References in this report (this "Quarterly Report") to "we," "us" or the
"Company" refer to Roth CH Acquisition II Co. prior to the consummation of the
Business Combination and Reservoir Media, Inc. following the consummation of the
Business Combination. References to our "management" or our "management team"
refer to our officers and directors. The following discussion and analysis of
the Company's financial condition and results of operations should be read in
conjunction with the financial statements and the notes thereto contained
elsewhere in this Quarterly Report. Certain information contained in the
discussion and analysis set forth below includes forward-looking statements that
involve risks and uncertainties.
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 Exchange Act that are not historical facts, and involve
risks and uncertainties that could cause actual results to differ materially
from those expected and projected. All statements, other than statements of
historical fact included in this Form 10-Q 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,"
"intend," "estimate," "seek" and variations and similar words and expressions
are intended to identify such forward-looking statements. Such forward-looking
statements relate to future events or future performance, but reflect
management's current beliefs, based on information currently available. A number
of factors could cause actual events, performance or results to differ
materially from the events, performance and results discussed in the
forward-looking statements. For information identifying important factors that
could cause actual results to differ materially from those anticipated in the
forward-looking statements, please refer to the Risk Factors section of the
Company's final prospectus for its Initial Public Offering filed with the U.S.
Securities and Exchange Commission (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.
Overview
We formed under the laws of the State of Delaware on February 13, 2019. We were
formed for the purpose of effecting a merger, share exchange, asset acquisition,
share purchase, recapitalization, reorganization or similar business combination
with one or more businesses, which we refer to herein as our "Business
Combination."
Business Combination
On April 14, 2021, we entered into the Merger Agreement with Merger Sub, a
Delaware corporation and our wholly-owned subsidiary, and Reservoir. On July 28,
2021, in connection with the consummation of the transactions contemplated by
the Merger Agreement, Merger Sub was merged with and into Reservoir and, as a
result, the separate corporate existence of Merger Sub ceased and Reservoir
survived the merger as our wholly-owned subsidiary. In addition, in connection
with the consummation of the Business Combination, "Roth CH Acquisition II Co."
was renamed "Reservoir Media, Inc."
Results of Operations
Our only activities from February 13, 2019 (inception) through June 30, 2021
were organizational activities, those necessary to consummate the Initial Public
Offering, described below, identifying a target company for a Business
Combination and negotiating the terms of the Merger Agreement with Reservoir. We
do not expect to generate any operating revenues until after the completion of
our Business Combination. We generate non-operating income in the form of
interest income on marketable securities held in the Trust Account. We are
incurring expenses as a result of being a public company (for legal, financial
reporting, accounting and auditing compliance), as well as for due diligence
expenses.
For the three months ended June 30, 2021, we had net loss of $848,707, which
consists of formation and operational costs of $667,324 and change in fair value
of warrant liability of $184,250, offset by interest earned on marketable
securities held in the Trust Account of $2,867.
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For the six months ended June 30, 2021, we had net loss of $1,096,238, which
consists of formation and operational costs of $871,563 and change in fair value
of warrant liability of $233,750, offset by interest earned on marketable
securities held in the Trust Account of $9,075.
For the six months ended June 30, 2020, we had net loss of $85, which consisted
exclusively of formation and operational costs.
Liquidity and Capital Resources
On December 15, 2020, we consummated the Initial Public Offering of 11,500,000
Units, inclusive of the underwriters' election to fully exercise their option to
purchase an additional 1,500,000 Units, at a price of $10.00 per Unit,
generating gross proceeds of $115,000,000. Simultaneously with the closing of
the Initial Public Offering, we consummated the sale of 275,000 Private Units to
the Sponsor at a price of $10.00 per Private Placement Unit generating gross
proceeds of $2,750,000.
Following the Initial Public Offering, the exercise of the over-allotment option
in full and the sale of the Private Units, a total of $115,000,000 was placed in
the Trust Account. We incurred $1,654,977 in transaction costs, including
$1,150,000 of underwriting fees and $504,977 of other offering costs.
For the six months ended June 30, 2021, cash used in operating activities was
$572,174. Net loss of $1,096,238 was offset by fair value of change in warrant
liability of $233,750 and interest earned on marketable securities held in the
Trust Account of $9,075. Changes in operating assets and liabilities provided
$299,389 of cash for operating activities.
As of June 30, 2021, we had marketable securities held in the Trust Account of
$115,015,688 consisting of securities held in a money market fund that invests
in U.S Treasury securities with a maturity of 185 days or less. Interest income
on the balance in the Trust Account may be used by us to pay taxes. Through
June 30, 2021, we did not withdraw any interest earned on the Trust Account to
pay our taxes. We intend to use substantially all of the funds held in the Trust
Account to acquire a target business and to pay our expenses relating thereto.
To the extent that our capital stock is used in whole or in part as
consideration to effect a Business Combination, the remaining funds held in the
Trust Account will be used as working capital to finance the operations of the
target business. Such working capital funds could be used in a variety of ways
including continuing or expanding the target business' operations, for strategic
acquisitions and for marketing, research and development of existing or new
products. Such funds could also be used to repay any operating expenses or
finders' fees which we had incurred prior to the completion of our Business
Combination if the funds available to us outside of the Trust Account were
insufficient to cover such expenses.
As of June 30, 2021, we had cash of $124,393. We intend to use the funds held
outside the Trust Account for identifying and evaluating prospective acquisition
candidates, performing business due diligence on prospective target businesses,
traveling to and from the offices, plants or similar locations of prospective
target businesses, reviewing corporate documents and material agreements of
prospective target businesses, selecting the target business to acquire and
structuring, negotiating and consummating the Business Combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with a Business Combination, the Insiders, or certain of our officers
and directors or their affiliates may, but are not obligated to, loan us funds
as may be required. If we complete our initial Business Combination, we would
repay such loaned amounts. In the event that our initial Business Combination
does not close, we may use a portion of the working capital held outside the
Trust Account to repay such loaned amounts but no proceeds from our Trust
Account would be used for such repayment.
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. However, if our estimate of
the costs of identifying a target business, undertaking in-depth due diligence
and negotiating a Business Combination are less than the actual amount necessary
to do so, we may have insufficient funds available to operate our business prior
to our Business Combination. Moreover, we may need to obtain additional
financing either to complete our Business Combination or because we become
obligated to redeem a significant number of our public shares upon consummation
of our Business Combination, in which case we may issue additional securities or
incur debt in connection with such Business Combination. Subject to compliance
with applicable securities laws, we would only complete such financing
simultaneously with the completion of our Business Combination. If we are unable
to complete our Business Combination because we do not have sufficient funds
available to us, we will be forced to cease operations and liquidate the Trust
Account. In addition, following our Business Combination, if cash on hand is
insufficient, we may need to obtain additional financing in order to meet our
obligations.
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Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of June 30, 2021. We do not participate in
transactions that create relationships with unconsolidated entities or financial
partnerships, often referred to as variable interest entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered into any off-balance sheet financing arrangements,
established any special purpose entities, guaranteed any debt or commitments of
other entities, or purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than as described below.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and income and expenses
during the periods reported. Actual results could materially differ from those
estimates. We have identified the following critical accounting policies:
Common Stock Subject to Possible Redemption
We account for our common stock subject to possible conversion in accordance
with the guidance in Accounting Standards Codification ("ASC") Topic 480
"Distinguishing Liabilities from Equity." Common stock subject to mandatory
redemption is classified as a liability instrument and measured at fair value.
Conditionally redeemable common stock (including common stock that features
redemption rights that are either within the control of the holder or subject to
redemption upon the occurrence of uncertain events not solely within our
control) is classified as temporary equity. At all other times, common stock is
classified as stockholders' equity. Our common stock features certain redemption
rights that are considered to be outside of our control and subject to
occurrence of uncertain future events. Accordingly, common stock subject to
possible redemption is presented at redemption value as temporary equity,
outside of the stockholders' equity section of our balance sheets.
Warrant Liability
The Company accounts for warrants as either equity-classified or
liability-classified instruments based on an assessment of the warrant's
specific terms and applicable authoritative guidance in Financial Accounting
Standards Board ("FASB") Accounting Standards Codification ("ASC") 480,
Distinguishing Liabilities from Equity ("ASC 480") and ASC 815, Derivatives and
Hedging ("ASC 815"). The assessment considers whether the warrants are
freestanding financial instruments pursuant to ASC 480, meet the definition of a
liability pursuant to ASC 480, and whether the warrants meet all of the
requirements for equity classification under ASC 815, including whether the
warrants are indexed to the Company's own ordinary shares, among other
conditions for equity classification. This assessment, which requires the use of
professional judgment, is conducted at the time of warrant issuance and as of
each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity
classification, the warrants are required to be recorded as a component of
additional paid-in capital at the time of issuance. For issued or modified
warrants that do not meet all the criteria for equity classification, the
warrants are required to be recorded at their initial fair value on the date of
issuance, and each balance sheet date thereafter. Changes in the estimated fair
value of the warrants are recognized as a non-cash gain or loss on the
statements of operations. The fair value of the warrants was estimated using a
Binomial Lattice Model (see Note 9).
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Net Income (Loss) Per Common Share
We apply the two-class method in calculating earnings per share. Net income
(loss) per common share, basic and diluted for common stock subject to possible
redemption is calculated by dividing the interest income earned on the Trust
Account, net of applicable taxes, if any, by the weighted average number of
shares of common stock subject to possible redemption outstanding for the
period. Net income (loss) per common share, basic and diluted for and
non-redeemable common stock is calculated by dividing net income (loss) less
income attributable to common stock subject to possible redemption, by the
weighted average number of shares of non-redeemable common stock outstanding for
the period presented.
Recent Accounting Standards
In August 2020, the FASB issued ASU No. 2020-06, "Debt-Debt with Conversion and
Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in
Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments
and Contracts in an Entity's Own Equity" ("ASU 2020-06"), which simplifies
accounting for convertible instruments by removing major separation models
required under current GAAP. ASU 2020-06 removes certain settlement conditions
that are required for equity contracts to qualify for the derivative scope
exception and it also simplifies the diluted earnings per share calculation in
certain areas. ASU 2020-06 is effective for fiscal years beginning after
December 15, 2023, including interim periods within those fiscal years, with
early adoption permitted. The Company adopted ASU 2020-06 effective as of
January 1, 2021. The adoption of ASU 2020-06 did not have an impact on the
Company's financial statements.
Management does not believe that any other recently issued, but not yet
effective, accounting standards, if currently adopted, would have a material
effect on our financial statements.
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