What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-04-13 compared with 2022-01-13 · 53 added, 39 removed, 121 unchanged (43% of the section changed)

19 unchanged sentences

The "Company", "Destiny Media", "Destiny", "we" or "us" refers to the consolidated activities of all four companies.

Our principal executive office is located at Suite 1110, 885 West Georgia Street, Vancouver, British Columbia V6C 3E8.

Our principal executive office is located at 601 - 189 National Ave, Vancouver, British Columbia V6A 4L8.

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

58 unchanged sentences

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

RESULTS OF OPERATIONS FOR THE THREE MONTH PERIODS ENDED NOVEMBER 30, 2021 AND 2020

Total revenue for the three-month period ending November 30, 2021 increased by approximately 1% ($1,134,151 in 2021 - $1,123,977 in 2020).

RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTH PERIODS ENDED FEBRUARY 28, 2022 AND 2021

Total revenue for the six months ending February 28, 2022 increased by approximately 1% after adjusting for unfavorable foreign exchange impacts.

With a decline in the value of the Euro relative to the US dollar, total revenue for the six month period declined by approximately 1.2% ($2,030,571 in 2022 - $2,054,676 in 2021).

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

Play MPE®'s year to date revenue grew by 1% (or 1.7% after adjusting for favorable foreign exchange).

Play MPE® continued to experience growth in the independent labels in the United States, Europe, and Australia with an average revenue growth of 3% in this segment.

Play MPE®'s year to date revenue grew by 1.3% after adjusting for unfavorable exchange impacts but declined by 0.9% with no adjustment.

Foreign currency fluctuations impacted the most recent quarter more strongly.

Total revenue for the three-month period ended February 28, 2022 showed a nominal increase of 0.5% after adjusting for foreign exchange but decreased by 3.7% over the comparable quarter in fiscal 2021 to $896,420 (2021 - $930,699) with no adjustment for foreign currency changes.

Operating Expenses

As our technologies and products are developed and maintained in-house, the majority of our expenditures are on salaries and wages and associated expenses such as office space, supplies and benefits.

Our technologies and products are developed and maintained in-house, the majority of our expenditures are on salaries and wages and associated expenses such as office space, supplies 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.

1 unchanged sentence

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.

Total operating costs during the three-month period ended November 30, 2021 increased by 8.6% to $852,029 (2020 - $784,426).

Operating Costs in the comparative period, include one-time, non-recuring costs associated with staff restructuring.

Adjusting for these one-time costs associated with staff restructuring, overall costs increased by 11.8%.

The increase in costs is primarily the result of expanded business development staffing costs designed to expand Play MPE ®‘ s global market share.

The Company also increased staffing costs to more quickly expand the company's product offering.

A portion of these costs were capitalized.

Also increasing overall costs are impacts a weakening of the US Dollar.

Foreign exchange impacts are generally temporarily in nature and generally reverse over time.

General and administrative

Operating costs during the six-month period ended February 28, 2022 increased by 9.6% to $1,812,731 (2021:

The increase in costs is primarily the result of increased staffing.

This additional staffing was brought on board to support expanded development of the Play MPE® platform, increase sales and additional operational staff to support expanded technical support and distribution list development.

This expanded staffing is focused on items designed to accelerate revenue growth of Play MPE® and expand the addressable market.

As a result of the rise in value of the Canadian dollar relative to the US dollar, overall costs grew by 2% for the period ending February 28, 2022.

General and administrative 28-Feb 28-Feb

(6 months) (6 months) Change Change

Bad debt 11,442 (4,465 ) 15,907 356.3%

Office and miscellaneous 98,536 76,161 22,375 29.4%

Foreign exchange (gain)/loss 6,938 (16,133 ) 23,071 143.0%

Professional fees 96,539 112,988 (16,449 ) (14.6%)

Rent 10,790 13,750 (2,960 ) (21.5%)

Telecommunications 1,851 1,609 242 15.0%

Travel 3,127 2,488 639 25.7%

Wages and benefits 236,343 137,545 98,798 71.8%

465,566 323,943 141,623 (4.0%)

Our general and administrative expenses consist of salaries and related personnel costs including overhead, office rent, and general office supplies.

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

The decrease in professional fees is due to a reduction of corporate administration costs and a reduction of litigation costs.

Sales and marketing

The decrease in professional fees is due to the timing of litigation proceedings.

The increase in salaries and wages relates to increased share purchase plan participate and option grants associated with an expanded board of directors.

Sales and marketing 28-Feb 28-Feb

(6 months) (6 months) Change Change

Advertising and marketing 65,328 14,641 50,687 346.2%

Rent 50,680 64,581 (13,901 ) (21.5%)

Telecommunications 10,595 8,980 1,615 18.0%

Wages and benefits 541,082 555,226 (14,144 ) (2.4%)

667,685 643,428 24,257 3.8%

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 increase in staffing costs primarily relates to the employment of additional staff designed to grow Play MPE ®‘ s market share.

The increase in advertising and marketing expenses is related to increased advertising, sponsorship, and attendance at industry events in the first quarter.

Product Development

The increase in advertising and marketing expenses is related to increased sponsorship, advertising, and attendance at industry events in the first two quarters.

Product Development 28-Feb 28-Feb

(6 months) (6 months) Change Change

Rent 40,307 51,360 (11,053 ) (21.5%)

Software services 37,798 35,925 1,873 5.2%

1 unchanged sentence

Wages and benefits 515,667 513,805 1,862 0.4%

625,734 635,480 (9,746 ) 1.5%

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

The increase in wages and benefits is related to an increase in staffing in product development, offset by $72,290 capitalized as internal use software in the quarter (November 30, 2020:

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

In addition to a nominal increase in operating costs associated with product development salaries and wages, the Company capitalized $102,865 in software development costs in the six month period ended February 28, 2022 (2021:

Depreciation and Amortization

Depreciation and amortization expense increased to $27,172 for the three-month period ended November 30, 2021 from $24,315 for the period ended November 30, 2020, an increase of 11.7% due to a amortization of software development costs associated with Play MPE® recipient player applications.

Depreciation and amortization expense increased to $53,746 for the six-month period ended February 28, 2021 from $50,715 for the period ended February 29, 2021, an increase of 6% due to amortization of software development costs associated with Play MPE® recipient player applications.

Other earnings and expenses

Interest income was $1,043 for the three-month period ended November 30, 2021 (2020:

$1,464) and is derived from one-year Guaranteed Investment Certificates.

During the three-month period ended November 30, 2021 we had net income of $165,601 (2020 - $250,702).

For the three-month period ended November 30, 2021, adjusted EBITDA was $217,635 (2020 - EBITDA $286,402).

Interest income was $3,007 for the six-month period ended February 28, 2022 (2021:

$2,338) and is derived from Guaranteed Investment Certificates.

During the three and six-month period ended February 28, 2022 we had net loss of $202,610 and $37,009 respectfully (2021:

$29,466 net loss and $221,236 net income respectfully).

For the three-month period ended February 28, 2022, adjusted EBITDA was $109,211 (2021:

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.

5 unchanged sentences

The following is a reconciliation of net income (loss) from operations to Adjusted EBITDA over the eight most recently completed fiscal quarters:

2022 Q2 2022 Q1 2021 Q4 2021 Q3 2021 Q2 2021 Q1 2020 Q4 2020 Q3

Net Income (loss) (202,610 ) 165,601 91,699 69,594 (29,466 ) 250,702 158,187 54,899

Stock-based compensation 68,789 25,905 12,620 13,133 26,400 12,848 17,936 15,276

Amortization, stock-based compensation and deferred leasehold inducements 26,574 27,172 27,969 26,673 13,133 24,315 34,641 33,194

2 unchanged sentences

LIQUIDITY AND FINANCIAL CONDITION

As at November 30, 2021, we held $2,536,426 (August 31, 2021 - $2,752,662) in cash and cash equivalents and short-term investments.

Our short-term investments consisted of one-year Guaranteed Investment Certificates (GICs) held through a major Canadian financial institution, and had reached maturity prior to November 30, 2021.

At November 30, 2021, we had working capital of $2,682,199 compared to $2,561,480 as at August 31, 2021.

During the three-month period ended November 30, 2021, the Company completed NCIB purchases totaling $44,166.

Net cash used in operating activities for the three-month period ended November 30, 2021 was $52,626 (2020:

net cash provided by operating activities of $441,654).

The primary reason for the decrease in cash flows from operating activities is related to changes in working capital which are expected to reverse over time.

Net cash used in investing activities for the three-month period ended November 30, 2021 was $80,287 (2020:

cash provided from investing activities of $758,561).

During the three-month period ended November 30, 2021, $72,290 was used in software under development.

Net cash used in financing activities during the three-month period ended November 30, 2021 was $44,166 (2020:

$nil), related to cash used to repurchase and retire 30,300 shares of common stock (2020:

Nil) of the Company under the NCIB.

As at February 28, 2022, we held $2,433,506 (August 31, 2021:

$2,752,662) in cash and cash equivalents and short-term investments.

Our short-term investments consisted of one-year Guaranteed Investment Certificates (GICs) held through a major Canadian financial institution and had reached maturity prior to February 28, 2022.

At February 28, 2022, we had working capital of $2,508,386 compared to $2,561,480 as at August 31, 2021.

During the six-month period ended February 28, 2022, the Company completed NCIB purchases totaling $179,400 (2021:

Net cash provided from operating activities for the six-month period ended February 28, 2022 was $69,128 (2021:

The primary reason for the decrease in cash flows from operating activities is related to increased expenditures designed to accelerate revenue growth.

Net cash used in investing activities for the six-month period ended February 28, 2022 was $169,680, compared to cash provided in investing activities of $787,067 for the six-month period ended February 28, 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, 2022 was $188,176 (2021:

$45,004), related to cash used to repurchase and retire 143,100 shares of common stock (2021:

41,285 shares of common stock) of the Company under the NCIB and to repurchase stock options.

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