DESTINY MEDIA TECHNOLOGIES INC
For the period ended Nov 30, 2024. Filed Jan 14, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Nov 30, 2024 · Filed Jan 14, 2025
DSNYStored price and day change unavailable
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-05-31; filed 2024-07-15.
0001062993-24-013709
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-11-30; filed 2025-01-14.
0001062993-25-000745
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 128 previous paragraphs and 109 current paragraphs.
82 unchanged; 20 reworded; 7 added; 21 removed; 5 previous and 0 current paragraphs rearranged.
Tables are not compared: 12 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (7)
Current report
The increase in revenue was driven by growing international distributions from existing customers. Throughout the prior fiscal year, the Company introduced easy to select international distribution lists by genre of music. With growing investments in recipient activity in multiple jurisdictions, the Company grew average revenue per sale by providing greater distribution channels. This increase accounted for approximately half of the growth in the first quarter. The remaining revenue growth is split between a growing customer base in well-established markets and progress in the Company's emerging markets.
Current report
While total salaries and wages remained consistent with the prior period, the amount capitalized to capital software assets and software under development intangible asset was lower this period, resulting in an increase to total operating expenses of approximately 13.8%. A reconciliation is provided below.
Current report
Total general and administrative expenses have remained steady relative to the prior three months ended November 30, 2023. Professional fees decreased from the prior period due; however we do expect this will increase in subsequent periods.
Current report
The rise in wages and benefits is attributed to an increase in marketing related expenditures as the Company increased marketing staff to coincide with product related additions designed to facilitate greater customer driven distributions.
Current report
Depreciation and amortization expense increased to $166,979 for the three months ended November 30, 2024 from $81,098 for the three months ended November 30, 2023, an increase of 105.9% due to depreciation of additionally capitalized software development costs associated with Play MPE® recipient player applications during the period.
Current report
Net Income (Loss)
Current report
Financing Activities
Removed paragraphs (21)
Previous report
Total operating expenditures for the three-month period ended May 31, 2024 increased by 13.6% due to a reduction in the amount of salaries and wages capitalized to the balance sheet. Total salaries and wages decreased by 4.0%. A reconciliation is provided below.
Previous report
The above increases were offset by a 12.4% reduction in total operating expenses due to the timing of professional services provided and a reduction in legal expenditures for a claim that was resolved in the Company's favor in the preceding year.
Previous report
The decrease in wages and benefits is primarily due to a one-time recruitment fee and the Company's portion of matching ESPP contributions incurred during the comparative period ending May 31, 2023. Professional fees also decreased due to the timing of services provided and the resolution of a one-time litigation favorably for the Company in the preceding year.
Previous report
The increase in wages and benefits is primarily attributed to one-time costs associated with a restructuring of the business development group that commenced in the third quarter of 2024.
Previous report
Depreciation and amortization expense increased to $87,760 for the three months ended May 31, 2024, from $37,182 for the three months ended May 31, 2023, an increase of 136.0%. This increase was due to the depreciation of newly enhanced features in the Play MPE® Player and Caster computer software applications.
Previous report
Revenue
Previous report
Total revenue for the nine months ended May 31, 2024 increased by 10.3% to $3,296,582, compared to $2,987,786 for the nine months ended May 31, 2023. After adjusting for foreign exchange rates, the Company's revenue for the nine-month period grew by 9.4%. The revenue increase in the nine months ended May 31, 2024 was driven by both our Major Label customers (increase of 8.6% period over period) and independent labels (increase of 11.9% period over period).
Previous report
Gross Margin
Previous report
Gross margin for the nine months ended May 31, 2024 was 86.4% of revenue, compared to 87.0% for the nine months ended May 31, 2023. During the nine months ended May 31, 2024, our gross margin remained relatively unchanged compared to the same period last year, indicating that the growth in the cost of sales has kept pace with the growth in revenue.
Previous report
Operating Expenses
Previous report
Operating costs during the nine months ended May 31, 2024 increased by 16.8% to $2,634,466 (May 31, 2023 - $2,256,388). This rise can be primarily attributed to the following factors:
Previous report
Total operating expenditures for the nine-month period ended May 31, 2024, increased by 12.6% due to a reduction in the amount of salaries and wages capitalized to the balance sheet. Total salaries and wages rose by 2.9% compared to the previous period.
Previous report
In the previous period, the Company realized a substantial currency gain that was not repeated in the current fiscal year. This contributed to a 5.1% increase in total operating expenditures for the nine-month period ended May 31, 2024.
Previous report
The above increases were offset by an 8.9% reduction in total operating expenses due to the timing of professional services provided and a reduction in legal expenditures for a claim that was resolved in the Company's favor in the preceding year.
Previous report
The decrease in wages and benefits is primarily due to a one-time recruitment fee and the Company's portion of matching ESPP contributions incurred during the comparative period ending May 31, 2023. Professional fees also decreased due to the timing of services provided and the resolution of a one-time litigation favorably for the Company in the preceding year. Additionally, during the comparative period, the Company maintained a substantial cash balance in the foreign currency accounts, resulting in a significant foreign exchange gain recorded upon the revaluation of cash.
Previous report
The increase in wages and benefits is primarily attributed to the addition of key personnel in the department along with staff turnover during the current period.
Previous report
Depreciation and Amortization
Previous report
Depreciation and amortization expense increased to $255,884 for the nine months ended May 31, 2024 from $109,513 for the nine months ended May 31, 2023, an increase of 133.7%. This increase was due to the depreciation of recently capitalized additions in the Play MPE® Player and Caster computer software applications.
Previous report
Other Income
Previous report
Net Income
Previous report
Financing Activity
Reworded paragraphs (20)
Previous wording
In this report, "we," "us," "our," "our company", "Destiny" and similar references refer to Destiny Media Technologies Inc., a Nevada corporation, and its wholly-owned subsidiaries: Destiny Software Productions, Inc. ("DSPI"), MPE Distributions, Inc. ("MPE"), Tonality, Inc. ("Tonality"), and Sonox Digital Inc. ("Sonox"), and (ii) the term "common stock" refers to the common stock, par value $0.001 per share, of Destiny Media Technologies, Inc., a Nevada corporation. The financial information included herein is presented in United States dollars unless otherwise indicated.
Current wording
In this report, "we," "us," "our," "our company", "Destiny" and similar references refer to Destiny Media Technologies, Inc., a Nevada corporation, and its wholly-owned subsidiaries: Destiny Software Productions, Inc. ("DSNY"), MPE Distributions, Inc. ("MPE"), Tonality, Inc. ("Tonality"), and Sonox Digital Inc. ("Sonox"), and (ii) the term "common stock" refers to the common stock, par value $0.001 per share, of Destiny Media Technologies, Inc., a Nevada corporation. The financial information included herein is presented in United States dollars unless otherwise indicated.
Previous wording
Our common stock trades on TSX Venture Exchange in Canada under the symbol "DSY.V", on the OTCQB U.S. ("OTCQB") under the symbol "DSNY", and on various German exchanges (Frankfurt, Berlin, Stuttgart and Xetra) under the symbol "DME1.F".
Current wording
Our common stock trades on TSX Venture Exchange in Canada under the symbol "DSY", on the OTCQB U.S. ("OTCQB") under the symbol "DSNY", and on various German exchanges (Frankfurt, Berlin, Stuttgart and Xetra) under the symbol DME1.F, WKN 935 410.
Previous wording
Our corporate website is located athttps://investors.dsny.com/
Current wording
Our corporate website is located athttp://www.dsny.com.
Previous wording
Destiny is currently developing additional functionality and complimentary services that are expected to expand the Company's addressable market, or act as catalysts to the Company's sales activities for Play MPE®. These are described more fully in the business development section of our Annual Report on Form 10-K for the fiscal year ended August 31, 2023, filed on November 28, 2023.
Current wording
Destiny is currently developing additional functionality and complimentary services that are expected to expand the Company's addressable market, or act as catalysts to the Company's sales activities for Play MPE®. These are described more fully in business development section of our Annual Report on Form 10-K for the fiscal year ended August 31, 2024, filed on November 21, 2024.
Previous wording
Total revenue for the three months ended May 31, 2024 was $1,155,442 compared to the revenue of $1,068,007 for the three months ended May 31, 2023, an increase of 8.2% period over period. After adjusting for foreign exchange rates, the Company's revenue for the three-month period grew by 8.5%. The growth in revenue for the quarter arose from both our Major Label customers (increase of 10.7% quarter over quarter) and independent labels (increase of 5.5% quarter over quarter).
Current wording
Total revenue for the three months ended November 30, 2024 was $1,226,757 compared to the revenue of $1,154,802 for the three months ended November 30, 2023, an increase of 6.23% period over period. After adjusting for foreign exchange rates, the Company's revenue for the three-month period grew by 6.0%.
Previous wording
Gross margin for the three months ended May 31, 2024, was 87.0% of revenue, compared to 87.5% for the three months ended May 31, 2023. The Company's cost of revenue consists of data hosting and processing charges, third party transaction related costs, and engineering, technical and customer support costs. These costs are driven by the size and volume of customer transactions processed, as well as the relative proportion of "full-service" versus "self-service" revenue. Our self-service sales are derived from customers who have been provided with a customer account to access our encoder to independently upload and publish releases. Our full-service revenue is derived from customers who are fully serviced by our internal staff, who prepare and publish releases on their behalf. During the three months ended May 31, 2024, our gross margin remained relatively unchanged compared to the same period last year, indicating that the growth in the cost of sales has kept pace with the growth in revenue.
Current wording
Gross margin for the three months ended November 30, 2024 was 87.3% of revenue, compared to 85.8% for the three months ended November 30, 2023. The Company's cost of revenue consists of data hosting and processing charges, third party transaction related costs, and engineering, technical and customer support costs. These costs are driven by the size and volume of customer transactions processed, as well as the relative proportion of "full-service" versus "self-service" revenue. Our self-service sales are derived from customers who have been provided with a customer account to access our encoder to independently upload and publish releases. Our full-service revenue is derived from customers who are fully serviced by our internal staff, who prepare and publish releases on their behalf. During the three months ended November 30, 2024, our gross margin increased over the comparative period primarily due to decrease staffing in the technical and customer support departments.
Previous wording
Operating costs during the three months ended May 31, 2024 increased by 5.7% to $884,607 (May 31, 2023 - $836,795). The increase in operating costs was primarily the result of the following:
Current wording
Operating costs during the three months ended November 30, 2024 increased by 27.5% to $960,910 (November 30, 2023 - $753,394). The increase in operating costs was primarily the result of the following:
Previous wording
Due to capitalization of salaries and wages in previous periods, depreciation of computer software increased in the current period and resulted in a 6.0% increase in total operating expenses.
Current wording
Due to capitalization of salaries and wages in previous periods, depreciation of computer software increased in the current period and resulted in a 11.4% increase in total operating expenses.
Previous wording
For ease of reference the following table has been prepared to present operating results had the Company not capitalized software development salaries for the three months ended May 31, 2024 and 2023.
Current wording
For ease of reference the following table has been prepared to present operating results had the Company not capitalized software for the three months ended November 30, 2024 and 2023.
Previous wording
The increase in wages and benefits is partly due to a lower amount capitalized to software under development intangible assets in the current period. During the comparative period, the Company capitalized the development of its new product, MTR™, which launched in beta in Canada in the fourth quarter of fiscal 2023. Following the launch, there has been a reduction in the capitalization rate of these development costs.
Current wording
The increase in wages and benefits is linked to a lower amount capitalized to capital software assets and software under development intangible assets in the current period. During the comparative period, the Company prioritized the development of its new product, MTR™, which subsequently underwent a beta launch in the summer of 2023. Following the launch, there has been a reduction in the capitalization of wages and salaries associated with the MTR™ product.
Previous wording
Interest income earned on the Company's mutual funds was $13,685 for the three months ended May 31, 2024 (May 31, 2023 - $9,593).
Current wording
Interest income earned on the Company's mutual funds was $8,408 for the three months ended November 30, 2024 (November 30, 2023 - $11,526).
Previous wording
During the three and nine months ended May 31, 2024 the Company reported a net income of $134,476 and $253,980, respectively (May 31, 2023 -$107,052 and $364,042, respectively).
Current wording
During the three months ended November 30, 2024 the Company reported a net income of $118,140 (November 30, 2023 - $249,516).
Previous wording
For the three and nine months ended May 31, 2024, adjusted EBITDA was $219,910 and $505,011, respectively (May 31, 2023 - $172,726 and $560,844, respectively). Adjusted EBITDA is not defined under U.S. GAAP, and it may not be comparable to similarly titled measures reported by other companies. We used Adjusted EBITDA, along with other GAAP measures, as a measure of our profitability because Adjusted EBITDA helps us to compare our performance on a consistent basis by removing from our operating results the impact of our capital structure, the effect of operating in different tax jurisdictions, the impact of our asset base, which can differ depending on the book value of assets, the accounting methods used to compute depreciation and amortization, the existence or timing of asset impairments and the effect of non-cash stock-based compensation expense.
Current wording
For the three months ended November 30, 2024, adjusted EBITDA was $287,470 (November 30, 2023 - $332,893). Adjusted EBITDA is not defined under U.S. GAAP, and it may not be comparable to similarly titled measures reported by other companies. We used Adjusted EBITDA, along with other GAAP measures, as a measure of our profitability because Adjusted EBITDA helps us to compare our performance on a consistent basis by removing from our operating results the impact of our capital structure, the effect of operating in different tax jurisdictions, the impact of our asset base, which can differ depending on the book value of assets, the accounting methods used to compute depreciation and amortization, the existence or timing of asset impairments and the effect of non-cash stock-based compensation expense.
Previous wording
As at May 31, 2024, we held $1,390,887 (August 31, 2023 - $2,002,769) in cash and cash equivalents. The Company's cash equivalents consist of investments in mutual funds with a major Canadian financial institution that earn interest at variable interest rates ranging from 4.55% - 4.90%.
Current wording
As at November 30, 2024, we held $1,526,761 (August 31, 2024 - $1,481,582) in cash and cash equivalents. The Company’s cash equivalents consist of investments in mutual funds with a major Canadian financial institution that earn interest at variable interest rates ranging from 4.30% – 4.90%.
Previous wording
At May 31, 2024, we had working capital of $1,820,539 compared to $2,185,960 as at August 31, 2023. The decrease in our working capital was primarily due to operating results.
Current wording
At November 30, 2024, we had working capital of $1,975,296 compared to $1,842,071 as at August 31, 2024. The decrease in our working capital was primarily due to operating results.
Previous wording
The following table sets forth a summary of the net cash flow activity for the periods indicated:
Current wording
The following table sets forth a summary of the net cash flow activity for each of the periods indicated:
Previous wording
Net cash provided by operating activities during the nine months ended May 31, 2024 was $291,047 (May 31, 2023 - $507,816). The primary reason for the decrease in cash flows from operating activities is related to the timing of receipts from our customers.
Current wording
Net cash provided by operating activities during the three months ended November 30, 2024 was $217,619 (November 30, 2023 -$188,769). The primary reason for the increase in cash flows from operating activities is related to the timing of receipts from our customers and the timing of payments to our vendors.
Previous wording
Net cash used in investing activities for the nine months ended May 31, 2024 was $422,965, compared to cash used in investing activities of $708,945 for the nine months ended May 31, 2023. The period-over-period decrease was mainly driven by the lower proportion of software development salaries and wages capitalized in the current period.
Current wording
Net cash used in investing activities for the three months ended November 30, 2024 was $96,980, compared to cash used by investing activities of $177,402 for the three months ended November 30, 2023. The period-over-period decrease was mainly driven by the lower proportion of software development salaries and wages capitalized in the current period.
Previous wording
Net cash used in financing activity during the nine months ended May 31, 2024 was $470,271 (May 31, 2023 - $4,463) - this cash was used to repurchase and retire 459,200 shares of common stock (May 31, 2023 - 5,685) of the Company under the Normal Course Issuer Bid ("NCIB").
Current wording
Net cash used in financing activities during the three months ended November 30, 2024 was $0 (November 30, 2023 - $170,778. Related to nil (November 30, 2023 - 172,000 shares of common stock were repurchased) of the Company under the Normal Course Issuer Bid ("NCIB").
Previous wording
For a description of our critical accounting policies, see the sections entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Significant Judgements and Estimates" and "Financial Statements and Supplementary Data - Note 2, Summary of Significant Accounting Policies" contained in our 2023 Form 10-K. There have not been any material changes to the critical accounting policies discussed therein during the three and nine months May 31, 2024.
Current wording
For a description of our critical accounting policies, see the sections entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Significant Judgements and Estimates" and "Financial Statements and Supplementary Data - Note 2, Summary of Significant Accounting Policies" contained in our 2024 Form 10-K. There have not been any material changes to the critical accounting policies discussed therein during the three months ended November 30, 2024.
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED MAY 31, 2024 AND 2023
Previous report — wording carried elsewhere
Due to the capitalization of salaries and wages in previous periods, depreciation of computer software increased in the nine-month period, resulting in a 6.5% rise in total operating expenses.
Previous report — wording carried elsewhere
For ease of reference the following table has been prepared to present operating results had the Company not capitalized software development salaries for the nine months ended May 31, 2024 and 2023.
Previous report — wording carried elsewhere
The increase in wages and benefits is due to a lower amount capitalized to software under development intangible assets in the current period. During the comparative period, the Company capitalized the development of its new product, MTR™, which was launched in beta in Canada in the fourth quarter of fiscal 2023. Following the launch, there has been a reduction in the capitalization rate of these development costs.
Previous report — wording carried elsewhere
Interest income earned on the Company's mutual funds was $40,672 for the nine months ended May 31, 2024 (May 31, 2023 - $26,038).