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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 10-Q

(Mark One)


[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 31, 2023

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from _____ to _____


Commission File Number 0-28259  

DESTINY MEDIA TECHNOLOGIES INC.

(Exact name of registrant as specified in its charter)

NEVADA 84-1516745
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
   
428 - 1575 West Georgia Street  
Vancouver, British Columbia, Canada  V6G 2V3
(Address of principal executive offices) (Zip Code)

604-609-7736

(Registrant's telephone number, including area code)

1110 - 885 West Georgia Street, Vancouver, British Columbia, V6C 3E8, Canada

(Former name, former address and former fiscal year, if changes since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
[X]Yes [  ] No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
[X]Yes [  ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer 

[  ]

Accelerated filer 

[  ]

Non-accelerated filer 

[  ]

Smaller reporting company 

[X]

Emerging growth company 

[  ]

   
 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

[  ] Yes [  ] No

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) [  ] Yes [X] No

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's class of common stock, as of the latest practicable date:

The number of shares outstanding of the registrant's common stock, par value $0.001, as of July 11, 2023 was 10,116,576.


DESTINY MEDIA TECHNOLOGIES, INC.
FORM 10-Q
TABLE OF CONTENTS
  Page
PART I - FINANCIAL INFORMATION 
   
ITEM 1.Condensed Consolidated Financial Statements1
 Condensed Consolidated Balance Sheets1
 Condensed Consolidated Statements of Comprehensive Income (Loss)2
 Condensed Consolidated Statements of Stockholders' Equity3
 Condensed Consolidated Statements of Cash Flows4
 Notes to Condensed Consolidated Financial Statements5
ITEM 2.Management's Discussion and Analysis of Financial Condition and Results of Operations10
ITEM 3.Quantitative and Qualitative Disclosures About Market Risk18
ITEM 4.Controls and Procedures18
   
PART II - OTHER INFORMATION 
   
ITEM 1.Legal Proceedings19
ITEM 1A.Risk Factors19
ITEM 2.Unregistered Sales of Equity Securities and Use of Proceeds19
ITEM 3.Defaults Upon Senior Securities19
ITEM 4.Mine Safety Disclosures19
ITEM 5.Other Information19
ITEM 6.Exhibits19
 Signatures20
   

PART I - FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DESTINY MEDIA TECHNOLOGIES, INC.

Condensed Consolidated Balance Sheets

    Notes     May 31,
2023
    August 31,
2022
 
ASSETS                  
Cash and cash equivalents   3   $ 1,825,172   $ 2,095,928  
Accounts receivable, net of allowance for doubtful accounts of $41,166 (August 31, 2022 - $39,518)         561,424     483,774  
Other receivables         51,042     29,600  
Prepaid expenses         47,073     83,242  
Deposits         32,083     33,305  
Total current assets         2,516,794     2,725,849  
                   
Property and equipment, net   4     206,427     311,792  
Intangible assets, net   5     1,199,648     529,717  
Total assets       $ 3,922,869   $ 3,567,358  
                   
LIABILITIES AND STOCKHOLDERS' EQUITY                  
Current                  
Accounts payable       $ 108,779   $ 116,290  
Accrued liabilities         300,116     319,738  
Deferred revenue         40,758     21,043  
Total current liabilities         449,653     457,071  
Total liabilities         449,653     457,071  
                   
Contingencies (Note 7)         -     -  
                   
Stockholders' equity                  
Common stock, par value $0.001, authorized 20,000,000 shares.
Issued and outstanding - 10,116,576 shares
(August 31, 2022 - 10,122,261 shares)
  6     10,122     10,122  
Additional paid-in capital   6     9,224,712     9,115,848  
Accumulated deficit         (5,275,423 )   (5,639,465 )
Accumulated other comprehensive loss         (486,195 )   (376,218 )
Total stockholders' equity         3,473,216     3,110,287  
Total liabilities and stockholders' equity       $ 3,922,869   $ 3,567,358  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

1

DESTINY MEDIA TECHNOLOGIES, INC.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

      Three Months Ended
May 31,
    Nine Months Ended
May 31,
 
  Notes   2023     2022     2023     2022  
                           
Service revenue 8 $ 1,068,007   $ 999,282   $ 2,987,786   $ 3,029,853  
                           
Cost of revenue                          
Hosting costs     30,555     50,604     84,040     138,399  
Internal engineering support     12,707     21,497     38,160     43,709  
Customer support     72,001     121,816     216,237     247,685  
Third-party and transactions costs     18,490     15,688     51,357     48,686  
      133,753     209,605     389,794     478,479  
                           
Gross margin     934,254     789,677     2,597,992     2,551,374  
                           
Operating expenses                          
General and administrative 6(b)   314,387     318,995     652,793     800,173  
Sales and marketing 6(b)   237,834     113,172     670,360     772,163  
Product development 6(b)   247,392     326,125     823,722     944,941  
Depreciation and amortization 4,5   37,182     36,313     109,513     90,059  
      836,795     794,605     2,256,388     2,607,336  
                           
Income (loss) from operations     97,459     (4,928 )   341,604     (55,962 )
                           
Other income                          
Interest and other income     9,593     1,686     26,038     4,693  
Gain on disposal of assets     -     -     -     11,018  
Net income (loss) before income tax     107,052     (3,242 )   367,642     (40,251 )
                           
Current income tax expense     -     -     (3,600 )   -  
Net income (loss)     107,052     (3,242 )   364,042     (40,251 )
                           
Foreign currency translation adjustments     1,429     28,168     (109,977 )   (8,639 )
                           
Total comprehensive income (loss)     108,481     24,926     254,065     (48,890 )
                           
Net income (loss) per common share     0.01     (0.00 )   0.04     (0.00 )
Basic and Diluted                          

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2


DESTINY MEDIA TECHNOLOGIES, INC.

Condensed Consolidated Statements of Stockholders' Equity

For the Three and Nine Months Ended May 31, 2023 and 2022

(Unaudited)

      Common stock                          
  Note   Shares     Amount     Additional
Paid-in
Capital
    Deficit     Accumulated
Other
Comprehensive
Income (Loss)
    Total
Stockholders'
Equity
 
Balance, February 28, 2022     10,122,261   $ 10,122   $ 9,064,465   $ (5,825,548 ) $ (297,940 ) $ 2,951,099  
Total comprehensive income (loss)     -     -     -     (3,242 )   28,168     24,926  
Stock-based compensation     -     -     75,163     -     -     75,163  
Stock options repurchased and retired     -     -     (2,499 )   -     -     (2,499 )
Balance, May 31, 2022     10,122,261   $ 10,122   $ 9,137,129   $ (5,828,790 ) $ (269,772 ) $ 3,048,689  
                                       
Balance, February 28, 2023     10,122,261   $ 10,122   $ 9,191,090   $ (5,382,475 ) $ (487,624 ) $ 3,331,113  
Total comprehensive income     -     -     -     107,052     1,429     108,481  
Stock-based compensation 6(b)   -     -     38,085     -     -     38,085  
Common shares held for retirement 6(a)   (5,685 )   -     (4,463 )   -     -     (4,463 )
Balance, May 31, 2023     10,116,576   $ 10,122   $ 9,224,712   $ (5,275,423 ) $ (486,195 ) $ 3,473,216  
 
      Common stock                          
  Note   Shares     Amount     Additional
Paid-in
Capital
    Deficit     Accumulated
Other
Comprehensive
Income (Loss)
    Total
Stockholders'
Equity
(Deficiency)
 
Balance, August 31, 2021     10,265,361   $ 10,266   $ 9,157,804   $ (5,788,539 ) $ (261,133 ) $ 3,118,398  
Total comprehensive income (loss)     -     -     -     (40,251 )   (8,639 )   (48,890 )
Stock-based compensation 6(b)   -     -     169,857     -     -     169,857  
Stock options repurchased and retired     -     -     (11,275 )   -     -     (11,275 )
Common shares retired 6(a)   (143,100 )   (144 )   (179,257 )   -     -     (179,401 )
Balance, May 31, 2022     10,122,261   $ 10,122   $ 9,137,129   $ (5,828,790 ) $ (269,772 ) $ 3,048,689  
                                       
Balance, August 31, 2022     10,122,261   $ 10,122   $ 9,115,848   $ (5,639,465 ) $ (376,218 ) $ 3,110,287  
Total comprehensive loss     -     -     -     364,042     (109,977 )   254,065  
Stock-based compensation 6(b)   -     -     113,327     -     -     113,327  
Common shares held for retirement 6(a)   (5,685 )   -     (4,463 )   -     -     (4,463 )
Balance, May 31, 2023     10,116,576   $ 10,122   $ 9,224,712   $ (5,275,423 ) $ (486,195 ) $ 3,473,216  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3


DESTINY MEDIA TECHNOLOGIES, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

      Nine Months Ended May 31,  
  Notes   2023     2022  
               
Operating Activities              
Net income (loss)   $ 364,042   $ (40,251 )
Adjustments to reconcile net loss to net cash used in operations:              
Depreciation and amortization 4   109,513     90,059  
Stock-based compensation 6(b)   113,327     169,857  
Allowance for doubtful accounts     (3,119 )   18,772  
Gain on disposal of assets 4,5   -     (11,018 )
Unrealized foreign exchange loss     -     29,607  
Changes in non-cash working capital:              
Accounts receivable     (95,790 )   (457,136 )
Other receivables     (22,283 )   29,680  
Prepaid expenses and deposits     34,795     38,382  
Accounts payable     16,787     (59,699 )
Accrued liabilities     (30,082 )   (33,315 )
Deferred revenue     20,626     17,045  
Operating lease liability     -     (9,498 )
Net cash provided by (used in) operating activities     507,816     (217,515 )
               
Investing Activities              
Development of software 5   (689,691 )   (88,099 )
Purchase of property, equipment, and intangibles 4,5   (19,254 )   (294,916 )
Net cash used in investing activities     (708,945 )   (383,015 )
               
Financing Activities              
Repurchase of common stock for cancellation 6(a)   (4,463 )   (179,401 )
Repurchase of stock options for retirement     -     (11,275 )
Net cash used in financing activities     (4,463 )   (190,676 )
               
Effect of foreign exchange rate changes on cash     (65,164 )   (8,002 )
               
Net decrease in cash and cash equivalents     (270,756 )   (799,208 )
Cash and cash equivalents, beginning of period     2,095,928     2,752,662  
Cash and cash equivalents, end of period     1,825,172     1,953,454  
Supplementary disclosure:              
Interest paid   $ -   $ -  
Income taxes paid   $ (3,600 ) $ -  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4


DESTINY MEDIA TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. ORGANIZATION

Destiny Media Technologies Inc. (the "Company") 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. The Company develops technologies that allow for the distribution over the internet of digital media files in either a streaming or digital download format. The technologies are proprietary. The Company operates out of Vancouver, BC, Canada and serves customers predominantly located in the United States, Europe and Australia.

The Company's stock is listed for trading under the symbol "DSNY" on the OTCQB U.S. in the United States, under the symbol "DSY" on the TSX Venture Exchange (the "TSX") and under the symbol "DME" on the Berlin, Frankfurt, Xetra and Stuttgart exchanges in Germany.

2. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements include the consolidated accounts of the Company and its wholly owned subsidiaries: Destiny Software Productions, Inc. ("DSNY"), MPE Distributions, Inc. ("MPE"), Tonality, Inc. ("Tonality"), and Sonox Digital Inc. ("Sonox"). All intercompany transactions have been eliminated on consolidation. All figures are in United States dollars unless otherwise stated.

The accompanying unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared in conformity with generally accepted accounting principles in the U.S. ("U.S. GAAP"). The unaudited condensed consolidated financial statements presented in this Quarterly Report should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company's Annual Report on Form 10-K filed with the SEC on November 14, 2022 (the "2022 Form 10-K"). The balance sheet as of August 31, 2022 was derived from audited consolidated financial statements included in the 2022 Form 10-K but does not include all disclosures required by U.S. GAAP for complete financial statements. The Company's significant accounting policies are described in Note 2 to those consolidated financial statements.

Interim results may not be indicative of the results that may be expected for the full year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted from these interim financial statements. The unaudited condensed consolidated financial statements reflect all adjustments which in the opinion of management are necessary for a fair statement of results of operations, financial condition, cash flows and stockholders' equity for the periods presented. Except as otherwise disclosed, all such adjustments are of a normal recurring nature.

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements in accordance with U.S. GAAP requires management to make use of certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reported periods. The Company bases its estimates on historical experience and on various other assumptions that management believes are reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. Significant estimates are related to the recoverability of long-term assets including intangible assets, amortization expense, and valuation of stock-based compensation.

5


3. CASH AND CASH EQUIVALENTS

The Company's cash includes cash in readily available checking accounts. The Company's cash equivalents are in a highly liquid cashable instrument with a major Canadian financial institution paying variable interest rates around 4.30%.

4. PROPERTY AND EQUIPMENT, NET

 

    May 31, 2023  
Property and Equipment   Cost     Accumulated
Amortization
    Net Book Value  
Furniture and fixtures $ 131,364   $ (119,828 ) $ 11,536  
Computer hardware   315,507     (263,728 )   51,779  
Computer software   649,708     (506,596 )   143,112  
Total property and equipment $ 1,096,579   $ (890,152 ) $ 206,427  
 
    August 31, 2022  
Property and Equipment   Cost     Accumulated
Amortization
    Net Book Value  
Furniture and fixtures $ 136,369   $ (122,279 ) $ 14,090  
Computer hardware   320,260     (259,339 )   60,921  
Computer software   673,691     (436,910 )   236,781  
Total property and equipment $ 1,130,320   $ (818,528 ) $ 311,792  

 

Depreciation and amortization for the three and nine months ended May 31, 2023 was $34,315 and $102,401, respectively (three and nine months ended May 31, 2022 - $32,851 and $66,190, respectively).

 

5. INTANGIBLE ASSETS, NET

    May 31, 2023  
Intangible Assets   Cost     Accumulated
Amortization
    Net Book Value  
Software under development $ 1,182,477   $ -   $ 1,182,477  
Patents, trademarks, and lists   458,698     (441,527 )   17,171  
Total intangible assets $ 1,641,175   $ (441,527 ) $ 1,199,648  
                   
                   
    August 31, 2022  
Intangible Assets   Cost     Accumulated
Amortization
    Net Book Value  
Software under development $ 516,397   $ -   $ 516,397  
Patents, trademarks, and lists   464,285     (450,965 )   13,320  
Total intangible assets $ 980,682   $ (450,965 ) $ 529,717  

Depreciation and amortization for the three and nine months ended May 31, 2023 was $2,867 and $7,112, respectively (three and nine months ended May 31, 2022 - $3,462 and $23,869, respectively).

6


6. STOCKHOLDERS' EQUITY

[a] Common stock issued and authorized

On May 1, 2023, the Company commenced a Normal Course Issuer Bid ("NCIB"), pursuant to which the Company may purchase up to a maximum of 599,092 common shares, through the TSX Venture Exchange at the market price at the time of purchase, subject to daily limits and compliance with the applicable rules of the TSX and Canadian securities laws. During the nine-month period ended May 31, 2022, the Company did not issue any common stock. During the nine-month period ended May 31, 2023, the Company repurchased and cancelled 5,685 common shares for $4,463.

Pursuant to the Company's 2015 Stock Option Plan (the "2015 Plan"), 530,000 shares of common stock have been reserved for issuance. A total of 41,250 options to be granted remain eligible for issuance under the 2015 Plan. On February 18, 2022 the Company received shareholder approval for the 2022 Stock Option Plan (the "2022 Plan") (together with the 2015 Plan, the "Plans"), whereby 1,000,000 common shares are reserved for issuance. As at May 31, 2023, 549,000 options to be granted remain eligible for issuance under the 2022 Plan.

The options generally vest over a range of periods from the date of grant, some are immediate, and others vest over 12 or 24 months. Any options that do not vest as the result of a grantee leaving the Company are forfeited and the underlying options are returned to the reserve. The options generally have a contractual term of five years.

Stock-Based Payment Award Activity

A summary of stock option activity under the Plans as of May 31, 2023, and changes during the period were the following:

    Number of
Options
    Weighted Average
Exercise Price
    Weighted Average
Contractual Term
    Aggregate Intrinsic
Value
 
Outstanding at August 31, 2021   410,000   $ 1.34     2.26   $ -  
Granted   561,000   $ 1.50     5.00   $ -  
Forfeited   (91,583 ) $ 1.38     3.85   $ -  
Repurchased   (82,500 ) $ 1.00     2.25        
Expired   (203,917 ) $ 1.46     0.50   $ -  
Outstanding as at August 31, 2022   593,000   $ 1.49     3.79   $ -  
Forfeited   (19,806 ) $ 1.50     3.68   $ -  
Expired   (17,194 ) $ 1.50     3.68   $ -  
Outstanding at May 31, 2023   563,000   $ 1.49     3.15   $ -  
Exercisable at May 31, 2023   441,208   $ 1.49     3.16   $ -  

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company's common stock for the options that were in-the-money as of May 31, 2023.

As of May 31, 2023, there was $72,153 of total unrecognized compensation cost related to non-vested stock-based compensation awards. The unrecognized compensation cost is expected to be recognized over a weighted average period of 1.5 years.

[b] Stock option plans

During the three and nine months ended May 31, 2023, the total stock-based compensation expense is reported in the condensed consolidated statement of comprehensive income (loss) as follows:

    Three Months Ended May 31,     Nine Months Ended May 31,  
Stock-based compensation   2023     2022     2023     2022  
General and administrative $ 19,177   $ 53,916   $ 57,503   $ 82,324  
Sales and marketing   7,587     1,151     21,860     39,029  
Product development   11,321     20,096     33,964     48,504  
Total stock-based compensation $ 38,085   $ 75,163   $ 113,327   $ 169,857  

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6. STOCKHOLDERS' EQUITY (cont'd)

[c] Employee Stock Purchase Plan

The Company's 2011 Employee Stock Purchase Plan (the "ESPP") became effective on February 22, 2011. Under the ESPP, employees of the Company can contribute up to 5% of their annual salary into a pool which is matched equally by the Company in order to purchase the Company's common shares under certain terms. Directors can contribute a maximum of $12,500 each for a combined maximum annual purchase of $25,000. The maximum annual combined contributions will be $400,000. All purchases are made through the TSX Venture Exchange by a third-party plan agent. The third-party plan agent is also responsible for the administration of the ESPP on behalf of the Company and the participants.

During the three and nine months period ended May 31, 2023, the Company recognized compensation expense of $112,046 and $182,216 respectfully (May 31, 2022 - $18,429 and $95,956) in salaries and wages on the condensed consolidated statement of comprehensive income (loss) in respect of the ESPP, representing the Company's employee matching of cash contributions to the ESPP. The shares were purchased on the open market at an average price of $1.09 (May 31, 2022 - $1.25). The shares are held in trust by the Company for a period of one year from the date of purchase.

[d] Earnings Per Share

Net income (loss) per common share (basic) is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Net income (loss) per common share (diluted) is calculated by dividing net income (loss) for the period by the weighted average number of common shares outstanding during the period, plus the dilutive effect of outstanding common share equivalents. This method requires that the dilutive effect of outstanding options and warrants issued be calculated using the treasury stock method. Under the treasury stock method, all common share equivalents have been exercised at the beginning of the period (or at the time of issuance, if later), and that the funds obtained thereby were used to purchase common shares of the Company at the average trading price of common shares during the period, but only if dilutive. For the three and nine months ended May 31, 2023 the outstanding options, in the amount of 549,000, were anti-dilutive and have been excluded from the calculation of diluted income (loss) per share.

7. CONTINGENCIES

The Company is subject to claims and legal proceedings that arise in the ordinary course of business. Such matters are inherently uncertain, and there can be no guarantee that the outcome of any such matter will be decided favorably to the Company or that the resolution of any such matter will not have a material adverse effect upon the Company's financial statements. The Company does not believe that any of such pending claims and legal proceedings will have a material adverse effect on its consolidated financial statements.

On September 5, 2017, the Company's former President and Chief Executive Officer filed a Notice of Civil Claim in the Supreme Court of British Columbia against the Company, its subsidiaries, independent directors and current Chief Executive Officer, claiming damages for conspiracy, breach of contract, wrongful dismissal, defamation and aggravated and punitive damages. The Company believes the claims are without merit and is defending itself against the claims. The quantum of loss, if any, is not determinable at this time and management believes it is unlikely that the outcome of this matter will have an adverse impact on its results of operations, cash flows and financial condition.

8


8. CONCENTRATIONS AND ECONOMIC DEPENDENCE

The Company operates solely in the digital media software segment and all revenue from its products and services are made in this segment.

Revenue from external customers earned during the three and nine months ended May 31, 2023 and 2022, by product and location of customer, was as follows:

    Three Months Ended May 31,     Nine Months Ended May 31,  
    2023     2022     2023     2022  
Play MPE®                        
North America $ 534,667   $ 498,465   $ 1,476,444   $ 1,460,020  
Europe   477,912     461,703     1,367,190     1,414,265  
Australasia   49,553     31,781     123,402     133,476  
Africa   5,875     6,563     20,750     19,642  
Total Play MPE®   1,068,007     998,512     2,987,786     3,027,403  
                         
Clipstream®                        
North America   -     770     -     2,450  
Total $ 1,068,007   $ 999,282   $ 2,987,786   $ 3,029,853  

Revenue in the above table is based on location of the customer's billing address. Some of these customers have distribution centers located around the globe and distribute around the world. During the nine months ended May 31, 2023, the Company generated 42% of total revenue from one customer (May 31, 2022 - 41%).

It is in management's opinion that the Company is not exposed to significant credit risk.

As at May 31, 2023, one customer represented $185,858 (or 33%) of the trade receivables balance (August 31, 2022, one customer represented $283,144 (or 59%)).

The Company has substantially all its assets in Canada and its current and planned future operations are, and will be, located in Canada.

9. SUBSEQUENT EVENTS

On June 15, 2023, the Company successfully resolved the first of two outstanding wrongful dismissal claims from 2017, both which pertained to the same case. In a ruling in the Supreme Court of British Columbia, the Court found the Company had just cause to dismiss the plaintiff. The Company was awarded costs as a result. The cost award is not currently accrued in these financial statements because the cost has not been determined and the collection is uncertain.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD LOOKING STATEMENTS

This report on Form 10-Q contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 under Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties, and other factors, which may be beyond our control, and which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. You can identify these forward-looking statements through our use of words such as "may," "can," "anticipate," "assume," "should," "indicate," "would," "believe," "contemplate," "expect," "seek," "estimate," "continue," "plan," "point to," "project," "predict," "could," "intend," "target," "potential" and other similar words and expressions of the future.

There are a number of important factors that could cause the actual results to differ materially from those expressed in any forward-looking statement made by us. These factors include, but are not limited to:

These forward-looking statements reflect our management's beliefs and views with respect to future events and are based on estimates and assumptions as of the date of this Annual Report on Form 10-K and are subject to risks and uncertainties. We discuss many of these risks in greater detail under "Risk Factors." Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

You should read this Annual Report on Form 10-K and the documents that we reference and have filed as exhibits to the Annual Report on Form 10-K completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of the forward-looking statements in this Annual Report on Form 10-K by these cautionary statements. Except as required by law, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

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.

OVERVIEW AND CORPORATE BACKGROUND

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.

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Our principal executive office is located at Suite 428, 1575 West Georgia Street, Vancouver, British Columbia V6G 2T1. Our telephone number is (604) 609-7736 and our facsimile number is (604) 609-0611.

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 DME, WKN 935 410.

Our corporate website is located at http://www.dsny.com.

OUR PRODUCTS AND SERVICES

Destiny develops and markets software as a service (SaaS) solutions that solve critical digital distribution and promotion problems for businesses in the music industry.

Play MPE®

Currently, the Company's core business is the Play MPE® online platform. Play MPE® distributes promotional content (broadcast quality audio, video, images, promotional information and other digital content) from music labels and artists to broadcasting professionals, music curators and music reviewers to discover, download, broadcast and review the content. Curators include radio programmers, digital streaming broadcasters, media reviewers, VIP's, DJ's, film and TV personnel, sports stadiums, retailers etc. In providing the distribution, Play MPE® provides several capabilities developed and designed to address the unique needs of music promoters. Play MPE® was first to market, and is the largest provider of this service and provides the most feature rich platform in the world.

Record labels and artists are Play MPE®'s customers. When adding music to the Play MPE® system, clients are targeting specific industry recipients who review and broadcast their music. Play MPE®'s primary value proposition in this marketing effort is a direct increase to record label and artist revenue through on-air broadcast royalties, streaming royalties and synchronization revenue (revenue when the reproduction of a song is coordinated with video advertisements, television, or film), and indirect increases in revenue through growing song and artists' popularity.

Also, Play MPE® provides numerous capabilities that dramatically reduce record label costs and provide controls necessary for certain strategic marketing plans and controls to secure record label content. In doing so, Play MPE® satisfies a broad range of stakeholders representing diverse interests at record labels. Music is protected by Play MPE®'s patented proprietary watermarking system which provides watermarks unique to each recipient.

Described more fully below, features within Play MPE® are grouped into four main categories: local distribution software, global distribution architecture, targeted recipient list curation and recipient players.

Customers range from small independent artists to the world's largest record labels (the "Major Record Labels"). The Major Record Labels are Universal Music Group ("Universal"), Warner Music Group ("Warner") and Sony Music Entertainment ("Sony"). These record labels directly own numerous sub-labels that include Capitol Music Group, Def Jam Recordings, Interscope Records, Island Records, Republic Records, Polydor, Deutsche Grammophon, Motown, Verve Label Group, Virgin Music Label and Artists Services, EMI, RCA Records, Epic Records, Columbia Records, Arista Records, Legacy Recordings, Provident Entertainment, Warner Records, Warner Bros, Atlantic Records Group, 300 Elektra Entertainment, to name only a few. Play MPE® welcomes all of these labels into its customer base.

Customers choose Play MPE® for its powerful set of tools, ease of use and its effectiveness in achieving the record label's promotional objectives.

Play MPE® CASTER (local distribution software)

Play MPE®'s Caster software includes local distribution functions that provide capabilities for a client to create and schedule release announcements and select its targeted audience. Play MPE® is designed uniquely to suit music marketing plans and significant components include:

11


Intuitive designs and functionality across all areas of this portion of the platform simplify the distribution process, reduce customer time required to distribute, and facilitate the inclusion of information to improve engagement which ultimately increases record label and artist revenue.

Caster is currently available in English, Spanish, German, Japanese and French.

When competing with an established service within a local market, it is these features balanced against changing consumer behaviors that determine Play MPE®'s ability to increase and acquire market share. Competing services offer the basic distribution requirements inherent in the service but do so while missing many features that provide efficient delivery, engaged recipients and accurate and complete distribution lists.

Caster consistently receives high reviews on the platform's ease of use and capabilities and on its ultimate effectiveness. Public reviews can be found at https://www.plaympe.com/testimonials/ 

Play MPE® CASTER (global architecture)

Play MPE®'s global distribution architecture was developed in close collaboration with Universal to address the needs of its global approach to release distribution. This architecture provides functionality required for Universal to conduct their unique approach to music distribution and provides numerous significant competitive advantages for Universal. These features improve marketing coordination and revenue generation while reducing overall label costs.

Significant components include:

12


Collectively, functions in global release management provide numerous competitive advantages that reduce overall costs, and improve marketing collaboration while increasing record label revenue and cash flow. We are unaware of any other service that provides these global distribution functions.

Play MPE® CASTER (targeted list management services)

Recipient lists are bundles of active and engaged recipients with an interest in specific music types. Lists are sold as a fixed price per list (or list bundle). As recipient lists are adjusted in real time, changes in gross recipient numbers or active recipients does not directly or immediately impact revenue.

Fundamental to our customers' success in music marketing is reaching music curators capable of, and actively engaged in, remarketing the promoted content to a wider consumer audience. To limit unwanted access to new music and to increase recipient engagement, targeted and limited distribution is a vital component in music promotion. Thus, Play MPE® is a permissions-only access system and only recipients designated or targeted to receive content obtain access to that content. Current and correct identification of engaged recipients is therefore critical to our customers' success. While targeted distribution limits access to new content, this aspect also improves recipient side engagement by eliminating unwanted content.

Play MPE® actively manages curated and targeted distribution lists. List creation and list maintenance involve several proprietary processes that are designed to create complete, active, accurate, and targeted lists to facilitate efficient marketing campaigns. Play MPE® provides more than 300 unique targeted lists comprising of more than 17,000 unique and active recipients in over 30 countries. To facilitate targeted music marketing campaigns, these lists are grouped by territory (typically by country), by genre of music, and by recipient type (see recipient player discussion). Relying on proprietary technical innovations and processes, these recipient lists are updated in real time. With an annual churn averaging between 27-34%, these recipient lists would quickly become inaccurate absent Play MPE®'s active curation. Play MPE® regularly monitors activity levels and recipients through proprietary analytics. Play MPE® provides the widest and most accurate distribution channels available in the industry.

For smaller record labels and independent artists, the provision of a list of destinations is a requirement for sale as these customers do not know who to contact. For larger record labels, promotions staff can upload their own contact lists. However, proprietary processes ensure Play MPE® lists are more accurate, complete and engaged. The majority of releases distributed through Play MPE®, include a targeted distribution list, curated by Play MPE®.

Play MPE® Player

Music curators review and download content through a web-based player and mobile player apps (iOS and Android). Web players are currently available in 15 different languages: English, Spanish, Swedish, Finnish, Italian, Dutch, Portuguese, French, Japanese, German, Norwegian, Latvian, Lithuanian, Estonian, and Danish.

Recipients on the Play MPE® platform have a wide variety of personas and include programming directors for internet streaming, satellite or terrestrial radio, retail store curators, sports stadium DJs, clubs, events, music reviews in newspapers or magazines, on-air personalities, music supervisors who program TV, movies, commercials or video games, or "A&R" representatives at larger record labels. Each recipient within the Play MPE® platform has a unique library of music catered to, and appropriate for, that recipient.

Recipients enjoy many features that make it easy to access, collaborate, review, and search for content. Play MPE®'s mobile apps offer off-line listening capabilities, the ability to utilize Google Chromecast and Apple Airplay streaming capabilities, creation of playlists, sorting, flagging and archiving features, and easier access to release metadata. Recipient side satisfaction directly increases activity which directly improves the effectiveness of promotional efforts of record label customers.

13


RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED MAY 31, 2023 AND 2022

Revenue

Total revenue for the nine months ended May 31, 2023 was $2,987,786 compared to the revenue of $3,029,853 for the nine months ended May 31, 2022. After adjusting for unfavorable foreign exchange rates, the Company's revenue for the nine month period grew by 1.6%.

Early in the year, the Company's revenue was adversely impacted by unfavorable foreign exchange rates and by adverse economic circumstances that led to a decline in independent record label revenue. The Company's third quarter showed a steady recovery in independent record label revenue and a small positive impact from foreign exchange. In the third quarter, independent label revenue grew by 13.5% while total revenue grew by 6.9%. The growth in independent label revenue is seen in North America, Australia and Europe and is derived from both increasing prices and increasing volume. Included in growing volume is increasing sales from the expansion of international distribution list options.

Gross Margin

Gross margin for the nine months ended May 31, 2023 was 87.0% of revenue, which represents an increase of 2.8% from the nine months ended May 31, 2022. 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 period ended May 31, 2023, our gross margin increased over the comparative period predominately due to a decrease in costs associated with the hosting services and a decrease of staffing in technical and customer support departments.

Operating Expenses

Our technologies and products are developed and maintained in-house, the majority of our expenditures are contributed towards salaries, wages and benefits. Our operations are primarily conducted in Canada and therefore, our costs are primarily incurred in Canadian dollars while our revenues are primarily denominated in Euros and US dollars. Operating expenses, therefore, are impacted by the relative values of the Canadian dollar and US dollar. The Company maintains a large portion of its financial reserves in Canadian dollars to mitigate the downside risk of adverse exchange rates on its operating expenditures.

Operating costs during the nine months ended May 31, 2023 decreased by 13.5% to $2,256,388 (My 31, 2022 - $2,607,336). The decrease in costs was primarily the result of the following two main factors:

The decrease in overall operating costs was somewhat offset by increased professional fees due to litigation proceedings during the nine months ended May 31, 2023.

14


  Nine Months Ended May 31,       
General and administrative expenses 2023  2022  $ Change  % Change 
Wages and benefits$300,001 $423,266  (123,265) (29.1)% 
Professional fees 255,913  98,290  157,623  160.4% 
Office and miscellaneous 69,047  83,674  (14,627) (17.5%) 
Shareholder relations 60,611  52,940  7,671  14.5% 
Rent 39,931  39,187  744  1.9% 
Foreign exchange (gain) loss (113,600) 34,779  (148,379) (426.6%) 
Telecommunications 9,174  26,109  (16,935) (64.9)
Bad debt 3,119  18,772  (15,653) (83.4%) 
Other 28,597  23,156  5,441  23.5% 
Total general and administrative expenses$652,793 $800,173  (147,380) 18.4% 

Our general and administrative expenses consist of salaries and related personnel costs including overhead, office rent, professional fees, shareholder relations, and general office expenses. The increase in professional fees is due to approximately $175,000 of non-recurring charges associated with litigation proceedings. On June 15, 2023, subsequent to the quarter, the Company successfully resolved the first of two outstanding claims against the Company when it received a favorable ruling in the Supreme Court of British Columbia. As a result the Company was awarded costs. The Company has not accrued this cost recovery. The decline in wages and benefits for the period is the result of timing on director compensation, a reduction in stock-based compensation, a decrease in onetime recruitment fees and favorable exchange rates as the US dollar rose relative to the Canadian dollar.

  Nine Months Ended May 31,       
Sales and marketing expenses 2023  2022  $ Change  % Change  
Wages and benefits$557,451 $644,358  (86,907) (13.5%) 
Advertising and marketing 73,834  89,338  (15,504) (17.4%) 
Rent 33,153  36,064  (2,911) (8.1%) 
Telecommunications 5,922  2,403  3,519  146.4% 
Total sales and marketing expenses$670,360 $772,163  (101,803) (13.2%) 

Sales and marketing expenses consist of salaries and related personnel costs including overhead, office rent, and telecommunications costs. Sales and marketing expenses also include advertising and marketing expenditures, which consist of promotional materials, online or print advertising, business development tools, and marketing or business development related travel costs, including attendance at conference or trade shows, and record label and client visits. The reduction in wages and benefits is primarily attributed to favorable exchange rates in the period ended May 31, 2023 as the US dollar rose relative to the Canadian dollar. The decrease in advertising and marketing is primarily due to reduced paid social advertising spend over the first nine months of the year, as well as a higher spend in the first nine months of 2022 to update and create new marketing materials. Decreased rental costs are caused by a decrease in the overall allocation to sales and marketing costs.  Total rent for the Company was comparable in the prior year.

  Nine Months Ended May 31,       
Product development expenses 2023  2022  $ Change  % Change  
Wages and benefits$600,434 $775,142  (174,708) (22.5%) 
Software services 67,163  54,829  12,334  22.5% 
Rent 66,062  73,159  (7,097) (9.7%) 
Telecommunications 90,063  41,813  48,250  115.4% 
Product development expenses$823,722 $944,943  (121,221) (12.8%) 

Product development costs consist primarily of salaries and related personnel costs including overhead and consulting fees with respect to product development and deployment. During the period nine month ended May 31, 2023, while the Company added staff to work on new products and enhancements to the Play MPE® platform, the Company capitalized more production costs of $689,691 (May 31, 2022 - $331,601) which resulted in a reduction of overall wages and benefits. Favorable foreign exchange rates in the period ended May 31, 2023 further decreased wages and benefits.

15


Depreciation and Amortization

Depreciation and amortization expense increased to $109,513 for the nine months ended May 31, 2023 from $90,059 for the nine months ended May 31, 2022, an increase of 21.6% due to depreciation of additionally capitalized software development costs associated with Play MPE® recipient player applications during the period.

Other Income

Interest income earned on the Company's checking accounts was $26,038 for the nine months ended May 31, 2023 (May 31, 2022 - $4,693).

Net Income (Loss)

During the three and nine months ended May 31, 2023 we had net income of $107,052 and $367,642, respectively (May 31, 2022 - net loss of $3,242 and $40,251, respectively).

For the three months ended May 31, 2023, adjusted EBITDA was $172,726 (May 31, 2022 - $106,548). 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.

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 over the eight most recently completed fiscal quarters:

  Q3 2023  Q2 2023  Q1 2023  Q4 2022  Q3 2022  Q2 2022  Q1 2022  Q4 2021 
Net Income (Loss)$107,052 $(1,276)$258,266 $194,673 $(3,242)$(202,610)$165,601 $91,699 
Stock-based compensation 38,085  38,085  37,157  (21,281) 75,163  68,789  25,905  12,620 
Depreciation, amortization, and deferred leasehold inducements 37,182  35,952  36,379  52,603  36,313  26,574  27,172  27,696 
Interest income (9,593) (8,777) (7,668) (4,460) (1,686) (1,964) (1,043) (869)
Adjusted EBITDA$172,726 $63,984 $324,134 $221,535 $106,548 $(109,211)$217,635 $131,146 

LIQUIDITY AND FINANCIAL CONDITION

As at May 31, 2023, we held $1,825,172 (August 31, 2022 - $2,095,928) in cash and cash equivalents.

At May 31, 2023, we had working capital of $2,067,141 compared to $2,268,778 as at August 31, 2022.

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Cash Flows


The following table sets forth a summary of the net cash flow activity for each of the periods indicated:

  Nine Months Ended May 31,       
Net cash and cash equivalents provided by (used in) 2023  2022  $ Change  % Change 
Operating activities$507,816 $(217,515) 725,331  (333.5%) 
Investing activities (708,945) (383,015) (325,930) 85.1% 
Financing activities (4,463) (190,676) 186,213  (97.7%) 
Effect of foreign exchange rate changes on cash (65,164) (8,002) (57,162) 714.3% 
Net increase (decrease) in cash and cash equivalents$(270,756)$(799,208) 528,452  (66.1%) 

Operating Activities

Net cash provided by operating activities during the nine months period ended May 31, 2023 was $507,816 (May 31, 2022 - cash used was $217,515). The primary reason for the increase in cash flows from operating activities is related to the timing of receipts from our customers.

Investing Activities

Net cash used in investing activities for the nine months ended May 31, 2023 was $708,945, (May 31, 2022 - cash used was $383,015). During the nine month period ended May 31, 2023, the contributions made towards investing activities were cash spent on new capital assets and internally developed computer software.

Financing Activities

Net cash used in financing activities during the nine months period ended May 31, 2023 was $4,463 (May 31, 2022 - $190,676), related to cash used on common shares held for retirement (May 31, 2022 - 143,100 shares of common stock were repurchased and retired) of the Company under the NCIB and to repurchase stock options.

CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT JUDGEMENTS AND ESTIMATES

Our management's discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States, or GAAP. The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses and the disclosure of contingent assets and liabilities in our financial statements and accompanying notes. We evaluate these estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

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 Estimates" and "Financial Statements and Supplementary Data - Note 2, Summary of Significant Accounting Policies" contained in our 2021 Form 10-K. There have not been any material changes to the critical accounting policies discussed therein during the nine months ended May 31, 2023.

OFF-BALANCE SHEET ARRANGEMENTS

As of May 31, 2023, the Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

 

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Exchange Risk

Our revenues are generated primarily in United States dollars and Euros while our operating expenses are primarily in Canadian dollars. Thus, operating expenses and the results of operations are impacted to the extent they are not hedged by the rise and fall of the relative values of Canadian dollar to these currencies. During the three and nine months ended May 31, 2023, as a result of fluctuations in the Euro, British Pound, and the Australian, Canadian, and US dollars, the Company recognized an unfavourable impact on reported revenues and a favorable impact on reported operating expenditures, for an overall marginal negative impact on reported net income.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Disclosure controls and procedures and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time period specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

In connection with this quarterly report, as required by Rule 13a-15 under the Securities Exchange Act of 1934, we have carried out an evaluation of the effectiveness of the design and operation of our Company's disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of our Company's management, including our company's Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Company's Chief Executive Officer and Chief Financial Officer concluded that as of May 31, 2023, our disclosure controls and procedures were effective as at the end of the period covered by this report.

Changes in Internal Control over Financial Reporting

There were no changes that would impact our internal controls for the period from September 1, 2022 to May 31, 2023.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

On September 5, 2017, the Company's former President and Chief Executive Officer filed a Notice of Civil Claim in the Supreme Court of British Columbia against the Company, its subsidiaries, independent directors and current Chief Executive Officer, claiming damages for conspiracy, breach of contract, wrongful dismissal, defamation and aggravated and punitive damages. The Company believes the claims are without merit and will defend itself against the claims.

ITEM 1A. RISK FACTORS.

In addition to the other information set forth in this Form 10-Q, you should carefully consider the factors discussed in "Item 1 - Risk Factors" in our Form 10-K for the fiscal year ended August 31, 2022 filed with the SEC. These risks could materially and adversely affect our business, financial condition and results of operations. The risks described in our Form 10-K have not changed materially, however, they are not the only risks we face. Our operations could also be affected by additional factors that are not presently known to us or by factors that we currently consider immaterial to our business.

COVID-19 Pandemic

In March 2020 the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, potentially leading to an economic downturn. It has also disrupted the normal operations of many businesses, including the Company's. This outbreak could decrease spending, adversely affect demand for the Company's product and harm the Company's business and results of operations. It is not possible for the Company to predict the duration or magnitude of the adverse results of the outbreak and its effects on the Company's business or results of operations at this time.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not Applicable.


ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.

31.1* Section 302 Certification of Chief Executive Officer
  
31.2 *Section 302 Certification of Chief Financial Officer
  
32.1* Section 906 Certification of Chief Executive Officer and Chief Financial Officer
  
101.INS*Inline XBRL Instance Document–the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document
  
101.SCH*Inline XBRL Taxonomy Extension Schema Document
  
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase Document
  
101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase Document
  
101.LAB*Inline XBRL Taxonomy Extension Label Linkbase Document
  
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase Document
  
104*Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* Filed herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

DESTINY MEDIA TECHNOLOGIES, INC.

By: /s/Frederick Vandenberg 
 Frederick Vandenberg 
 Chief Executive Officer, President 
 (Principal Executive Officer) 
 Date: July 17, 2023 
   
By: /s/ Olya Massalitina  
 Olya Massalitina 
 Chief Financial Officer, Treasurer 
 (Principal Financing and Accounting Officer) 
 Date: July 17, 2023 

 

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