Destiny Media Technologies, Inc. Announces Third Quarter Fiscal 2014 Results

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Jul 14, 2014, 04:01 ET

VANCOUVER, July 14, 2014 /PRNewswire/ - Destiny Media Technologies (TSXV: DSY) (OTCQX: DSNY), the makers of Play MPE^®, a system for the secure distribution of pre-release music to radio and the developer of Clipstream^®, a new cross-platform player-less video streaming format, today announced its financial results for the third quarter of fiscal 2014 ended May 31, 2014.

Highlights

3Q FY14 revenue increased eight percent year over year to $942,472, and 16 percent sequentially from 2Q FY14
3Q FY14 net income of $80,100 versus $26,595 during 3Q FY13
3Q FY14 operating cash flow of $148,597 during the quarter
Licensing agreement to transmit digital fingerprints and meta data to Shazam
Commenced service as exclusive supplier of digital distribution services to Sony Music Entertainment Australia
Chargeable transactions with Universal Music Group grew by 83% and exceeded the global commitment two of three months during the quarter

"We saw meaningful revenue traction in our Play MPE business this quarter and continue to take a disciplined approach to adding sales, marketing and development resources to the enhancement and new service offerings of our Clipstream® video cloud service," said Steve Vestergaard, President and Chief Executive Officer at Destiny Media Technologies. "To further accelerate the growth of our Play MPE business, we are developing a web based encoder to allow for a more user friendly experience, and pursuing opportunities to expand Play MPE into content segments beyond music delivery."

"Continued expansion of Play MPE® use within the U.S. independent music sector was a key contributor to the growth in third quarter revenue. This segment has experienced growth in 23 of the last 24 comparable quarters. Also, in two months during the quarter, our largest major label customer exceeded their level of committed usage. Continued growth in usage from this customer will now drive Play MPE® revenue going forward," said Fred Vandenberg, Chief Financial Officer of Destiny Media Technologies. "Through our licensing agreement with Shazam, we have simplified the process for the labels to introduce new music, and have strengthened Play MPE's position as the industry's leading secure delivery of pre-release music."

Third Quarter Results

Service revenue for the third quarter of 2014 increased eight percent to $942,472, versus $873,866 during the prior year quarter. On a sequential basis, revenue increased 16 percent from the second quarter of fiscal 2014. The increase in revenue was primarily related to increased usage by U.S. independent labels and in Australia, as well as a more favorable exchange rate versus the Euro.

Net income for the third quarter was $80,100, or $0.00 per diluted share, versus net income of $26,595, or $0.00 per diluted share, in the prior year quarter.

Cash and cash equivalents on hand at the end of the third quarter was $1,038,930 versus $870,939 at the end of the second quarter. The company generated $148,597 of operating cash flow during the third quarter.

Third Quarter Earnings Conference Call

Destiny Media Technologies will host a conference call at 5:00 p.m. ET (2:00pm PT) on July 14, 2014, to further discuss its third quarter fiscal 2014 results. Investors and interested parties may participate in the call by dialing (416) 764-8688 or (888) 390-0546 and referring to conference ID # 03977398. A written transcript and archived stream will subsequently be made available on Destiny's corporate site at http://www.dsny.com in the Company's proprietary Clipstream^® format.

About Destiny Media Technologies, Inc.

Destiny Media Technologies (DSY.V) (DSNY) provides services that enable content owners to securely display and distribute their audio and video content digitally through the internet. The Company's two major services are Clipstream and Play MPE^®. Clipstream (www.clipstream.com) is a video format that plays on any modern smart phone, tablet, internet, TV, or computer. With Clipstream, there is no player to configure or install, videos never go obsolete, and there are up to 90% cost savings from caching. Play MPE (www.plaympe.com) provides a standardized method to securely and cost effectively distribute pre-release music to radio stations and other music industry professionals, before it is ready for sale. More information can be found at www.dsny.com.

Forward-Looking Statements

This release contains forward-looking statements that reflect current views with respect to future events and operating performance. Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in these forward-looking statements. Destiny Media Technologies is not obligated to update these statements in the future. For more information on the Company's risks and uncertainties relating to those forward-looking statements, please refer to the Risk Factors section in our Annual Form 10-K ending August 31, 2013, which is available on www.sedar.com or www.sec.gov.

Destiny Media Technologies, Inc.
CONDENSED STATEMENT OF OPERATIONS
(Expressed in United States dollars)
Unaudited

	Three Months	Three Months	Nine Months	Nine Months
	Ended	Ended	Ended	Ended
	May 31,	May 31,	May 31,	May 31,
	2014	2013	2014	2013
	$	$	$	$

Revenue	942,472	873,866	2,675,695	2,818,055
Operating expenses
General and administrative	271,855	285,857	1,041,520	675,454
Sales and marketing	330,830	207,492	1,057,221	651,092
Research and development	237,790	336,083	770,636	1,193,515
Amortization	39,655	28,746	104,063	84,792
	880,130	858,178	2,973,440	2,604,853
Income (loss) from operations	62,342	15,688	(297,745)	213,202
Other income
Interest income	14,758	18,907	47,405	59,641
Income (loss) before income taxes	77,100	34,595	(250,340)	272,843
Income tax recovery (expense) - deferred	3,000	(8,000)	—	(73,000)
Net Income (loss)	80,100	26,595	(250,340)	199,843
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments	75,804	(13,465)	(78,877)	(96,429)

Total comprehensive income (loss)	155,904	13,130	(329,217)	103,414

Net income (loss) per common share,
basic and diluted	0.00	0.00	(0.00)	0.00

Destiny Media Technologies, Inc.
CONSOLIDATED BALANCE SHEETS
(Expressed in United States dollars)
Unaudited

	May 31,	August 31,
	2014	2013
	$	$
ASSETS
Current
Cash and cash equivalents	1,038,930	1,521,552
Accounts receivable, net of allowance for doubtful accounts of $5,535 [August 31, 2013 - $11,392]	486,165	419,697
Other receivables	67,613	16,636
Current portion of long term receivable	112,205	99,649
Prepaid expenses	33,962	29,653
Deposits	22,962	35,611
Deferred tax assets - current portion	130,000	130,000
Total current assets	1,891,837	2,252,798
Long term receivable	374,643	440,889
Property and equipment, net	315,126	234,969
Deferred tax assets - long term portion	729,000	729,000
Total assets	3,310,606	3,657,656

LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Accounts payable	102,526	79,622
Accrued liabilities	202,207	221,720
Deferred leasehold inducement	—	2,892
Deferred revenue	31,100	70,415
Total liabilities	335,833	374,649
Commitments and contingencies
Stockholders' equity
Common stock, par value $0.001
Authorized: 100,000,000 shares
Issued and outstanding: 52,865,173 shares [August 31, 2013 - issued outstanding 51,981,964 shares]	52,865	51,982
Additional paid-in capital	8,949,484	8,929,384
Accumulated deficit	(6,037,356)	(5,787,016)
Accumulated other comprehensive income	9,780	88,657
Total stockholders' equity	2,974,773	3,283,007
Total liabilities and stockholders' equity	3,310,606	3,657,656

Destiny Media Technologies, Inc.
REG G RECONCILIATION OF NON-GAAP MEASURES
Adjusted EBITDA Calculation Reconciliation of Net Income to Adjusted EBITDA

	Three Months Ended May 31, 2014	Three Months Ended May 31, 2013
Net (loss)income	$80,100	$26,595
(Benefit) provision for income taxes	($3,000)	$8,000
Interest (income) expense	($14,758)	($18,907)
Depreciation and amortization expense	$39,968	$30,692
Adjusted EBITDA	$102,310	$46,380