DESTINY MEDIA TECHNOLOGIES INC
For the period ended Feb 28, 2025. Filed Apr 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.
Feb 28, 2025 · Filed Apr 14, 2025
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious 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 OperationsCurrent report: 10-Q
Period ended 2025-02-28; filed 2025-04-14.
0001062993-25-007398
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 109 previous paragraphs and 127 current paragraphs.
86 unchanged; 16 reworded; 22 added; 7 removed; 0 previous and 3 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 (22)
Current report
Total revenue for the three months ended February 28, 2025 was $1,018,972 compared to the revenue of $986,338 for the three months ended February 29, 2024, an increase of 3.3% period over period. Total revenue for the six months ended February 28, 2025 was $2,245,729 compared to the revenue of $2,141,140 for the six months ended February 29, 2024, an increase of 4.9% period over period. Revenue from MTR™ continues to grow throughout the year and the quarter and management expects to continue to build on this service with features to accommodate larger use clients later in the fiscal year.
Current report
A one-time, non-repeating cost associated with litigation increasing total costs by 23.4%. This litigation is currently awaiting adjudication and the Company is confident in a positive outcome.
Current report
A non-cash increase in amortization costs that grew overall costs by 9.7%.
Current report
A reduction in salaries and wages reducing overall expenditures by 12.7%. This reduction is a mixture of temporary and on-going cost reductions as we adjust staffing in development and sales and marketing.
Current report
General and administrative expenses remained consistent with expectations, with a notable increase in professional fees. This increase is due to litigation-related costs. These costs represent the final stages of this litigation, and the Company expects a successful outcome. The Company also expects a cost award that will offset a portion of these expenses.
Current report
Sales and marketing expenses declined as the Company restructured its business development group, leading to a reduction in overall staffing. Looking ahead, the Company expects to increase these expenditures, with a focus on marketing-related initiatives, as upcoming Play MPE® platform enhancements are anticipated to drive greater customer adoption.
Current report
Product development salaries and wages declined due to a reduction in overall staffing, as the Company prioritized increased productivity and operational efficiency. These costs were offset by increases in investments in infrastructure.
Current report
RESULTS OF OPERATIONS FOR SIX MONTHS ENDED FEBRUARY 28, 2025 AND FEBRUARY 29, 2024
Current report
Revenue
Current report
Gross Margin
Current report
Operating Expenses
Current report
Operating costs during the six months ended February 28, 2025 increased by 22.2% to $2,139,182 ( February 29, 2024 - $1,749,859). This rise can be primarily attributed to the following factors:
Current report
A one-time, non-repeating cost associated with litigation increasing total costs by 14.2%. This litigation is currently awaiting adjudication and the Company is confident in a positive outcome.
Current report
A non-cash increase in amortization costs that grew overall costs by 10.4%.
Current report
A reduction in salaries and wages reducing overall expenditures by 1.0%.
Current report
General and administrative expenses remained consistent with expectations, with a notable increase in professional fees. This increase is due to litigation-related costs. These costs represent the final stages of this litigation, and the Company expects a successful outcome. The Company also expects a cost award that will offset a portion of these expenses.
Current report
Sales and marketing expenses declined as the Company restructured its business development group, leading to a reduction in overall staffing. Looking ahead, the Company expects to increase these expenditures, with a focus on marketing-related initiatives, as upcoming Play MPE® platform enhancements are anticipated to drive greater customer adoption.
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
Other Income
Current report
Interest income earned on the Company's investments was $14,901 for the six months ended February 28, 2025 (February 29, 2024 - $26,987).
Current report
Financing Activity
Removed paragraphs (7)
Previous 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.
Previous 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.
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 11.4% increase in total operating expenses.
Previous 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.
Previous 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.
Previous report
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 report
Financing Activities
Reworded paragraphs (16)
Previous 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.
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".
Previous wording
MTR™ (or "Music Tracking Radar" or "Meter"https://www.plaympe.com/track/) is a digital tracking service that tracks and reports the number and times an individual track is played. MTR™ uses a proprietary algorithm to uniquely identify and match a track. The Company launched MTR™ in beta in fourth quarter of 2023. During the beta phase of this new product, the Company tested monitoring uptime, customer acquisition activities and added functionality for sale at scale. The beta version of the platform initially monitored digital broadcasts of 800 stations in Canada.
Current wording
MTR™ (or "Music Tracking Radar" or "Meter"https://www.plaympe.com/track/) is a digital tracking service that tracks and reports the number and times an individual track is played. MTR™ uses a proprietary algorithm to uniquely identify and match a track. The Company launched MTR™ in beta in fourth quarter of 2023. During the beta phase of this new product, the Company will test monitoring uptime, customer acquisition activities and add functionality for sale at scale. The beta version of the platform will initially monitor digital broadcasts of 800 stations in Canada.
Previous 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.
Current wording
Gross margin for the three months ended February 28, 2025 was 85.3% of revenue, compared to 86.3% for the three months ended February 29, 2024. 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 February 28, 2025, our gross margin decreased compared to the same period last year. This decrease in gross margin is caused by infrastructure required to build out the MTR™ business.
Previous 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:
Current wording
Operating costs during the three months ended February 28, 2025 increased by 18.2% to $1,178,272 (February 29, 2024 - $996,465). The increase in operating costs was primarily the result of the following:
Previous wording
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 wording
Depreciation and amortization expense increased to $183,724 for the three months ended February 28, 2025 from $87,026 for the three months ended February 29, 2024, an increase of 111.1% due to depreciation of additionally capitalized software development costs associated with Play MPE® recipient player applications during the period.
Previous 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).
Current wording
Interest income earned on the Company's investments was $6,493 for the three months ended February 28, 2025 (February 29, 2024 - $15,461).
Previous 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%.
Current wording
Total revenue for the six months ended February 28, 2025 was $2,245,729 compared to the revenue of $2,141,140 for the six months ended February 29, 2024, an increase of 4.9% period over period.
Previous wording
During the three months ended November 30, 2024 the Company reported a net income of $118,140 (November 30, 2023 - $249,516).
Current wording
During the three and six months ended February 28, 2025 the Company reported a net loss of $302,094 and net loss of $183,954, respectively (February 29, 2024 - net loss of $130,012 and net income of $119,504, respectively).
Previous 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.
Current wording
For the three and six months ended February 28, 2025, adjusted EBITDA was $(116,719) and $170,751, respectively (February 29, 2024 - $(47,792) and $285,101, 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, 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%.
Current wording
As at February 28, 2025, we held $1,216,378 (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.
Previous 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.
Current wording
At February 28, 2025, we had working capital of $1,687,699 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 each of the periods indicated:
Current wording
The following table sets forth a summary of the net cash flow activity for the periods indicated:
Previous 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.
Current wording
Net cash provided by operating activities during the six months ended February 28, 2025 was $47,646 (February 29, 2024 – $132,797). The primary reason for the decrease in cash flows from operating activities is related to the timing of receipts of refundable taxes.
Previous 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.
Current wording
Net cash used in investing activities for the six months ended February 28, 2025 was $223,440, compared to cash used in investing activities of $281,563 for the six months ended February 29, 2024. 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, 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").
Current wording
Net cash used in financing activity during the six months ended February 28, 2025 was nil (February 29, 2024 - $306,680). In the prior year, this cash was used to repurchase and retire 309,300 shares of common stock 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 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.
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 and six months ended February 28, 2025.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
Gross margin for the six months ended February 28, 2025 was 86.4% of revenue, compared to 86.0% for the six months ended February 29, 2024. 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 — 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, 2025 and February 29, 2024.
Current report — wording carried from elsewhere
Depreciation and amortization expense increased to $350,703 for the six months ended February 28, 2025 from $168,124 for the six months ended February 29, 2024, an increase of 108.6% due to depreciation of additionally capitalized software development costs associated with Play MPE® recipient player applications during the period.