What changed in this filing

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Item 1. Financial Statements

2021-01-13 compared with 2020-07-15 · 133 added, 146 removed, 196 unchanged (59% of the section changed)

2 unchanged sentences

Destiny Media Technologies Inc.

November 30, 2020

(Expressed in United States dollars)

4 unchanged sentences

Short-term investments [note 3]

Accounts receivable, net of allowance for doubtful accounts of $23,111, [August 31, 2019 – $10,106]

Accounts receivable, net of allowance for

doubtful accounts of $23,562, [August 31, 2020 – $23,412]

Other receivables

7 unchanged sentences

Accrued liabilities

Deferred leasehold inducement

Deferred revenue

3 unchanged sentences

Total liabilities

Commitments and contingencies [notes 7 and 8]

Commitments and contingencies [note 7]

Stockholders’ equity

11 unchanged sentences

Destiny Media Technologies Inc.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in United States dollars)

Three months ended November 30,

Service revenue [note 9]

3 unchanged sentences

Customer support

Third Party and transactions costs

Third party and transaction costs

Operating expenses

3 unchanged sentences

Depreciation and amortization

Income (loss) from operations

Income from operations

Interest income

Other income (expense)

Other comprehensive income (loss)

Foreign currency translation adjustments

Total comprehensive income (loss)

Net income (loss) per common share, basic and diluted

Total comprehensive income

Net income per common share, basic and diluted

Weighted average common shares outstanding:

Basic and diluted

See accompanying notes

2 unchanged sentences

(Expressed in United States dollars)

Three months ended May 31, 2020 and 2019

stockholders'

comprehensive

Balance, February 29, 2020

Total comprehensive income (loss)

Stock based compensation [note 6]

Balance, May 31, 2020

Balance, February 28, 2019

Total comprehensive income (loss)

Stock based compensation [note 6]

Balance, May 31, 2019

See accompanying notes

Destiny Media Technologies Inc.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(Expressed in United States dollars)

Nine months ended May 31, 2020 and 2019

Three months ended November 30, 2020 and 2019

stockholders'

1 unchanged sentence

Balance, August 31, 2020

Total comprehensive income (loss)

Total comprehensive income

Stock based compensation [note 6]

Common shares retired

Balance, May 31, 2020

Balance, November 30, 2020

Balance, August 31, 2019

Total comprehensive income (loss)

Shares issued for rounding purposes in connection with reverse split

Repurchase of common stock

Total comprehensive income

Stock based compensation [note 6]

Balance, May 31, 2019

Balance, November 30, 2019

See accompanying notes

1 unchanged sentence

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

Nine months ended May 31, 2020 and 2019

Three months ended November 30,

(Expressed in United States dollars)

OPERATING ACTIVITIES

Net income (loss)

Items not involving cash:

Depreciation and amortization [note 4]

Allowance for doubtful amounts

Stock-based compensation

Deferred leasehold inducement

Unrealized foreign exchange gain

Unrealized foreign exchange (gain) loss

Changes in non-cash working capital:

6 unchanged sentences

Operating lease liability

Net cash provided by (used in) operating activities

Net cash provided by operating activities

INVESTING ACTIVITIES

Purchase of short-term investments, net

Redemption (purchase) of short-term investments, net

Purchase of property, equipment and intangibles

Net cash used in investing activities

Net cash provided by (used in) investing activities

FINANCING ACTIVITY

Repurchase of common stock for retirement

Net cash used in investing activity

Net cash used in financing activity

Effect of foreign exchange rate changes on cash

5 unchanged sentences

Income taxes paid

Non-cash investing and financing activities

Right of use asset

Operating lease liability

See accompanying notes

2 unchanged sentences

FINANCIAL STATEMENTS

November 30, 2020

Destiny Media Technologies Inc.

5 unchanged sentences

in the United States, under the symbol "DSY" on the TSX Venture Exchange and under the symbol "DME" on the Berlin, Frankfurt, Xetra and Stuttgart exchanges in Germany.

Effective September 13, 2019, the Company effected a reverse stock split on the basis of 5:1.

As such, the Company's authorized common stock was decreased from 100,000,000 shares of common stock, par value $0.001 to 20,000,000 shares of common stock, par value $0.001 and all shares of common stock issued and outstanding were decreased on the basis of one new share for each five old shares.

These consolidated financial statements give retroactive effect to such reverse stock split and all share and per share amounts have been adjusted accordingly.

BASIS OF PRESENTATION

2 unchanged sentences

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

Operating results for the nine months ended May 31, 2020 are not necessarily indicative of the results that may be expected for the year ended August 31, 2020.

Operating results for the three months ended November 30, 2020 are not necessarily indicative of the results that may be expected for the year ended August 31, 2021.

The balance sheet at August 31, 2020 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by United States generally accepted accounting principles for annual financial statements.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended August 31, 2020.

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.

Destiny Media Technologies Inc.

1 unchanged sentence

FINANCIAL STATEMENTS

November 30, 2020

SHORT TERM INVESTMENTS

The Company's short-term investments consists of one-year Guaranteed Investment Certificates with a major Canadian financial institution that earn interest at variable interest rates ranging from 2.15% - 2.36%.

The Company's short-term investments consisted of one-year Guaranteed Investment Certificates with a major Canadian financial institution that earn interest at variable interest rates ranging from 0.10% - 2.36%.

As at November 30, 2020, the Company's short-term investments had reached maturity, and are included in cash and cash equivalents.

PROPERTY AND EQUIPMENT AND INTANGIBLES

November 30, 2020

Property and equipment

11 unchanged sentences

Patents, trademarks and lists

Depreciation and amortization for the three and nine month periods ended May 31, 2020 was $33,194 and $100,744 respectively (2019:

$26,764 and $67,099 respectively)

Depreciation and amortization for the three month period ended November 30, 2020 was $24,315 (2019:

Destiny Media Technologies Inc.

1 unchanged sentence

FINANCIAL STATEMENTS

November 30, 2020

RIGHT OF USE ASSET

On adoption of ASC 842, Lease Accounting, the Company recognized right-of-use assets, and a corresponding increase in lease liabilities (note 7), in the amount of $637,014 which represented the present value of future lease payments using a discount rate of 8% per annum.

The Company adopted the modified retrospective approach on adopting ASC 842 and accordingly the adoption was made effective September 1, 2019, with no restatement of the prior year comparatives.

During the three and nine-month periods ended May 31.

2020, the Company recorded a lease expense of $52,930 and $160,387, respectively, related to the depreciation of right-of-use assets.

Supplemental cash flow information related to the lease was as follows:

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

Right-of-use assets obtained in exchange for lease obligations:

Operating lease

Weighted-average discount rate - operating leases

The Company entered into a lease agreement commencing July 1, 2017 and expiring June 30, 2022 consisting of approximately 6,600 square feet.

On adoption of ASC 842, Lease Accounting, the Company recognized right-of-use assets and a corresponding increase in lease liabilities, in the amount of $671,911 which represented the present value of future lease payments using a discount rate of 8% per year.

Property tax and insurance payments paid to the lessor are included in the calculation of future lease payments.

Right of Use Asset Continuity

November 30, 2020

August 31, 2020

Balance, September 1

Lease Inducement

Foreign Currency Translation Adjustment

Balance, End of Period

The Company has operating lease payments committed as follows:

Total lease payments payable

Less amounts representing interest

Total Operating Lease Liability

Less current portion of operating lease liability

Long term portion of operating lease liability

Operating Lease Liability Continuity

November 30, 2020

August 31, 2020

Balance, September 1

Less Lease Payments

Foreign Currency Translation Adjustment

Balance, End of Period

During the three month period ended November 30, 2020 the Company recorded depreciation expense of $54,636 (2019 :

$54,158) which has been allocated between general and administrative expenses, research and development and sales and marketing on the consolidated statement of comprehensive income.

The total rent commitment, net of the leasehold improvement allowance, is being amortized to rent expense on a straight-line basis over the term of the lease.

Destiny Media Technologies Inc.

NOTES TO CONDENSED CONSOLIDATED INTERIM

FINANCIAL STATEMENTS

November 30, 2020

STOCKHOLDERS' EQUITY

2 unchanged sentences

Effective September 16, 2019, the Company commenced a Normal Course Issuer Bid, pursuant to which the Company may purchase up to a maximum of 550,140 common shares, through the TSX Venture Exchange (the "TSX") 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 months ended May 31, 2020, the Company repurchased and cancelled 550,140 common shares for $533,223.

During the year ended August 31, 2020, the Company repurchased and cancelled 550,140 common shares for $533,223.

[b] Stock option plan

4 unchanged sentences

The options generally have a contractual term of five years.

Destiny Media Technologies Inc.

NOTES TO CONDENSED CONSOLIDATED INTERIM

FINANCIAL STATEMENTS

STOCKHOLDERS' EQUITY (cont'd.)

[b] Stock option plan (cont'd.)

Stock-Based Payment Award Activity

A summary of stock option activity under the Plan as of May 31, 2020, and changes during the period then ended is presented below:

A summary of stock option activity under the Plan as of November 30, 2020, and changes during the period then ended is presented below:

Exercise Price

Outstanding at August 31, 2020

Outstanding at May 31, 2020

Exercisable at May 31, 2020

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 at May 31, 2020.

The following table summarizes information regarding the non-vested options outstanding as of May 31, 2020 and changes during the period then ended:

Number of Options

Non-vested options at August 31, 2019

Non-vested options at May 31, 2020

As of May 31, 2020, there was $80,386 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 1.65 years.

Outstanding at November 30, 2020

Exercisable at November 30, 2020

Destiny Media Technologies Inc.

1 unchanged sentence

FINANCIAL STATEMENTS

November 30, 2020

STOCKHOLDERS' EQUITY (cont'd.)

[b] Stock option plan (cont'd.)

On October 3, 2019, the Company adjusted the exercise price of 140,000 employee stock options previously issued to certain employees to $1.00.

The incremental fair value recorded on modification was $10,331, and determined using the Black-Scholes option-pricing model with the following assumptions weighted average volatility 146%, discount rate 1.7%, and weighted average life of 3.27 years.

Total stock-based compensation expense of $15,276 and $35,909 was recognized during the three and nine month periods ended May 31, 2020, (2019:

$10,363 and $34,470) is reported in the statement of comprehensive income as follows:

The following table summarizes information regarding the non-vested options outstanding as of November 30, 2020 and changes during the period then ended:

Number of Options

Non-vested options at August 31, 2020

Non-vested options at November 30, 2020

As of November 30, 2020, there was $56,810 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 0.99 years.

Total stock-based compensation expense of $12,849 was recognized during the three month period ended November 30, 2020, (2019:

$17,936) is reported in the statement of comprehensive income as follows:

Stock-based compensation

10 unchanged sentences

Weighted average grant date fair value

No stock options were granted in the three and nine month periods ended May 31, 2019.

Expected volatilities are based on historical volatility of the Company's stock.

The Company uses historical data to estimate option exercise and employee termination within the valuation model.

The expected term of options granted represents the period of time that options granted are expected to be outstanding.

The risk-free rate for periods within the contractual life of the options is based on US Treasury bill rates in effect at the time of grant.

Destiny Media Technologies Inc.

1 unchanged sentence

FINANCIAL STATEMENTS

November 30, 2020

STOCKHOLDERS' EQUITY (cont'd.)

[b] Stock option plan (cont'd.)

Expected volatilities are based on historical volatility of the Company's stock.

The Company uses historical data to estimate option exercise and employee termination within the valuation model.

The expected term of options granted represents the period of time that options granted are expected to be outstanding.

The risk-free rate for periods within the contractual life of the options is based on US Treasury bill rates in effect at the time of grant.

[c] Employee Stock Purchase Plan

5 unchanged sentences

The third-party plan agent is also responsible for the administration of the Plan on behalf of the Company and the participants.

During the three and nine month periods ended May 31, 2020, the Company recognized compensation expense of $20,947 and $53,369 (2019 - $20,324 and $53,657) in salaries and wages on the consolidated statement of comprehensive income (loss) in respect of the Plan, representing the Company's employee matching of cash contributions to the Plan.

During the three month period ended May 31, 2020, the shares were purchased on the open market at an average price of $0.68, for the nine-month period ended May 31, 2020:

During the three month period ended November 30, 2020, the Company recognized compensation expense of $15,186 (2019 :

$13,132) in salaries and wages on the consolidated statement of comprehensive income in respect of the Plan, representing the Company's employee matching of cash contributions to the Plan.

During the three month period ended November 30, 2020, the shares were purchased on the open market at an average price of $0.67 (2019 :

The shares are held in trust for a period of one year from the date of purchase.

The Company has entered into a lease agreement expiring June 30, 2022 for office premises consisting of approximately 6,550 square feet.

The Company is committed to lease payments as follows:

Fiscal year ending August 31,

Total lease payments payable

Less amounts representing interest

Total operating lease liability

Less current portion of operating lease liability

Long term portion of operating lease liability

Destiny Media Technologies Inc.

NOTES TO CONDENSED CONSOLIDATED INTERIM

FINANCIAL STATEMENTS

COMMITMENTS (cont'd.)

During the three and nine month periods ended May 31, 2020 the Company incurred depreciation expense of $52,930 and $160,387 respectively (2019:

rent expense of $60,507 and $183,640) in connection with its office premises lease, which has been allocated between general and administrative expenses, research and development and sales and marketing on the consolidated statement of comprehensive income (loss).

Amounts representing interest of $10,267 and $35,070 were recognized during the three and nine-month periods ended May 31, 2020 (2019 - nil).

CONTINGENCIES

5 unchanged sentences

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.

NEW ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Standards

In February 2016, the FASB issued ASU No.

2016-02, "Leases (Topic 842)" ("ASU 2016-02").

The amendments in this Update increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements.

The FASB has also issued ASU No.

2018-11 "Leases (Topic 842):

Targeted Improvements and ASU 2019-01 "Leases Codification Improvements Codification improvements to Topic 842 (leases)", which provides narrow amendments to clarify how to apply certain aspects of the new lease standard.

Destiny Media Technologies Inc.

1 unchanged sentence

FINANCIAL STATEMENTS

NEW ACCOUNTING PRONOUNCEMENTS (cont'd.)

Recently Adopted Accounting Standards (cont'd.)

The Company adopted ASU No.

2016-02 as of September 1, 2019 using the modified retrospective approach wherein entities are permitted to apply the new lease standard at adoption date with no effect to the opening balance of retained earnings in the period of adoption.

Accordingly, all periods prior to September 1, 2019 were presented in accordance with the previous ASC Topic 840, Leases , with no retrospective adjustments to the comparative periods presented.

In accordance with ASC Topic 842, Leases, the Company determines, at the inception of a contract, if the arrangement is a lease and whether it meets the classification criteria for a finance or operating lease.

Right of use (ROU) assets represent the Company's right to use an underlying asset during the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease.

ROU assets and lease liabilities are recognized at commencement date based on the present value of fixed lease payments over the lease term.

ROU assets also include any advance lease payments and are net of lease incentives.

Where the operating leases do not provide an implicit rate, the Company estimates its incremental borrowing rate based on information available at commencement date in determining the present value of lease payments.

Finance lease agreements generally include an interest rate that is used to determine the present value of future lease payments.

Operating fixed lease expense and finance lease depreciation expense are recognized on a straight-line basis over the lease term.

Further, as permitted by the standard, the Company made an accounting policy election to not record right of use assets or lease liabilities with a term of 12 months or less.

Instead, consistent with legacy accounting guidance, the Company will recognize payments for such leases in the consolidated statement of comprehensive income/(loss) on a straight-line basis over the lease term.

The adoption of this standard on September 1, 2019, resulted in the recognition of additional assets of $637,014 and liabilities of $637,014 upon adoption on its accompanying condensed consolidated balance sheet.

The new standard did not have a material impact on the Company's results of operations or cash flows.

November 30, 2020

NEW ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Standards

In June 2016, the FASB issued ASU No.

2016-13, "Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments" ("ASU 2016-13").

Financial Instruments-Credit Losses (Topic 326) amends guidance on reporting credit losses for assets held

on an amortized cost basis and available-for-sale debt securities.

For assets held on an amortized cost basis, Topic 326 eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses.

The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected.

For available-for-sale debt securities, credit losses should be measured in a manner similar to current GAAP, however Topic 326 will require that credit losses be presented as an allowance rather than as a write-down.

ASU 2016-13 affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income.

The amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash.

The amendments in this ASU will be effective for the Company on September 1, 2020.

The adoption of this standard did not have a material impact on the Company's consolidated financial statements.

In February 2018, the FASB issued ASU No.

2018-02, "Income Statement-Reporting Comprehensive Income (Topic 220):

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income" ("ASU 2018-02"), which provides financial statement preparers with an option to reclassify stranded tax effects within accumulated other comprehensive income to retained earnings in each period in which the effect of the change in the U.S.

federal corporate income tax rate in the Tax Cuts and Jobs Act (or portion thereof) is recorded.

The amendments in this ASU will be effective for the Company on September 1, 2019.

The amendments in this ASU should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S.

federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized.

The adoption of this guidance did not have a material impact on the Company's consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement - Disclosure Framework (Topic 820).

The updated guidance improves the disclosure requirements on fair value measurements.

The amendments in this ASU was effective for the Company on September 1, 2020..

The adoption of this guidance did not have a material impact on the Company's consolidated financial statements.

Destiny Media Technologies Inc.

1 unchanged sentence

FINANCIAL STATEMENTS

November 30, 2020

CONCENTRATIONS AND ECONOMIC DEPENDENCE

1 unchanged sentence

Revenue from external customers, by product and location of customer, is as follows:

Three Months Ended

Nine Months Ended

North America

Total Play MPE®

North America

United States

Total Play MPE® Revenue

United States

Total Clipstream ® Revenue

Total Revenue

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 three and nine month periods ended May 31, 2020, the Company generated 39% and 43% of total revenue from one customer respectively (2019 - 42% and 41%).

Some of these customers have distribution centres located around the globe and distribute around the world.

During the three month period ended November 30, 2020, the Company generated 38% of total revenue from one customer respectively (2019 :

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

As at May 31, 2020, two customers represented $532,296 (71%) of the trade receivables balance (August 31, 2019, two customers represented $233,549 (70%)).

By July 8, 2020, the Company has collected $610,558 of the accounts receivable balance outstanding at May 31, 2020.

As at November 30, 2020, one customer represented $144,407 (or 46%) of the trade receivables balance (August 31, 2020, two customers represented $275,620 (or 65%)).

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

5 unchanged sentences

FINANCIAL STATEMENTS

FAIR VALUE MEASUREMENTS

The following table presents the classification of financial assets that are measured at fair value on a recurring basis as of May 31, 2020 and August 31, 2019.

Cash and cash equivalents

Short-term investments

Total financial assets

August 31, 2019

Cash and cash equivalents

Short-term investments

Total financial assets

The company has no financial liabilities subject to level 1, 2 or 3 fair value measurements.

November 30, 2020

SUBSEQUENT EVENTS

In March 2020 the World Health Organization declared coronavirus COVID-19 a global pandemic.

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.

On January 4, 2021, the Company commenced a Normal Course Issuer Bid ("NCIB"), pursuant to which the Company may purchase up to a maximum of 522,532 shares of common stock in the capital of the Company, representing approximately 5% of the then-outstanding common stock.

Purchases pursuant to the NCIB will be made from time to time by RBC Dominion Securities Inc.

on behalf of the Company through the facilities of 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 Venture Exchange and Canadian securities laws.

Shares purchased will be paid for with cash available from the Company's working capital.

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-Q

Item 1. Financial Statements