The Copyright Catalogue
The Catalogue is estimated to be composed of over 12,000 music titles, of which
approximately 1,430 produced royalty income in recent years. Based on the 2020
Listing, the Trust's receipts are derived principally from copyrights
established prior to 1960 in the Unites States. The receipts fluctuate based on
consumer interest in the nostalgia appeal of older songs and the overall
popularity of the songs contained in the Catalogue. The Catalogue also generates
royalty income in Canada and other foreign countries in which copyright is
claimed.
A number of factors create uncertainties with respect to the Catalogue's ability
to continue to generate royalty income on a continuing, long-term basis for the
Trust. These factors include: (i) the effect that foreign and domestic copyright
laws and any changes thereto have or will have on renewal rights (e.g., vesting
of renewal term rights), (ii) the length of the term of copyright protection
under foreign and domestic copyright laws, (iii) reversionary rights that may
effect whether EMI is able to retain its rights to the Copyrighted Songs during
certain renewal terms (e.g., statutory termination of transfers or "copyright
recapture") and (iv) ongoing disputes regarding the payment and calculation of
the Contingent Portion.
The Trust does not own the Catalogue or any copyrights or other intellectual
property rights and is not responsible for collecting royalties in connection
with the Catalogue. As the current owner and administrator of the Catalogue, EMI
is obligated under the Asset Purchase Agreement to use its best efforts to
collect all royalties, domestic and foreign, in connection with the Catalogue
and to remit a portion of its royalty income to the Trust in accordance with its
Contingent Portion payment obligation.

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The Trust's income is dependent, in part, on EMI's ability to maintain its
rights in the Copyrighted Songs through copyright protection. As the copyrights
for the Copyrighted Songs expire, less royalty income will be generated and the
size of each payment of the Contingent Portion will be reduced accordingly.
Based on the 2020 Listing, the Top 50 Songs obtained copyright registration
under the United States Copyright Act of 1909 (the "
1909 Act
") between 1922 and 1960. For copyrighted works subject to the 1909 Act,
copyright law generally provides for a possible 95 years of copyright
protection, subject to certain factors, including the initial registration date
of each copyright and compliance with certain statutory provisions including
notice and renewal. The Copyright expiration dates for the Top 50 Songs range
between 2022 and 2055, as set forth in the 2020 Listing.
The Copyrighted Songs are subject to statutory rights of termination of
transfers, which may impact whether EMI is able to retain its ownership of the
Copyrighted Songs during their respective terms of copyright protection. For
copyrights governed by the 1909 Act, this termination right vests at the end of
two different renewal terms, which vary for each Copyrighted Song. As the owner
of the Catalogue, EMI (and not the Trust) is responsible for administrating the
Catalogue and seeking renewals of the Copyrighted Songs. The Asset Purchase
Agreement provides that EMI is obligated to use its best efforts to secure
renewals.
Contingent Portion Payments
Payments of the Contingent Portion to the Trust are ordinarily made on a
quarterly basis, approximately two to three months after a quarter ends. The
Trust distributes the amounts it receives in Contingent Portion payments to the
Unit Holders after payment of, or withholdings in connection with, expenses and
liabilities of the Trust.
The amount of each payment of the Contingent Portion is based on a formula
provided in the Asset Purchase Agreement. Prior to the first quarter of 2010,
the Contingent Portion was calculated as an amount ranging from 65% to 75% of
gross royalty income from the exploitation of the Catalogue for each quarterly
period, less royalty expenses. In addition, the Contingent Portion was
guaranteed to be at least a minimum of $167,500 per quarter (the "
Minimum Payment Obligation
").
Beginning with the first quarter of 2010, the Asset Purchase Agreement provides
for certain changes with respect to the calculation of the Contingent Portion.
One such change is that the Minimum Payment Obligation is no longer in effect.
The Trust is also of the view that the Contingent Portion payable to the Trust
changed to a fixed 75% of gross royalty income from the exploitation of the
Catalogue for each quarterly period, less royalty related expenses (the "
New Calculation Method
"). However, EMI has disputed that the New Calculation Method is the correct
interpretation of the Asset Purchase Agreement. As a result of the New
Calculation Method not being applied, EMI's payments of the Contingent Portion
have been deficient, in the Trust's view, by the following amounts (the "
Underpayments
"):

                            Amount of

Quarterly Payment Period    Deficiency
March 31, 2016             $     79,889
September 30, 2016               37,529
March 31, 2017                   85,359
September 30, 2017               41,557
March 31, 2018                   98,901
September 30, 2018               75,712
March 31, 2019                   71,489
June 30, 2019                    41,786
September 30, 2019               68,571
December 31, 2019                42,572
March 31, 2020                   40,025
June 30, 2020                    15,557
September 30, 2020               40,085



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March 31, 2021          42,742
June 30, 2021           43,148
September 30, 2021      38,846

Total                $ 863,768



As of the date hereof, the Trust has not received the Underpayments. The Trust
can offer no assurance that it will be able to recover any of the Underpayments
or that it will resolve the dispute relating to the New Calculation Method with
respect to future payments of the Contingent Portion.
The Trust has engaged Citrin Cooperman & Company LLP, an accounting firm
specializing in auditing royalty income, to conduct a special audit of the books
and records of EMI administered by Sony/ATV to resolve the ongoing dispute and
also determine whether there have been any other material royalty omissions or
expense over-deductions for the periods beginning January 1, 2016 and ended
December 31, 2020.
Recent Contingent Portion Payment
On August 31, 2021 the Trust received a Contingent Portion payment of $284,082
(or $1.0229 per Trust Unit) from EMI, which was attributable to royalty income
generated by the Catalog during the second quarter of 2021, as compared to
$257,170 ($0.9260 per Trust Unit) for the payment attributable to the second
quarter of 2020.
Recent Distributions to Unit Holders
On September 23, 2021, the Trust made a distribution of $215,933 (or $0.7775 per
Trust Unit) to the Trust's Unit Holders of record at the close of business on
September 22, 2021. For computation details regarding the distribution please
refer to the quarterly distribution report, dated September 23, 2021attached as
Exhibit 99.1
to the Current Report on Form 8-K, filed by the Trust with
the Securities and Exchange Commission on September 23, 2021.
Cash and Administrative Expenses
As of November 1, 2021, the Trust was holding $46 in cash and had received
invoices for an aggregate of $12,847 in unpaid administrative expenses for
services rendered to the Trust.
Inflation
The Trust does not believe that inflation has materially affected its
activities.
Liquidity and Capital Resources
The Declaration of Trust provides for the distribution to the Unit Holders of
all funds the Trust receives after payment of, or withholdings in connection
with, expenses and liabilities of the Trust.
See the table headed "Statements of Cash Receipts and Disbursements" under
Part 1 - Item 1, "Financial Statements" for information regarding cash
disbursements made to Unit Holders during the three and nine months ended
September 30, 2021 and September 30, 2020.
Off-Balance Sheet Arrangements
There are no off-balance sheet arrangements that have
or are reasonably likely to have a current or future effect on the Trust's
financial condition, changes in financial condition, revenues or expenses,
results of operations or liquidity that is material to investors.

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Impact of COVID-19
In late 2019, an outbreak of a novel coronavirus ("
COVID-19
") emerged and by March 11, 2020 was declared a global pandemic by The World
Health Organization. Across the United States and the world, governments and
municipalities instituted measures in an effort to control
the spread of COVID-19, including quarantines, shelter-in-place orders, school closings,
travel restrictions and
the closure of non-essential businesses. By the
end of March 2020, the macroeconomic impacts became significant, exhibited by,
among other things, a rise in unemployment and
market volatility.
The trajectory of COVID-19 remains highly uncertain
and it is plausible that the Trust's business and results of operations may be
directly and negatively impacted. As a result, the Trust's past results may not
be indicative of its future performance and historical trends in proceeds from
Contingent Portion payments and cash distributions to Unit Holders, among
others, may differ materially.

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