MMTRS Q3 2025: EMI pays $500,000; 25% fee cap set
Mills Music Trust reported Q3 2025 cash activity and a post‑quarter settlement with EMI. The Trust received $356,533 in Contingent Portion payments attributable to Q2 2025 royalties and ended the quarter with $377,109 in undistributed cash reserved for potential administrative expenses. 277,712 Trust Units were outstanding as of September 30, 2025.
On October 30, 2025, EMI agreed to pay the Trust $500,000 within ten business days in full and final settlement of claims through December 31, 2024. The parties also amended the Asset Purchase Agreement, capping foreign sub‑publishing fees at 25% and limiting U.S. copyright renewal offsets to U.S. royalty income beginning July 1, 2025. The Trust plans to release the reserve and make a distribution equal to the cash balance plus the settlement payment, less unpaid invoices, after receiving the funds. The ongoing Calculation Method dispute remains unresolved for periods after December 31, 2024, with claimed underpayments totaling $1,637,819 as of September 30, 2025.
Positive
- $500,000 settlement payment agreed within ten business days of Oct 30, 2025
- Amended terms cap foreign sub‑publishing fees at 25% from Jul 1, 2025
- Planned distribution of cash balance plus settlement after receipt, net of unpaid invoices
Negative
- No Q3 2025 distribution; $377,109 reserved for potential expenses
- Contingent Portion payment for Q2 2025 $356,533 vs $512,648 prior year comparable
- Calculation Method dispute remains unresolved for periods after Dec 31, 2024
Insights
$500k settlement and deduction limits support near‑term payout.
The Trust’s model is straightforward: receive EMI royalty‑based Contingent Portion payments and distribute cash after expenses. Q3 ended with $377,109 held in reserve and no distribution. Post‑quarter, EMI agreed to a $500,000 payment settling claims through Dec 31, 2024, and amendments that cap foreign sub‑publishing fees at 25% and restrict U.S. renewal offsets to U.S. royalties starting Jul 1, 2025.
Once the settlement is received, the Trust states it will release the reserve and distribute the sum of the cash balance and settlement less unpaid invoices. This sequence points to a tangible cash distribution mechanism tied to receipt of funds; actual timing depends on settlement payment receipt.
The Calculation Method dispute remains open for periods after Dec 31, 2024, with claimed underpayments of $1,637,819 as of Sep 30, 2025. Future impact hinges on dispute outcomes and ongoing royalty trends; the filing does not specify timing.
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
N/A |
N/A |
N/A |
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer |
☒ | Smaller reporting company | ||||
| Emerging growth company | ||||||
TABLE OF CONTENTS
| PART I — FINANCIAL STATEMENTS |
3 | |||
| Item 1. Financial Statements |
3 | |||
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
9 | |||
| Item 3. Quantitative and Qualitative Disclosures About Market Risk |
12 | |||
| Item 4. Controls and Procedures |
12 | |||
| PART II — OTHER INFORMATION |
13 | |||
| Item 1. Legal Proceedings |
13 | |||
| Item 1A. Risk Factors |
13 | |||
| Item 2. Unregistered Sale of Equity Securities and Use of Proceeds |
13 | |||
| Item 3. Defaults Upon Senior Securities |
13 | |||
| Item 4. Mine Safety Disclosures |
13 | |||
| Item 5. Other Information |
13 | |||
| Item 6. Exhibits |
14 | |||
| SIGNATURES |
15 | |||
Three Months Ended September 30 |
Nine Months Ended September 30 |
|||||||||||||||
2025 |
2024 |
2025 |
2024 |
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Receipts from EMI |
$ | $ | $ | $ | ||||||||||||
Undistributed Cash at Beginning of Period |
(1) |
|||||||||||||||
Disbursements — Administrative Expenses |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Balance Available for Distribution |
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Cash Distributions to Unit Holders |
( |
) | ( |
) | ||||||||||||
Undistributed Cash at End of period |
$ | (2) |
$ | $ | (2) |
$ | ||||||||||
Cash Distribution per Unit (based on |
$ | $ | $ | $ | ||||||||||||
| (1) | As of July 1, 2 |
| (2) | As of September 30, 2025, undistributed cash in the aggregate amount of $ |
Quarterly Payment Period |
Amount of Deficiency |
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March 31, 2016 |
$ | |||
September 30, 2016 |
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March 31, 2017 |
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September 30, 2017 |
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March 31, 2018 |
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September 30, 2018 |
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March 31, 2019 |
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June 30, 2019 |
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September 30, 2019 |
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December 31, 2019 |
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March 31, 2020 |
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June 30, 2020 |
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September 30, 2020 |
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March 31, 2021 |
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June 30, 2021 |
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September 30, 2021 |
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December 31, 2021 |
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March 31, 2022 |
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June 30, 2022 |
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September 30, 2022 |
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December 31, 2022 |
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March 31, 2023 |
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June 30, 2023 |
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September 30, 2023 |
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December 31, 2023 |
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March 31, 2024 |
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June 30, 2024 |
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September 30, 2024 |
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December 31, 2024 |
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March 31, 2025 |
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June 30, 2025 |
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September 30, 2025 |
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Total |
$ |
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Three Months Ended September 30 |
Nine Months Ended September 30 |
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2025 |
2024 |
2025 |
2024 |
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Corporate Trustee Fees |
$ | $ | $ | $ | ||||||||||||
Individual Trustee Fees |
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Transfer Agent and Registrar Fees (1) |
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Total |
$ |
$ |
$ |
$ |
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| (1) | These services are performed by the Corporate Trustee. |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Copyright Catalogue
The Catalogue is estimated to be composed of over 12,000 music titles (the “Copyrighted Songs”), of which approximately 1,430 produced royalty income in recent years. Based on the Listing, the Trust derives its receipts principally from copyrights established prior to 1960 in the United 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 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 affect 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.
The Trust’s income is dependent, in part, on EMI’s ability to maintain its rights in the Copyrighted Songs through copyright protection. Although Copyrighted Songs may continue to generate royalty revenue after their copyrights have expired, in general 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 Listing, most of the Top 50 Songs obtained copyright registration under the United States Copyright Act of 1909 (the “1909 Act”) between 1926 and 1965. 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, to the extent known, range between 2021 and 2075, as set forth in the 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 (the “Calculation Method Dispute”). 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, as of September 30, 2025 (the “Calculation Method Underpayments”):
| Quarterly Payment Period |
Amount of 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 | |||
9
| March 31, 2020 |
40,025 | |||
| June 30, 2020 |
15,557 | |||
| September 30, 2020 |
40,085 | |||
| March 31, 2021 |
42,742 | |||
| June 30, 2021 |
43,148 | |||
| September 30, 2021 |
38,846 | |||
| December 31, 2021 |
38,112 | |||
| March 31, 2022 |
0 | |||
| June 30, 2022 |
70,709 | |||
| September 30, 2022 |
83,438 | |||
| December 31, 2022 |
0 | |||
| March 31, 2023 |
44,908 | |||
| June 30, 2023 |
37,491 | |||
| September 30, 2023 |
131,213 | |||
| December 31, 2023 |
40,761 | |||
| March 31, 2024 |
43,909 | |||
| June 30, 2024 |
0 | |||
| September 30, 2024 |
135,768 | |||
| December 31, 2024 |
0 | |||
| March 31, 2025 |
69,244 | |||
| June 30, 2025 |
0 | |||
| September 30, 2025 |
78,498 | |||
|
|
|
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| Total |
$ | 1,637,819 | ||
|
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|
In addition, on October 1, 2020, the Trust engaged Citrin Cooperman & Company LLP, an accounting firm specializing in auditing royalty income (“Citrin”), to conduct a special audit of the books and records of EMI administered by Sony/ATV to determine the areas and extent of underpayment, if any, of quarterly Contingent Portion payments payable to the Trust for the periods beginning January 1, 2016 and ended December 31, 2020 (the “Audit Period”). Citrin’s final report (the “Citrin Report”) was delivered to the Trustees on April 4, 2022. The Citrin Report identified multiple asserted royalty omissions and expense over-deductions from the Contingent Portion during the Audit Period in addition to the Underpayments (the “Citrin Underpayments”). The Trust distributed the Citrin Report to EMI on or about April 13, 2022. EMI has disputed the findings of the Citrin Report.
On October 30, 2025 (the “Settlement Date”), the Trust, Trustees, EMI and certain EMI affiliates entered into a settlement agreement, effective as of July 1, 2025 (the “Settlement Agreement”), pursuant to which the parties agreed to settle (the “Settlement”) all claims (the “Settled Claims”) of the Trust and/or the Trustees (i) for all periods of time prior to December 31, 2024 relating to EMI’s obligation to make Contingent Portion payments under the Asset Purchase Agreement, and (ii) regarding the interpretation of certain provisions of the Asset Purchase Agreement that had been subject to a tolling agreement between EMI and the Trust.
Under the terms of the Settlement, among other things, (i) EMI agreed to make a payment to the Trust in the amount of $500,000 within ten business days of the Settlement Date in full and final settlement of the Settled Claims (the “Settlement Payment”), (ii) the Trust and EMI agreed to amend Section 1(c)(i)(A) of the Asset Purchase Agreement to provide that beginning with the quarterly period beginning July 1, 2025, in calculating any Contingent Portion Payment due and payable by EMI to the Trust, EMI shall cap the foreign sub-publishing fee between EMI and any foreign affiliate thereof at twenty-five percent (25%), which cap acts as a limitation on certain deductions that EMI can make against payments due to the Trust, and (iii) the Trust and EMI agreed to amend Section 1(c)(i)(B) of the Asset Purchase Agreement to provide that beginning with the quarterly period beginning July 1, 2025, EMI shall only be entitled to offset the costs associated with EMI obtaining U.S. copyright renewals for a song against royalty income collected by EMI in the U.S. for such song (and not against any foreign royalty income collected outside of the U.S. for such song), and this modification also serves to narrow permissible offsets to payments due from EMI to the Trust.
The Settlement includes all claims relating to the Calculation Method Underpayments through December 31, 2024 and all claims relating to the Citrin Underpayments. The Settlement does not include any claims for any periods after December 31, 2024 nor does it resolve the Calculation Method Dispute. As such, the Trustees and EMI have not agreed to settle any claims relating to the Calculation Method Dispute or the Calculation Method Underpayments for any period of time after December 31, 2024. The Trust can offer no assurance that it will be able to recover any portion of the Calculation Method Underpayments that were not subject to the Settlement, or that it will favorably resolve the Calculation Method Dispute with respect to future payments of the Contingent Portion.
For the full text of the pro forma Asset Purchase Agreement, as amended by the Settlement Agreement, please refer to the Current Report on Form 8-K, dated October 30, 2025, which the Trust filed with the Securities and Exchange Commission on November 5, 2025.
10
Recent Contingent Portion Payment
On September 3, 2025 the Trust received a Contingent Portion payment of $356,533 (or $1.2838 per Trust Unit) from EMI, which was attributable to royalty income generated by the Catalog during the second quarter of 2025, as compared to $512,648 (or $1.8460 per Trust Unit) for the payment attributable to the second quarter of 2024.
Recent Distributions to Unit Holders
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. In March, June and September 2025, the Trust received from EMI a Contingent Portion payment of $260,759 ($0.9390 Per Trust Unit), $202,850 ($0.7304 per Trust Unit) and $356,533 ($1.2838 per Trust Unit), respectively, attributable to royalties received by EMI for the fourth quarter of 2024, the first quarter of 2025 and the second quarter of 2025, respectively (collectively, the “Contingent Portion Payments”). After receiving the Contingent Portion Payments, the Trust paid $196,827, $128,795, and $117,457 respectively, in connection with invoices rendered to the Trust by advisors and professionals providing services to the Trust and for administrative costs associated with the Trust, leaving an aggregate balance of $377,109 ($1.3579 per Trust Unit) (the “Cash Balance”) at September 30, 2025. The Trustees decided to reserve the full amount of such balance (the “Reserve”) for potential future administrative expenses and liabilities in accordance with Section 5.7 of the Declaration of Trust, and therefore did not make a distribution to Unit Holders in respect of the Contingent Portion Payments in the third quarter of 2025.
For information regarding cash disbursements made to Unit Holders for the three and nine months ended September 30, 2025 and September 30, 2024 see the table headed “Statements of Cash Receipts and Disbursements” under Part I — Item 1, “Financial Statements”. For more computation details regarding the Contingent Portion Payments and the lack of a distribution related thereto please refer to the Current Report on Form 8-K, dated September 29, 2025, which the Trust filed with the Securities and Exchange Commission on October 21, 2025.
As soon as reasonably practical and operationally feasible following receipt from EMI of the Settlement Payment, the Trustees will release the Reserve and cause the Trust to make a distribution to the Unit Holders in connection with such release in an amount equal to the sum of the Cash Balance and Settlement Payment less any unpaid invoices from advisors and professionals providing services to the Trust and for administrative costs associated with the Trust. The Trust will continue from time to time to assess the Trust’s needs with respect to future potential administrative expenses and liabilities to determine whether a reserve may be required in the future.
Cash and Administrative Expenses
As of October 21, 2025, the Trust was holding $377,109 in cash and had received invoices for an aggregate of $9,413 in unpaid administrative expenses for services rendered to the Trust.
Segment Information
The Trust reports segment information based on the management approach which designates the internal reporting used by the Chief Operating Decision Maker, which are the Trust’s Trustees (in such capacities, collectively, the “CODM”), for making decisions and assessing performance as the source of the Trust’s reportable segments.
The Trust has one reportable segment: receiving quarterly payments of the Contingent Portion from EMI and distributing the amounts it receives to the Unit Holders, after payment of, or withholdings in connection with, expenses and liabilities of the Trust. As the Trust operates in one reportable segment, the CODM evaluates the performance of the Trust based on the aggregate amount of cash distributions which the Trust is able to pay to Unit Holders. The key performance metric considered by the CODM is cash distributions per Trust Unit. Material cash receipts, disbursements and withholdings of the Trust which are reviewed by the CODM include receipts of the Contingent Portion from EMI and administrative expenses, which primarily consist of third party service provider fees (including legal, accounting, auditor and printer fees) and Trustee and Transfer Agent Registrar fees. The CODM will continue to evaluate its segment reporting disclosures and make adjustments if and to the extent there are material changes in financial reporting
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.
11
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, 2025 and September 30, 2024.
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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
ITEM 4. CONTROLS AND PROCEDURES
Controls and Procedures
As of the end of the period covered by this quarterly report, the Trust carried out an evaluation of the effectiveness of the design and operation of the Trust’s “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”)) under the supervision and with the participation of the Trust’s management, including the Chief Financial Individual providing accounting services and the Trustees. Based on that evaluation, the Chief Financial Individual providing accounting services and the Trustees concluded that, as of September 30, 2025, the Trust’s disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information the Trust is required to disclose in reports that it files or submits 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 the Trust’s management, including the Chief Financial Individual providing accounting services and the Trustees, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in the Trust’s internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) during the fiscal period covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, the Trust’s internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating the disclosure controls and procedures, the Trust’s management, including the Chief Financial Individual providing accounting services and the Trustees, recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that the Trust’s management, including the Chief Financial Individual providing accounting services and the Trustees, is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
12
Exhibit No. |
Description | |
| 31.1 | Certification by the Chief Financial Individual providing accounting services pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith) | |
| 31.2 | Certification by the trust officer of the Corporate Trustee pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith) | |
| 32.1* | Certification by the Chief Financial Individual providing accounting services pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith) | |
| 32.2* | Certification by the trust officer for the Corporate Trustee Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith) | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Schema Document | |
| 101.CAL | Inline XBRL Calculation Linkbase Documents | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
| 101.LAB | Inline XBRL Labels Linkbase Documents | |
| 101.PRE | Inline XBRL Presentation Linkbase Documents | |
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | |
| * | Furnished, not filed |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| November 14, 2025 | Mills Music Trust | |||||
| (Registrant) | ||||||
| By: | /s/ Garfield Barrett | |||||
| Garfield Barrett | ||||||
| Trust Officer of the Corporate Trustee | ||||||
| HSBC Bank USA, NA | ||||||
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