RSVR 10-K & 10-Q changes, risk factors and insider trading

We are dependent on signing and retaining songwriters who will write the hit songs of today and the classics of tomorrow. We are also dependent on identifying, signing and retaining recording artists with long -– term potential, whose debut music is well received on release, whose subsequent music is anticipated by consumers and whose music will continue to generate sales as part of our catalog for years to come. The competition among music publishing and record companies for such talent is intense. Competition among music publishing and record companies to sell and otherwise market and promote music is also intense. Our competitive position is dependent on our continuing ability to attract and develop songwriters and recording artists whose work can achieve a high degree of public acceptance and who can timely deliver their music to us. Our prospects and financial results may be adversely affected if we are unable to identify, sign and retain such songwriters and recording artists under terms that are economically attractive to us because our prospects and financial results are generally affected by the appeal of our music publishing and recorded music catalogs to consumers.

Any future outbreak of contagious disease or other widespread natural disaster or prolonged geopolitical conflict could materially and adversely affect our business, cash flows, financial condition and results of operations.

A future pandemic could have an adverse effect on our business, cash flows, financial condition and results of operations. An outbreak of contagious disease, pandemic or other widespread natural disaster or prolonged geopolitical conflict could suspend live concert tours, adversely impacting our concert promotion business and its sale of tour merchandise and make it more difficult for artists to engage in marketing efforts around the release of their new recordings. It could delay the release of new recordings by impeding the types of collaboration among artists, songwriters, producers, musicians, engineers and studios which are necessary for the delivery of those recordings. The cessation or significant delay in the production of motion pictures and television programs could negatively affect synchronization revenue in our Music Publishing business and licensing revenue in our Recorded Music business.

Our management previously determined that material weaknesses existed in theour ICFR while preparing our consolidated financial statements as of March 31, 2025, 2024 and 2023. Our management has also evaluated the effectiveness of our disclosure controls and procedures and determined that,in asprior offiscal Marchyears 31, 2025,that our disclosure controls and procedures were not effective.

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 our annual or interim consolidated financial statements will not be prevented or detected on a timely basis. The material weaknesses identified in prior fiscal years relate to an ineffective control environment due to improper segregation of duties and a lack of qualified personnel to address certain complex accounting transactions and an ineffective risk assessment process resulting in improper design of control activities to address certain risks of material misstatement.

Matters impacting our ICFR may in the future cause us to be unable to report our consolidated financial information on a timely basis and thereby subject us to adverse regulatory consequences, including sanctions by the SEC or violations of applicable Nasdaq listing rules, which may result in a breach of the covenants under our $450$550 million senior secured revolving credit facility (the “Senior Credit Facility”) or future financing arrangements. There also could be a negative reaction in the financial markets due to a loss of investor confidence and the reliability of our consolidated financial statements. Confidence in the reliability of our consolidated financial statements could also suffer if we continue to report a material weakness in our ICFR.ICFR in the future. This could materially adversely affect our business, cash flows, financial condition and results of operations and lead to a decline in the market price of our Common Stock and Warrants.

We are aware of a number of judicial decisions and legislative proposals that could bring about major reforms in worker classification. Although we believe that the songwritersongwriters and recording artistartists with which we partner are properly characterized as independent contractors, tax or other regulatory authorities may in the future challenge our characterization of these relationships. If such regulatory authorities or state, federal or foreign courts were to determine that our songwritersongwriters and recording artistartists are employees, and not independent contractors, we would be required to withhold income taxes, to withhold and pay Social Security, Medicare and similar taxes and to pay unemployment and other related payroll taxes. We would also be liable for unpaid past taxes and subject to penalties. As a result, any determination that our songwritersongwriters and recording artistartists are our employees could have a material adverse effect on our business, cash flows, financial condition and results of operations.

In addition, the need to maintain the corporate infrastructure demanded of a public company may also divert management’s attention from implementing our business strategy, which could prevent us from improving our business, financial condition, cash flows and results of operations. We have made, and will continue to make, changes to our internal control over financial reporting, including information technology controls, and procedures for financial reporting and accounting systems to meet our reporting obligations as a public company. However, the measures that we take may not be sufficient to satisfy our obligations as a public company. If we do not continue to develop and implement the right processes and tools to manage our changing enterprise and maintain our culture, our ability to compete successfully and achieve our business objectives could be impaired, which could negatively impact our business, financial condition, cash flows and results of operations. In addition, we cannot predict or estimate the amount of additional costs we may incur to comply with these requirements. We anticipate that these costs will continue to increase our administration expenses, particularly whenour legal, accounting and financial compliance costs as a result of our loss of “emerging growth company” status and our compliance with the additional requirements that we arewere requiredpreviously exempt from as an “emerging growth company” including the requirement to include our independent registered public accounting firm’s attestation report on ICFR.

A substantial portion of our revenue comes from the distribution of music, which is potentially subject to unauthorized consumer copying and widespread digital dissemination without an economic return to us, including as a result of “stream-ripping.stream- ripping.” In its Engaging withGlobal Music 2023Report report,2025, the IFPI surveyednoted overthe 43,000danger peopleof “streaming manipulation,” a process by which bad actors upload tracks to examinedigital themusic waysservices inthat are produced using generative AI tools and then use “bots” to generate artificial streams of those tracks, which musicultimately consumersdiverts agedroyalties 16from tolegitimate 64copyright engaged with recorded music across 26 countries. Of those surveyed, 29% had used illegal or unlicensed methods to listen to or download music and 20% had used an unlicensed mobile app to illegally download music.holders. Organized industrial piracy may also lead to decreased revenues. The impact of digital piracy on legitimate music revenues and subscriptions is hard to quantify, but we believe that illegal file sharing and other forms of unauthorized activity, including streamstreaming manipulation, have a substantial negative impact on music revenues.

As with many technological innovations, AIAI, including generative AI, and machine learning technologies, also presents additional risks and challenges that could affect our business. AI and machine learning technologies are complex and rapidly evolving and the potential for AI-generated musicmusic, vocals, lyrics and other derivative works has also introduced new challenges for protecting our intellectual property and other rights of our artists and songwriters. In addition, the increasing availability of widely accessible AI tools has made it easier for third parties to generate, distribute and monetize synthetic or AI-generated content that may imitate or replicate the style, voice or other distinctive attributes of our artists. Along with ana rapidly evolving and uncertain legal and regulatory environment,environment in the U.S. and internationally, these challenges include new forms of intellectual property infringement through the unauthorized reproduction of copyrighted works and the name, images, likeness and voices of our artists and songwriters to “train” AI applications and to create unauthorized derivative works. This issue is the subject of litigation in the U.S. If third parties are legally permitted to use our copyrighted materials without our consent to train an AI model that could create vast quantities of new musical works to compete with and dilute the impact of our copy protected material on digital music services,services or other distribution platforms, it could have a significant adverse effect on our business.

We maintain security measures with respect to such information, but despite these measures, such information may still be vulnerable to security breaches by computer hackers and others that attempt to penetrate the security measures that we have in place. A compromise of our security systems (through cyber-attacks, which are rapidly evolving and sophisticated or otherwise) that results in personal information being obtained by unauthorized persons or other bad actsactors could materially adversely affect our reputation with our customers, potential customers, employees, artists and vendors, as well as our business, cash flows, financial condition and results of operations, and could result in litigation against us or the imposition of governmental penalties. Unauthorized persons have also attempted to redirect payments to or from us. If any such attempt were successful, we could lose and fail to recover the redirected funds, which loss could be material. The increasing sophistication and resources of cyber criminals make it difficult to keep up with new threats and could result in a breach of security. For example, AI tools, including generative AI models and machine learning, develop rapidly, and threat actors use them to identify currently unknown vulnerabilities and create sophisticated attack methods that are increasingly automated, coordinated and more difficult to defend against. This may necessitate has necessitated and may in the future necessitate ongoing enhancements to our cybersecurity systems and infrastructure. We may also be subject to cyber-attacks that target our music, including not-yet-released music. The theft and premature release of this music may adversely affect our reputation with current and potential artists and adversely impact our business, cash flows, financial condition and results of operations. In addition, a security breach could require that we expend significant additional resources related to our information security systems and could result in a disruption of our business operations.

We engage in a wide array of online activities globally and are thus subject to a broad range of related laws and regulations including, for example, those relating to privacy, consumer protection, data retention and data protection, online behavioral advertising, geo-location tracking, text messaging, e-mail advertising, mobile advertising, content regulation, defamation, age verification, the protection of children online, social mediamedia, AI, and other Internet, mobile and online-related prohibitions and restrictions. The regulatory framework for privacy and data security issues worldwide has become increasingly burdensome and complex, and is likely to continue to be so for the foreseeable future. Practices regarding the collection, use, storage, transmission, security and disclosure of personal information by companies operating over the Internet and mobile platforms are receiving ever-increasing public and governmental scrutiny.

WeAs areof March 31, 2026, we no longer qualify as an emerging growth company, but remain a smaller reporting company, which permits us to continue to take advantage of certain scaled disclosure requirements, and we cannot be certain if theour reduceduse reportingof such scaled disclosure requirements applicable to emerging growth companies will make our Common Stock or Warrants less attractive to investors which may result in a less active trading market for our Common Stock or Warrants.

WeAs areof March 31, 2026 (the last day of the fiscal year following the fifth anniversary of our initial public offering), we ceased to be an emerging growth company, as defined in the Jumpstart Our Business Startups Act (“JOBS Act.Act”). ForAs asa long asresult, we continueare no longer able to berely anon emerging growth company, we may take advantage ofcertain exemptions from various reporting and governance requirements that arewere applicablepreviously available to other public companies that are not “emerging growth companies,”us, including the exemption from compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We will remain an emerging growth company until the earlier of (i)(x) March 31, 2026, (y) the date on which we have total annual gross revenue of at least $1.235 billion, or (z) the date on which we are deemed to be a large accelerated filer, which means the market value of shares of our Common Stock and Warrants that are held by non-affiliates exceeds $700 million as of the prior September 30th, and (ii) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

In addition, under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have elected to avail ourselves of this exemption from new or revised accounting standards and, therefore, we willwere not be subject to the same new or revised accounting standards as other public companies thatduring arethe notperiod we were an emerging growth companies.company. As a result, our financial statements while we were an emerging growth company may not be comparable to companies that complied with new or revised accounting pronouncements as of public company effective dates.

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 nonaffiliatednon-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.

Our recorded music businesses areis both primarily handledoperated by our Chrysalislabel Records labelteams based in London and New York City, which release music from our labels Chrysalis Records, Tommy Boy label based inMusic, New York City. In addition, we ownState and Reservoir Recordings. We primarily manage some select Catalog recorded musicmusic, underbut our Philly Groove Records and Reservoir Recordings labels. Wewe have a small roster of Currentcurrent Artistsartists 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 Travis Tritt, and an interest in the Loud Records catalog containing recordings by the Wu-Tang Clan.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, as well as recordings under the Tommy Boy record label by artists such as Coolio, House of Pain, Naughty By Nature,Nature and Queen Latifah.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.partners, including MERLIN, AMPED and Proper. Chrysalis Records’ current frontline releases are distributed through Secretly Distribution, with prior frontline releases distributed via PIAS. Chrysalis Records and Tommy Boy catalogues are distributed via our agreements with MERLIN, AMPED, Proper and other partners.Distribution.

Through our distribution network, our music is being sold in physical retail outletsoutlets, 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;YouTube, radio services such as iHeart Radio and SiriusXM;SiriusXM, and to 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.

NM -– Not meaningful

Total revenues increased by $13,850$16,958 thousand, or 10%,11%, during Fiscal 20252026 compared to Fiscal 2024,2025, driven by a 12%9% increase in Music Publishing revenue,revenue and a 4%16% increase in Recorded Music revenue, and a 12% increase in Other revenue related to the Company’s artist management business.revenue. Music Publishing revenues represented 68%66% and 66%68% of total revenues during Fiscal 20252026 and Fiscal 2024,2025, respectively. Recorded Music revenues represented 28%29% and 29%28% of total revenues during Fiscal 20252026 and Fiscal 2024,2025, respectively. U.S. and international revenues represented 56% and 44% of total revenues, respectively, during Fiscal 2026. U.S. and international revenues represented 59% and 41% of total revenues, respectfully,respectively, during Fiscal 2025 and Fiscal 2024.2025.

Total digital revenues increased by $12,786$9,845 thousand, or 16%,11%, during Fiscal 20252026 compared to Fiscal 2024.2025. Total digital revenues represented 58% and 54% of consolidated revenues during Fiscal 20252026 and Fiscal 2024, respectively.2025.

Music Publishing revenues increased by $11,219$9,390 thousand, or 12%,9%, during Fiscal 20252026 compared to Fiscal 2024.2025. This increase in Music Publishing revenue was mainly driven by revenuea from$4,163 the existing catalog, which benefitted from price increases at multiple music streaming services that contributed to anthousand increase in digital revenue, andprimarily acquisitionsdue to the acquisition of catalogs.additional Additionally,music catalogs and continued growth at music streaming services, a $2,869 thousand increase in performance revenue driven by the performance of hit songs, a $1,114 thousand increase in Other revenue primarily attributable to acquired stage rights and an $897 thousand increase in synchronization revenue increased during Fiscal 2025, driven primarily by the timing of licenses. These factors were partially offset by a decrease in performance revenue, partially due to the timing of hit songs.

On a geographic basis, U.S. Music Publishing revenues represented 54% and 58% of total Music Publishing revenues during Fiscal 20252026 and Fiscal 2024.2025, respectively. International Music Publishing revenues represented 46% and 42% of total Music Publishing revenues during Fiscal 20252026 and Fiscal 2024.2025, respectively.

Recorded Music revenues increased by $1,884$7,264 thousand, or 4%,16%, during Fiscal 20252026 compared to Fiscal 2024.2025. This increase in Recorded Music revenuerevenues includeswas mainly due to a $5,682 thousand increase in digital revenue, primarily due to the acquisition of additional music catalogs and continued growth at music streaming services, partially offset by the non-recurrence of royalty recoveries recognized during Fiscal 2025 related to underreported usage for music catalogs (the “Royalty Recovery”). In addition toAdditionally, the Royaltyincrease Recovery,in Recorded Music revenues reflects a $1,211 thousand increase in synchronization revenue alsodriven benefited from continued growth at music streaming services and price increases at multiple music streaming services, andby the acquisitiontiming of new catalogs. These increases were partially offset by a decrease in physical revenue after robust sales of new De La Soul releases in Fiscal 2024.licenses.

On a geographic basis, U.S. Recorded Music revenues represented 54% and 55% of total Recorded Music revenues during Fiscal 20252026 and Fiscal 2024.2025, respectively. International Recorded Music revenues represented 46% and 45% of total Recorded Music revenues during Fiscal 20252026 and Fiscal 2024.2025, respectively.

Cost of revenue increased by $1,952$4,561 thousand, or 4%,8%, during Fiscal 20252026 compared Fiscal 2024,2025, primarily as a result of anthe increase in revenues. Cost of revenue as a percentage of revenues decreased to 35% during Fiscal 2026 from 36% during Fiscal 2025 from 38% during Fiscal 2024,2025, reflecting decreases in cost of revenue as a percentage of revenue for the Music Publishing and Recorded Music segments, as well as an increase in Other revenue related to the Company’s artist management business, which does not have a corresponding cost of revenue.segments.

Artist royalties and other recorded music costs for the Recorded Music segment decreasedincreased by $1,342$1,252 thousand, or 10%, during Fiscal 20252026 compared to Fiscal 2024,2025, primarily as a result of the decreaseincrease in physicalRecorded sales.Music revenues. Artist royalties and other recorded music costs as a percentage of Recorded Music revenues decreased to 26% during Fiscal 2026 from 28% during Fiscal 2025 from 32% during Fiscal 2024,2025, driven primarily by the change in the mix of salesrevenues by type and songwriting clients with their specific contractual royalty rates being applied to a lower percentage of physical sales, which carry higher costs than other types of revenues, and the Royalty Recovery, which did not have a corresponding cost of revenue.revenues.

Music Publishing administration expenses decreasedincreased by $535$2,538 thousand, or 2%,10%, during Fiscal 20252026 compared to Fiscal 2024.2025. Expressed as a percentage of revenues, Music Publishing administration expenses decreased towere 23% during Fiscaleach 2025 from 26% duringof Fiscal 2024,2026 primarilyand asFiscal a result of the nonrecurrence of the Recoupable legal fee write-off.2025.

Recorded Music administration expenses decreasedincreased by $383$1,897 thousand, or 4%,21%, during Fiscal 20252026 compared to Fiscal 2024.2025. Expressed as a percentage of revenue, Recorded Music administration expenses decreasedincreased to 22% during Fiscal 2026 from 21% during Fiscal 2025 from 23% during Fiscal 2024,2025, primarily due to takinginvestments advantagemade of operating leverage onin the Recorded Music platform.business to address frontline opportunities, as well as increased compensation and other costs due to inflation.

Operating income increased by $10,485$3,170 thousand, or 43%,9%, during Fiscal 20252026 compared to Fiscal 2024,2025, primarily driven by revenuean growth,increase in revenues, partially offset by an improvementincrease in cost of revenue as a percentage of revenuesamortization and thedepreciation nonrecurrenceand ofadministration the Recoupable legal fee write-off.expenses. Operating income margin (operating income expressed as a percentage of revenues) increased towas 22% during Fiscaleach 2025 compared to 17% duringof Fiscal 2024, primarily as a result of an improvement in cost of revenue as a percentage of revenues, the nonrecurrence of the Recoupable legal fee write-off2026 and improvedFiscal operating leverage as revenues increased.2025.

Interest expense increased by $795$4,569 thousand, or 4%21% during Fiscal 20252026 compared to Fiscal 2024.2025. The increase in interest expense was driven primarily by anincreased increasedebt in borrowingsbalances due to use of funds in acquisitions of music catalogs and writer signingssignings, andas well as an increase in effective interest rates. The increase in the Company’s effective interest expenserates increasedprimarily reflects an increase on the portions of its borrowings that are hedged beginning in October 2024,hedged, as its swap contracts in effect during Fiscal 2026 have a higher fixed interest rate than the Company’s previous swap contractscontracts, which were in effect during a portion of Fiscal 2025 until they matured on September 30, 2024, and new swap contracts became effective on the same date. These factors were partially offset by the nonrecurrence of $620 thousand incurred in connection with settlement of the Royalty Dispute described in Note 16, “Contingencies and Commitments” to the accompanying consolidated financial statements.2024.

Gain (Loss) on Foreign Exchange

Gain on foreign exchange was $231 thousand during Fiscal 2026 compared to $578 thousand during Fiscal 2025 compared to a loss on foreign exchange of $102 thousand during Fiscal 2024.2025. This change was due to fluctuations in the two foreign currencies we are directly exposed to, namely the British pound sterling and the euro.

Loss on fair value of swaps was $351 thousand during Fiscal 2026 compared to $4,214 thousand during Fiscal 2025 compared to $1,125 thousand during Fiscal 2024.2025. This change was due to the marking to market of our interest rate swap hedges. ThisAdditionally, changethe wasloss drivenduring primarilyFiscal by2025 reflects the September 2024 decrease in the Secured Overnight Financing rate (“SOFR”), as well as the time value of the swaps that expired on September 30, 2024, partially offset by marking to market our current interest rate swap hedges.2024.

Other Income (Expense), Income, Net

Other (expense) income, net during Fiscal 2026 was comprised primarily of the Company’s recognition of its share of losses incurred by equity method investments. Other (expense) income, net during Fiscal 2025 consisted of a $104 thousand gain recorded on the disposal of an equity investment during the period (the “Investment Gain”) and the Company’s share of proceeds related to underreported usage for acquired music catalogs that pertained to periods prior to the Company’s acquisition of the music catalogs, which totaled $823 thousand (the “Recovery Income”). These factors were partially offset by a $500 thousand impairment of an investment (the “2025 Investment Write-down”) and the Company’s share of loss recorded by an equity method investment (the “EMI Loss”). Other expense, net during Fiscal 2024 consisted primarily of a $991 thousand impairment to write-down an equity investment to its estimated fair value (the “2024 Investment Write-down”).investment. See Note 2, “Summary of Significant Accounting Policies – Investments in Equity Affiliates” to the accompanying consolidated financial statements for discussion about the Investment Gain, 2025 Investment Write-downGain and 2024 Investment Write-down.

Income tax expense increased to $3,328 thousand during Fiscal 2026 compared to $2,141 thousand during Fiscal 2025 compared to $335 thousand during Fiscal 2024.2025. The increase in the income tax expense during Fiscal 20252026 was primarily due to thean increase of income before income taxes, partially offset by a lower effective income tax rate.taxes.

The Company’s effective income tax rate during Fiscal 20252026 was 21.7%29.8% compared to 28.6%21.7% during Fiscal 2024.2025. The decreaseincrease in the effective income tax rate during Fiscal 20252026 reflects the non-recurrence of incremental tax expense due to a non-deductible impairment charge to write-down an equity investment in the U.K. to its estimated fair value, which increased the Company’s effective income tax rate by 21.1% during Fiscal 2024. Additionally, the Fiscal 2025 effective income tax rate reflects return to provision reconciliation related to certain international tax liabilities, aspartially welloffset asby an increase in earnings, which reduced the relative impact of statutory limitations on certain deductions. These factors were partially offset by the non-recurrence of an incremental tax benefit arising from a change in estimate of the applicable tax rate used to measure the Company’s state and local deferred tax liabilities in the U.S., which decreased the Company’s effective income tax rate by 34.6% during Fiscal 2024.

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

OIBDA increased by $11,798$7,654 thousand, or 24%,12%, during Fiscal 20252026 compared to Fiscal 2024,2025, driven by ana $8,460$3,543 thousand increase in Music Publishing OIBDA and a $3,609$4,115 thousand increase in Recorded Music OIBDA. Expressed as a percentage of revenue, OIBDA Margin increased towas 39% during Fiscaleach 2025 from 34% duringof Fiscal 2024, primarily as a result of a decrease in cost of revenue as a percentage of revenues, the nonrecurrence of the Recoupable legal fee write-off2026 and improvedFiscal operating leverage as revenues increased.2025.

Music Publishing OIBDA increased by $8,460$3,543 thousand, or 29%,9%, during Fiscal 20252026 compared to Fiscal 2024.2025, driven primarily by an increase in revenues, partially offset by an increase in administration expenses. Expressed as a percentage of revenue, Music Publishing OIBDA Margin increased towas 35% during Fiscaleach 2025 compared to 30% duringof Fiscal 2024, reflecting a decrease in cost of revenue as a percentage of revenues, the nonrecurrence of the Recoupable legal fee write-off2026 and improvedFiscal operating leverage as revenues increased.2025.

Recorded Music OIBDA increased by $3,609$4,115 thousand, or 19%18% during Fiscal 20252026 compared to Fiscal 2024.2025, driven primarily by an increase in revenues, partially offset by an increase in administration expenses. Expressed as a percentage of revenue, Recorded Music OIBDA Margin increased to 52% during Fiscal 2026 from 51% during Fiscal 2025 from 45% during Fiscal 2024,2025, reflecting aan decreaseimprovement in costartist ofroyalties revenueand other recorded music costs as a percentage of revenuesRecorded andMusic improved operating leverage as revenues increased.revenues.

NM -– Not meaningful

(a) Reflects the loss (gain) on foreign exchange fluctuations.

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

Consolidated Adjusted EBITDA increased by $10,102$7,868 thousand, or 18%,12%, during Fiscal 20252026 compared to Fiscal 2024,2025, primarily as a result of revenuean growth, a decreaseincrease in costrevenues, ofpartially revenueoffset asby aan percentageincrease ofin revenuesadministration and improved operating leverage as revenues increased.expenses.

Cash provided by operating activities was $50,140 thousand during Fiscal 2026 compared to $45,279 thousand during Fiscal 2025 compared to $36,193 thousand during Fiscal 2024.2025. The primary driverdrivers of the $9,086$4,861 thousand increase in cash provided by operating activities during Fiscal 20252026 as compared to Fiscal 20242025 waswere an increaseincreases in earnings.earnings Thisand factorcash was partially offsetprovided by aworking reductioncapital. The increase in cash provided by working capital,capital drivenwas due primarily byto the timing of payments of accounts payable and the timing of collections of accounts receivable and paymentsroyalty advances and recoupments, partially offset by the timing of accountsroyalty payable.payments to artists.

Cash provided by financing activities was $64,203 thousand during Fiscal 2026 compared to $54,518 thousand during Fiscal 2025 compared to $17,560 thousand during Fiscal 2024.2025. The increase in cash provided by financing activities in Fiscal 20252026 reflects a $32,000 thousandan increase in borrowings usedfrom forthe investingsecured activitiesline andof acredit, $6,000partially thousandoffset decreaseby an increase in repayments towardsof the secured line of credit.

We are a holding company that conducts substantially all of our business operations through Reservoir Media Management, Inc. (“RMM”) and RMM’s subsidiaries.. 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.

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 genregenres 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.

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 standardsstandards, 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.

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 Currentcurrent Artistsartists 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,artists such as Sinéad O’Connor, The Specials, Generation X,X and The WaterboysWaterboys, and De La Soul, recordings under the Tommy Boy label by artists,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 dealsdeals, such as with Amazon, Apple, TikTok,TikTok and YouTube, plus a network of distribution partnerspartners, including MERLIN, AMPED,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,services such as Amazon, Apple, Deezer, SoundCloud, Spotify, Tencent Music Entertainment Group and YouTube, radio services,services such as iHeart Radio and SiriusXM, and download services. We also license music digitally to fitness platforms,platforms such as Apple Fitness+, Equinox, Hydrow and Peloton and to social media outletsoutlets, such as Facebook, Instagram, TikTok and Snap.

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 itthem and may be useful to investors.

Our incomestatement statementof operations was composed of the following amounts (in thousands):

Total revenues increased by $3,264$4,318 thousand, or 8%,12%, during the three months ended DecemberJune 31,30, 20252026 compared to the three months ended DecemberJune 31,30, 2024,2025, driven by a 12%35% increase in Recorded Music revenues and a 6% increase in Music Publishing revenues and an 8% increase in Recorded Music revenues. Music Publishing revenues represented 66%64% and 64%67% of total revenues for the three months ended DecemberJune 31,30, 20252026 and the three months ended DecemberJune 31,30, 2024,2025, respectively. Recorded Music revenues represented 34% and 28% of total revenues for the three months ended DecemberJune 31,30, 20252026 and Decemberthe 31,three 2024.months ended June 30, 2025, respectively. U.S. and international revenues represented 60%54% and 40%,46%, respectively, of total revenues for the three months ended DecemberJune 31,30, 2025.2026. U.S. and international revenues represented 62%57% and 38%,43%, respectively, of total revenues for the three months ended DecemberJune 31,30, 2024.2025. 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 $5,085$2,866 thousand, or 7%,13%, during the ninethree months ended DecemberJune 31,30, 20252026 compared to the ninethree months ended DecemberJune 31,30, 2024,2025, primarily due to the acquisition of additional music catalogs and continued growth at music streaming services. Total digital revenues represented 58%61% and 59%60% of total revenues for the ninethree months ended DecemberJune 31,30, 20252026 and the ninethree months ended DecemberJune 31,30, 2024,2025, respectively.

Music Publishing revenues increased by $6,441$1,579 thousand, or 8%,6%, during the ninethree months ended DecemberJune 31,30, 20252026 compared to the ninethree months ended DecemberJune 31,30, 2024.2025. This increase in Music Publishing revenues was mainly due to a $3,905 thousand increase in performance revenue driven by the performance of hit songs, a $923$1,045 thousand increase in digital revenue, primarily due to the acquisition of additional music catalogs and continued growth at music streaming services,services and an $886$836 thousand increase in otherperformance revenue primarilydriven attributableby tothe acquiredperformance stageof rightshit andsongs. These increases were partially offset by a $564$132 thousand increasedecrease in synchronization revenue driven by the timing of licenses.licenses and a $128 thousand decrease in other revenue.

On a geographic basis, U.S. Music Publishing revenues represented 56%57% of total Music Publishing revenues for the ninethree months ended DecemberJune 31,30, 20252026 compared to 59% forand the ninethree months ended DecemberJune 31,30, 2024.2025. International Music Publishing revenues represented 44%43% of total Music Publishing revenues for the ninethree months ended DecemberJune 31,30, 20252026 compared to 41% forand the ninethree months ended DecemberJune 31,30, 2024.2025.

Recorded Music revenues increased by $4,012$3,656 thousand, or 12%,35%, during the ninethree months ended DecemberJune 31,30, 20252026 compared to the ninethree months ended DecemberJune 31,30, 2024.2025. This increase in Recorded Music revenues was mainly due to a $4,162$1,821 thousand increase in digital revenue, primarily due to the acquisition of additional music catalogs and continued growth at music streaming services, partiallya offset$1,182 thousand increase in synchronization revenue driven by the non-recurrencetiming of thelicenses, royalty recovery. This increase was partially offset byand a $548$579 thousand decreaseincrease in physical revenue due to the planned timing of releases.release schedules.

On a geographic basis, U.S. Recorded Music revenues represented 53%46% of total Recorded Music revenues for the ninethree months ended DecemberJune 31,30, 20252026 compared to 55%52% for the ninethree months ended DecemberJune 31,30, 2024.2025. International Recorded Music revenues represented 47%54% of total Recorded Music revenues for the ninethree months ended DecemberJune 31,30, 20252026 compared to 45%48% for the ninethree months ended DecemberJune 31,30, 2024.2025. The shift in geographic mix is primarily attributable to the Viral Wave Acquisition.

Cost of revenue increased by $2,742$1,595 thousand, or 6%,12%, during the ninethree months ended DecemberJune 31,30, 20252026 compared to the ninethree months ended DecemberJune 31,30, 2024,2025, primarily as a result of an increase in revenues. Cost of revenue as a percentage of revenues decreasedincreased to 36% for the ninethree months ended DecemberJune 31,30, 20252026 from 37%35% for the ninethree months ended DecemberJune 31,30, 2024,2025, reflecting decreasesan increase in cost of revenue as a percentage of revenuesrevenue forin the Music Publishing and Recorded Music segments.segment.

Writer royalties and other publishing costs for the Music Publishing segment increased by $1,952$38 thousand, or 6%,thousand during the ninethree months ended DecemberJune 31,30, 20252026 compared to the ninethree months ended DecemberJune 31,30, 2024.2025. 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 ninethree months ended DecemberJune 31,30, 2025 from 43% for the nine months ended December 31, 2024,2025, 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 $790$1,557 thousand, or 9%,56%, during the ninethree months ended DecemberJune 31,30, 20252026 compared to the ninethree months ended DecemberJune 31,30, 2024.2025. Artist royalties and other recorded music costs as a percentage of Recorded Music revenues decreasedincreased to 27%31% for the ninethree months ended DecemberJune 31,30, 20252026 from 28%26% for the ninethree months ended DecemberJune 31,30, 2024,2025, driven primarily by the change in the mix of revenue by type,type includingto a lowerhigher percentage of physical salessales, thatas well as the addition of revenues from Viral Wave, both of which carry higher costs than other types of revenue, and artists with their specific contractual royalty rates being applied to the revenues.costs.

Amortization and depreciation expense increased by $1,076$982 thousand, or 16%,13%, during the three months ended DecemberJune 31,30, 20252026 compared to the three months ended DecemberJune 31,30, 2024,2025, primarily due to the acquisition of additional music catalogs.

Total administration expenses increased by $289$1,809 thousand, or 3%,16%, during the three months ended DecemberJune 31,30, 20252026 compared to the three months ended DecemberJune 31,30, 2024,2025, 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 decreasedincreased to 25%31% for the three months ended DecemberJune 31,30, 20252026 from 26%30% for the three months ended DecemberJune 31,30, 2024.2025.

Music Publishing administration expenses increased by $448$1,334 thousand, or 7%,19%, during the three months ended DecemberJune 31,30, 20252026 compared to the three months ended DecemberJune 31,30, 2024.2025. Expressed as a percentage of revenues, Music Publishing administration expenses decreasedincreased to 21%31% for the three months ended DecemberJune 31,30, 20252026 from 22%28% for the three months ended DecemberJune 31,30, 2024,2025, primarily as a result of improvedan operatingincrease leveragein asshare-based revenuescompensation increased.and professional fees incurred in connection with structuring associated with certain strategic growth initiatives.

Recorded Music administration expenses increased by $336$843 thousand, or 15%,30%, during the three months ended DecemberJune 31,30, 20252026 compared to the three months ended DecemberJune 31,30, 2024.2025. Expressed as a percentage of revenue, Recorded Music administration expenses increaseddecreased to 20%26% for the three months ended DecemberJune 31,30, 20252026 from 19%27% for the three months ended DecemberJune 31,30, 2024,2025, primarily due to investmentstaking madeadvantage inof operating leverage on the Recorded Music business to address frontline opportunities, as well as increased compensation and other costs due to inflation.platform.

Other administration expenses decreased by $495$369 thousand, or 18%,26%, during the three months ended DecemberJune 31,30, 20252026 compared to the three months ended DecemberJune 31,30, 2024,2025, primarily due to selling expenses associated with our artist management business, consisting mostly of manager compensation.

Operating income increaseddecreased by $770$68 thousand, or 8%,1%, during the three months ended DecemberJune 31,30, 20252026 compared to the three months ended DecemberJune 31,30, 2024,2025, primarily driven by an increase in revenues,administration expenses and amortization and depreciation, partially offset by increasesan increase in amortization and depreciation and administration expenses.revenues. Operating income margin (operating income expressed as a percentage of revenues) wasdecreased 23%to 13% during the three months ended DecemberJune 31,30, 2026 from 15% during the three months ended June 30, 2025 andprimarily Decemberdue 31,to 2024.an increase in administration expenses as a percentage of revenue.

Interest expense increased by $807$609 thousand, or 14%,10%, during the three months ended DecemberJune 31,30, 20252026 compared to the three months ended DecemberJune 31,30, 2024,2025, driven primarily by increased debt balances due to use of funds in acquisitions of music catalogs and writer signings, partially offset by a decrease in SOFR.signings.

(Loss) Gain on Foreign Exchange (Loss) gain on foreign exchange increasedwas by$(44) $12 thousand, or 16%,thousand during the three months ended DecemberJune 31,30, 20252026 compared to $1,095 thousand during the three months ended DecemberJune 31,30, 2024.2025. This change was due to fluctuations in the two foreign currencies we are directly exposed to, namely British pound sterling and euro.

Gain (Loss) Gain on Fair Value of Swaps

LossGain (loss) on fair value of swaps was $926 thousand for the three months ended June 30, 2026 compared to $(270997) thousand for the three months ended DecemberJune 31,30, 2025 compared to gain on fair value of swaps of $3,085 thousand for the three months ended December 31, 2024.2025. This change was due to marking to market our interest rate swap hedges.

Other (expense) income, net during the ninethree months ended DecemberJune 31,30, 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. Other (expense) income, net during the nine months ended December 31, 2024 consisted of the investment gain and the recovery income, partially offset by the Company’s share of loss recorded by an equity method investment.

Income Tax ExpenseBenefit

Income tax expensebenefit was $1,078$239 thousand during the three months ended DecemberJune 31,30, 20252026 compared to $1,987$271 thousand during the three months ended DecemberJune 31,30, 2024.2025. The effective income tax rate during the three months ended DecemberJune 31,30, 20252026 was 32.9%32.0% compared to 27.2%29.6% during the three months ended DecemberJune 31,30, 2024.2025. 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 primarilyalso reflects the amount and mix of income (loss) from multiple tax jurisdictions.

Net IncomeLoss

Net incomeloss was $3,763$508 thousand during the ninethree months ended DecemberJune 31,30, 20252026 compared to $5,010$644 thousand during the ninethree months ended DecemberJune 31,30, 2024.2025. TheThis decrease in net incomechange was driven primarily by an increase in interest expense andthe change in other incomegain (expenseloss), net, partially offset by an increase in operating income, decrease in loss on fair value of swapsswaps, andpartially offset by the change in (loss) gain on foreign exchange.exchange and an increase in interest expense.