue to control the Company upon closing of the Business Combination. Under this method of accounting, the Company is treated as the “acquired” company for accounting purposes and the Business Combination is treated as the equivalent of RHI issuing stock for the net assets of the Company, accompanied by a recapitalization. The net assets of the Company are stated at historical cost, with no goodwill or intangible assets recorded. In addition, all historical financial information presented in the unaudited condensed consolidated financial statements represents the accounts of RHI and its consolidated subsidiaries as if RHI is the predecessor to the Company.

Immediately prior to the consummation of the Business Combination, each share of Series A preferred stock, par value $0.00001 per share, of RHI (the “RHI Preferred Stock”) that was issued and outstanding was automatically converted into a number of shares of common stock, par value $0.00001 per share, of RHI (the “RHI Common Stock”) at the then-effective conversion rate as calculated pursuant RHI’s second amended and restated certificate of incorporation (the “RHI Preferred Stock Conversion”). Additionally, each share of RHI Common Stock (including the RHI Common Stock resulting from the RHI Preferred Stock Conversion) that was issued and outstanding immediately prior to the consummation of the Business Combination was canceled and converted into the right to receive 196.06562028646 (the “Exchange Ratio”) shares of Common Stock. Furthermore, each option to acquire a share of RHI Common Stock that was outstanding immediately prior to the consummation of the Business Combination became fully vested in accordance with the original terms of the awards and was converted into an option to purchase shares of Common Stock (each option, an “RMI Exchanged Option”), with the number of shares of Common Stock subject to the options and exercise price of each RMI Exchanged Option adjusted commensurately with the Exchange Ratio.

In connection with the Business Combination, ROCC entered into subscription agreements with certain accredited investors (the “PIPE Investors”), pursuant to which ROCC issued 15,000,000 shares of common stock, par value $0.0001 per share, of ROCC (the “ROCC Common Stock”) at a purchase price of $10.00 per share for an aggregate purchase price of $150.0 million (the “PIPE Investment”). ROCC consummated the PIPE Investment immediately prior to the consummation of the Business Combination.

Approximately $20,900,000 of transaction fees and expenses were incurred in connection with the closing of the Business Combination and the PIPE Investment, which have been accounted for as a reduction in proceeds.

A portion of the proceeds from the Business Combination and the PIPE Investment was used to pay transaction fees and expenses, and approximately $81,300,000 was used to retire the Tommy Boy Related Party Notes (as defined below) and related accrued interest, repay the secured loan outstanding in an amount of $18,250,000 and make a payment totaling $36,750,000 on the secured line of credit in connection with a refinancing of the Previous Credit Facilities. See Note 9, “Secured Line of Credit” for additional information with respect to the Company’s financing arrangements.

On the Closing Date, the Company also amended and restated its certificate of incorporation to adjust the number of its authorized shares of capital stock to 750,000,000 shares of Common Stock and 75,000,000 shares of preferred stock.

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REVENUE RECOGNITION

9 Months Ended

Dec. 31, 2022

REVENUE RECOGNITION

REVENUE RECOGNITION

NOTE 5. REVENUE RECOGNITION

For the Company’s operating segments, Music Publishing and Recorded Music, the Company accounts for a contract when it has legally enforceable rights and obligations and collectability of consideration is probable. The Company identifies the performance obligations and determines the transaction price associated with the contract. Revenue is recognized when, or as, control of the promised services or goods is transferred to the Company’s customers, and in an amount that reflects the consideration the Company is contractually due in exchange for those services or goods. Certain of the Company’s arrangements include licenses of intellectual property with consideration in the form of sales- and usage-based royalties. Royalty revenue is recognized when the subsequent sale or usage occurs using the best estimates available of the amounts that will be received by the Company. The Company recognized revenue of $3,478,970 and $1,210,132 from performance obligations satisfied in previous periods for the nine months ended December 31, 2022 and 2021, respectively. The increase in revenue recognized from performance obligations satisfied in previous periods is impacted by an updated estimate of Music Publishing royalties based on the Company’s current estimate of effects arising from the July 2022 ruling by the U.S. Copyright Royalty Board (the “CRB”) to affirm increases to the statutory royalty rate structure for mechanical royalties in the U.S. for the period 2018 to 2022.  For much of the period between 2018 and 2022, most digital service providers have accounted and submitted payment to the Company using the applicable 2017 rate while the remand process took place.

Disaggregation of Revenue

The Company’s revenue consisted of the following categories during the three and nine months ended December 31, 2022 and 2021:

	Three Months Ended December 31,				Nine Months Ended December 31,
	2022		2021		2022		2021
Revenue by Type
Digital	$	10,717,506	$	8,331,669	$	32,428,357	$	26,503,799
Performance		4,407,361		3,454,835		12,355,228		10,461,131
Synchronization		3,670,065		2,426,601		11,382,565		8,513,259
Mechanical		589,209		741,649		2,104,190		2,108,872
Other		770,990		2,734,586		2,394,879		4,386,722
Total Music Publishing		20,155,131		17,689,340		60,665,219		51,973,783
Digital		5,246,986		4,499,408		16,122,688		12,002,943
Physical		1,104,207		1,254,258		3,252,740		4,739,055
Neighboring rights		822,106		573,036		2,248,387		1,363,710
Synchronization		388,305		1,181,661		2,402,179		1,588,658
Total Recorded Music		7,561,604		7,508,363		24,025,994		19,694,366
Other revenue		2,214,678		614,853		2,784,681		1,050,202
Total revenue	$	29,931,413	$	25,812,556	$	87,475,894	$	72,718,351

	Three Months Ended December 31,				Nine Months Ended December 31,
	2022		2021		2022		2021
Revenue by Geographical Location
United States Music Publishing	$	11,187,010	$	8,676,305	$	35,946,459	$	26,266,349
United States Recorded Music		4,188,061		3,574,200		12,958,074		10,143,238
United States other revenue		2,214,678		614,853		2,784,681		1,050,202
Total United States		17,589,749		12,865,358		51,689,214		37,459,789
International Music Publishing		8,968,121		9,013,035		24,718,760		25,707,434
International Recorded Music		3,373,543		3,934,163		11,067,920		9,551,128
Total International		12,341,664		12,947,198		35,786,680		35,258,562
Total revenue	$	29,931,413	$	25,812,556	$	87,475,894	$	72,718,351

Only the United States represented 10% or more of the Company’s total revenues in the three and nine months ended December 31, 2022 and 2021.

Deferred Revenue

The following table reflects the change in deferred revenue during the nine months ended December 31, 2022 and 2021:

	Nine Months Ended December 31,
	2022		2021
Balance at beginning of period	$	1,103,664	$	1,337,987
Cash received during period		4,977,624		3,891,627
Revenue recognized during period		(3,337,864)		(3,591,297)
Balance at end of period	$	2,743,424	$	1,638,317

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ACQUISITIONS

9 Months Ended

Dec. 31, 2022

ACQUISITIONS

ACQUISITIONS

NOTE 6. ACQUISITIONS

In the ordinary course of business, the Company regularly acquires publishing and recorded music catalogs, which are typically accounted for as asset acquisitions. During the nine months ended December 31, 2022 and 2021, the Company completed such acquisitions totaling $36,264,222 and $159,003,542, respectively, inclusive of deferred acquisition payments.

The Company did not complete any individually significant acquisition transactions during the nine months ended December 31, 2022. On June 2, 2021, the Company acquired U.S. based record label and music publishing company Tommy Boy for approximately $100 million, which was the most significant acquisition transaction during the nine months ended December 31, 2021. Two members of the Company’s board of directors (the “Board”) were also members of Tommy Boy’s board of managers and had an equity interest in both companies. The acquisition of Tommy Boy was accounted for as an asset acquisition as a result of the significant concentration of the fair value of gross assets acquired in a recorded music catalog intangible asset (weighted average useful life of 30 years).

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INTANGIBLE ASSETS

9 Months Ended

Dec. 31, 2022

INTANGIBLE ASSETS

INTANGIBLE ASSETS

NOTE 7. INTANGIBLE ASSETS

Intangible assets subject to amortization consist of the following as of December 31, 2022 and March 31, 2022:

	December 31, 2022		March 31, 2022
Intangible assets subject to amortization:
Publishing and recorded music catalogs	$	685,503,750	$	654,284,671
Artist management contracts		1,773,787		947,723
Gross intangible assets		687,277,537		655,232,394
Accumulated amortization		(99,450,776)		(83,848,539)
Intangible assets, net	$	587,826,761	$	571,383,855

Straight-line amortization expense totaled $5,496,020 and $4,906,344 in the three months ended December 31, 2022 and 2021, respectively. Straight-line amortization expense totaled $16,152,354 and $13,646,413 in the nine months ended December 31, 2022 and 2021, respectively.

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ROYALTY ADVANCES

9 Months Ended

Dec. 31, 2022

ROYALTY ADVANCES

ROYALTY ADVANCES

NOTE 8. ROYALTY ADVANCES

The Company made royalty advances totaling $15,706,783 and $17,888,739 during the nine months ended December 31, 2022 and 2021, respectively, recoupable from the writer’s or artist’s share of future royalties otherwise payable, in varying amounts. Advances expected to be recouped within the next twelve months are classified as current assets, with the remainder classified as noncurrent assets.

	Nine Months Ended
	December 31,
	2022		2021
Balance at beginning of period	$	57,012,754	$	41,582,080
Additions		15,706,783		17,888,739
Recoupments		(9,834,724)		(8,008,275)
Balance at end of period	$	62,884,813	$	51,462,544

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SECURED LINE OF CREDIT

9 Months Ended

Dec. 31, 2022

SECURED LINE OF CREDIT

SECURED LINE OF CREDIT

NOTE 9. SECURED LINE OF CREDIT

Long-term debt consists of the following:

	December 31, 2022		March 31, 2022
Secured line of credit	$	298,828,409	$	275,645,715
Debt issuance costs, net		(6,670,345)		(5,789,546)
	$	292,158,064	$	269,856,169

Credit Facilities

On December 19, 2014, Reservoir Media Management, Inc. (“RMM”), a subsidiary of RHI, entered into a credit agreement (the “RMM Credit Agreement”) governing RMM’s secured term loan (the “Secured Loan”) and secured revolving credit facility (the “Secured Line of Credit” and together with the Secured Loan, the “Credit Facilities”). The Credit Facilities were subsequently amended multiple times and were refinanced in July 2021 in connection with the consummation of the Business Combination, pursuant to that certain Fourth Amended and Restated Credit Agreement, dated as of July 28, 2021 (the “Debt Refinancing”). On December 7, 2021, RMM entered into an amendment (the “First Amendment”) to the RMM Credit Agreement. The First Amendment amended the RMM Credit Agreement to increase RMM’s senior secured revolving credit facility from $248,750,000 to an aggregate amount of $350,000,000 (the “Senior Credit Facility”) and modified certain covenants.

On December 16, 2022, RMM entered into an amendment (the "Second Amendment") to the RMM Credit Agreement. The Second Amendment amended the RMM Credit Agreement to (i) increase RMM's senior secured revolving credit facility from $350,000,000 to $450,000,000, (ii) increase the incremental borrowing available under the facility's accordion feature (discussed below) from $50,000,000 to $150,000,000, (iii) extend the maturity date of the loans advanced under the RMM Credit Agreement from October 16, 2024 to December 16, 2027, (iv) modify the interest rate to be equal to either the sum of a base rate plus a margin of 1.00% or the sum of a SOFR rate plus a margin of 2.00%, in each case subject to a 0.25% increase based on a consolidated net senior debt to library value ratio, (v) remove the existing total leverage ratio financial covenant of no greater than 7.50:1.00 (net of up to $20,000,000 of certain cash balances) as of the end of each fiscal quarter, (vi) reduce the minimum required fixed charge coverage ratio financial covenant to 1.10:1.00 and (vii) modify the consolidated senior debt to library value ratio financial covenant to 0.450, subject to certain adjustments. In connection with the Second Amendment, RMM recorded a loss on early extinguishment of debt of approximately $914,000 that reflects the write-off of a portion of unamortized previous debt issuance costs and capitalized approximately $3,500,000 in new debt issuance costs.

RMM is required to pay an unused fee in respect of unused commitments under the Senior Credit Facility, if any, at a rate of 0.25% per annum. Substantially all tangible and intangible assets of the Company, RHI, RMM and the other subsidiary guarantors are pledged as collateral to secure the obligations of RMM under the RMM Credit Agreement.

The RMM Credit Agreement contains customary covenants limiting the ability of the Company, RHI, RMM and certain of its subsidiaries to, among other things, incur debt or liens, merge or consolidate with others, make investments, make cash dividends, redeem or repurchase capital stock, dispose of assets, enter into transactions with affiliates or enter into certain restrictive agreements. In addition, the Company, on a consolidated basis with its subsidiaries, must comply with financial covenants requiring the Company to maintain (i) a fixed charge coverage ratio of not less than 1.10:1.00 for each four fiscal quarter period, and (ii) a consolidated senior debt to library value ratio of 0.45:1.00, subject to certain adjustments. If RMM does not comply with the covenants in the RMM Credit Agreement, the lenders may, subject to customary cure rights, require the immediate payment of all amounts outstanding under the Senior Credit Facility.

The Senior Credit Facility also includes an “accordion feature” that permits RMM to seek additional commitments in an amount not to exceed $150,000,000 that would increase the Senior Credit Facility. As of December 31, 2022, the Senior Credit Facility had a borrowing capacity of $450,000,000, with remaining borrowing availability of $151,171,591.

Interest Rate Swaps

At December 31, 2022, RMM had the following interest rate swaps outstanding, under which it pays a fixed rate and receives a floating interest payment from the counterparty based on LIBOR with reference to notional amounts adjusted to match the original scheduled principal repayments pursuant to the indenture agreement:

	Notional
	Amount at		Pay
	December 31,		Fixed
Effective Date	2022		Rate		Maturity
March 10, 2022	$	8,375,000	1.602	%	September 2024
March 10, 2022	$	87,859,962	1.492	%	September 2024
December 31, 2021	$	53,765,038	1.042	%	September 2024

In January 2023, RMM modified these outstanding interest rate swaps to replace the floating rate interest payments received from the counterparty based on LIBOR to floating rate interest payments received from the counterparty based on SOFR, with corresponding adjustments to the fixed rates paid by RMM.  The change in the reference rate in these interest rate swaps from LIBOR to SOFR did not have a material impact on the Company’s consolidated financial statements.

On March 10, 2022, two previous interest rate swaps expired with original notional amounts of $40,228,152 and $59,325,388. Through the expiration date of these previous interest rate swaps, RMM paid fixed rates of 2.812% and 2.972%, respectively, to the counterparty and received a floating interest payment from the counterparty based on LIBOR with reference to notional amounts adjusted to match the original scheduled principal repayments pursuant to the indenture agreement.

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INCOME TAXES

9 Months Ended

Dec. 31, 2022

INCOME TAXES

INCOME TAXES

NOTE 10. INCOME TAXES

Income tax expense for the three months ended December 31, 2022 and 2021 was $3,529,984 and $395,251, respectively. Income tax expense for the nine months ended December 31, 2022 and 2021 was $5,217,691 and $1,407,989, respectively.

During the three months ended December 31, 2022, the Company changed its estimate of the applicable tax rate used to measure its international deferred tax liabilities in the United Kingdom resulting in a significant increase in its effective tax rate for the three and nine months ended December 31, 2022. The increase of the estimate of the applicable future tax rate from 19% to 25% used to measure the international deferred tax liabilities in the United Kingdom resulted in incremental tax expense of $3,658,643 during the three and nine months ended December 31, 2022 due to the increase in the value of deferred tax liabilities.

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SUPPLEMENTARY CASH FLOW INFORMATION

9 Months Ended

Dec. 31, 2022

SUPPLEMENTARY CASH FLOW INFORMATION

SUPPLEMENTARY CASH FLOW INFORMATION

NOTE 11. SUPPLEMENTARY CASH FLOW INFORMATION

Interest paid and income taxes paid for the nine months ended December 31, 2022 and 2021 were comprised of the following:

	2022		2021
Interest paid	$	8,006,819	$	6,939,505
Income taxes paid	$	43,446	$	727,431

Non-cash investing and financing activities for the nine months ended December 31, 2022 and 2021 were comprised of the following:

	2022		2021
Acquired intangible assets included in other liabilities	$	2,748,436	$	4,625,990
Reclassification of liability-classified awards to equity-classified awards	$	1,106,429	$	—
Conversion of RHI Preferred Stock to Common Stock	$	—	$	81,632,500

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AMOUNTS DUE TO / (FROM) RELATED PARTIES

9 Months Ended

Dec. 31, 2022

AMOUNTS DUE TO / (FROM) RELATED PARTIES

AMOUNTS DUE TO / (FROM) RELATED PARTIES

NOTE 12. AMOUNTS DUE TO / (FROM) RELATED PARTIES

The acquisition of Tommy Boy was financed using cash on hand and borrowings from related parties (the “Tommy Boy Related Party Notes”). The Tommy Boy Related Party Notes bore interest of 4.66% per year and were payable upon the earlier of the consummation of the Business Combination and December 21, 2021. The Tommy Boy Related Party Notes and accrued interest were paid on the Closing Date. See Note 4, “Business Combination and PIPE Investment” for additional information with respect to the consummation of the Business Combination.

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SHAREHOLDERS' EQUITY

9 Months Ended

Dec. 31, 2022

SHAREHOLDERS' EQUITY

SHAREHOLDERS' EQUITY

NOTE 13. SHAREHOLDERS’ EQUITY

The condensed consolidated statements of shareholders’ equity reflect the reverse capitalization as of the Closing Date. Because RHI was deemed to be the accounting acquirer in the reverse capitalization with ROCC, all periods prior to the Closing Date reflect the balances and activity of RHI. The consolidated balances, share activity and per share amounts in these condensed consolidated statements of equity were retroactively adjusted, where applicable, using the Exchange Ratio. See Note 1, “Description of Business” and Note 4, “Business Combination and PIPE Investment” for additional information.

RHI Preferred Stock

Prior to the Business Combination, RHI had 16,175,406 shares of RHI Preferred Stock outstanding. The RHI Preferred Stock was convertible into an equal number of shares of RHI Common Stock at the option of the preferred shareholder and was mandatorily converted into an equal number of shares of RHI Common Stock upon a qualified public offering of RHI Common Stock. Immediately prior to the effective time of the Business Combination, each share of RHI Preferred Stock that was issued and outstanding was automatically converted into a number of shares of RHI Common Stock pursuant to the RHI Preferred Stock Conversion. See Note 4, “Business Combination and PIPE Investment” for additional information with respect to the RHI Preferred Stock Conversion.

While outstanding, the RHI Preferred Stock participated in dividends declared on common shares, if any, on the basis as if the shares of RHI Preferred Stock were converted into shares of RHI Common Stock. The Company did not declare any dividends subsequent to the issuance of RHI Preferred Stock through the RHI Preferred Stock Conversion.

As of December 31, 2022 and March 31, 2022, the Company had no shares of RHI Preferred Stock outstanding.

Warrants

As of December 31, 2022, the Company’s outstanding warrants included 5,750,000 publicly-traded warrants (the “Public Warrants”), which were issued during ROCC’s initial public offering on December 15, 2020, and 137,500 warrants sold in a private placement to ROCC’s sponsor (the “Private Warrants” and together with the Public Warrants, the “Warrants”), which were assumed by the Company in connection with the Business Combination and exchanged into warrants for shares of Common Stock. Each whole Warrant entitles the registered holder to purchase one whole share of Common Stock at a price of $11.50 per share, provided that the Company has an effective registration statement under the Securities Act covering the shares of Common Stock issuable upon exercise of the Warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder. Pursuant to the warrant agreement, a registered holder may exercise its Warrants only for a whole number of shares of Common Stock. The Warrants will expire five years after the completion of the Business Combination, or earlier upon redemption or liquidation.

The Company may redeem the outstanding Public Warrants in whole, but not in part, at a price of $0.01 per warrant upon a minimum of 30 days’ prior written notice of redemption, if and only if the last sale price of Common Stock equals or exceeds $18.00 per share for any 20-trading days within a 30-trading day period ending three business days before the Company sends the notice of redemption to the registered holders. If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the warrants to do so on a cashless basis. In no event will the Company be required to net cash settle the warrant exercise. The Private Warrants are identical to the Public Warrants, except that the Private Warrants are exercisable for cash or on a cashless basis, at the holder’s option, and are non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

The Company evaluated the Warrants under ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC Topic 815, Derivatives and Hedging (“ASC 815”), and in accordance with its accounting policies, concluded they meet the criteria to be equity classified as they were determined to be indexed in the Company’s stock and meet the requirements for equity classification.

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SHARE-BASED COMPENSATION

9 Months Ended

Dec. 31, 2022

SHARE-BASED COMPENSATION

SHARE-BASED COMPENSATION

NOTE 14. SHARE-BASED COMPENSATION

2021 Incentive Plan

On July 28, 2021, in connection with the Business Combination, the Company adopted the Reservoir Media, Inc. 2021 Omnibus Incentive Plan (the “2021 Incentive Plan”), which became effective on such date. In addition, pursuant to terms of the Merger Agreement, at the effective time of the Business Combination, options previously granted under the Reservoir Holdings, Inc. 2019 Long Term Incentive Plan (the “Previous RHI 2019 Incentive Plan”) to purchase shares of RHI Common Stock were converted into options to purchase 1,494,848 shares of Common Stock pursuant to the 2021 Incentive Plan. As of the effective date of the 2021 Incentive Plan, no further stock awards have been or will be granted under the Previous RHI 2019 Incentive Plan, and the Previous RHI 2019 Incentive Plan is no longer in effect.

Share-based compensation expense totaled $791,187 ($609,829, net of taxes) and $1,208,685 ($931,705, net of taxes) during the three months ended December 31, 2022 and 2021, respectively. Share-based compensation expense totaled $2,408,677 ($1,856,553, net of taxes) and $1,425,838 ($1,099,096, net of taxes) during the nine months ended December 31, 2022 and 2021, respectively. Share-based compensation expense is classified as “Administration expenses” in the accompanying condensed consolidated statements of income (loss).

During the three and nine months ended December 31, 2022, the Company granted restricted stock units (“RSUs”) to satisfy previous obligations to issue a variable number of equity awards based on a fixed monetary amount. Prior to the issuance of these RSUs, the Company classified these awards as liabilities. Upon issuance of the RSU’s the awards became equity-classified as they no longer met the criteria to be liability-classified and a liability of $1,106,429 was reclassified from accounts payable and accrued liabilities to additional paid-in capital.

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EARNINGS PER SHARE

9 Months Ended

Dec. 31, 2022

EARNINGS PER SHARE

EARNINGS PER SHARE

NOTE 15. EARNINGS PER SHARE

The following table summarizes the basic and diluted earnings per common share calculation for the three and nine months ended December 31, 2022 and 2021:

		Three Months Ended			Nine Months Ended
		December 31,			December 31,
		2022	2021		2022		2021
Basic (loss) earnings per common share
Net (loss) income attributable to Reservoir Media, Inc.	$	(4,406,623)	$	1,183,071	$	206,349	$	4,179,443
Less: income allocated to participating securities		—		—		—		(520,077)
Net (loss) income attributable to common shareholders	$	(4,406,623)	$	1,183,071	$	206,349	$	3,659,366
Weighted average common shares outstanding - basic		64,379,536		64,106,963		64,316,532		48,836,288
(Loss) earnings per common share - basic	$	(0.07)	$	0.02	$	—	$	0.07
Diluted (loss) earnings per common share
Net (loss) income attributable to common shareholders	$	(4,406,623)	$	1,183,071	$	206,349	$	3,659,366
Add: income allocated to participating securities		—		—		—		520,077
Net (loss) income attributable to Reservoir Media, Inc.	$	(4,406,623)	$	1,183,071	$	206,349	$	4,179,443
Weighted average common shares outstanding - basic		64,379,536		64,106,963		64,316,532		48,836,288
Weighted average effect of potentially dilutive securities:
Assumed conversion of RHI Preferred Stock		—		—		—		6,940,720
Effect of dilutive stock options and RSUs		—		609,793		448,849		628,479
Weighted average common shares outstanding - diluted		64,379,536		64,716,756		64,765,381		56,405,487
(Loss) earnings per common share - diluted	$	(0.07)	$	0.02	$	—	$	0.07

Because of their anti-dilutive effect, 7,830,870 shares of Common Stock equivalents, comprised of 1,483,554 stock options, 459,816 RSUs and 5,887,500 warrants, have been excluded from the diluted earnings per share calculation for the three months ended December 31, 2022. Because of their anti-dilutive effect, 5,922,218 shares of Common Stock equivalents, comprised of 34,718 RSUs and 5,887,500 warrants, have been excluded from the diluted earnings per share calculation for the nine months ended December 31, 2022. Because of their anti-dilutive effect, 5,887,500 shares of Common Stock equivalents comprised of warrants have been excluded from the diluted earnings per share calculation for the three and nine months ended December 31, 2021.

Prior to the RHI Preferred Stock Conversion in connection with the Business Combination, shares of the RHI Preferred Stock were considered participating securities.

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FINANCIAL INSTRUMENTS

9 Months Ended

Dec. 31, 2022

FINANCIAL INSTRUMENTS

FINANCIAL INSTRUMENTS

NOTE 16. FINANCIAL INSTRUMENTS

The Company is exposed to the following risks related to its financial instruments:

(a) Credit Risk

Credit risk arises from the possibility that the Company’s debtors may be unable to fulfill their financial obligations. Revenues earned from publishing and distribution companies are concentrated in the music and entertainment industry. The Company monitors its exposure to credit risk on a regular basis.

(b) Interest Rate Risk

The Company is exposed to market risk from changes in interest rates on its secured line of credit. As described in Note 9, “Secured Line of Credit,” the Company entered into interest rate swap agreements to partially reduce its exposure to fluctuations in interest rates on its Credit Facilities.

The fair value of the outstanding interest rate swaps was a $8,315,009 asset as of December 31, 2022 and a $3,991,802 asset as of March 31, 2022. Fair value is determined using Level 2 inputs, which are based on quoted prices and market observable data of similar instruments. The change in the unrealized fair value of the swaps during the three months ended December 31, 2022 of $179,573 was recorded as a loss on changes in fair value of derivative instruments. The change in the unrealized fair value of the swaps during the nine months ended December 31, 2022 of $4,323,207 was recorded as a gain on changes in fair value of derivative instruments. The change in the unrealized fair value of the swaps during the three and nine months ended December 31, 2021 of $1,663,743 and $2,888,961, respectively, was recorded as a gain on changes in fair value of derivative instruments.

(c) Foreign Exchange Risk

The Company is exposed to foreign exchange risk in fluctuations of currency rates on its revenue from royalties, writers’ fees and its subsidiaries’ operations.

(d) Financial Instruments

Financial instruments not described elsewhere include cash, accounts receivable, accounts payable, accrued liabilities and borrowings under its secured line of credit. The carrying values of these instruments as of December 31, 2022 do not differ materially from their respective fair values due to the immediate or short-term duration of these items or their bearing market-related rates of interest.

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CONTINGENCIES AND COMMITMENTS

9 Months Ended

Dec. 31, 2022

CONTINGENCIES AND COMMITMENTS

CONTINGENCIES AND COMMITMENTS

NOTE 17. CONTINGENCIES AND COMMITMENTS

(a) Leases

The Company leases its business premises under operating leases which have expiration dates between 2022 – 2033. The Company determines if an arrangement is or contains a lease at inception of the contract. Beginning April 1, 2022, the Company recognizes on the balance sheet a lease liability for its obligation to make lease payments arising from the lease and a corresponding ROU asset representing its right to use the underlying asset over the period of use based on the present value of lease payments over the lease term as of the lease commencement date in accordance with ASC 842.

Certain leases contain fixed rent escalations and/or renewal options. None of the Company’s operating leases include variable lease payments. Subsequent amortization of the ROU asset and accretion of the lease liability for an operating lease is recognized as a single lease cost, on a straight-line basis, over the lease term. Reductions of the ROU asset and the change in the lease liability are included in changes in Other assets and liabilities in the Consolidated Statement of Cash Flows.

During the three and nine months ended December 31, 2022, the Company obtained right-of-use assets in exchange for new operating lease obligations totaling $5,789,681 and $6,146,064, respectively, including a right-of-use asset totaling approximately $5.8 million in exchange for a new operating lease obligation for its new headquarter office facility consisting of 12,470 square feet of leased office space at 200 Varick Street, Suite 801A, New York, NY (the “New HQ Lease”). The total commitment under the New HQ Lease is approximately $8.4 million, which is payable monthly with escalating rental payments over a 130-month lease term.

(b) Litigation

The Company is subject to claims and contingencies in the normal course of business. To the extent the Company cannot predict the outcome of the claims and contingencies or estimate the amount of any loss that may result, no provision for any contingent liabilities has been made in the consolidated financial statements. The Company believes that losses resulting from these matters, if any, would not have a material adverse effect on the financial position, results of operations or cash flows of the Company. All such matters which the Company concludes are probable to result in a loss and for which management can reasonably estimate the amount of such loss have been accrued for within these condensed consolidated financial statements.

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SEGMENT REPORTING

9 Months Ended

Dec. 31, 2022

SEGMENT REPORTING

SEGMENT REPORTING

NOTE 18. SEGMENT REPORTING

The Company’s business is organized in two reportable segments: Music Publishing and Recorded Music. The Company identified its Chief Executive Officer as its Chief Operating Decision Maker (“CODM”). The Company’s CODM evaluates financial performance of its segments based on several factors, of which the primary financial measure is operating income before depreciation and amortization (“OIBDA”). The accounting policies of the Company’s business segments are consistent with the Company’s policies for the consolidated financial statements. The Company does not have sales between segments.

The following tables present total revenue and reconciliation of OIBDA to operating income by segment for the three and nine months ended December 31, 2022 and 2021:

	Three Months Ended December 31, 2022
	Music		Recorded
	Publishing		Music		Other		Consolidated
Total revenue	$	20,155,131	$	7,561,604	$	2,214,678	$	29,931,413
Reconciliation of OIBDA to operating income:
Operating income		1,659,409		2,278,413		661,236		4,599,058
Amortization and depreciation		4,165,456		1,358,898		21,947		5,546,301
OIBDA	$	5,824,865	$	3,637,311	$	683,183	$	10,145,359

	Nine Months Ended December 31, 2022
	Music		Recorded
	Publishing		Music		Other		Consolidated
Total revenue	$	60,665,219	$	24,025,994	$	2,784,681	$	87,475,894
Reconciliation of OIBDA to operating income:
Operating income		4,472,540		7,336,090		678,409		12,487,039
Amortization and depreciation		12,129,949		4,096,356		65,840		16,292,145
OIBDA	$	16,602,489	$	11,432,446	$	744,249	$	28,779,184

	Three Months Ended December 31, 2021
	Music		Recorded
	Publishing		Music			Other	Consolidated
Total revenue	$	17,689,340	$	7,508,363	$	614,853	$	25,812,556
Reconciliation of OIBDA to operating income:
Operating income(a)		1,109,455		1,257,675		322,257		2,689,387
Amortization and depreciation		3,522,472		1,408,248		24,316		4,955,036
OIBDA	$	4,631,927	$	2,665,923	$	346,573	$	7,644,423

	Nine Months Ended December 31, 2021
	Music		Recorded
	Publishing		Music		Other		Consolidated
Total revenue	$	51,973,783	$	19,694,366	$	1,050,202	$	72,718,351
Reconciliation of OIBDA to operating income:
Operating income(a)		6,707,074		3,569,121		398,176		10,674,371
Amortization and depreciation		10,000,876		3,696,820		74,191		13,771,887
OIBDA	$	16,707,950	$	7,265,941	$	472,367	$	24,446,258

^(a)During the fourth quarter of the fiscal year ended March 31, 2022, the Company revised the methodology it uses to allocate corporate general and administrative expenses to its operating segments to better align usage of corporate resources allocated to the Company segments. The updated allocation methodology had no impact on the Company’s consolidated statements of operations. This change was applied retrospectively, and segment OIBDA for all comparative periods has been updated to reflect this change.

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CORRECTION OF PRIOR PERIOD ERRORS

9 Months Ended

Dec. 31, 2022

CORRECTION OF PRIOR PERIOD ERRORS

CORRECTION OF PRIOR PERIOD ERRORS

NOTE 19. CORRECTION OF PRIOR PERIOD ERRORS

As previously disclosed in Note 19 to the Company’s consolidated financial statements as of and for the fiscal year ended March 31, 2022, the Company identified prior period accounting errors that the Company has concluded are not material to the Company’s previously reported consolidated financial statements and unaudited interim condensed consolidated financial statements.

Based on management’s evaluation of the accounting errors in consideration of the SEC Staff’s Accounting Bulletins Nos. 99 (“SAB 99”) and 108 (“SAB 108”) and interpretations therewith, the Company concluded the errors are not material, on an individual or aggregate basis, to the Company’s previously reported annual and interim consolidated financial statements affected by the errors, which includes the Company’s previously reported unaudited interim condensed consolidated financial information for the three and nine months ended December 31, 2021 (the “previously reported financial statements”).  However, the Company further concluded the accounting errors cannot be corrected as an out-of-period adjustment in the Company’s consolidated financial statements as of and for the year ended March 31, 2022, because to do so would cause a material misstatement in those financial statements.  Accordingly, the Company referred to the guidance prescribed by SAB 108 which specifies that the errors must be corrected the next time the previously reported financial statements are filed.  Therefore, the Company corrected the accounting errors in all of the Company’s previously reported annual and interim consolidated financial statements impacted by the errors, which includes the accompanying unaudited condensed consolidated financial statements as of and for the three and nine months ended December 31, 2021.

The following is a description of the accounting errors and their impact on the Company’s previously reported financial statements:

The Company identified certain accounting errors that originated in the fourth quarter of fiscal year 2020 related to the recognition of royalty revenue associated with royalties generated from the pre-acquisition usage of intellectual property rights that the Company acquired in certain of its music catalog acquisitions for which the Company was entitled to collect pre-acquisition royalties from the sellers for a specified period prior to the closing date of these acquisitions. The Company’s historical accounting practice with respect to pre-acquisition royalties was to recognize revenue upon closing of the acquisitions. Upon further review, the Company concluded that the pre-acquisition royalties should have been accounted for as reduction of the purchase price of the acquired music catalogs, as prescribed by ASC 805-50, Business Combinations – Related Issues (“ASC 805-50”) rather than recognized as revenue under ASC 606, Revenue from Contracts with Customers (“ASC 606”).

As part of its review, the Company further concluded that certain royalty revenue generated from pre-acquisition usage that remained uncollected at closing, as well as the related royalties due to certain artists or songwriters associated with each of the acquired music catalogs, should have been recognized as accounts receivable and royalties payable, respectively, on the closing date of the acquired music catalog based on the Company’s best estimate of the uncollected royalties due to the Company and payables due to the artists or songwriters on the closing date. The Company’s historical accounting practice associated with these uncollected royalties and royalties payable was to recognize the uncollected royalties as revenue under ASC 606 as they were collected after the closing date, and to recognize cost of revenue as the royalties due to the artists or songwriters when the related royalty revenue was collected. The Company also concluded that the acquired accounts receivable and royalties payable assumed on the date of closing should have been included in the purchase price allocation of the Company’s acquired music catalogs, as prescribed by ASC 805-50. The financial tables below present the impact of correcting the accounting errors on the Company’s previously reported financial statements.

The following table presents the impact of correcting the accounting errors on the Company’s previously reported unaudited condensed consolidated statement of income for the three and nine months ended December 31, 2021:

	Three Months Ended December 31, 2021						Nine Months Ended December 31, 2021
	As Reported		Adjustment		Revised		As Reported		Adjustment		Revised
Revenues	$	27,127,779	$	(1,315,223)	$	25,812,556	$	74,281,417	$	(1,563,066)	$	72,718,351
Amortization and depreciation		4,981,748		(26,712)		4,955,036		13,838,676		(66,789)		13,771,887
Total costs and expenses		23,149,881		(26,712)		23,123,169		62,110,769		(66,789)		62,043,980
Operating income		3,977,898		(1,288,511)		2,689,387		12,170,648		(1,496,277)		10,674,371
Income before income taxes		3,093,763		(1,288,511)		1,805,252		7,179,148		(1,496,277)		5,682,871
Income tax expense		717,379		(322,128)		395,251		1,782,058		(374,069)		1,407,989
Net income		2,376,384		(966,383)		1,410,001		5,397,090		(1,122,208)		4,274,882
Net income attributable to Reservoir Media, Inc.		2,149,454		(966,383)		1,183,071		5,301,651		(1,122,208)		4,179,443
Earnings per common share - basic	$	0.03	$	(0.01)	$	0.02	$	0.10	$	(0.03)	$	0.07
Earnings per common share - diluted	$	0.03	$	(0.01)	$	0.02	$	0.09	$	(0.02)	$	0.07

The following table presents the impact of correcting the accounting errors on the Company’s previously reported unaudited condensed consolidated statement of comprehensive income for the three and nine months ended December 31, 2021:

	Three Months Ended December 31, 2021						Nine Months Ended December 31, 2021
	As Reported		Adjustment		Revised		As Reported		Adjustment		Revised
Net income	$	2,376,384	$	(966,383)	$	1,410,001	$	5,397,090	$	(1,122,208)	$	4,274,882
Total comprehensive income (loss)		2,531,476		(966,383)		1,565,093		3,987,887		(1,122,208)		2,865,679
Total comprehensive income (loss) attributable to Reservoir Holdings, Inc.		2,304,546		(966,383)		1,338,163		3,892,448		(1,122,208)		2,770,240

The following table presents the impact of correcting the accounting errors on the Company’s previously reported unaudited condensed consolidated balance sheet and consolidated statement of changes in shareholders’ equity as of December 31, 2021:

	December 31, 2021
	As Reported		Adjustment		Revised
Intangible assets, net	$	538,787,661	$	(3,585,124)	$	535,202,537
Total assets		633,057,023		(3,585,124)		629,471,899
Income taxes payable		524,442		(6,323)		518,119
Deferred income taxes		20,599,049		(841,989)		19,757,060
Total liabilities		290,511,282		(848,312)		289,662,970
Retained earnings		6,053,147		(2,736,812)		3,316,335
Total Reservoir Media, Inc, shareholders’ equity		341,444,605		(2,736,812)		338,707,793
Total shareholders’ equity		342,545,741		(2,736,812)		339,808,929
Total liabilities and shareholders’ equity		633,057,023		(3,585,124)		629,471,899

The following table presents the impact of correcting the accounting errors on the Company’s previously reported unaudited condensed consolidated statement of cash flows for the nine months ended December 31, 2021:

	Nine Months Ended December 31, 2021
	As Reported		Adjustment		Revised
Net income	$	5,397,090	$	(1,122,208)	$	4,274,882
Amortization of intangible assets		13,713,202		(66,789)		13,646,413
Deferred income taxes		863,512		(374,069)		489,443
Net cash provided by operating activities		14,414,357		(1,563,066)		12,851,291
Purchases of music catalogs		(157,555,894)		1,563,066		(155,992,828)
Net cash used for investing activities		(160,143,142)		1,563,066		(158,580,076)

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RECENT ACCOUNTING PRONOUNCEMENTS (Policies)

9 Months Ended

Dec. 31, 2022

RECENT ACCOUNTING PRONOUNCEMENTS

Recent Accounting Pronouncements

Accounting Standards Not Yet Adopted

In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-03, “Financial Instruments–Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-03”), which replaces the incurred loss impairment methodology in current US GAAP with a methodology that reflects expected credit losses. Subsequent to ASU 2016-03, the FASB has issued several related ASUs amending the original ASU 2016-03. The updates are intended to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. For public entities, ASU 2016-03 was effective for annual reporting periods beginning after December 15, 2019, including interim periods within that annual reporting period. For the Company, ASU 2016-03 is effective beginning April 1, 2023, including interim periods within that fiscal year, with early adoption permitted for annual periods beginning after December 15, 2018. The Company does not expect the adoption of ASU 2016-03 will have a material effect on the Company’s consolidated financial statements.

In April 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848)” (“ASU 2020-04”), which provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting; particularly as it relates to the risk of cessation of LIBOR. The amendments in ASU 2020-04 apply only to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. In December 2022, the FASB issued ASU 2022-06, “Deferral of the Sunset Date of Topic 848” (“ASU 2022-06”) which deferred the sunset date of ASU 2020-04.  Following the issuance of ASU 2022-06, the expedients and exceptions provided by ASU 2020-04 do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2024, except for hedging relationships existing as of December 31, 2024, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. As discussed in Note 9 “Secured Line of Credit” the Senior Credit Facility was amended on December 16, 2022, including the modification of the indexed interest rate from LIBOR to SOFR effective on the amendment date.  Additionally, in January 2023, RMM modified its outstanding interest rate swaps to replace the floating rate interest payments received from the counterparty based on LIBOR to floating rate interest payments received from the counterparty based on SOFR, with corresponding adjustments to the fixed rates paid by RMM.  Consequently, ASU 2020-04 will not have a material effect on the Company’s consolidated financial statements.

Accounting Standards Recently Adopted

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which established a new ASC Topic 842, “Leases” (“ASC 842”) that introduced a right-of-use (“ROU”) model that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases with terms longer than twelve months. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the consolidated statements of income. The Company adopted the new standard beginning April 1, 2022 (the “effective date”), using a modified retrospective transition approach with application as of the effective date as the date of initial application without restating comparative period financial statements.

The new guidance also provides several practical expedients and policies that companies may elect. The Company elected the package of practical expedients under which it did not reassess the classification of its existing leases, reevaluate whether any expired or existing contracts are or contain leases or reassess initial direct costs under the new guidance. Rather, the Company retained the conclusions reached for these items under ASC Topic 840, Leases. Additionally, the Company elected a practical expedient to not separate non-lease components, such as common area maintenance, from lease components. The Company did not elect the practical expedient that permits a reassessment of lease terms for existing leases.

Upon its transition to the new guidance, the Company recognized approximately $2.1 million of operating lease liabilities and corresponding ROU assets. As the rates implicit in the Company’s leases are not readily determinable, the Company used its incremental borrowing rate based on the information available at the effective date to determine the present value of lease payments. This rate is based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments. The adoption of this new guidance will not have a material impact on the amount or timing of the Company’s cash flows or liquidity.

In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes” (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. The Company adopted ASU 2019-12 on April 1, 2022 and this adoption did not have a material impact to the Company’s consolidated financial statements or the Company’s disclosures.

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REVENUE RECOGNITION (Tables)

9 Months Ended

Dec. 31, 2022

REVENUE RECOGNITION

Schedule of revenue

	Three Months Ended December 31,				Nine Months Ended December 31,
	2022		2021		2022		2021
Revenue by Type
Digital	$	10,717,506	$	8,331,669	$	32,428,357	$	26,503,799
Performance		4,407,361		3,454,835		12,355,228		10,461,131
Synchronization		3,670,065		2,426,601		11,382,565		8,513,259
Mechanical		589,209		741,649		2,104,190		2,108,872
Other		770,990		2,734,586		2,394,879		4,386,722
Total Music Publishing		20,155,131		17,689,340		60,665,219		51,973,783
Digital		5,246,986		4,499,408		16,122,688		12,002,943
Physical		1,104,207		1,254,258		3,252,740		4,739,055
Neighboring rights		822,106		573,036		2,248,387		1,363,710
Synchronization		388,305		1,181,661		2,402,179		1,588,658
Total Recorded Music		7,561,604		7,508,363		24,025,994		19,694,366
Other revenue		2,214,678		614,853		2,784,681		1,050,202
Total revenue	$	29,931,413	$	25,812,556	$	87,475,894	$	72,718,351

	Three Months Ended December 31,				Nine Months Ended December 31,
	2022		2021		2022		2021
Revenue by Geographical Location
United States Music Publishing	$	11,187,010	$	8,676,305	$	35,946,459	$	26,266,349
United States Recorded Music		4,188,061		3,574,200		12,958,074		10,143,238
United States other revenue		2,214,678		614,853		2,784,681		1,050,202
Total United States		17,589,749		12,865,358		51,689,214		37,459,789
International Music Publishing		8,968,121		9,013,035		24,718,760		25,707,434
International Recorded Music		3,373,543		3,934,163		11,067,920		9,551,128
Total International		12,341,664		12,947,198		35,786,680		35,258,562
Total revenue	$	29,931,413	$	25,812,556	$	87,475,894	$	72,718,351

Schedule of change in deferred revenue

	Nine Months Ended December 31,
	2022		2021
Balance at beginning of period	$	1,103,664	$	1,337,987
Cash received during period		4,977,624		3,891,627
Revenue recognized during period		(3,337,864)		(3,591,297)
Balance at end of period	$	2,743,424	$	1,638,317

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INTANGIBLE ASSETS (Tables)

9 Months Ended

Dec. 31, 2022

INTANGIBLE ASSETS

Schedule of intangible assets subject to amortization

	December 31, 2022		March 31, 2022
Intangible assets subject to amortization:
Publishing and recorded music catalogs	$	685,503,750	$	654,284,671
Artist management contracts		1,773,787		947,723
Gross intangible assets		687,277,537		655,232,394
Accumulated amortization		(99,450,776)		(83,848,539)
Intangible assets, net	$	587,826,761	$	571,383,855

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ROYALTY ADVANCES (Tables)

9 Months Ended

Dec. 31, 2022

ROYALTY ADVANCES

Schedule of royalty advances

	Nine Months Ended
	December 31,
	2022		2021
Balance at beginning of period	$	57,012,754	$	41,582,080
Additions		15,706,783		17,888,739
Recoupments		(9,834,724)		(8,008,275)
Balance at end of period	$	62,884,813	$	51,462,544

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SECURED LINE OF CREDIT (Tables)

9 Months Ended

Dec. 31, 2022

SECURED LINE OF CREDIT

Schedule of long-term debt

	December 31, 2022		March 31, 2022
Secured line of credit	$	298,828,409	$	275,645,715
Debt issuance costs, net		(6,670,345)		(5,789,546)
	$	292,158,064	$	269,856,169

Schedule of interest rate swaps

	Notional
	Amount at		Pay
	December 31,		Fixed
Effective Date	2022		Rate		Maturity
March 10, 2022	$	8,375,000	1.602	%	September 2024
March 10, 2022	$	87,859,962	1.492	%	September 2024
December 31, 2021	$	53,765,038	1.042	%	September 2024

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SUPPLEMENTARY CASH FLOW INFORMATION (Tables)

9 Months Ended

Dec. 31, 2022

SUPPLEMENTARY CASH FLOW INFORMATION

Summary of interest paid and income taxes paid

	2022		2021
Interest paid	$	8,006,819	$	6,939,505
Income taxes paid	$	43,446	$	727,431

Schedule of non-cash investing and financing activities

	2022		2021
Acquired intangible assets included in other liabilities	$	2,748,436	$	4,625,990
Reclassification of liability-classified awards to equity-classified awards	$	1,106,429	$	—
Conversion of RHI Preferred Stock to Common Stock	$	—	$	81,632,500

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EARNINGS PER SHARE (Tables)

9 Months Ended

Dec. 31, 2022

EARNINGS PER SHARE

Summary of basic and diluted earnings per common share calculation

		Three Months Ended			Nine Months Ended
		December 31,			December 31,
		2022	2021		2022		2021
Basic (loss) earnings per common share
Net (loss) income attributable to Reservoir Media, Inc.	$	(4,406,623)	$	1,183,071	$	206,349	$	4,179,443
Less: income allocated to participating securities		—		—		—		(520,077)
Net (loss) income attributable to common shareholders	$	(4,406,623)	$	1,183,071	$	206,349	$	3,659,366
Weighted average common shares outstanding - basic		64,379,536		64,106,963		64,316,532		48,836,288
(Loss) earnings per common share - basic	$	(0.07)	$	0.02	$	—	$	0.07
Diluted (loss) earnings per common share
Net (loss) income attributable to common shareholders	$	(4,406,623)	$	1,183,071	$	206,349	$	3,659,366
Add: income allocated to participating securities		—		—		—		520,077
Net (loss) income attributable to Reservoir Media, Inc.	$	(4,406,623)	$	1,183,071	$	206,349	$	4,179,443
Weighted average common shares outstanding - basic		64,379,536		64,106,963		64,316,532		48,836,288
Weighted average effect of potentially dilutive securities:
Assumed conversion of RHI Preferred Stock		—		—		—		6,940,720
Effect of dilutive stock options and RSUs		—		609,793		448,849		628,479
Weighted average common shares outstanding - diluted		64,379,536		64,716,756		64,765,381		56,405,487
(Loss) earnings per common share - diluted	$	(0.07)	$	0.02	$	—	$	0.07

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SEGMENT REPORTING (Tables)

9 Months Ended

Dec. 31, 2022

SEGMENT REPORTING

Summary of total revenue and reconciliation of OIBDA to operating income by segment

	Three Months Ended December 31, 2022
	Music		Recorded
	Publishing		Music		Other		Consolidated
Total revenue	$	20,155,131	$	7,561,604	$	2,214,678	$	29,931,413
Reconciliation of OIBDA to operating income:
Operating income		1,659,409		2,278,413		661,236		4,599,058
Amortization and depreciation		4,165,456		1,358,898		21,947		5,546,301
OIBDA	$	5,824,865	$	3,637,311	$	683,183	$	10,145,359

	Nine Months Ended December 31, 2022
	Music		Recorded
	Publishing		Music		Other		Consolidated
Total revenue	$	60,665,219	$	24,025,994	$	2,784,681	$	87,475,894
Reconciliation of OIBDA to operating income:
Operating income		4,472,540		7,336,090		678,409		12,487,039
Amortization and depreciation		12,129,949		4,096,356		65,840		16,292,145
OIBDA	$	16,602,489	$	11,432,446	$	744,249	$	28,779,184

	Three Months Ended December 31, 2021
	Music		Recorded
	Publishing		Music			Other	Consolidated
Total revenue	$	17,689,340	$	7,508,363	$	614,853	$	25,812,556
Reconciliation of OIBDA to operating income:
Operating income(a)		1,109,455		1,257,675		322,257		2,689,387
Amortization and depreciation		3,522,472		1,408,248		24,316		4,955,036
OIBDA	$	4,631,927	$	2,665,923	$	346,573	$	7,644,423

	Nine Months Ended December 31, 2021
	Music		Recorded
	Publishing		Music		Other		Consolidated
Total revenue	$	51,973,783	$	19,694,366	$	1,050,202	$	72,718,351
Reconciliation of OIBDA to operating income:
Operating income(a)		6,707,074		3,569,121		398,176		10,674,371
Amortization and depreciation		10,000,876		3,696,820		74,191		13,771,887
OIBDA	$	16,707,950	$	7,265,941	$	472,367	$	24,446,258

^(a)During the fourth quarter of the fiscal year ended March 31, 2022, the Company revised the methodology it uses to allocate corporate general and administrative expenses to its operating segments to better align usage of corporate resources allocated to the Company segments. The updated allocation methodology had no impact on the Company’s consolidated statements of operations. This change was applied retrospectively, and segment OIBDA for all comparative periods has been updated to reflect this change.

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CORRECTION OF PRIOR PERIOD ERRORS (Tables)

9 Months Ended

Dec. 31, 2022

CORRECTION OF PRIOR PERIOD ERRORS

Schedule of correction of prior period errors

The following table presents the impact of correcting the accounting errors on the Company’s previously reported unaudited condensed consolidated statement of income for the three and nine months ended December 31, 2021:

	Three Months Ended December 31, 2021						Nine Months Ended December 31, 2021
	As Reported		Adjustment		Revised		As Reported		Adjustment		Revised
Revenues	$	27,127,779	$	(1,315,223)	$	25,812,556	$	74,281,417	$	(1,563,066)	$	72,718,351
Amortization and depreciation		4,981,748		(26,712)		4,955,036		13,838,676		(66,789)		13,771,887
Total costs and expenses		23,149,881		(26,712)		23,123,169		62,110,769		(66,789)		62,043,980
Operating income		3,977,898		(1,288,511)		2,689,387		12,170,648		(1,496,277)		10,674,371
Income before income taxes		3,093,763		(1,288,511)		1,805,252		7,179,148		(1,496,277)		5,682,871
Income tax expense		717,379		(322,128)		395,251		1,782,058		(374,069)		1,407,989
Net income		2,376,384		(966,383)		1,410,001		5,397,090		(1,122,208)		4,274,882
Net income attributable to Reservoir Media, Inc.		2,149,454		(966,383)		1,183,071		5,301,651		(1,122,208)		4,179,443
Earnings per common share - basic	$	0.03	$	(0.01)	$	0.02	$	0.10	$	(0.03)	$	0.07
Earnings per common share - diluted	$	0.03	$	(0.01)	$	0.02	$	0.09	$	(0.02)	$	0.07

The following table presents the impact of correcting the accounting errors on the Company’s previously reported unaudited condensed consolidated statement of comprehensive income for the three and nine months ended December 31, 2021:

	Three Months Ended December 31, 2021						Nine Months Ended December 31, 2021
	As Reported		Adjustment		Revised		As Reported		Adjustment		Revised
Net income	$	2,376,384	$	(966,383)	$	1,410,001	$	5,397,090	$	(1,122,208)	$	4,274,882
Total comprehensive income (loss)		2,531,476		(966,383)		1,565,093		3,987,887		(1,122,208)		2,865,679
Total comprehensive income (loss) attributable to Reservoir Holdings, Inc.		2,304,546		(966,383)		1,338,163		3,892,448		(1,122,208)		2,770,240

The following table presents the impact of correcting the accounting errors on the Company’s previously reported unaudited condensed consolidated balance sheet and consolidated statement of changes in shareholders’ equity as of December 31, 2021:

	December 31, 2021
	As Reported		Adjustment		Revised
Intangible assets, net	$	538,787,661	$	(3,585,124)	$	535,202,537
Total assets		633,057,023		(3,585,124)		629,471,899
Income taxes payable		524,442		(6,323)		518,119
Deferred income taxes		20,599,049		(841,989)		19,757,060
Total liabilities		290,511,282		(848,312)		289,662,970
Retained earnings		6,053,147		(2,736,812)		3,316,335
Total Reservoir Media, Inc, shareholders’ equity		341,444,605		(2,736,812)		338,707,793
Total shareholders’ equity		342,545,741		(2,736,812)		339,808,929
Total liabilities and shareholders’ equity		633,057,023		(3,585,124)		629,471,899

The following table presents the impact of correcting the accounting errors on the Company’s previously reported unaudited condensed consolidated statement of cash flows for the nine months ended December 31, 2021:

	Nine Months Ended December 31, 2021
	As Reported		Adjustment		Revised
Net income	$	5,397,090	$	(1,122,208)	$	4,274,882
Amortization of intangible assets		13,713,202		(66,789)		13,646,413
Deferred income taxes		863,512		(374,069)		489,443
Net cash provided by operating activities		14,414,357		(1,563,066)		12,851,291
Purchases of music catalogs		(157,555,894)		1,563,066		(155,992,828)
Net cash used for investing activities		(160,143,142)		1,563,066		(158,580,076)

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DESCRIPTION OF BUSINESS (Details)	9 Months Ended
	Dec. 31, 2022 segment item $ / shares	Mar. 31, 2022 $ / shares	Jul. 28, 2021 $ / shares
DESCRIPTION OF BUSINESS
Common shares, par value (per share) | $ / shares	$ 0.0001	$ 0.0001	$ 0.0001
Number of operating segments | segment	2
Music Publishing
DESCRIPTION OF BUSINESS
Minimum ownership or control rights	140,000
Recorded Music
DESCRIPTION OF BUSINESS
Minimum ownership or control rights	36,000

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RECENT ACCOUNTING PRONOUNCEMENTS (Details) $ in Millions	Dec. 31, 2022 USD ($)
RECENT ACCOUNTING PRONOUNCEMENTS
Operating lease liabilities	$ 2.1

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BUSINESS COMBINATION AND PIPE INVESTMENT (Details)	9 Months Ended
	Dec. 31, 2022 USD ($) $ / shares shares	Mar. 31, 2022 $ / shares shares	Jul. 28, 2021 $ / shares
BUSINESS COMBINATION AND PIPE INVESTMENT
Preferred stock, shares, par value	$ 0.0001	$ 0.0001
Common shares, par value (per share)	$ 0.0001	$ 0.0001	$ 0.0001
Common stock, shares authorized | shares	750,000,000	750,000,000
Preferred stock, shares, authorized | shares	75,000,000	75,000,000
RHI Preferred Stock
BUSINESS COMBINATION AND PIPE INVESTMENT
Preferred stock, shares, par value	$ 0.00001
RHI Common Stock
BUSINESS COMBINATION AND PIPE INVESTMENT
Common shares, par value (per share)	$ 0.00001
Common Stock
BUSINESS COMBINATION AND PIPE INVESTMENT
Exchange ratio	196.06562028646
PIPE investors
BUSINESS COMBINATION AND PIPE INVESTMENT
Number of shares issued | shares	15,000,000
Purchase price	$ 10.00
Aggregate purchase price | $	$ 150,000,000.0
Fees in connection with the closing of the Business Combination and PIPE Investment | $	20,900,000
Repayment of Related Party Notes | $	81,300,000
Repayment of secured loan | $	18,250,000
Repayment of secured lines of credit | $	$ 36,750,000
PIPE investors | Common Stock
BUSINESS COMBINATION AND PIPE INVESTMENT
Common shares, par value (per share)	$ 0.0001

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REVENUE RECOGNITION (Details) - USD ($)	3 Months Ended		9 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Revenue recognized from performance obligations satisfied in previous period			$ 3,478,970	$ 1,210,132
Revenues	$ 29,931,413	$ 25,812,556	87,475,894	72,718,351
United States
Revenues	$ 17,589,749	$ 12,865,358	$ 51,689,214	$ 37,459,789
Percentage of revenue more than Company's total revenue	10.00%	10.00%	10.00%	10.00%
International
Revenues	$ 12,341,664	$ 12,947,198	$ 35,786,680	$ 35,258,562
Music Publishing
Revenues	20,155,131	17,689,340	60,665,219	51,973,783
Music Publishing | United States
Revenues	11,187,010	8,676,305	35,946,459	26,266,349
Music Publishing | International
Revenues	8,968,121	9,013,035	24,718,760	25,707,434
Recorded Music
Revenues	7,561,604	7,508,363	24,025,994	19,694,366
Recorded Music | United States
Revenues	4,188,061	3,574,200	12,958,074	10,143,238
Recorded Music | International
Revenues	3,373,543	3,934,163	11,067,920	9,551,128
Other revenue
Revenues	2,214,678	614,853	2,784,681	1,050,202
Other revenue | United States
Revenues	2,214,678	614,853	2,784,681	1,050,202
Digital | Music Publishing
Revenues	10,717,506	8,331,669	32,428,357	26,503,799
Digital | Recorded Music
Revenues	5,246,986	4,499,408	16,122,688	12,002,943
Performance | Music Publishing
Revenues	4,407,361	3,454,835	12,355,228	10,461,131
Synchronization | Music Publishing
Revenues	3,670,065	2,426,601	11,382,565	8,513,259
Synchronization | Recorded Music
Revenues	388,305	1,181,661	2,402,179	1,588,658
Mechanical | Music Publishing
Revenues	589,209	741,649	2,104,190	2,108,872
Physical | Recorded Music
Revenues	1,104,207	1,254,258	3,252,740	4,739,055
Neighboring rights | Recorded Music
Revenues	822,106	573,036	2,248,387	1,363,710
Other | Music Publishing
Revenues	$ 770,990	$ 2,734,586	$ 2,394,879	$ 4,386,722

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REVENUE RECOGNITION - Change in Deferred Revenue (Details) - USD ($)	9 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
REVENUE RECOGNITION
Balance at beginning of period	$ 1,103,664	$ 1,337,987
Cash received during period	4,977,624	3,891,627
Revenue recognized during period	(3,337,864)	(3,591,297)
Balance at end of period	$ 2,743,424	$ 1,638,317

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ACQUISITIONS (Details)		9 Months Ended
	Jun. 02, 2021 USD ($) item	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)
Publishing and recorded music catalogs
ACQUISITIONS
Total consideration transferred		$ 36,264,222	$ 159,003,542
Tommy Boy
ACQUISITIONS
Total consideration transferred	$ 100,000,000
Number of members of the board, holding membership in Tommy Boy's Board | item	2
Tommy Boy | Recorded music catalog
ACQUISITIONS
Weighted average useful life	30 years

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INTANGIBLE ASSETS (Details) - USD ($)	3 Months Ended		9 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021	Mar. 31, 2022
Intangible assets subject to amortization:
Gross intangible assets	$ 687,277,537		$ 687,277,537		$ 655,232,394
Accumulated amortization	(99,450,776)		(99,450,776)		(83,848,539)
Intangible assets, net	587,826,761	$ 535,202,537	587,826,761	$ 535,202,537	571,383,855
Amortization expense	5,496,020	$ 4,906,344	16,152,354	$ 13,646,413
Publishing and recorded music catalogs
Intangible assets subject to amortization:
Gross intangible assets	685,503,750		685,503,750		654,284,671
Artist management contracts
Intangible assets subject to amortization:
Gross intangible assets	$ 1,773,787		$ 1,773,787		$ 947,723

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ROYALTY ADVANCES (Details) - USD ($)	9 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
ROYALTY ADVANCES
Balance at beginning of period	$ 57,012,754	$ 41,582,080
Additions	15,706,783	17,888,739
Recoupments	(9,834,724)	(8,008,275)
Balance at end of period	$ 62,884,813	$ 51,462,544

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SECURED LINE OF CREDIT - Schedule of long-term debt (Details) - USD ($)	Dec. 31, 2022	Mar. 31, 2022
Long-term Debt, by Current and Noncurrent
Debt issuance costs, net	$ (6,670,345)	$ (5,789,546)
Long-term portion	292,158,064	269,856,169
Secured loan
Long-term Debt, by Current and Noncurrent
Secured line of credit	$ 298,828,409	$ 275,645,715

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SECURED LINE OF CREDIT - Credit Facilities (Details)		3 Months Ended	9 Months Ended
	Dec. 16, 2022 USD ($)	Dec. 31, 2022 USD ($)	Dec. 31, 2022 USD ($)	Mar. 31, 2022 USD ($)	Dec. 07, 2021 USD ($)
SECURED LINE OF CREDIT
Loss on early extinguishment of debt		$ (914,040)	$ (914,040)
Capitalized debt issuance costs		$ 6,670,345	$ 6,670,345	$ 5,789,546
New Senior Credit Facility
SECURED LINE OF CREDIT
Aggregate amount					$ 350,000,000
Unused fee (in percent)	0.25%
Consolidated senior debt to library value ratio		0.45	0.45
Additional commitments		$ 150,000,000	$ 150,000,000
Borrowing capacity		450,000,000	450,000,000
Remaining borrowing availability		$ 151,171,591	$ 151,171,591
RMM credit agreement
SECURED LINE OF CREDIT
Aggregate amount					$ 248,750,000
Margin (in percent)	0.25%
Total Leverage of cash balance	$ 20,000,000
Total leverage ratio	7.50
Fixed charge coverage ratio	1.10
Consolidated senior debt to library value ratio	0.450
Loss on early extinguishment of debt	$ 914,000
Capitalized debt issuance costs	$ 3,500,000
Base rate | RMM credit agreement
SECURED LINE OF CREDIT
Margin (in percent)	1.00%
SOFR | RMM credit agreement
SECURED LINE OF CREDIT
Margin (in percent)	2.00%
Maximum | RMM credit agreement
SECURED LINE OF CREDIT
Aggregate amount	$ 450,000,000
Incremental borrowing available under the facility	150,000,000
Minimum | New Senior Credit Facility
SECURED LINE OF CREDIT
Fixed charge coverage ratio		1.10	1.10
Minimum | RMM credit agreement
SECURED LINE OF CREDIT
Aggregate amount	350,000,000
Incremental borrowing available under the facility	$ 50,000,000

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SECURED LINE OF CREDIT - Interest Rate Swaps (Details) - USD ($)	Dec. 31, 2022	Mar. 10, 2022
Interest rate swaps
SECURED LINE OF CREDIT
Notional Amount	$ 8,375,000
Pay Fixed Rate (in percent)	1.602%
Interest rate swap one
SECURED LINE OF CREDIT
Notional Amount	$ 87,859,962	$ 40,228,152
Pay Fixed Rate (in percent)	1.492%	2.812%
Interest rate swap two
SECURED LINE OF CREDIT
Notional Amount	$ 53,765,038	$ 59,325,388
Pay Fixed Rate (in percent)	1.042%	2.972%

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INCOME TAXES - Reconciliation of the statutory tax rate to the effective rate (Details) - USD ($)	3 Months Ended		9 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
INCOME TAXES
Income tax expense	$ 3,529,984	$ 395,251	$ 5,217,691	$ 1,407,989
Effective tax rate (in percent)	19.00%		25.00%
Deferred income taxes	$ 3,658,643		$ 3,658,643	$ 489,443

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SUPPLEMENTARY CASH FLOW INFORMATION (Details) - USD ($)	9 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
SUPPLEMENTARY CASH FLOW INFORMATION
Interest paid	$ 8,006,819	$ 6,939,505
Income taxes paid	43,446	727,431
Acquired intangible assets included in other liabilities	2,748,436	4,625,990
Reclassification of liability-classified awards to equity-classified awards	$ 1,106,429
Conversion of RHI Preferred Stock to Common Stock		$ 81,632,500

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AMOUNTS DUE TO / (FROM) RELATED PARTIES (Details)	Dec. 21, 2021
Tommy Boy
AMOUNTS DUE TO / (FROM) RELATED PARTIES
Percentage of interest rate per year	4.66%

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SHAREHOLDERS' EQUITY (Details) - shares	Dec. 31, 2022	Sep. 30, 2022	Mar. 31, 2022	Jul. 27, 2021
SHAREHOLDERS' EQUITY
Preferred stock, shares, outstanding	0		0
RHI Preferred Stock
SHAREHOLDERS' EQUITY
Preferred stock, shares, outstanding		0	0	16,175,406

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SHAREHOLDERS' EQUITY - Warrants (Details) - Common Stock Warrants		9 Months Ended
	Dec. 15, 2020 shares	Dec. 31, 2022 D $ / shares shares
SHAREHOLDERS' EQUITY
Number of warrants outstanding | shares		5,750,000
Number of warrants sold | shares	137,500
Number of shares issuable per warrant | shares		1
Exercise price of warrants | $ / shares		$ 11.50
Warrants expiration term (in years)		5 years
Redemption price per public warrant (in dollars per share) | $ / shares		$ 0.01
Minimum threshold written notice period for redemption of public warrants		30 days
Stock price trigger for redemption of public warrants (in dollars per share) | $ / shares		$ 18.00
Threshold trading days for redemption of public warrants		20 days
Threshold consecutive trading days for redemption of public warrants		30 days
Threshold number of business days before sending notice of redemption to warrant holders | D		3

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SHARE-BASED COMPENSATION (Details) - USD ($)		3 Months Ended		9 Months Ended
	Jul. 28, 2021	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
SHARE-BASED COMPENSATION
Share-based compensation expense		$ 791,187	$ 1,208,685	$ 2,408,677	$ 1,425,838
Share-based compensation expense net of taxes		609,829	$ 931,705	1,856,553	$ 1,099,096
RSU | Additional paid-in capital
SHARE-BASED COMPENSATION
Accounts payable to accrued liabilities to additional paid-in capital		$ 1,106,429		$ 1,106,429
2021 Incentive Plan
SHARE-BASED COMPENSATION
Number of shares to purchase the common stock	1,494,848

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EARNINGS PER SHARE - Summary of Basic and Diluted Earnings Per Share (Details) - USD ($)	3 Months Ended		9 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Basic (loss) earnings per common share
Net (loss) income attributable to Reservoir Media, Inc.	$ (4,406,623)	$ 1,183,071	$ 206,349	$ 4,179,443
Less: income allocated to participating securities				(520,077)
Net (loss) income attributable to common shareholders	$ (4,406,623)	$ 1,183,071	$ 206,349	$ 3,659,366
Weighted average common shares outstanding - basic	64,379,536	64,106,963	64,316,532	48,836,288
Earnings per common share - basic	$ (0.07)	$ 0.02		$ 0.07
Diluted (loss) earnings per common share
Net (loss) income attributable to common shareholders	$ (4,406,623)	$ 1,183,071	$ 206,349	$ 3,659,366
Add: income allocated to participating securities				520,077
Net (loss) income attributable to Reservoir Media, Inc.	$ (4,406,623)	$ 1,183,071	$ 206,349	$ 4,179,443
Weighted average common shares outstanding - basic	64,379,536	64,106,963	64,316,532	48,836,288
Weighted average effect of potentially dilutive securities:
Assumed conversion of RHI Preferred Stock				6,940,720
Effect of dilutive stock options and RSUs		609,793	448,849	628,479
Weighted average common shares outstanding - diluted	64,379,536	64,716,756	64,765,381	56,405,487
Earnings per common share - diluted	$ (0.07)	$ 0.02		$ 0.07

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EARNINGS PER SHARE - Additional Information (Details) - shares	3 Months Ended		6 Months Ended	9 Months Ended
	Dec. 31, 2022	Sep. 30, 2021	Sep. 30, 2021	Dec. 31, 2022
EARNINGS PER SHARE
Anti-dilutive effect of common shares	7,830,870			5,922,218
RSU
EARNINGS PER SHARE
Anti-dilutive effect of common shares	459,816			34,718
Warrants
EARNINGS PER SHARE
Anti-dilutive effect of common shares	5,887,500			5,887,500
Stock options
EARNINGS PER SHARE
Anti-dilutive effect of common shares	1,483,554	5,887,500	5,887,500

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FINANCIAL INSTRUMENTS (Details) - Level 2 - Interest rate swaps - USD ($)	3 Months Ended		9 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021	Mar. 31, 2022
FINANCIAL INSTRUMENTS
Fair value of swap liability	$ 8,315,009		$ 8,315,009		$ 3,991,802
Gain on changes in fair value of derivative instruments	$ 179,573	$ 1,663,743	$ 4,323,207	$ 2,888,961

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CONTINGENCIES AND COMMITMENTS (Details)		3 Months Ended	9 Months Ended
	Apr. 01, 2022 USD ($) ft²	Dec. 31, 2022 USD ($)	Dec. 31, 2022 USD ($)
CONTINGENCIES AND COMMITMENTS
Increase in operating lease liability		$ 5,789,681	$ 6,146,064
Total lease amount	$ 5,800,000
Area of land leased | ft²	12,470
Other commitment	$ 8,400,000
Lease term	130 months
Provision made		$ 0	$ 0

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SEGMENT REPORTING (Details)	9 Months Ended
	Dec. 31, 2022 segment
SEGMENT REPORTING
Number of reportable segments	2

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SEGMENT REPORTING - Total revenue (Details) - USD ($)	3 Months Ended		9 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
SEGMENT REPORTING
Total revenue	$ 29,931,413	$ 25,812,556	$ 87,475,894	$ 72,718,351
Reconciliation of OIBDA to operating income:
Operating income	4,599,058	2,689,387	12,487,039	10,674,371
Amortization and depreciation	5,546,301	4,955,036	16,292,145	13,771,887
OIBDA	10,145,359	7,644,423	28,779,184	24,446,258
Music Publishing
SEGMENT REPORTING
Total revenue	20,155,131	17,689,340	60,665,219	51,973,783
Reconciliation of OIBDA to operating income:
Operating income	1,659,409	1,109,455	4,472,540	6,707,074
Amortization and depreciation	4,165,456	3,522,472	12,129,949	10,000,876
OIBDA	5,824,865	4,631,927	16,602,489	16,707,950
Recorded Music
SEGMENT REPORTING
Total revenue	7,561,604	7,508,363	24,025,994	19,694,366
Reconciliation of OIBDA to operating income:
Operating income	2,278,413	1,257,675	7,336,090	3,569,121
Amortization and depreciation	1,358,898	1,408,248	4,096,356	3,696,820
OIBDA	3,637,311	2,665,923	11,432,446	7,265,941
Other
SEGMENT REPORTING
Total revenue	2,214,678	614,853	2,784,681	1,050,202
Reconciliation of OIBDA to operating income:
Operating income	661,236	322,257	678,409	398,176
Amortization and depreciation	21,947	24,316	65,840	74,191
OIBDA	$ 683,183	$ 346,573	$ 744,249	$ 472,367

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CORRECTION OF PRIOR PERIOD ERRORS (Details) - USD ($)	3 Months Ended						9 Months Ended
	Dec. 31, 2022	Sep. 30, 2022	Jun. 30, 2022	Dec. 31, 2021	Sep. 30, 2021	Jun. 30, 2021	Dec. 31, 2022	Dec. 31, 2021	Mar. 31, 2022	Mar. 31, 2021
Unaudited condensed consolidated statement of income
Revenues	$ 29,931,413			$ 25,812,556			$ 87,475,894	$ 72,718,351
Amortization and depreciation	5,546,301			4,955,036			16,292,145	13,771,887
Total costs and expenses	25,332,355			23,123,169			74,988,855	62,043,980
Operating income	4,599,058			2,689,387			12,487,039	10,674,371
Income before income taxes	(536,449)			1,805,252			5,654,167	5,682,871
Income tax expense	3,529,984			395,251			5,217,691	1,407,989
Net income	(4,066,433)	$ 4,486,088	$ 16,821	1,410,001	$ 4,371,862	$ (1,506,981)	436,476	4,274,882
Net income attributable to Reservoir Media, Inc.	$ (4,406,623)			$ 1,183,071			206,349	$ 4,179,443
Earnings per common share - basic	$ (0.07)			$ 0.02				$ 0.07
Earnings per common share - diluted	$ (0.07)			$ 0.02				$ 0.07
Unaudited condensed consolidated statement of comprehensive income
Net income	$ (4,066,433)	4,486,088	16,821	$ 1,410,001	4,371,862	(1,506,981)	436,476	$ 4,274,882
Total comprehensive income (loss)				1,565,093				2,865,679
Total comprehensive income (loss) attributable to Reservoir Holdings, Inc.	245,461			1,338,163			(5,077,140)	2,770,240
Unaudited condensed consolidated balance sheet and consolidated statement of changes in shareholders' equity
Intangible assets, net	587,826,761			535,202,537			587,826,761	535,202,537	$ 571,383,855
Total assets	720,278,975			629,471,899			720,278,975	629,471,899	684,270,090
Income taxes payable	1,625,607			518,119			1,625,607	518,119	77,496
Deferred income taxes	28,056,203			19,757,060			28,056,203	19,757,060	24,884,170
Total liabilities	375,424,589			289,662,970			375,424,589	289,662,970	336,817,766
Retained earnings	12,419,868			3,316,335			12,419,868	3,316,335	12,213,519
Total Reservoir Media, Inc. shareholders' equity	343,566,792			338,707,793			343,566,792	338,707,793	346,394,857
Total shareholders' equity	344,854,386	343,605,876	343,302,614	339,808,929	337,035,151	193,104,437	344,854,386	339,808,929	347,452,324	$ 194,370,601
Total liabilities and shareholders' equity	720,278,975			629,471,899			720,278,975	629,471,899	$ 684,270,090
Unaudited condensed consolidated statement of cash flows
Net income	(4,066,433)	$ 4,486,088	$ 16,821	1,410,001	$ 4,371,862	$ (1,506,981)	436,476	4,274,882
Amortization of intangible assets	5,496,020			4,906,344			16,152,354	13,646,413
Deferred income taxes	$ 3,658,643						3,658,643	489,443
Net cash provided by operating activities							26,203,396	12,851,291
Purchases of music catalogs							(45,099,964)	(155,992,828)
Net cash used for investing activities							$ (45,410,327)	(158,580,076)
As reported
Unaudited condensed consolidated statement of income
Revenues				27,127,779				74,281,417
Amortization and depreciation				4,981,748				13,838,676
Total costs and expenses				23,149,881				62,110,769
Operating income				3,977,898				12,170,648
Income before income taxes				3,093,763				7,179,148
Income tax expense				717,379				1,782,058
Net income				2,376,384				5,397,090
Net income attributable to Reservoir Media, Inc.				$ 2,149,454				$ 5,301,651
Earnings per common share - basic				$ 0.03				$ 0.10
Earnings per common share - diluted				$ 0.03				$ 0.09
Unaudited condensed consolidated statement of comprehensive income
Net income				$ 2,376,384				$ 5,397,090
Total comprehensive income (loss)				2,531,476				3,987,887
Total comprehensive income (loss) attributable to Reservoir Holdings, Inc.				2,304,546				3,892,448
Unaudited condensed consolidated balance sheet and consolidated statement of changes in shareholders' equity
Intangible assets, net				538,787,661				538,787,661
Total assets				633,057,023				633,057,023
Income taxes payable				524,442				524,442
Deferred income taxes				20,599,049				20,599,049
Total liabilities				290,511,282				290,511,282
Retained earnings				6,053,147				6,053,147
Total Reservoir Media, Inc. shareholders' equity				341,444,605				341,444,605
Total shareholders' equity				342,545,741				342,545,741
Total liabilities and shareholders' equity				633,057,023				633,057,023
Unaudited condensed consolidated statement of cash flows
Net income				2,376,384				5,397,090
Amortization of intangible assets								13,713,202
Deferred income taxes								863,512
Net cash provided by operating activities								14,414,357
Purchases of music catalogs								(157,555,894)
Net cash used for investing activities								(160,143,142)
Adjustment
Unaudited condensed consolidated statement of income
Revenues				(1,315,223)				(1,563,066)
Amortization and depreciation				(26,712)				(66,789)
Total costs and expenses				(26,712)				(66,789)
Operating income				(1,288,511)				(1,496,277)
Income before income taxes				(1,288,511)				(1,496,277)
Income tax expense				(322,128)				(374,069)
Net income				(966,383)				(1,122,208)
Net income attributable to Reservoir Media, Inc.				$ (966,383)				$ (1,122,208)
Earnings per common share - basic				$ (0.01)				$ (0.03)
Earnings per common share - diluted				$ (0.01)				$ (0.02)
Unaudited condensed consolidated statement of comprehensive income
Net income				$ (966,383)				$ (1,122,208)
Total comprehensive income (loss)				(966,383)				(1,122,208)
Total comprehensive income (loss) attributable to Reservoir Holdings, Inc.				(966,383)				(1,122,208)
Unaudited condensed consolidated balance sheet and consolidated statement of changes in shareholders' equity
Intangible assets, net				(3,585,124)				(3,585,124)
Total assets				(3,585,124)				(3,585,124)
Income taxes payable				(6,323)				(6,323)
Deferred income taxes				(841,989)				(841,989)
Total liabilities				(848,312)				(848,312)
Retained earnings				(2,736,812)				(2,736,812)
Total Reservoir Media, Inc. shareholders' equity				(2,736,812)				(2,736,812)
Total shareholders' equity				(2,736,812)				(2,736,812)
Total liabilities and shareholders' equity				(3,585,124)				(3,585,124)
Unaudited condensed consolidated statement of cash flows
Net income				$ (966,383)				(1,122,208)
Amortization of intangible assets								(66,789)
Deferred income taxes								(374,069)
Net cash provided by operating activities								(1,563,066)
Purchases of music catalogs								1,563,066
Net cash used for investing activities								$ 1,563,066