DESTINY MEDIA TECHNOLOGIES INC
For the period ended May 31, 2026. Filed Jul 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.
May 31, 2026 · Filed Jul 14, 2026
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious 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 OPERATIONSCurrent report: 10-Q
Period ended 2026-05-31; filed 2026-07-14.
0001062993-26-003637
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 122 previous paragraphs and 125 current paragraphs.
82 unchanged; 27 reworded; 15 added; 12 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 12 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 (15)
Current report
Play MPE® Quickshare
Current report
Play MPE®'s Quickshare is a simplified distribution tool for Play MPE® customers to promote music directly to anyone inside or outside the Play MPE® platform. With this feature, customers can send a link to a dedicated webpage to allow streaming or downloading of content outside of Play MPE® Player. The distribution does not include numerous features included within Caster's full version and distribution is intended only to replace other file sharing services while attracting greater use within the Play MPE® platform. The initial version will provide limited access and sharing capabilities free of charge and is a value-added feature within Play MPE® local distribution suite of features.
Current report
An increase in wages and benefits resulting from a one-time employee-related charge of $110,467 and lower capitalization of development costs.
Current report
Increase in professional fees of $13,842 reflecting the timing of legal, tax and audit services compared to the prior year.
Current report
Increase in travel expenses of $4,762 associated with strategic planning sessions, customer meetings and sales activities.
Current report
Lower amortization expense of $25,926 and foreign exchange gain of $46,651 partially offset the above listed increases.
Current report
Sales and marketing expenses decreased by 24.1% during the period, primarily due to lower wages and benefits and reduced marketing expenditures. The decrease in wages and benefits reflects changes in the allocation of personnel costs among operating functions during the quarter.
Current report
Product development expenses decreased by 1.8% during the period and remained relatively consistent with the prior year period. The decrease was primarily due to lower rent expense, reflecting office cost reduction initiatives and changes in the allocation of rent expense among operating departments.
Current report
The decrease in revenue during the nine-month period was primarily attributable to lower revenue generated from major label customers, including the impact of a longer-term agreement with a major label customer that reduced certain short-term pricing available in prior periods. The decline was partially offset by continued growth in the Company's independent customer segment, which experienced increases in customer acquisition and customer engagement during the period. After adjusting for the impact of foreign exchange rate fluctuations, revenue for the nine months ended May 31, 2026 decreased by 2.9% compared to the prior year period.
Current report
Gross margin for the nine months ended May 31, 2026 was 84.3% of revenue, compared to 86.2% for the same period in 2025. The decrease was primarily due to higher infrastructure costs associated with additional hosting capacity deployed to support the Company's platform, as well as higher salaries and wages included in cost of revenue resulting from organizational changes and temporary increases in employee responsibilities during the period.
Current report
Advertising and marketing expenses increased by $28,489, reflecting higher marketing activities during the first half of the fiscal year.
Current report
Product development expenses increased by 2.5% during the period, primarily due to lower capitalization of software development costs, resulting in a higher portion of development payroll being recognized as expense.
Current report
Interest income earned on the Company's mutual funds was $16,004 for the nine months ended May 31, 2026 (May 31, 2025 - $19,870). One time gain on sale of property and equipment was $3,981 for the nine months ended May 31, 2026 (May 31, 2025- $nil).
Current report
Net cash provided by operating activities during the nine months ended May 31, 2026 was $355,433 (May 31, 2025 - $138,911). The increase in cash provided by operating activities was primarily due to favorable changes in working capital, including improved collections of accounts receivable.
Current report
Financing Activity
Removed paragraphs (12)
Previous report
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 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.
Previous report
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 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.
Previous 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.
Previous report
RESULTS OF OPERATIONS FOR SIX MONTHS ENDED FEBRUARY 28, 2026 AND 2025
Previous 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
Previous report
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 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.
Previous 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).
Previous report
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 report
Financing Activities
Reworded paragraphs (27)
Previous wording
Destiny Media Technologies Inc. was incorporated in August 1998 under the laws of the State of Colorado and the corporate jurisdiction was changed to Nevada effective October 8, 2014. We carry out our business operations through our wholly owned subsidiaries: Destiny Software Productions Inc., a British Columbia company incorporated in 1992, MPE Distribution, Inc., a Nevada company that was incorporated in 2007, Tonality Inc., a Nevada company that was incorporated in 2021, and Sonox Digital Inc. incorporated under the Canada Business Corporations Act in 2012.
Current wording
Destiny Media Technologies Inc. was incorporated in August 1998 under the laws of the State of Colorado and the corporate jurisdiction was changed to Nevada effective October 8, 2014. We carry out our business operations through our wholly owned subsidiaries: Destiny Software Productions Inc., a British Columbia company incorporated in 1992, MPE Distributions, Inc., a Nevada company that was incorporated in 2007, Tonality Inc., a Nevada company that was incorporated in 2021, and Sonox Digital Inc. incorporated under the Canada Business Corporations Act in 2012.
Previous wording
Our principal executive office is located at Suite 428, 1575 West Georgia Street, Vancouver, British Columbia V6G 2V3. Our telephone number is (604) 609-7736 and our facsimile number is (604) 609-0611.
Current wording
Our principal executive office is located at Suite 400, 22 E5th Avenue, Vancouver, British Columbia V5T 1G8. Our telephone number is (604) 609-7736 and our facsimile number is (604) 609-0611.
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".
Current 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".
Previous wording
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 wording
Total revenue for the three months ended May 31, 2026 was $1,039,118 compared to the revenue of $1,133,963 for the three months ended May 31, 2025, a decrease of 8.4% period over period. Total revenue for the nine months ended May 31, 2026 was $3,285,366 compared to the revenue of $3,379,692 for the nine months ended May 31, 2025, a decrease of 2.8% period over period. Revenue decreased during the quarter primarily due to the execution of a longer-term agreement with a major label customer, which resulted in the elimination of certain short-term pricing that had previously contributed to revenue. Revenue from certain major label customers was also lower compared to the prior year period. These decreases were partially offset by continued strength in the Company's independent customer segment, supported by growth in customer acquisition, improved sales conversion rates and pricing adjustments implemented during the year. While the total number of releases distributed during the quarter decreased compared to the prior year period, revenue generated per release increased. MTR™ revenue decreased by 11.8% during the quarter; however, it remains an immaterial component of the Company's overall revenue.
Previous wording
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 wording
Gross margin for the three months ended May 31, 2026 was 84.0% of revenue, compared to 85.7% for the three months ended May 31, 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. During the three months ended May 31, 2026, our gross margin decreased compared to the same period last year. The decrease was primarily due to higher salaries and wages included in cost of revenue, resulting from temporary changes in team responsibilities and organizational adjustments implemented during the period.
Previous 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:
Current wording
Operating costs during the three months ended May 31, 2026 increased by 4.6% to $1,097,213 (May 31, 2025 - $1,049,348). The increase in operating costs was primarily the result of the following:
Previous 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 February 28, 2026 and 2025.
Current 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, 2026 and 2025.
Previous wording
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 wording
General and administrative expenses increased by 66.3% during the period, primarily due to higher wages and benefits, including a one-time employee-related charge and increased consulting costs, as well as higher professional fees. The increase was partially offset by favorable foreign exchange movements compared to the prior year period.
Previous wording
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 wording
Depreciation and amortization expense decreased to $164,499 for the three months ended May 31, 2026, from $190,425 for the three months ended May 31, 2025, a decrease of 13.6% primarily due to a lower level of capitalized software development costs in recent quarters, resulting in a reduced amortization base.
Previous 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).
Current wording
Interest income earned on the Company's mutual funds was $7,025 for the three months ended May 31, 2026 (May 31, 2025 - $4,969). One time gain on sale of property and equipment was $3,981 for the three months ended May 31, 2026 (May 31, 2025- $nil), resulting from the sale of certain assets during the period.
Previous wording
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 wording
Total revenue for the nine months ended May 31, 2026 was $3,285,366 compared to the revenue of $3,379,692 for the nine months ended May 31, 2025, a decrease of 2.8% period over period.
Previous wording
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 wording
Operating costs during the nine months ended May 31, 2026 increased by 9.3% to $3,485,902 (May 31, 2025 - $3,188,530). This rise can be primarily attributed to the following factors:
Previous wording
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 wording
An increase in wages and benefits of $438,524, primarily due to a one-time employee-related charge of $354,592, lower capitalization of development costs resulting in a higher portion of payroll costs being expensed during the period, and increased consulting costs. This increase was partially offset by lower stock-based compensation expense.
Previous wording
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 wording
Professional fees decreased by $168,393, primarily due to legal costs associated with litigation in the prior year that did not recur in the current period.
Previous wording
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.
Current 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 nine months ended May 31, 2026 and 2025.
Previous wording
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 wording
General and administrative expenses increased by 46.1% during the period, primarily due to higher wages and benefits, including a one-time employee-related charge, lower capitalization of development costs and increased consulting costs. These increases were partially offset by lower professional fees compared to the prior year period, primarily due to litigation-related legal costs incurred in the prior year that did not recur in the current period.
Previous wording
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 wording
Sales and marketing expenses decreased by 7.0% during the period, primarily due to lower wages and benefits resulting from changes in personnel responsibilities and cost allocations. This decrease was partially offset by higher advertising and marketing expenditures to support ongoing marketing initiatives.
Previous wording
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 wording
Depreciation and amortization expense decreased to $504,001 for the nine months ended May 31, 2026 from $541,128 for the nine months ended May 31, 2025, a decrease of 6.9% primarily due to a lower level of capitalized software development costs in recent quarters, resulting in a reduced amortization base.
Previous 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).
Current wording
During the three and nine months ended May 31, 2026 the Company reported a net loss of $213,327 and $695,985, respectively (May 31, 2025 - a net loss of $72,288 and $256,242, respectively).
Previous 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.
Current wording
For the three and nine months ended May 31, 2026, adjusted EBITDA loss was $(55,500) and $(205,597), respectively (May 31, 2025 - adjusted EBITDA was $122,097 and $292,848, 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
We believe Adjusted EBITDA is useful to investors as it is a widely used measure of performance and the adjustments we make to Adjusted EBITDA provide further clarity on our profitability. We remove the effect of non-cash stock-based compensation from our earnings which can vary based on share price, share price volatility, and expected life of the equity instruments we grant. In addition, this stock-based compensation expense does not result in cash payments by the Company. Adjusted EBITDA has limitations as a profitability measure in that it does not include provisions for income taxes, the effect of our expenditures on capital assets, the effect of non-cash stock-based compensation expense and the effect of asset impairments. The following is a reconciliation of net income from operations to Adjusted EBITDA:
Current wording
We believe Adjusted EBITDA is useful to investors as it is a widely used measure of performance and the adjustments we make to Adjusted EBITDA provide further clarity on our profitability. We remove the effect of non-cash stock-based compensation from our earnings which can vary based on share price, share price volatility, and expected life of the equity instruments we grant. In addition, this stock-based compensation expense does not result in cash payments by the Company. Adjusted EBITDA has limitations as a profitability measure in that it does not include provisions for income taxes, the effect of our expenditures on capital assets, the effect of non-cash stock-based compensation expense and the effect of asset impairments. The following is a reconciliation of net income (loss) from operations to Adjusted EBITDA:
Previous 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%.
Current wording
As at May 31, 2026, we held $1,397,098 (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 that earn interest at variable interest rates.
Previous 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.
Current wording
At May 31, 2026, we had working capital of $1,369,118 compared to $1,634,587 as at August 31, 2025. 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 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.
Current wording
Net cash used in investing activities for the nine months ended May 31, 2026 was $53,662, compared to cash used in investing activities of $314,225 for the nine months ended May 31, 2025. The decrease in cash used in investing activities was primarily due to lower capitalized software development costs during the current period.
Previous wording
Net cash used in financing activities during the six months ended February 28, 2026 was $nil (February 28, 2025 - $nil).
Current wording
Net cash used in financing activity during the nine months ended May 31, 2026 was $nil (May 31, 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 six months ended February 28, 2026.
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 three and nine months ended May 31, 2026.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED MAY 31, 2026 AND 2025
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
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.