MILLS MUSIC TRUST Annual Report Summary

I’ve put together this guide to help you understand how Mills Music Trust performed this year. My goal is to explain the financial details in plain English so you can decide if this investment fits your goals.

1. What does this company do?

Think of Mills Music Trust as a middleman for music royalties. They don’t write songs, record albums, or manage artists. Instead, they own the right to receive royalties from over 12,000 music titles.

The Trust was set up in 1964 to collect these payments and pass them to you. They collect money from EMI—the company that manages the songs—and distribute it after paying the bills. The Trust manages 1,118,000 units of interest, which trade on the OTC Pink Sheets.

2. Financial performance

The big news for 2025 was a $500,000 settlement payment. The Trust held this cash for most of the year to cover potential legal costs. In the fourth quarter, they distributed the remaining $377,109—or about $0.337 per unit—to investors.

Total royalty income for the year ending October 31, 2025, was about $1.1 million. The stock price trended downward, dropping from $38.72 in late 2024 to $21.00 by the end of 2025. This reflects investor concern over the declining value of the music catalog.

3. Major wins and challenges

• The "Holiday" Powerhouse: Income relies on a few classic songs. Hits like Sleigh Ride and Little Drummer Boy are top earners. Because of this, income is seasonal; over 40% of annual revenue arrives in the fourth quarter.
• The Dispute: The Trust and EMI disagree on how to calculate royalties, especially for digital streaming. The Trust spent $122,000 this year to audit EMI’s royalty statements to ensure accuracy.
• The "Clock" is Ticking: The music library is aging. Many top songs were copyrighted between 1926 and 1954. As copyrights expire, songs enter the "public domain" and stop generating income. For example, St. James Infirmary lost its copyright in 2025, and Mood Indigo will follow in 2026. The Trust cannot buy new songs to replace these losses.

4. Financial health

The Trust is very lean. It has no employees or offices. Its only job is to collect and distribute money. They keep enough cash to cover $150,000 to $250,000 in annual administrative costs. As of October 31, 2025, the Trust held $415,000 in cash to cover expenses and the ongoing EMI audit.

5. Key risks

• Reliance on EMI: If EMI fails to collect royalties or miscalculates your share, your income drops. The Trust has limited ability to verify global collections independently.
• Lack of Control: The Trust cannot change its business model, buy new songs, or market its catalog.
• Cybersecurity: The Trust relies on EMI’s systems. A digital breach at EMI could disrupt royalty payments or destroy historical data needed to verify income.

Summary for Investors: This is a "wasting asset." You are buying a share of a shrinking list of aging songs. As copyrights expire, income will naturally decline. View these payments as a return of your initial investment rather than dividends from a growing company. Before investing, consider whether the current yield justifies the long-term decline of the underlying music catalog.