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Item 1A. Risk Factors

2020-11-18 compared with 2019-11-18 · 70 added, 176 removed, 3 unchanged (99% of the section changed)

We face risks in executing our business plan and achieving

RISK FACTORS.

We face risks in executing our business plan and achieving revenues.

The following risks are material risks that we face.

We also face the

risks identified elsewhere in this Annual Report, including those risks

identified under Item 1.

Business, including Competition and Government

Regulation, and Item 7.

Managements Discussion and Analysis of Financial

Condition and Results of Operations.

If any of these risks occur, our business

and our operating results and financial condition could be seriously harmed.

If revenues decline, then our financial condition and

results of operations will be adversely affected.

99% of our revenue is generated from our Play MPE® distribution

Competitors may arise and/or customers may not renew distribution

This factor could cause our revenue to decrease with the result that

our financial condition and operating results would be adversely affected.

Competitors have been small, regionally based, have limited resources, and have

yet to capture a material share of the market.

If a competitor were to develop a

comparable or superior product, our market share could be reduced.

If we are not able to control our operating expenses, then

our financial condition may be adversely affected.

Operating expenses were $2,917,935 for the year ended August

31, 2019 and $2,658,657 for the year ended August 31, 2018 while our revenues

were $3,809,092 and $3,606,471, respectively.

Our ability to maintain

profitability is conditional upon our ability to control our operating expenses.

There is a risk that we will have to increase our operating expenses in the

Factors that could cause our operating expenses to increase include our

determination to spend more on sales and marketing in order to increase product

sales or our determination that more research and development expenditures are

required in order to keep our current software products competitive or in order

to develop new products for the market.

To the extent that our operating

expenses increase without a corresponding increase in revenue, our financial

condition would be adversely impacted.

If we are not successful in legal proceedings against us,

then our business and financial condition could be adversely affected.

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 Companys financial statements.

Company does not believe that any of such pending claims and legal proceedings

will have a material adverse effect on its consolidated financial statements,

however if we are not successful in these legal proceeding and are forced to

make payments of damages to the plaintiffs, then our business and our financial

condition would be adversely affected.

Our financial results may be adversely impacted by currency

fluctuations.

Our revenues are primarily in United States dollars and Euros

while our operating expenses are primarily in Canadian dollars.

An increase in

the value of the Canadian dollar in relation to the United States dollar and/or

Euro could have the effect of decreasing our income from operations.

currently hedge our foreign currency exposures.

If our products are defective or contain errors, we may

become subject to product liability claims.

As a result of their complexity, our software products may

contain undetected errors or failures when first introduced or as new versions

are released.

There can be no assurance that, despite testing we undertake and

testing and use by current and potential customers, errors will not be found in

new products after commencement of commercial use.

The occurrence of such errors

could result in loss of or delay in market acceptance of our products, which

could have a material adverse effect on our business, financial condition and

results of operations.

Our products also may be vulnerable to break-ins and

similar disruptive problems caused by Internet or other users.

Such computer break-ins and other disruptions would jeopardize

the security of information stored in and transmitted through the computer

systems of our customers, which may result in significant liability to us and

deter potential customers.

The sale and support of our products may entail the

risk of liability claims.

A product liability claim brought against us could

have a material adverse effect on our business, financial condition and results

of operations.

Successful expansion of our business will depend on our

ability to manage growth.

Should we be successful in the sales and marketing efforts of

our software products, we will experience significant growth in operations.

this occurs, management anticipates that additional expansion will be required

in order to continue our product development.

Any expansion of our business

would place further demands on our management, operational capacity and

financial resources.

We anticipate that we may need to recruit qualified

personnel in all areas of its operations, including management, sales,

marketing, delivery, and software development.

There can be no assurance that we

will be effective in attracting and retaining additional qualified personnel,

expanding its operational capacity or otherwise managing growth.

there can be no assurance that our current systems, procedures or controls will

be adequate to support any expansion of our operations.

The failure to manage

growth effectively could have a material adverse effect on our business,

financial condition and results of operations.

Our network infrastructure could be vulnerable to system

failure and/or security risks.

Despite the implementation of security measures, our network

infrastructure could be vulnerable to unforeseen computer problems.

believe we have taken steps to mitigate much of the risk, we may in the future

experience interruptions in service as a result of the accidental or intentional

actions of Internet users, current and former employees or others.

security risks may result in liability to us and also may deter new customers

from purchasing our software and services, and individuals from utilizing it.

Although we intend to continue to implement and establish security measures,

there can be no assurance that measures implemented by us will not be

circumvented in the future, which could have a material adverse effect on our

business, financial condition or results of operations.

Our business depends on continued development of the

internet and intranets as mediums of commerce and communications, and our

ability to evolve along with these mediums.

The market for our streaming media products and services is new

and evolving rapidly.

We also face the risks identified elsewhere in this Annual Report, including those risks identified under "Item 1.

Business", including Competition and Government Regulation, and "Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations".

If any of these risks occur, our business and our operating results and financial condition could be seriously harmed.

If revenues decline, then our financial condition and results of operations will be adversely affected.

99% of our revenue is generated from our Play MPE® distribution service.

Competitors may arise and/or customers may not renew distribution contracts.

This factor could cause our revenue to decrease with the result that our financial condition and operating results would be adversely affected.

Competitors have been small, regionally based, have limited resources, and have yet to capture a material share of the market.

If a competitor were to develop a comparable or superior product, our market share could be reduced.

If we are not able to control our operating expenses, then our financial condition may be adversely affected.

Operating expenses were $3,360,953 for the year ended August 31, 2020 and $2,917,935 for the year ended August 31, 2019 while our revenues were $3,824,565 and $3,809,092, respectively.

Our ability to maintain profitability is conditional upon our ability to control our operating expenses.

There is a risk that we will have to increase our operating expenses in the future.

Factors that could cause our operating expenses to increase include our determination to spend more on sales and marketing in order to increase product sales or our determination that more research and development expenditures are required in order to keep our current software products competitive or in order to develop new products for the market.

To the extent that our operating expenses increase without a corresponding increase in revenue, our financial condition would be adversely impacted.

If we are not successful in legal proceedings against us, then our business and financial condition could be adversely affected.

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, however if we are not successful in these legal proceeding and are forced to make payments of damages to the plaintiffs, then our business and our financial condition would be adversely affected.

Our financial results may be adversely impacted by currency fluctuations.

Our revenues are primarily in United States dollars and Euros while our operating expenses are primarily in Canadian dollars.

An increase in the value of the Canadian dollar in relation to the United States dollar and/or Euro could have the effect of decreasing our income from operations.

We do not currently hedge our foreign currency exposures.

If our products are defective or contain errors, we may become subject to product liability claims.

As a result of their complexity, our software products may contain undetected errors or failures when first introduced or as new versions are released.

There can be no assurance that, despite testing we undertake and testing and use by current and potential customers, errors will not be found in new products after commencement of commercial use.

The occurrence of such errors could result in loss of or delay in market acceptance of our products, which could have a material adverse effect on our business, financial condition and results of operations.

Our products also may be vulnerable to break-ins and similar disruptive problems caused by Internet or other users.

Such computer break-ins and other disruptions would jeopardize the security of information stored in and transmitted through the computer systems of our customers, which may result in significant liability to us and deter potential customers.

The sale and support of our products may entail the risk of liability claims.

A product liability claim brought against us could have a material adverse effect on our business, financial condition and results of operations.

Successful expansion of our business will depend on our ability to manage growth.

Should we be successful in the sales and marketing efforts of our software products, we will experience significant growth in operations.

If this occurs, management anticipates that additional expansion will be required in order to continue our product development.

Any expansion of our business would place further demands on our management, operational capacity and financial resources.

We anticipate that we may need to recruit qualified personnel in all areas of its operations, including management, sales, marketing, delivery, and software development.

There can be no assurance that we will be effective in attracting and retaining additional qualified personnel, expanding its operational capacity or otherwise managing growth.

In addition, there can be no assurance that our current systems, procedures or controls will be adequate to support any expansion of our operations.

The failure to manage growth effectively could have a material adverse effect on our business, financial condition and results of operations.

Our network infrastructure could be vulnerable to system failure and/or security risks.

Despite the implementation of security measures, our network infrastructure could be vulnerable to unforeseen computer problems.

Although we believe we have taken steps to mitigate much of the risk, we may in the future experience interruptions in service as a result of the accidental or intentional actions of Internet users, current and former employees or others.

Unknown security risks may result in liability to us and also may deter new customers from purchasing our software and services, and individuals from utilizing it.

Although we intend to continue to implement and establish security measures, there can be no assurance that measures implemented by us will not be circumvented in the future, which could have a material adverse effect on our business, financial condition or results of operations.

Our business depends on continued development of the internet and intranets as mediums of commerce and communications, and our ability to evolve along with these mediums.

The market for our streaming media products and services is new and evolving rapidly.

It depends on increased use of the Internet and intranets.

If the Internet and intranets are not adopted as methods for commerce and

communications, or if the adoption rate slows, the market for our products and

services may not grow, or may develop more slowly than expected.

Sales of our products depend in large part on the continued

development of the Internet as a viable commercial marketplace.

There are now

substantially more users and much more traffic over the Internet than ever

before, use of the Internet is growing faster than anticipated, and the

technological infrastructure of the Internet may be unable to support the

demands placed on it by continued growth.

Delays in development or adoption of

new technological standards and protocols, or increased government regulation,

could also affect Internet use.

In addition, issues related to use of the

Internet and intranets, such as security, reliability, cost, ease of use and

quality of service, remain unresolved and may affect the amount of business that

is conducted over the Internet and intranets.

We could experience product delays and errors, which could

affect our ability to adapt to technological changes and evolving industry

We have experienced development delays and cost overruns

associated with our product development efforts.

We may encounter such problems

in the future.

Delays and cost overruns could affect our ability to respond to

technological changes, evolving industry standards, competitive developments or

customer requirements.

Our products also may contain undetected errors that

could cause adverse publicity, reduced market acceptance of the products, or

lawsuits by customers.

Our business could be adversely affected by online commerce

security failures.

Online commerce and communications depend on the ability to

transmit confidential information securely over public networks.

Any compromise

of our ability to transmit confidential information securely, and costs

associated with the prevention or elimination of such problems, could have a

material adverse effect on our business.

Our business is international, and could be affected by

unexpected changes in international regulatory standards and laws.

We market and sell our products in the United States, Canada,

Europe, Asia, South America, Africa and Australia.

As such, we are subject to

the normal risks of doing business abroad.

Risks include unexpected changes in

regulatory requirements, export and import restrictions, tariffs and trade

barriers, difficulties in staffing and managing foreign operations, longer

payment cycles, problems in collecting accounts receivable, potential adverse

tax consequences, exchange rate fluctuations, increased risks of piracy, limits

on the our ability to enforce our intellectual property rights, discontinuity of

our infrastructures, limitations on fund transfers and other legal and political

Such limitations and interruptions could have a material adverse effect

on our business.

If the Internet and intranets are not adopted as methods for commerce and communications, or if the adoption rate slows, the market for our products and services may not grow, or may develop more slowly than expected.

Sales of our products depend in large part on the continued development of the Internet as a viable commercial marketplace.

There are now substantially more users and much more "traffic" over the Internet than ever before, use of the Internet is growing faster than anticipated, and the technological infrastructure of the Internet may be unable to support the demands placed on it by continued growth.

Delays in development or adoption of new technological standards and protocols, or increased government regulation, could also affect Internet use.

In addition, issues related to use of the Internet and intranets, such as security, reliability, cost, ease of use and quality of service, remain unresolved and may affect the amount of business that is conducted over the Internet and intranets.

We could experience product delays and errors, which could affect our ability to adapt to technological changes and evolving industry standards.

We have experienced development delays and cost overruns associated with our product development efforts.

We may encounter such problems in the future.

Delays and cost overruns could affect our ability to respond to technological changes, evolving industry standards, competitive developments or customer requirements.

Our products also may contain undetected errors that could cause adverse publicity, reduced market acceptance of the products, or lawsuits by customers.

Our business could be adversely affected by online commerce security failures.

Online commerce and communications depend on the ability to transmit confidential information securely over public networks.

Any compromise of our ability to transmit confidential information securely, and costs associated with the prevention or elimination of such problems, could have a material adverse effect on our business.

Our business is international, and could be affected by unexpected changes in international regulatory standards and laws.

We market and sell our products in the United States, Canada, Europe, Asia, South America, Africa and Australia.

As such, we are subject to the normal risks of doing business abroad.

Risks include unexpected changes in regulatory requirements, export and import restrictions, tariffs and trade barriers, difficulties in staffing and managing foreign operations, longer payment cycles, problems in collecting accounts receivable, potential adverse tax consequences, exchange rate fluctuations, increased risks of piracy, limits on the our ability to enforce our intellectual property rights, discontinuity of our infrastructures, limitations on fund transfers and other legal and political risks.

Such limitations and interruptions could have a material adverse effect on our business.

Customer Concentration

During the year ended August 31, 2019, 41% of the Companys

revenue is derived from one customer with operations in numerous countries.

customer is currently of key importance to our operations and any adverse change

to the revenue from this customer would have a material adverse effect on our

results of operations.

UNRESOLVED STAFF

During the year ended August 31, 2020, 42% of the Company's revenue is derived from one customer with operations in numerous countries.

This customer is currently of key importance to our operations and any adverse change to the revenue from this customer would have a material adverse effect on our results of operations.

UNRESOLVED STAFF COMMENTS.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors