Table of Contents
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 June 30, 2026
☐ 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 ofincorporation or organization)
(I.R.S. EmployerIdentification No.)
200 Varick Street
Suite 801
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 whichregistered
Common Stock, $0.0001 par value per share (the “Common Stock”)
RSVR
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 July 27, 2026, there were 65,930,743 shares of Common Stock of Reservoir Media, Inc. issued and outstanding.
FORM 10-Q FOR THE THREE MONTHS ENDED JUNE 30, 2026
TABLE OF CONTENTS
Part I. Financial Information
1
Item 1. Financial Statements
Condensed Consolidated Statements of Operations for the Three Months Ended June 30, 2026 and 2025 (unaudited)
Condensed Consolidated Statements of Comprehensive (Loss) Income for the Three Months Ended June 30, 2026 and 2025 (unaudited)
2
Condensed Consolidated Balance Sheets as of June 30, 2026 and March 31, 2026 (unaudited)
3
Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Three Months Ended June 30, 2026 and 2025 (unaudited)
4
Condensed Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2026 and 2025 (unaudited)
5
Notes to Condensed Consolidated Financial Statements
7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
17
Item 3. Quantitative and Qualitative Disclosures About Market Risk
31
Item 4. Controls and Procedures
Part II. Other Information
32
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
33
Part III. Signatures
34
i
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
RESERVOIR MEDIA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In U.S. dollars, except share data)
(Unaudited)
Three Months Ended June 30,
2026
2025
Revenues
$
41,482,053
37,164,293
Costs and expenses:
Cost of revenue
14,788,122
13,192,715
Amortization and depreciation
8,295,471
7,313,737
Administration expenses
13,020,086
11,211,147
Total costs and expenses
36,103,679
31,717,599
Operating income
5,378,374
5,446,694
Interest expense
(6,905,300)
(6,295,958)
(Loss) gain on foreign exchange
(43,542)
1,095,414
Gain (loss) on fair value of swaps
925,853
(997,165)
Other (expense) income, net
(102,896)
(163,776)
Loss before income taxes
(747,511)
(914,791)
Income tax benefit
(239,125)
(271,066)
Net loss
(508,386)
(643,725)
Net loss attributable to noncontrolling interests
415,275
88,066
Net loss attributable to Reservoir Media, Inc.
(93,111)
(555,659)
Loss per common share (Note 13):
Basic
—
(0.01)
Diluted
Weighted average common shares outstanding (Note 13):
65,752,884
65,369,891
See accompanying notes to the condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(In U.S. dollars)
Other comprehensive income:
Translation adjustments
46,167
4,052,168
Total comprehensive (loss) income
(462,219)
3,408,443
Comprehensive loss attributable to noncontrolling interests
Total comprehensive (loss) income attributable to Reservoir Media, Inc.
(46,944)
3,496,509
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30,
March 31,
Assets
Current assets
Cash and cash equivalents
13,660,380
25,927,462
Accounts receivable
42,706,945
40,832,075
Current portion of royalty advances
15,999,934
16,368,968
Other current assets
4,938,838
9,409,757
Total current assets
77,306,097
92,538,262
Intangible assets, net
799,847,481
788,740,821
Equity method and other investments
2,704,261
2,830,766
Royalty advances, net of current portion and reserves
56,004,440
54,128,586
Property and equipment, net
803,656
661,986
Operating lease right of use assets, net
7,587,776
7,889,862
Fair value of swap assets
1,993,188
1,356,878
Other assets
2,641,076
1,529,920
Total assets
948,887,975
949,677,081
Liabilities
Current liabilities
Accounts payable and accrued liabilities
3,363,899
4,116,221
Royalties payable
45,334,589
52,323,565
Accrued payroll
807,728
2,672,350
Deferred revenue
3,755,963
2,472,734
Other current liabilities
5,159,837
3,408,651
Income taxes payable
682,208
547,932
Total current liabilities
59,104,224
65,541,453
Secured line of credit
462,151,603
455,705,468
Deferred tax liability
42,013,356
41,786,064
Operating lease liabilities, net of current portion
7,110,527
7,445,152
Fair value of swap liability
289,543
Other liabilities
318,697
345,149
Total liabilities
570,698,407
571,112,829
Contingencies and commitments (Note 15)
Shareholders’ Equity
Preferred stock, $0.0001 par value 75,000,000 shares authorized, 0 shares issued and outstanding at June 30, 2026 and March 31, 2026
Common stock, $0.0001 par value; 750,000,000 shares authorized, 65,930,743 shares issued and outstanding at June 30, 2026; 65,602,509 shares issued and outstanding at March 31, 2026
6,594
6,561
Additional paid-in capital
347,020,691
346,933,189
Retained earnings
31,357,123
31,450,234
Accumulated other comprehensive loss
(624,605)
(670,772)
Total Reservoir Media, Inc. shareholders’ equity
377,759,803
377,719,212
Noncontrolling interest
429,765
845,040
Total shareholders’ equity
378,189,568
378,564,252
Total liabilities and shareholders’ equity
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
For the Three Months Ended June 30, 2026
Common Stock
Accumulated other
Additional paid-in
Retained
comprehensive
Noncontrolling
Shareholders’
Shares
Amount
capital
earnings
(loss) income
interests
equity
Balance, March 31, 2026
65,602,509
Share-based compensation
1,295,456
Vesting of restricted stock units, net of shares withheld for employee taxes
328,234
(2,054,621)
(2,054,588)
Reclassification of liability-classified awards to equity-classified awards
846,667
(415,275)
Other comprehensive income
Balance, June 30, 2026
65,930,743
For the Three Months Ended June 30, 2025
income (loss)
Balance, March 31, 2025
65,239,735
6,524
344,145,789
23,147,570
(2,422,107)
1,322,006
366,199,782
873,978
Stock option exercises
2,678
13,684
248,770
26
(1,382,819)
(1,382,793)
995,407
(88,066)
Balance, June 30, 2025
65,491,183
6,550
344,646,039
22,591,911
1,630,061
1,233,940
370,108,501
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash flows from operating activities:
Adjustments to reconcile net loss to net cash (used for) provided by operating activities:
Amortization of intangible assets
8,219,304
7,262,026
Depreciation of property and equipment
76,167
51,711
1,820,144
1,133,552
Amortization of deferred financing costs
446,135
372,570
(Gain) loss on fair value of swaps
(925,853)
997,165
Loss from equity method investments
126,505
164,228
Deferred income taxes
(239,708)
Changes in operating assets and liabilities, excluding net assets of acquired business:
(1,389,510)
3,174,032
(546,817)
(89,887)
Royalty advances
38,389
1,696,322
Other assets and liabilities
214,888
170,465
Accounts payable, accrued expenses and deferred revenue
(1,423,284)
(2,369,707)
(7,286,554)
(5,524,771)
(28,781)
(108,772)
Net cash (used for) provided by operating activities
(1,407,361)
6,014,143
Cash flows from investing activities:
Purchases of music catalogs
(14,670,802)
(7,938,946)
Acquisition of business, net of cash acquired
(5,032,615)
Investments in equity affiliates
(1,686,788)
Purchases of property and equipment
(84,247)
(33,608)
Net cash used for investing activities
(19,787,664)
(9,659,342)
Cash flows from financing activities:
Proceeds from secured line of credit
6,000,000
Proceeds from stock option exercises
Taxes paid related to net share settlement of restricted stock units
Deferred financing costs paid
(1,140,259)
Net cash provided by (used for) financing activities
3,945,412
(2,509,368)
Foreign exchange impact on cash
(41,240)
(374,429)
Net decrease in cash, cash equivalents and restricted cash
(17,290,853)
(6,528,996)
Cash, cash equivalents and restricted cash at beginning of period
31,301,233
21,386,140
Cash, cash equivalents and restricted cash at end of period
14,010,380
14,857,144
Reconciliation of Cash and cash equivalents to Consolidated Statements of Cash Flows:
Cash and cash equivalents, as presented in Condensed Consolidated Balance Sheets
Restricted cash included in Other current assets
350,000
5,373,771
Cash, cash equivalents and restricted cash as presented in Condensed Consolidated Statements of Cash Flows(a)
(a)
Restricted cash included in Other current assets at June 30, 2026 and March 31, 2026 consists of funds placed in escrow in connection with the Viral Wave Acquisition that was completed in April 2026 and are legally restricted as to withdrawal of use. Restricted cash is recorded at cost which approximates fair value. See Note 5, Acquisitions.
6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
NOTE 1. DESCRIPTION OF BUSINESS
Reservoir Media, Inc., 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, Abu Dhabi, Mumbai and Cairo.
Following a business combination between Roth CH Acquisition II Co. (“ROCC”) and Reservoir Holdings, Inc., a Delaware corporation (“RHI”), on July 28, 2021 (the “Business Combination”), the Company’s legal name became “Reservoir Media, Inc.” The common stock, $0.0001 par value per share, of the Company (the “Common Stock”) is traded on The Nasdaq Stock Market LLC (“NASDAQ”) under the ticker symbol “RSVR.”
The Company is a holding company that conducts substantially all of its business operations through Reservoir Media Management, Inc. (“RMM”), and RMM’s subsidiaries. The Company’s activities are organized into two reportable segments: Music Publishing and Recorded Music. Operations of the Music Publishing segment involve the acquisition of interests in music catalogs from which royalties are earned as well as signing songwriters to exclusive agreements which give the Company an interest in the future delivery of songs. Operations of the Recorded Music segment involve the acquisition of sound recording catalogs as well as the discovery and development of recording artists and the marketing, distribution, sale and licensing of the music catalog.
NOTE 2. 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 (“U.S. GAAP” or “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, 2026 and 2025.
The condensed consolidated balance sheet of the Company as of March 31, 2026, included herein, was derived from the audited financial statements as of that date, but does not include all disclosures, including certain notes required by U.S. 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 months ended June 30, 2026 are not necessarily indicative of the results to be expected for any subsequent quarter, the fiscal year ending March 31, 2027 or any other period.
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosure of contingent assets and liabilities. Significant estimates are used for, but not limited to, determining useful lives of intangible assets, intangible asset recoverability and impairment and accrued revenue. Actual results could differ from these estimates.
NOTE 3. RECENT ACCOUNTING PRONOUNCEMENTS
Accounting Standards Not Yet Adopted
In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which will require disclosure of additional information about specific expense categories in the notes to financial statements at each interim and annual reporting period. The amendments in ASU 2024-03 are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact that adoption of ASU 2024-03 will have on its disclosures upon adoption.
NOTE 4. REVENUE RECOGNITION
For the Company’s operating and reportable segments, Music Publishing and Recorded Music, the Company accounts for a contract when it has legally enforceable rights and obligations and collectability of consideration is probable. The Company identifies the performance obligations and determines the transaction price associated with the contract. Revenue is recognized when, or as, control of the promised services or goods is transferred to the Company’s customers, and in an amount that reflects the consideration to which the Company is expected to be entitled in exchange for those services or goods. Certain of the Company’s arrangements include licenses of intellectual property with consideration in the form of sales- and usage-based royalties. Royalty revenue is recognized when the subsequent sale or usage occurs using the best estimates available of the amounts that will be received by the Company. The Company recognized revenue of $175,689 and $114,218 from performance obligations satisfied in previous periods for the three months ended June 30, 2026 and 2025, respectively.
Disaggregation of Revenue
The Company’s revenue consisted of the following categories during the three months ended June 30, 2026 and 2025:
Revenue by Type
Digital
15,354,854
14,310,164
Performance
5,620,830
4,784,639
Synchronization
4,021,242
4,153,411
Mechanical
580,344
621,622
Other
935,621
1,063,630
Total Music Publishing
26,512,891
24,933,466
9,856,228
8,035,214
Physical
1,650,606
1,071,879
Neighboring rights
1,146,975
1,072,507
1,446,583
264,723
Total Recorded Music
14,100,392
10,444,323
Other revenue
868,770
1,786,504
Total revenue
Revenue by Geographical Location
United States Music Publishing
15,035,925
14,119,702
United States Recorded Music
6,434,001
5,411,322
United States other revenue
Total United States
22,338,696
21,317,528
International Music Publishing
11,476,966
10,813,764
International Recorded Music
7,666,391
5,033,001
Total International
19,143,357
15,846,765
Only the United States represented 10% or more of the Company’s total revenues during the three months ended June 30, 2026 and 2025.
8
Deferred Revenue
The following table reflects the change in deferred revenue during the three months ended June 30, 2026 and 2025:
Balance at beginning of period
1,885,462
Recognized in Viral Wave Acquisition
90,553
Cash received during period
3,169,809
2,701,296
Revenue recognized during period(a)
(1,977,133)
(1,846,534)
Balance at end of period
2,740,224
NOTE 5. ACQUISITIONS
Viral Wave Business Combination
PopArabia FZ-LLC, a subsidiary of the Company, completed the acquisition of all of the issued and outstanding share capital of ViralWave Content Consultancy DWC-LLC (“Viral Wave”) (the “Viral Wave Acquisition”). The Viral Wave Acquisition closed on April 7, 2026 following required regulatory approvals. Purchase price consideration in the Viral Wave Acquisition totaled $5,892,734, consisting of $5,372,734 of cash paid, $350,000 of deferred purchase price and $170,000 of contingent consideration. The purchase price is subject to customary working capital and other purchase price adjustments.
Viral Wave is a music and entertainment organization specializing in content distribution throughout the Middle East and North Africa region (“MENA”). The acquisition is expected to support the Company’s strategy to expand its presence in emerging markets, including MENA, as well as among global Arabic-language audiences.
The Viral Wave Acquisition was accounted for as a business combination in accordance with FASB ASC Topic 805, Business Combinations using the acquisition method of accounting. The allocation of purchase price consideration to the preliminary fair value of the net assets acquired is as follows:
340,119
491,394
Intangible assets
3,379,457
1,530,120
Property and equipment
133,590
(550,120)
(302,271)
Total identifiable net assets
5,022,289
Goodwill
870,445
Total consideration
5,892,734
The preliminary fair value of identifiable intangible assets subject to amortization is $3,379,457 and consists of music distribution customer relationships, mobile carrier distribution agreements and a recorded music catalog, which have preliminary fair values of $1,474,883, $1,352,823 and $551,750, respectively. The weighted average amortization period of all identifiable intangible assets is 9.2 years.
9
The excess of the purchase price over the preliminary fair value of net assets acquired of $870,445 has been recorded as goodwill, which is classified as Other assets in the June 30, 2026 condensed consolidated balance sheet. Goodwill arising from the Viral Wave Acquisition has been assigned to the Company’s Recorded Music segment.
The purchase price allocation is preliminary and subject to revision as the Company obtains additional information necessary to finalize its estimates, primarily related to the valuation of identifiable intangible assets acquired, and may also include other assets acquired and liabilities assumed.
The results of operations of Viral Wave have been included in our consolidated financial statements from the acquisition date of April 7, 2026.
Transaction costs related to the Viral Wave Acquisition were not material and are included in administration expenses in the accompanying condensed consolidated statements of operation.
Asset 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 three months ended June 30, 2026 and 2025, the Company completed such acquisitions totaling $15,846,511 and $3,791,366, respectively, inclusive of deferred acquisition payments. The weighted average amortization periods for music catalogs acquired in asset acquisitions during the three months ended June 30, 2026 and 2025 were determined to be 26.7 years and 30 years, respectively.
NOTE 6. INTANGIBLE ASSETS
Intangible assets subject to amortization consist of the following as of June 30, 2026 and March 31, 2026:
Intangible assets subject to amortization:
Publishing and recorded music catalogs
991,906,727
975,400,109
Other intangible assets
3,783,699
954,397
Gross intangible assets
995,690,426
976,354,506
Accumulated amortization
(195,842,945)
(187,613,685)
Straight-line amortization expense totaled $8,219,304 and $7,262,026 during the three months ended June 30, 2026 and 2025, respectively.
10
NOTE 7. ROYALTY ADVANCES
The Company made royalty advances totaling $3,702,065 and $2,686,189 during the three months ended June 30, 2026 and 2025, 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, net of reserves for amounts that may not be recoverable.
The following table reflects the change in royalty advances, net during the three months ended June 30, 2026 and 2025:
Three Months Ended June 30 ,
70,497,554
70,690,618
Additions
3,702,065
2,686,189
Recoupments
(3,740,454)
(4,382,511)
Foreign currency translation
15,089
433,472
72,004,374
69,427,768
NOTE 8. SECURED LINE OF CREDIT
Long-term debt consists of the following:
464,828,410
458,828,410
Debt issuance costs, net
(2,676,807)
(3,122,942)
Credit Facilities
RMM is party to a credit agreement (as amended or supplemented from time to time, the “RMM Credit Agreement”) governing RMM’s senior secured revolving credit facility (the “Senior Credit Facility”). On June 3, 2025, RMM entered into an amendment (the “Third Amendment”) to the RMM Credit Agreement, which amended the Senior Credit Facility to (i) increase the revolving credit commitment from $450,000,000 to $550,000,000, (ii) adjust the consolidated net senior debt to the value of the music library ratio from 30.0% to 37.5% for the 0.25% increase in the pricing grid, (iii) reset the incremental borrowing capacity under the facility’s accordion feature to $150,000,000 after the effectiveness of the Third Amendment, (iv) exclude non wholly-owned foreign subsidiaries from the requirement to guarantee obligations under the RMM Credit Agreement and (v) modify certain negative covenants under the RMM Credit Agreement as further set forth in the Third Amendment. In connection with the Third Amendment, the Company incurred banking, legal and consulting fees of $1,140,259 that were recorded as deferred financing fees, which will be amortized over the remaining term of the Senior Credit Facility.
The maturity date of the loans advanced under the Senior Credit Facility is December 16, 2027. The interest rate on borrowings under the Senior Credit Facility is equal to, at the Company’s option, either (i) the sum of a base rate plus a margin of 1.00% or (ii) the sum of a Secured Overnight Financing Rate (“SOFR”) rate plus a margin of 2.00%, in each case subject to a 0.25% increase based on a consolidated net senior debt to library value ratio. RMM is 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. Substantially all tangible and intangible assets of the Company, RHI, RMM and the other subsidiaries are pledged as collateral to secure the obligations of RMM under the RMM Credit Agreement.
11
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.
As described above, 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. As of June 30, 2026, the Senior Credit Facility had a borrowing capacity of $550,000,000, with remaining borrowing availability of $85,171,590.
Interest Rate Swaps
At June 30, 2026, RMM had the following interest rate swaps outstanding, under which it pays a fixed rate and receives a floating interest payment from the counterparty based on SOFR:
Notional
Amount at
Pay Fixed
Effective Date
Rate
Maturity
September 30, 2024
100,000,000
2.946
%
December 2027
50,000,000
3.961
August 29, 2025
65,000,000
3.405
NOTE 9. INCOME TAXES
Income tax benefit for the three months ended June 30, 2026 and 2025 was $239,125 (32.0% effective tax rate) and $271,066 (29.6% effective tax rate), respectively. Income tax benefit during the three months ended June 30, 2026 reflects excess tax benefits related to share-based compensation. The change in effective income tax rate during these periods also reflects the amount and mix of income (loss) from multiple tax jurisdictions.
NOTE 10. SUPPLEMENTARY CASH FLOW INFORMATION
Interest paid and income taxes paid for the three months ended June 30, 2026 and 2025 were comprised of the following:
Interest paid
6,457,464
5,924,841
Income taxes paid
54,200
108,773
Non-cash investing and financing activities for the three months ended June 30, 2026 and 2025 were comprised of the following:
Acquired intangible assets included in other current liabilities and other liabilities
1,900,000
275,000
Deferred consideration and contingent consideration included in other current liabilities and other liabilities
520,000
12
NOTE 11. WARRANTS
As of June 30, 2026, 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 entitled 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. The Warrants expired on July 28, 2026.
NOTE 12. SHARE-BASED COMPENSATION
Share-based compensation expense totaled $1,820,144 ($1,419,727, net of taxes) and $1,133,552 ($882,507, net of taxes) during the three months ended June 30, 2026 and 2025, respectively. Share-based compensation expense is classified as “Administration expenses” in the accompanying condensed consolidated statements of operations.
During the three months ended June 30, 2026 and 2025, 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 RSUs, the awards became equity-classified as they no longer met the criteria to be liability-classified and as a result liabilities of $846,667 and $995,407 were reclassified from accounts payable and accrued liabilities to additional paid-in capital during the three months ended June 30, 2026 and 2025, respectively.
NOTE 13. LOSS PER SHARE
The following table summarizes the basic and diluted loss per common share calculation for the three months ended June 30, 2026 and 2025:
Basic loss per common share
Weighted average common shares outstanding - basic
Loss per common share - basic
Diluted loss per common share
Weighted average effect of potentially dilutive securities:
Effect of dilutive stock options and RSUs
Weighted average common shares outstanding - diluted
Loss per common share - diluted
Because of their anti-dilutive effect, 7,663,056 shares of Common Stock equivalents, comprised of 1,258,454 stock options, 517,102 RSUs and 5,887,500 warrants have been excluded from the diluted earnings per share calculation for the three months ended June 30, 2026. Because of their anti-dilutive effect, 7,863,770 shares of Common Stock equivalents, comprised of 1,258,454 stock options, 717,816 RSUs and 5,887,500 warrants have been excluded from the diluted earnings per share calculation for the three months ended June 30, 2025.
13
NOTE 14. FINANCIAL INSTRUMENTS
The Company is exposed to the following risks related to its financial instruments:
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 Senior Credit Facility. As described in Note 8, “Secured Line of Credit,” the Company entered into interest rate swap agreements to partially reduce its exposure to fluctuations in interest rates on its Credit Facilities.
The fair value of the outstanding interest rate swaps consisted of a $1,993,188 asset as of June 30, 2026 and a $1,356,878 asset and a $289,543 liability at March 31, 2026. 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 June 30, 2026 and 2025 of $925,853 and $(997,165), respectively, was recorded as a gain (loss) on fair value of swaps.
(c)
Foreign Exchange Risk
The Company is exposed to foreign exchange risk in fluctuations of currency rates on its revenue from royalties, writers’ fees and its subsidiaries’ operations.
(d)
Financial Instruments
Financial instruments not described elsewhere include cash, accounts receivable, accounts payable, accrued liabilities and the Company’s secured line of credit. The carrying values of these instruments as of June 30, 2026 do not differ materially from their respective fair values due to the immediate or short-term duration of these items or their bearing market-related rates of interest.
NOTE 15. CONTINGENCIES AND COMMITMENTS
Litigation
The Company is subject to claims and contingencies in the normal course of business. To the extent the Company cannot determine whether a loss is probable based on the uncertain 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 condensed 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. When applicable, 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.
14
NOTE 16. SEGMENT REPORTING
The Company’s business is organized in three operating segments, one of which does not meet the quantitative thresholds for determining reportable segments, and two reportable segments: 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 operating income before depreciation and amortization (“OIBDA”). The CODM regularly reviews trends in OIBDA and compares OIBDA results to budgets to evaluate the profitability of the segments. During the annual budget process, the CODM also considers OIBDA to assist in the allocation of resources to the segments.
The accounting policies of the Company’s business segments are consistent with the Company’s policies for the condensed consolidated financial statements. The Company does not have sales between segments.
The following tables present total revenue and OIBDA by segment, significant segment expenses, which are expenses that are included in OIBDA, significant to the segment considering qualitative and quantitative factors and regularly provided or easily computed from information regularly provided to the CODM, and a reconciliation of OIBDA to income before income taxes for the three months ended June 30, 2026 and 2025:
Three Months Ended June 30, 2026
Music
Recorded
Publishing
Total
Reportable segment revenue
40,613,283
Other revenue(a)
Consolidated revenue
Significant segment expenses:
10,475,141
4,312,981
8,266,979
3,677,771
Reportable segment OIBDA
7,770,771
6,109,640
13,880,411
Other loss(a)
(206,566)
(8,295,471)
Loss on foreign exchange
Gain on fair value of swaps
Other expense, net
15
Three Months Ended June 30, 2025
35,377,789
10,436,807
2,755,908
6,932,820
2,834,435
7,563,839
4,853,980
12,417,819
Other profit(a)
342,612
(7,313,737)
Gain on foreign exchange
Loss on fair value of swaps
The Company’s CODM manages assets on a consolidated basis. Segment assets and amortization and depreciation by reportable segment are not reported to the Company’s CODM nor used to allocate resources or assess performance of the segments. Accordingly, neither total segment assets nor amortization and depreciation by reportable segment have been disclosed.
16
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.
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 provisions of the United States Private Securities Litigation Reform Act of 1995. 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. Because some of these risks and uncertainties cannot be predicted or quantified, you should not rely on our forward-looking statements as predictions of future events. 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 May 28, 2026 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. You should read this Quarterly Report with the understanding that actual future events or future performance might be materially different from our expectations.
Introduction
We are a holding company that conducts substantially all of our business operations through Reservoir Media Management, Inc. (“RMM”). RMM is one of the world’s leading independent music companies. We operate a music publishing business, a recorded music business, a management business and a rights management entity in the Middle East.
Recent Developments
On March 4, 2026, we announced that the Company’s Board of Directors (the “Board”) formed a special committee of independent and disinterested directors of the Board (the “Special Committee”) to evaluate unsolicited, non-binding proposals received from certain of the Company’s shareholders to acquire the Company’s outstanding equity, including proposals from Irenic Capital Management LP (“Irenic”) and from Richmond Hill Investment Co. LP (“Richmond Hill”) and Wesbild Inc. (“Wesbild” and together with Richmond Hill “Wesbild/Richmond”) (together the “Proposals”). For additional information regarding the Proposals, see “Recent Developments” in the Annual Report. On May 1, 2026, we announced that the Special Committee engaged Morgan Stanley & Co. LLC as its financial advisor and Wachtell, Lipton, Rosen & Katz as its legal counsel in connection with the Special Committee’s evaluation of the Proposals. There can be no assurance that any definitive agreement will result from either of the Proposals or that any transaction will be consummated with Irenic, Richmond Hill, Wesbild or any other party.
Business Overview
We are an independent music company operating in music publishing and recorded music. Both of our business areas are populated with hit songs dating back to the early 1900s and represent an array of artists across genres and geography. Consistent with how we classify and operate our business, our company is organized in two reportable segments: Music Publishing and Recorded Music. A brief description of each segment’s operations is presented below.
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 a vast collection of musical compositions, including numerous pop hits, American standards, and motion picture and theatrical compositions. Assembled over many years, our catalog represents 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. In addition to the catalog, we represent many active songwriters who are consistently generating new music.
Music Publishing revenues are derived from five main sources:
The principal costs associated with our Music Publishing business are as follows:
18
Recorded Music Segment
Our Recorded Music business consists of three types of sound recording rights 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 (“Current Artist”). 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 “Catalog”). 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.
Our recorded music business is operated by our label teams based in London and New York City, which release music from our labels Chrysalis Records, Tommy Boy Music, New State and Reservoir Recordings. We primarily manage Catalog recorded music, but we have a small roster of current artists for whom we release new music. We also own income participation interests in recordings by The Isley Brothers, The Commodores, Wisin and Yandel, Alabama and others. 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, recordings under the Tommy Boy label by artists such as Coolio, House of Pain, Naughty By Nature and Queen Latifah, plus select catalog artists on Fool’s Gold Records, which we also distribute.
Our Current Artist and Catalog recorded music distribution is handled by a mix of direct deals, such as with Amazon, Apple, TikTok and YouTube, plus a network of distribution partners, including MERLIN, AMPED and Proper. Chrysalis Records’ current frontline releases are distributed through Secretly Distribution.
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 to social media outlets, such as Facebook, Instagram, TikTok and Snap.
Recorded Music revenues are derived from four main sources:
The principal costs associated with our Recorded Music business are as follows:
19
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 them and may be useful to investors.
Results of Operations
Statement of Operations
Our statement of operations was composed of the following amounts (in thousands):
For the Three Months Ended
2026 vs. 2025
$ Change
% Change
41,482
37,164
4,318
14,788
13,193
1,595
8,295
7,314
982
13,020
11,211
1,809
36,104
31,718
4,386
5,378
5,447
(68)
(1)
(6,905)
(6,296)
(609)
(44)
1,095
(1,139)
NM
926
(997)
1,923
(103)
(164)
61
(37)
(748)
(915)
167
(18)
(239)
(271)
(12)
(508)
(644)
135
(21)
415
88
327
(93)
(556)
463
(83)
NM – Not meaningful
20
Our revenues were composed of the following amounts (in thousands):
15,355
14,310
1,045
5,621
4,785
836
4,021
4,153
(132)
(3)
580
622
(41)
(7)
936
1,064
(128)
26,513
24,933
1,579
9,856
8,035
1,821
23
1,651
1,072
579
54
1,147
1,073
74
1,447
265
1,182
14,100
10,444
3,656
35
869
1,787
(918)
(51)
Total Revenue
U.S. Music Publishing
15,036
14,120
916
U.S. Recorded Music
6,434
5,411
1,023
U.S. Other Revenue
Total U.S.
22,339
21,318
1,021
11,477
10,814
663
7,666
5,033
2,633
52
19,143
15,847
3,297
21
Three Months Ended June 30, 2026 vs. Three Months Ended June 30, 2025
Total revenues increased by $4,318 thousand, or 12%, during the three months ended June 30, 2026 compared to the three months ended June 30, 2025, driven by a 35% increase in Recorded Music revenues and a 6% increase in Music Publishing revenues. Music Publishing revenues represented 64% and 67% of total revenues for the three months ended June 30, 2026 and the three months ended June 30, 2025, respectively. Recorded Music revenues represented 34% and 28% of total revenues for the three months ended June 30, 2026 and the three months ended June 30, 2025, respectively. U.S. and international revenues represented 54% and 46%, respectively, of total revenues for the three months ended June 30, 2026. U.S. and international revenues represented 57% and 43%, respectively, of total revenues for the three months ended June 30, 2025. The shift in geographic mix is primarily attributable to the acquisition of ViralWave Content Consultancy DWC-LLC (“Viral Wave”) (the “Viral Wave Acquisition”).
Total digital revenues increased by $2,866 thousand, or 13%, during the three months ended June 30, 2026 compared to the three months ended June 30, 2025, primarily due to the acquisition of additional music catalogs and continued growth at music streaming services. Total digital revenues represented 61% and 60% of total revenues for the three months ended June 30, 2026 and the three months ended June 30, 2025, respectively.
Music Publishing revenues increased by $1,579 thousand, or 6%, during the three months ended June 30, 2026 compared to the three months ended June 30, 2025. This increase in Music Publishing revenues was due to a $1,045 thousand increase in digital revenue, primarily due to the acquisition of additional music catalogs and continued growth at music streaming services and an $836 thousand increase in performance revenue driven by the performance of hit songs. These increases were partially offset by a $132 thousand decrease in synchronization revenue driven by the timing of licenses and a $128 thousand decrease in other revenue.
On a geographic basis, U.S. Music Publishing revenues represented 57% of total Music Publishing revenues for the three months ended June 30, 2026 and the three months ended June 30, 2025. International Music Publishing revenues represented 43% of total Music Publishing revenues for the three months ended June 30, 2026 and the three months ended June 30, 2025.
Recorded Music revenues increased by $3,656 thousand, or 35%, during the three months ended June 30, 2026 compared to the three months ended June 30, 2025. This increase in Recorded Music revenues was mainly due to a $1,821 thousand increase in digital revenue, primarily due to the acquisition of additional music catalogs and continued growth at music streaming services, a $1,182 thousand increase in synchronization revenue driven by the timing of licenses, and a $579 thousand increase in physical due to timing of release schedules.
On a geographic basis, U.S. Recorded Music revenues represented 46% of total Recorded Music revenues for the three months ended June 30, 2026 compared to 52% for the three months ended June 30, 2025. International Recorded Music revenues represented 54% of total Recorded Music revenues for the three months ended June 30, 2026 compared to 48% for the three months ended June 30, 2025. The shift in geographic mix is primarily attributable to the Viral Wave Acquisition.
Cost of Revenue
Our cost of revenue was composed of the following amounts (in thousands):
Writer royalties and other publishing costs
10,475
10,437
38
Artist royalties and other recorded music costs
4,313
2,756
1,557
56
Total cost of revenue
Cost of revenue increased by $1,595 thousand, or 12%, during the three months ended June 30, 2026 compared to the three months ended June 30, 2025, primarily as a result of an increase in revenues. Cost of revenue as a percentage of revenues increased to 36% for the three months ended June 30, 2026 from 35% for the three months ended June 30, 2025, reflecting an increase in cost of revenue as a percentage of revenue in the Recorded Music segment.
Writer royalties and other publishing costs for the Music Publishing segment increased by $38 thousand during the three months ended June 30, 2026 compared to the three months ended June 30, 2025. Writer royalties and other publishing costs as a percentage of Music Publishing revenues decreased to 40% for the three months ended June 30, 2026 from 42% for the three months ended June 30, 2025, driven primarily by the change in the mix of revenue 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 increased by $1,557 thousand, or 56%, during the three months ended June 30, 2026 compared to the three months ended June 30, 2025. Artist royalties and other recorded music costs as a percentage of Recorded Music revenues increased to 31% for the three months ended June 30, 2026 from 26% for the three months ended June 30, 2025, driven primarily by the change in the mix of revenue by type to a higher percentage of physical sales, as well as the addition of revenues from Viral Wave, both of which carry higher costs.
22
Amortization and Depreciation
Amortization and depreciation expense increased by $982 thousand, or 13%, during the three months ended June 30, 2026 compared to the three months ended June 30, 2025, primarily due to the acquisition of additional music catalogs.
Administration Expenses
Our administration expenses are composed of the following amounts (in thousands):
Music Publishing administration expenses
8,267
6,933
1,334
Recorded Music administration expenses
3,678
2,834
843
30
Other administration expenses
1,075
1,444
(369)
(26)
Total administration expenses
Total administration expenses increased by $1,809 thousand, or 16%, during the three months ended June 30, 2026 compared to the three months ended June 30, 2025, driven primarily by increases in administration expenses in the Music Publishing and Recorded Music segments, partially offset by a decrease in other administration expenses. The increase also reflects $201 thousand of professional fees incurred in connection with structuring associated with certain strategic growth initiatives, the Viral Wave Acquisition and by the Special Committee (the “Transaction costs”). Expressed as a percentage of revenues, administration expenses increased to 31% for the three months ended June 30, 2026 from 30% for the three months ended June 30, 2025.
Music Publishing administration expenses increased by $1,334 thousand, or 19%, during the three months ended June 30, 2026 compared to the three months ended June 30, 2025. Expressed as a percentage of revenues, Music Publishing administration expenses increased to 31% for the three months ended June 30, 2026 from 28% for the three months ended June 30, 2025, primarily as a result of an increase in share-based compensation and professional fees incurred in connection with structuring associated with certain strategic growth initiatives.
Recorded Music administration expenses increased by $843 thousand, or 30%, during the three months ended June 30, 2026 compared to the three months ended June 30, 2025. Expressed as a percentage of revenue, Recorded Music administration expenses decreased to 26% for the three months ended June 30, 2026 from 27% for the three months ended June 30, 2025, primarily due to taking advantage of operating leverage on the Recorded Music platform.
Other administration expenses decreased by $369 thousand, or 26%, during the three months ended June 30, 2026 compared to the three months ended June 30, 2025, primarily due to selling expenses associated with our artist management business, consisting mostly of manager compensation.
Operating Income
Operating income decreased by $68 thousand, or 1%, during the three months ended June 30, 2026 compared to the three months ended June 30, 2025, primarily driven by an increase in administration expenses and amortization and depreciation, partially offset by an increase in revenues. Operating income margin (operating income expressed as a percentage of revenues) decreased to 13% during the three months ended June 30, 2026 from 15% during the three months ended June 30, 2025 primarily due to an increase in administration expenses as a percentage of revenue.
Interest Expense
Interest expense increased by $609 thousand, or 10%, during the three months ended June 30, 2026 compared to the three months ended June 30, 2025, driven primarily by increased debt balances due to use of funds in acquisitions of music catalogs and writer signings.
(Loss) Gain on Foreign Exchange
(Loss) gain on foreign exchange was $(44) thousand during the three months ended June 30, 2026 compared to $1,095 thousand during the three months ended June 30, 2025. This change was due to fluctuations in the two foreign currencies we are directly exposed to, namely British pound sterling and euro.
Gain (Loss) on Fair Value of Swaps
Gain (loss) on fair value of swaps was $926 thousand for the three months ended June 30, 2026 compared to $(997) thousand for the three months ended June 30, 2025. This change was due to marking to market our interest rate swap hedges.
Other (Expense) Income, Net
Other (expense) income, net during the three months ended June 30, 2026 and the three months ended June 30, 2025 was comprised primarily of the Company’s recognition of its share of losses incurred by equity method investments.
Income Tax Benefit
Income tax benefit was $239 thousand during the three months ended June 30, 2026 compared to $271 thousand during the three months ended June 30, 2025. The effective income tax rate during the three months ended June 30, 2026 was 32.0% compared to 29.6% during the three months ended June 30, 2025. Income tax benefit during the three months ended June 30, 2026 reflects excess tax benefits related to share-based compensation. The change in effective income tax rate during these periods also reflects the amount and mix of income (loss) from multiple tax jurisdictions.
Net Loss
Net loss was $508 thousand during the three months ended June 30, 2026 compared to $644 thousand during the three months ended June 30, 2025. This change was driven primarily by the change in gain (loss) on fair value of swaps, partially offset by the change in (loss) gain on foreign exchange and an increase in interest expense.
24
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 the Company’s 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 expense (benefit), 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, loss on early extinguishment of debt and to write-down an equity investment to its fair value), (2) any net gain or loss on foreign exchange, (3) any net gain or loss resulting from interest rate swaps, (4) equity-based compensation expense and (5) certain unusual or non-recurring items. 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 in 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.
25
Reconciliation of Operating Income to OIBDA
We use OIBDA as our primary measure of financial performance. The following tables reconcile consolidated operating income to OIBDA and present OIBDA for our reportable segments (in thousands):
Consolidated
OIBDA
13,674
12,760
913
OIBDA Margin
Music Publishing
7,771
7,564
207
29
Recorded Music
6,110
4,854
1,256
43
46
OIBDA increased by $913 thousand, or 7%, during the three months ended June 30, 2026 compared to the three months ended June 30, 2025, driven by increases in Music Publishing OIBDA and Recorded Music OIBDA, partially offset by a $549 thousand decrease in Other OIBDA associated with our artist management business. Expressed as a percentage of revenue, OIBDA Margin decreased to 33% for the three months ended June 30, 2026 from 34% for the three months ended June 30, 2025.
Music Publishing OIBDA increased by $207 thousand, or 3%, during the three months ended June 30, 2026 compared to the three months ended June 30, 2025. Expressed as a percentage of revenue, Music Publishing OIBDA Margin decreased to 29% for the three months ended June 30, 2026 from 30% for the three months ended June 30, 2025. The increase in Music Publishing OIBDA primarily reflects an increase in revenues, partially offset by an increase in administration expenses. The decrease in OIBDA Margin primarily reflects an increase in administration expenses as a percentage of revenues, partially offset by a decrease in cost of revenue as a percentage of revenue.
Recorded Music OIBDA increased by $1,256 thousand, or 26% during the three months ended June 30, 2026 compared to the three months ended June 30, 2025. Expressed as a percentage of revenue, Recorded Music OIBDA Margin decreased to 43% for the three months ended June 30, 2026 from 46% for the three months ended June 30, 2025. The increase in Recorded Music OIBDA primarily reflects an increase in revenues. The decrease in OIBDA Margin primarily reflects an increase in cost of revenue as a percentage of revenues, partially offset by a decrease in administration expenses as a percentage of revenues.
Reconciliation of Net Loss to EBITDA and Adjusted EBITDA
The following table reconciles net loss to Adjusted EBITDA (in thousands):
136
6,905
6,296
609
981
EBITDA
14,453
12,695
1,758
Loss (gain) on foreign exchange(a)
44
(1,095)
1,139
(Gain) loss on fair value of swaps(b)
(926)
997
(1,923)
Non-cash share-based compensation(c)
1,820
1,134
686
60
Transaction costs(d)
201
Other expense (income), net(e)
103
164
(61)
Adjusted EBITDA
15,695
13,895
1,800
Adjusted EBITDA increased by $1,800 thousand, or 13%, during the three months ended June 30, 2026 compared to the three months ended June 30, 2025, primarily as a result of an increase in revenues, partially offset by an increase in administration expenses.
Liquidity and Capital Resources
Capital Resources
As of June 30, 2026, we had $462,152 thousand of debt (net of $2,677 thousand of deferred financing costs) and $13,660 thousand of cash and cash equivalents.
27
Cash Flows
The following table summarizes our historical cash flows (in thousands).
2026 vs.2025
Cash (used for) provided by:
Operating activities
(1,407)
6,014
(7,421)
Investing activities
(19,788)
(9,659)
(10,129)
105
Financing activities
3,945
(2,509)
6,454
Operating Activities
Cash (used for) provided by operating activities was $(1,407) thousand for the three months ended June 30, 2026 compared to $6,014 thousand for the three months ended June 30, 2025. The primary driver of the $7,421 thousand change in cash (used for) provided by operating activities during the three months ended June 30, 2026 compared to the three months ended June 30, 2025 was an increase in cash used for working capital. The increase in cash used for working capital was due primarily to the timing of collections of accounts receivable and royalty payments to artists, as well as the timing of royalty advance recoupments, partially offset by the timing of payments of accounts payable.
Investing Activities
Cash used for investing activities was $19,788 thousand for the three months ended June 30, 2026 compared to $9,659 thousand for the three months ended June 30, 2025. The increase in cash used in investing activities was primarily due to an increase in acquisitions of music catalogs and the Viral Wave Acquisition, partially offset by a decrease in investments in equity affiliates.
Financing Activities
Cash provided by (used for) financing activities was $3,945 thousand for the three months ended June 30, 2026 compared to $(2,509) thousand for the three months ended June 30, 2025. The change in cash provided by (used for) financing activities primarily reflects an increase in borrowings from the secured line of credit and the nonrecurrence of the payment of deferred financing costs. These factors were partially offset by an increase in taxes paid related to the net share settlement of restricted stock units.
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 secured revolving credit facility (the “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 June 30, 2026
As of June 30, 2026, our outstanding debt consisted of $464,828 thousand borrowed under the Senior Credit Facility. As of June 30, 2026, remaining borrowing availability under the Senior Credit Facility was $85,172 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.
28
Debt Capital Structure
RMM is a borrower under a revolving credit agreement (as amended or supplemented from time to time, the “RMM Credit Agreement”) governing RMM’s Senior Credit Facility. On June 3, 2025, RMM entered into an amendment (the “Third Amendment”) to the RMM Credit Agreement, which amended the Senior Credit Facility to (i) increase the revolving credit commitment from $450,000 thousand to $550,000 thousand, (ii) adjust the consolidated net senior debt to the value of the music library ratio for the 0.25% increase in the pricing grid from 30.0% to 37.5%, (iii) reset the incremental borrowing capacity under the facility’s accordion feature to $150,000 thousand after the effectiveness of the Third Amendment, (iv) exclude non wholly-owned foreign subsidiaries from the requirement to guarantee obligations under the RMM Credit Agreement and (v) modify certain negative covenants under the RMM Credit Agreement as further set forth in the Third Amendment.
The maturity date of the loans advanced under the Senior Credit Facility is December 16, 2027. The interest rate on borrowings under the Senior Credit Facility is equal to, at our option, either (i) the sum of a base rate plus a margin of 1.00% or (ii) the sum of a Secured Overnight Financing Rate (“SOFR”) rate plus a margin of 2.00%, in each case subject to a 0.25% increase based on a consolidated net senior debt to library value ratio. RMM is 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. The Senior Credit Facility also includes an “accordion feature” that permits RMM to seek additional commitments in an amount not to exceed $150,000 thousand.
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 certain subsidiaries of RMM. Substantially all of our, RHI’s, RMM’s and other subsidiaries’ 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 Employee Retirement Income Security Act (“ERISA”) events and certain material judgments, in each case, subject to customary thresholds, notice and grace period provisions.
Covenant Compliance
The Senior Credit Facility contains financial covenants that require 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 (ii) 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 June 30, 2026, we were in compliance with both of the financial covenants and all non-financial covenants under the Senior Credit Facility.
At June 30, 2026, RMM had the following interest rate swaps outstanding, under which it pays a fixed rate and receives a floating interest payment from the counterparty based on SOFR (in thousands):
100,000
50,000
65,000
Dividends
Our ability to pay dividends to Reservoir Media, Inc.’s shareholders is restricted by covenants in the Senior Credit Facility. We did not pay any dividends to Reservoir Media, Inc.’s shareholders during the three months ended June 30, 2026.
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 human-made disasters, including pandemics. We and our affiliates continue to evaluate opportunities to, from time to time, depending on market conditions and prices, contractual restrictions, our financial liquidity and other factors, seek to pay dividends or prepay outstanding debt or repurchase or retire our outstanding debt. The 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 June 30, 2026, there have been no material changes, outside the ordinary course of business, in our contractual obligations since March 31, 2026. 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 May 28, 2026 for information regarding our contractual obligations.
Critical Accounting Policies
As of June 30, 2026, there have been no material changes to our critical accounting policies since March 31, 2026. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on May 28, 2026 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 U.S. GAAP requires us to make estimates and judgments that affect the amounts reported in those condensed consolidated financial statements and the accompanying notes thereto. 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 June 30, 2026, 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.”
Management’s Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) that are designed to provide reasonable assurance that information required to be disclosed in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial and accounting officer, as appropriate to allow timely decisions regarding required financial disclosure.
As of June 30, 2026, our management, with the participation of our principal executive officer and principal financial and accounting officer, evaluated the effectiveness of our disclosure controls and procedures. Based on this evaluation, our principal executive officer and principal financial and accounting officer concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2026.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on the Effectiveness of Controls
Our disclosure controls and procedures and our internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives as specified above. Management does not expect, however, that our disclosure controls and procedures will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based on 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, if any, within the Company have been detected.
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, 2026. 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 June 30, 2026 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.
Rule 10b5-1 and Non-Rule 10b5-1 Trading Arrangements
During the three months ended June 30, 2026, none of our directors or officers (as defined in Rule 16a-1 (f) under the Exchange Act) adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (each as defined in Item 408 of Regulation S-K).
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report.
No.
Description of Exhibit
3.1
Second Amended and Restated Certificate of Incorporation of Reservoir Media, Inc. (incorporated by reference to Exhibit 3.1 to Reservoir Media, Inc.’s Current Report on Form 8 K filed with the SEC on July 28, 2021).
3.2
Amended and Restated Bylaws of Reservoir Media, Inc. (incorporated by reference to Exhibit 3.2 to Reservoir Media, Inc.’s Current Report on Form 8 K filed with the SEC on July 28, 2021).
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).
*
Filed herewith.
**
Furnished herewith.
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.
Date: August 4, 2026
By:
/s/ Golnar Khosrowshahi
Name: Golnar Khosrowshahi
Title: Chief Executive Officer (Principal Executive Officer)
/s/ Jim Heindlmeyer
Name: Jim Heindlmeyer
Title: Chief Financial Officer
(Principal Financial and Accounting Officer)