What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-04-14 compared with 2021-01-13 · 43 added, 28 removed, 137 unchanged (34% of the section changed)

21 unchanged sentences

Our telephone number is (604) 609-7736 and our facsimile number is (604) 609-0611.

Our common stock trades on the TSX Venture Exchange in Canada under the symbol "DSY", on the OTCQB U.S.

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.

53 unchanged sentences

The expansion of languages was undertaken to facilitate the expansion of Play MPE® in non-English speaking countries.

During Q2 2021, Caster's release creator tool was updated to provide additional template management functionality which provides flexibility in creating and sharing email templates.

This streamlines release creation for our enterprise customers.

During the quarter the Company's software engineering group continued to focus on enhancements to global release management features which are designed to expand global use by international labels.

The engineering group is also investigating various technologies to expand the Company's addressable market.

These features primarily improve the salability of the platform as the Company targets significant global expansion.

3 unchanged sentences

Further, the number of tracks within each release grew by 46.3%.

Our Latin initiative continued to make progress with the commencement of distributions by Warner Music Latina immediately following the quarter.

The Company sees tremendous potential to grow market share with investments in product development and business development staff.

During the quarter, the Company continued to recruit for new engineering, product development, marketing and business development staff adding the front-end engineering lead in October, a senior account executive to lead the LATAM market initiative in November 2020 and additional product development support staff.

The Company is targeting growth in its core Play MPE® business by expanding the use of Play MPE® into new market segments and by expanding our addressable market through the addition of new saleable products and services by adding technologies within the Play MPE® platform.

During the quarter the Company added to our marketing, software engineering, operations and product design teams.

Recruitment efforts in business development resulted in additions to staff following the end of our second quarter.

The Company continues to recruit primarily for software engineering capacity.

The Company also has a legacy business, Clipstream®, in the online video industry for which it is pursuing strategic alternatives.

3 unchanged sentences

This product has incidental revenues and is not supported or marketed.

RESULTS OF OPERATIONS FOR THE THREE MONTH PERIODS ENDED NOVEMBER 30.

2020 AND 2019

Total revenue for the three-month period ended November 30, 2020 increased by 7.5% ($1,123,977 in 2020 - $1,045,856 in 2019) due to increased Play MPE® revenues, offset by reduced Clipstream revenue.

Play MPE® revenue in the quarter grew by 8.8% (5.4% after adjusting for favorable foreign exchange).

Play MPE® continued to experience high growth in the independent labels in the United States, Europe, and Australia with an overage revenue growth of 38.5% in this segment.

RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTH PERIODS ENDED FEBRUARY 28, 2021 AND FEBRUARY 29, 2020

Total revenue for the six months ending February 28, 2021 increased by approximately 11% ($2,054,676 in 2021 - $1,852,585 in 2020).

Play MPE® represents virtually all the Company's revenue.

Play MPE®'s year to date revenue grew by 11.8% (or 9.9% after adjusting for favorable foreign exchange).

Play MPE® continued to experience high growth in the independent labels in the United States, Europe, and Australia with an average revenue growth of 35% in this segment.

Total revenue for the three-month period ended February 28, 2021 increased by 15.4% over the comparable quarter in fiscal 2020, to $930,699 (2020 - $806,729) (11.0% after adjustment for favorable foreign exchange).

Play MPE® had high growth in the independent labels in the United States, Europe, and Australia with an average revenue growth of 28.1% in the quarter.

Operating Expenses

3 unchanged sentences

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 three-month period ended November 30, 2020 decreased by 8.33% to $784,426 (2019 - $855,305).

The majority of the decrease in costs was the result of a reduction in travel and related expenditures associated with client meetings and business development efforts.

Operating costs during the six-month period ended February 28, 2021 decreased by 5.9% to $1,653,566 (2020 - $1,757,029).

The decrease in costs was the result of a reduction non-recurring (one-time) costs associated with staff restructuring incurred in the six-month period ended February 29, 2020 and a reduction in travel and related expenditures associated with client meetings associated with business development efforts.

These reductions were the result of COVID-19 pandemic travel restrictions.

Total overall costs, adjusted for the one-time costs associated with staff restructuring, increased by 3.3%.

This increase in costs is caused by increased investments in business development, marketing, and product design and development staffing designed to accelerate product development and revenue growth.

This increase has been partially offset by the abovementioned reduction in business development related travel costs caused by COVID-19 pandemic travel restrictions.

Total operating expenditures

Non-recurring (one-time) costs

Adjusted total expenditures

General and administrative

Office and miscellaneous

Foreign exchange (gain)/loss

Professional fees

3 unchanged sentences

General and administrative costs also include professional fees and general travel expenditures.

The decrease in non-recurring professional fees is the result of professional fees associated with staff restructuring, share consolidation and share repurchase activities incurred in the three month period ended November 30, 2019.

The decrease in professional fees is the result of reduced non-recurring costs.

Sales and marketing

4 unchanged sentences

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 increase in staffing costs relates to additional staff designed to grow and enhance business development activities.

The decrease in advertising and marketing expenses is related to reduced travel expenditures for our staff to attend label visits and industry events due to the COVID-19 pandemic.

The increase in staffing costs primarily relates to one time charges associated with staff restructuring.

Wages also increased over the prior year through additional staff designed to grow and enhance business development activities.

The decrease in advertising and marketing expenses is related to decreased travel expenditures for our staff to attend label visits and industry events due to COVID-19.

Product Development

3 unchanged sentences

Product development costs consist primarily of salaries and related personnel costs including overhead and consulting fees with respect to product development and deployment.

The decrease in wages and benefits is related to the timing of employment of product development staff during the quarter.

The increase in wages and benefits is related to an increase in staffing in product development during the quarter.

The Company has also restructured the use of external hosting services resulting in a permanent decline in costs with no reduction in system reliability or capabilities.

Depreciation and Amortization

Depreciation and amortization expense decreased to $24,315 for the three-month period ended November 30, 2020 from $32,073 for the period ended November 30, 2019, a decrease of 24.2% due to a decrease in computer software costs associated with externally developed Play MPE® recipient player applications.

Depreciation and amortization expense decreased to $50,715 for the six-month period ended February 28, 2021 from $67,550 for the period ended February 29, 2020, a decrease of 24.9% due to a decrease in computer software costs associated with externally developed Play MPE® recipient player applications.

Other earnings and expenses

Interest income was $1,464 for the three-month period ended November 30, 2020 (2019:

Interest income was $2,338 for the six-month period ended February 28, 2021 (2020:

$14,477) and is derived from one-year Guaranteed Investment Certificates.

During the three-month period ended November 30, 2020 we had net income of $250,702 (2019:

During the six-month period ended February 28, 2021 we had net income of $221,236 (2020 - $43,673 net loss).

Overall, an increase in revenue was accompanied by budgeted spending on staffing and marketing and advertising costs, as discussed above

For the three-month period ended November 30, 2020, adjusted EBITDA was $286,402 (2019:

EBITDA $154,431).

For the three-month period ended February 28, 2021, adjusted EBITDA was $9,192 (2020 - EBITDA ($126,134)).

Adjusted EBITDA is not defined under generally accepted accounting principles ("GAAP") and it may not be comparable to similarly titled measures reported by other companies.

10 unchanged sentences

LIQUIDITY AND FINANCIAL CONDITION

As at November 30, 2020, we held $3,076,862 (August 31, 2020 - $2,622,830) in cash and cash equivalents and short-term investments.

Our short-term investments consisting of one-year Guaranteed Investment Certificates (GICs) held through a major Canadian financial institution, had reached maturity prior to November 30, 2020 (August 31, 2020:

At November 30, 2020, we had working capital of $2,729,542 compared to $2,423,774 as at August 31, 2020.

During the three-month period ended November 30, 2020, the Company did not complete any NCIB purchases (2019:

Net cash provided by operating activities for the three-month period ended November 30, 2020 was $441,654, compared to $86,245 for the three-month period ended November 30, 2019.

As at February 28, 2021, we held $3,011,715 (August 31, 2020 - $2,622,830) in cash and cash equivalents and short-term investments.

At February 28, 2021, we had working capital of $2,716,767 compared to $2,423,774 as at August 31, 2020.

During the three-month period ended February 28, 2021, the Company completed NCIB purchases totaling $45,004 (2020:

Net cash provided by operating activities for the six-month period ended February 28, 2021 was $391,840, compared to net cash used in operating activities of $133,573 for the six months ended February 29, 2020.

The primary reason for the increase in cash flows from operating activities is due to an increase in operating revenues, as described above, as well as a decrease in accounts receivable during the quarter.

Net cash provided by investing activities for the three-month period ended November 30, 2020 was $758,561, compared to cash used in investing activities of $766,603 for the three-month period ended November 30, 2019.

During the three-month period ended November 30, 2020, $763,749 was received on the maturity of our GICs.

Investing activities during the three-month period ended November 30, 2019 were attributable largely to investment into GICs.

Net cash used in financing activities during the three-month period ended November 30, 2020 was $Nil.

In the three-month period ended November 30, 2019 net cash used in financing activities, related to cash used to repurchase and retire 298,755 shares of common stock of the Company under the NCIB for a total of $291,889.

Net cash provided by investing activities for the six-month period ended February 28, 2021 was $787,067, compared to cash used in investing activities of $796,851 for the six-month period ended February 29, 2021.

During the six-month period ended February 28, 2021, $800,624 was received on the maturity of our GICs.

Net cash used in financing activities during the six-month period ended February 28, 2021 was $45,004 (February 29, 2020 was $533,223), related to cash used to repurchase and retire 41,285 shares of common stock (550,140 shares of common stock) of the Company under the NCIB.

CRITICAL ACCOUNTING POLICIES

6 unchanged sentences

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 2. Management’s Discussion and Analysis