DESTINY MEDIA TECHNOLOGIES INC
For the period ended Feb 28, 2026. Filed Apr 14, 2026.
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.
Feb 28, 2026 · Filed Apr 14, 2026
DSNYStored price and day change unavailable
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-11-30; filed 2026-01-14.
0001062993-26-000238
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-02-28; filed 2026-04-14.
0001062993-26-001967
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 104 previous paragraphs and 122 current paragraphs.
84 unchanged; 13 reworded; 24 added; 7 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 6 previous and 12 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 (24)
Current report
Revenue decreased during the period primarily due to the execution of a longer-term agreement with a major label customer, which resulted in the elimination of certain short-term premium pricing that had previously contributed to revenue. This decrease was partially offset by growth in revenue from the Company's independent customer base, driven by a 23% increase in the number of Play MPE® customers and higher average spend per customer. The increase in customer spend was influenced in part by pricing adjustments implemented during the year. MTR™ revenue increased by 13.5% during the quarter; however, it remains nominal.
Current report
Gross margin for the three months ended February 28, 2026 was 83.2%, compared to 85.3% for the three months ended February 28, 2025. The decrease was primarily attributable to higher data hosting and processing costs, which mostly increased as a result of additional features introduced to the platform that required incremental infrastructure resources.
Current report
An increase in wages and benefits of $344,993, representing approximately 29% of the overall increase in operating expenses, which included a one-time employee-related charge of $244,125 and lower capitalization of development costs of $100,868 due to a reduction in activities qualifying for capitalization under U.S. GAAP, resulting in a higher portion of payroll costs being expensed in the period
Current report
Professional fees contributed to approximately 15% decrease in total operating expenses, primarily due to legal costs associated with litigation in the prior year that did not recur in the current period.
Current report
Total general and administrative expenses increased by 49% during the period, primarily due to higher wages and benefits, including a one-time employee-related charge, as well as increased consulting fees associated with changes in management. The increase was also impacted by foreign exchange fluctuations. These increases were partially offset by lower professional fees compared to the prior year period.
Current report
Sales and marketing expenses increased during the period, primarily due to higher personnel costs in business development, as well as increased advertising and promotional spending to support ongoing marketing initiatives.
Current report
Product development expenses remained relatively consistent during the period. A lower level of costs capitalized to software development resulted in a greater proportion of these costs being expensed in the current period, which was largely offset by a reduction in headcount within the department and cost efficiencies related to the Company's MTR infrastructure.
Current report
Depreciation and amortization expense decreased to $167,017 for the three months ended February 28, 2026 from $183,724 for the three months ended February 28, 2025, a decrease of 9.1%, primarily due to a lower level of capitalized software development costs in recent quarters, resulting in a reduced amortization base.
Current report
RESULTS OF OPERATIONS FOR SIX MONTHS ENDED FEBRUARY 28, 2026 AND 2025
Current report
Revenue
Current report
Total revenue for the six months ended February 28, 2026 was $2,246,248 compared to the revenue of $2,245,729 for the six months ended February 28, 2025, a decrease of 0.02% period over period.
Current report
Gross Margin
Current report
Gross margin for the six months ended February 28, 2026 was 84.5% of revenue, compared to 86.4% for the six months ended February 28, 2025. 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.
Current report
Operating Expenses
Current report
Operating costs during the six months ended February 28, 2026 increased by 11.7% to $2,388,689 (February 28, 2025 - $2,139,182). This rise can be primarily attributed to the following factors:
Current report
An increase in wages and benefits of $344,821, representing approximately 16.1% of the overall increase in operating expenses, which included a one-time employee-related charge of $244,125 and lower capitalization of development costs of $100,868 due to a reduction in activities qualifying for capitalization under U.S. GAAP, resulting in a higher portion of payroll costs being expensed in the period
Current report
Professional fees contributed to approximately 8.5% decrease in total operating expenses, primarily due to legal costs associated with litigation in the prior year that did not recur in the current period.
Current report
Total general and administrative expenses increased by 38.5% during the period, primarily due to higher wages and benefits, including a one-time employee-related charge, as well as increased consulting fees associated with changes in management. The increase was also impacted by foreign exchange fluctuations. These increases were partially offset by lower professional fees compared to the prior year period.
Current report
Sales and marketing expenses increased during the period, primarily due to higher advertising and promotional spending to support ongoing marketing initiatives. This increase was partially offset by lower wages and benefits resulting from reduced headcount in the first quarter of the year.
Current report
Product development costs increased as a result of a lower capitalization rate associated with software development. This increase is partially offset by a reduction in overall staffing, as the Company prioritized increased productivity and operational efficiency.
Current report
Depreciation and Amortization
Current report
Depreciation and amortization expense decreased to $339,502 for the six months ended February 28, 2026 from $350,703 for the six months ended February 28, 2025, a decrease of 3.2% primarily due to a lower level of capitalized software development costs in recent quarters, resulting in a reduced amortization base.
Current report
Other Income
Current report
Interest income earned on the Company's investments was $8,979 for the six months ended February 28, 2026 (February 28, 2025 - $14,901).
Removed paragraphs (7)
Previous report
Revenue growth during the period was driven primarily by an expansion of the Company's independent customer base in the United States and Canada, as well as contractual indexation under a major label agreement with one customer. The number of independent record label customers increased by 7.3%, reflecting a 28.2% increase in new Play MPE® customers. Pricing adjustments were implemented late in the quarter and, as a result, had a limited impact on period revenues. These factors were partially offset by a modest decline in revenue from certain international markets.
Previous report
MTR™ revenue increased by 30.4% during the quarter; however, it remains nominal. Marketing of the MTR™ technology has contributed to new customer acquisition for Play MPE® and has generated valuable data and analytical insights into platform usage and performance. The Company is evaluating opportunities to monetize these insights further, including expanding MTR™ offerings to higher-volume customers and assessing the potential application of the MTR™ technology to radio advertising tracking.
Previous report
Gross margin for the three months ended November 30, 2025 was 85.4%, compared to 87.3% for the three months ended November 30, 2024. The decrease was primarily attributable to higher hosting costs associated with the ongoing rollout of the Company's MTR™ business, which increased cost of revenue relative to the prior-year period. Gross margin improved compared to the fourth quarter of fiscal 2025, reflecting operating efficiencies achieved during the period.
Previous report
Due to capitalization of salaries and wages in previous periods, depreciation of computer software increased in the current period and resulted in a 0.6% increase in total operating expenses.
Previous report
Sales and marketing expenses declined during the period as the Company restructured its business development group, resulting in lower staffing levels. Advertising and promotional spending increased during the period to support ongoing marketing initiatives, and the Company expects overall marketing expenditures to increase further as it continues to invest in customer engagement and market awareness.
Previous report
The increase in wages and benefits during the period was primarily attributable to a lower level of costs capitalized to software and software development intangible assets, resulting in a higher proportion of these costs being expensed in the current period. Overall costs reductions took effect later in the quarter and therefore had limited impact on the quarterly results.
Previous report
Depreciation and amortization expense increased to $172,485 for the three months ended November 30, 2025 from $166,979 for the three months ended November 30, 2024, an increase of 3.3% due to depreciation of additionally capitalized software development costs during the last year.
Reworded paragraphs (13)
Previous wording
Total revenue for the three months ended November 30, 2025 was $1,243,139 compared to the revenue of $1,226,757 for the three months ended November 30, 2024, an increase of 1.3% period over period. After adjusting for foreign exchange rates, the Company's revenue for the three-month period grew by 1.6%.
Current wording
Total revenue for the three months ended February 28, 2026 was $1,003,109 compared to the revenue of $1,018,972 for the three months ended February 28, 2025, a decrease of 1.6% period over period. After adjusting for foreign exchange rates, the Company's revenue for the three-month period decreased by 1.8%.
Previous wording
Operating costs during the three months ended November 30, 2025 increased by 2.3% to $983,349 (November 30, 2024 - $960,910). The increase in operating costs was primarily the result of the following:
Current wording
Operating costs during the three months ended February 28, 2026 increased by 19.3%% to $1,405,340 (February 28, 2025- $1,178,272). The increase in operating costs was primarily the result of the following:
Previous wording
Total expenses increased by 1.3% during the period, primarily due to the impact of foreign currency fluctuations related to movements in the Canadian dollar.
Current wording
Total expenses increased by 3.7% during the period, primarily due to the impact of foreign currency fluctuations related to movements in the Canadian dollar.
Previous wording
Interest income earned on the Company's mutual funds was $4,926 for the three months ended November 30, 2025 (November 30, 2024 - $8,408).
Current wording
Interest income earned on the Company's mutual funds was $4,053 for the three months ended February 28, 2026 (February 28, 2025 - $6,493).
Previous wording
Total general and administrative expenses increased by 11% during the period, primarily due to the impact of foreign currency fluctuations related to movements in the Canadian dollar. This increase was partially offset by cost efficiencies in other expense categories.
Current wording
Total expenses increased by 2.6% during the period, primarily due to the impact of foreign currency fluctuations related to movements in the Canadian dollar.
Previous wording
During the three months ended November 30, 2025 the Company reported a net income of $83,652 (November 30, 2024 - $118,140).
Current wording
During the three and six months ended February 28, 2026 the Company reported a net loss of $566,310 and net loss of $482,658, respectively (February 28, 2025 - net loss of $302,094 and net loss of $183,954, respectively).
Previous wording
For the three months ended November 30, 2025, adjusted EBITDA was $252,544 (November 30, 2024 - $287,470). 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 and six months ended February 28, 2026, adjusted EBITDA was $(402,641) and $(150,097), respectively (February 28, 2025 - $(116,719) and $170,751, 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.
Previous wording
As at November 30, 2025, we held $1,362,500 (August 31, 2025 - $1,117,889) in cash and cash equivalents. The Company's cash equivalents consist of investments in mutual funds with a major Canadian financial institution earns an average interest of 2.23%.
Current wording
As at February 28, 2026, we held $1,151,271 (August 31, 2025 - $1,117,889) in cash and cash equivalents. The Company's cash equivalents consist of investments in mutual funds with a major Canadian financial institution earns an average interest of 2.01%.
Previous wording
At November 30, 2025, we had working capital of $1,831,647 compared to $1,634,587 as at August 31, 2025. The decrease in our working capital was primarily due to operating results.
Current wording
At February 28, 2026, we had working capital of $1,446,468 compared to $1,634,587 as at August 31, 2025. The decrease in our working capital was primarily due to operating results.
Previous wording
Net cash provided by operating activities during the three months ended November 30, 2025 was $298,600 (November 30, 2023 - $217,619). 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.
Current wording
Net cash provided by operating activities during the six months ended February 28, 2026 was $84,834 (February 28, 2025 - $47,646). 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 three months ended November 30, 202 was $30,127, compared to cash used by investing activities of $96,980 for the three months ended November 30, 2024. 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 six months ended February 28, 2026 was $43,093, compared to cash used by investing activities of $223,440 for the three months ended February 28, 2025. 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 activities during the three months ended November 30, 2025 was $nil (November 30, 2024 - $nil).
Current wording
Net cash used in financing activities during the six months ended February 28, 2026 was $nil (February 28, 2025 - $nil).
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 2025 Form 10-K. There have not been any material changes to the critical accounting policies discussed therein during the three months ended November 30, 2025.
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 2025 Form 10-K. There have not been any material changes to the critical accounting policies discussed therein during the six months ended February 28, 2026.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
For ease of reference the following table has been prepared to present operating results had the Company not capitalized software for the six months ended February 28, 2026 and 2025.