Jeff Elliott - IR Steve Vestergaard - CEO Fred Vanderberg - CFO

Hubert Mak - Cormark Securities

Good afternoon, ladies and gentlemen, and welcome to Destiny Media Technologies Inc. Fourth Quarter and Fiscal Year 2015 Results Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. [Operator Instructions] This call is being recorded on Wednesday, November 25, 2015. I would now like to turn the conference over to Mr. Jeff Elliott, Investor Relations. Please go ahead.

Thank you, operator, and hello everyone. Good afternoon and thank you for joining us on the call today. Before we begin, I would like to announce that we will be referring to today's earnings release which was sent to the newswires earlier this afternoon. I'd also like to remind everyone that this conference call could contain forward-looking statements about Destiny Media Technologies within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based upon current beliefs and expectations of management and are subject to risks and uncertainties, which could cause actual results to differ materially from those forward-looking statements. Such risks are more fully discussed in the company's filings with the SEC and SEDAR, and the company does not assume any obligation to update information contained in this call. During this conference call, we will discuss certain non-GAAP financial measures. These non-GAAP financial measures are presented in the supplemental disclosures and should not be considered in isolation of or as a substitute of or superior to the financial information prepared in accordance with GAAP and should be read in conjunction with the company's financial statements filed with the SEC and SEDAR. The non-GAAP financial measures used in the company’s presentation may differ from similarly titled measures presented by other companies. A reconciliation of the non-GAAP financial measures to the most comparable GAAP financial measures can be found in the earnings press release. On today's call are Steve Vestergaard, the Chief Executive Officer and Fred Vanderberg, the Chief Financial Officer. With that, I’ll turn it over to Fred.

Thanks, Jeff. 2015 was a year that saw some significant changes in a company that had an impact on our results both from the internal restructuring of staff and to a relatively significant fluctuation in exchange rates. As the U.S. dollar strengthened relative to both the Euro and the Canadian dollar, we saw an unfavorable impact on our revenue, but a favorable impact on our costs. As a result, total revenue declined by 7%. However, ignoring the impact of FX, Play MPE revenue grew by 4% for the year from increases in revenue in Australia and U.S. independent clients. As far as restructuring, we saw approximately one-third of our staff changeover. We moved offices and we have begun outsourcing some of our server infrastructure. We expect that approximately 17% of our salaries and wages are from nonrecurring costs and we will also see some smaller costs be eliminated. EBITDA that’s net earnings before interest, taxes, depreciation, and amortization was a net loss of approximately 500,000. Cash used in operations during the year was 70,000 as well at the yearend we had approximately $400,000 in cash, $265,000 in long-term receivables; and subsequent to year end, which of course is not in the disclosed cash balance was a private placement of $500,000. The current burn rates I think will last well into fiscal 2017. And with that, I will turn it over to Steve for some more detail on the results.

Thanks Fred. So thank you for all joining us in the call today. And I want to start by saying we are kind of proud of the accomplishments our staff have made in 2015. As Fred said, it was kind of a year of change. We tried a bunch of things. Some worked, some didn’t. But this is a much different company than it was a year ago. 2015 was about laying the foundation for growth in fiscal 2016 and implementation of our disciplined commercialization strategy. But before I review the year, I want to just remind everyone exactly what we do here, I know there are some new investors on the call. So our company has two business lines. Play MPE is a secure automated systems that record labels use to move broadcast quality, new music releases, securely to trusted recipients such as radio, Internet radio, bloggers, DJs and VIPs. All the major labels are active customers along with many independents. And as we grow recipients in new geographies, incremental revenues and margins are extremely high. This system represents the bulk of our current revenue. Clipstream is a new solution that uses web servers to deliver a high quality streaming media directly to the browser. So we have abandoned the more common approach of using the video tag and streaming servers, transcoding to various formats and viewing through plug-ins. And because we are doing that, we are able to deliver features and benefits to the publisher that they really need and want but they can’t get through their current standard html 5.0 video tag. So our technology now allow users to upload and send videos from any device regardless of format or operating system and that’s been the case since July of this year. So from an investment perspective, both businesses have recurring revenue and will be steady and predictable over time. Also because the business requires limited capital investment, incremental contribution margin and returns should be very attractive over time. So now I would like to review each business one-by-one here. So first I will review Play MPE. We’ve spent much of the year this fiscal year reengineering the backend for Play MPE. So we currently have five server facilities around the world forming our own mini-cloud, but we don’t want to be in the cloud business. That’s been really costly in terms of maintenance and our expertise isn’t hardware and networking, and it’s costly to constantly replace dozens of aging servers, RAID arrays, and routers, so that’s what we have been doing for the last 12 years. We are currently entering the Christmas period, that’s a window of opportunity for us, where few songs are released. We are taking advantage of that window of opportunity to phase out our current backend across those five server facilities. We are moving everything over to Amazon cloud services. That doesn’t sound like a big deal but it is, it’s a no small feat. Just as an example, just moving our song library took many days even at backbone transmission speeds. Our system has so many parts with encoders, repeaters, and nine versions of the player in two dozen languages and integration with third parties from Shazam to Clear Channel to the BBC, it's a big complicated system that -- it's like trying to move a house or something. So we're currently experiencing additional costs with the consulting that's involved in the move, and as Fred said, a lot of these costs are not recurring, so a lot of our recent expenses are not recurring. And as we do the move, there has been duplication where we’re playing for two backends, so we’re playing for our five facilities, but we're also paying for Amazon, paying for Amazon as there is kind of an overlap during that transitional period, but once we get past it, we expect actually very significant savings in 2016. This new approach will be much more secure, it will be cheaper, and it will give much better performance to our customers as we can light up nearly unlimited servers in real time to match hardware resources exactly to demand. A particular advantage is that Amazon has servers all over the world, so we can let users download music from a server that's physically closest to them at much higher speeds than what they get now. So we're phasing in the transition, doing it in steps, and we will be moving components of the system weekly between now and Christmas, it's challenging as the system can't go down for even a few seconds because it's always being used and until the final switch over of the Christmas holidays, we've got to kind of move things without interrupting anything. You may have noticed our new website went live yesterday. This was part of Phase 1 where we successfully moved over much of our core functionality to the AWS cloud. So we're under contract with all of the major record labels. One of the reasons we're investing so heavily in infrastructure that can scale to handle volumes as much larger than we do now, is that we expect to work with majors to make our system as standard in many new countries around the world that currently don't use us. We see these new geographies as a potential driver of growth in 2016, but we are also investing heavily in marketing both to keep existing labels and to drive activity with existing customers, but also to sign up new independent labels that haven't been aware of our service. We expect our heavy outreaches into advertising the search engines and billboard magazine, our new partnerships with new resellers, the syndication of our charts and our new features in our system to drive increased independent usage. Behind the scenes, we have been developing a number of new features and technologies that we’ll be able to start rolling out after Christmas when the backend is fully moved into the AWS cloud. We expect to offer a new web-based encoder better recording and analytics, the new upload service for independence and a new promotional service where we can promote new music via a no log-in of playerless streams. We're also building a number of internal tools including a new billing system lets us better monetize transactions we currently don't get paid for. We've also been walking down our intellectual property. We think our watermarking technology is one feature that really sets Play MPE apart, but we see demand to watermark music and video even outside of the Play MPE system. So the watermark can actually be an independent business. So the main Play MPE security system is patented, but recently we've received additional grounds for our watermarking this year. We currently have three U.S. patents with the fourth pending and nine international patents. There is no other distribution system with a global reach and the futures of the Play MPE system. We think we can drive good shareholder value going forward as there are few incremental costs as we drive new revenue. The Play MPE system has been driving predictable positive cash flow for years and is actually financed the complete development of our second offering which is Clipstream, so how that for a seagway. So getting into Clipstream, when our sales teams identified the flash with going to die, the market was going to become highly fragmented way back in 2010, five years ago, I presented a near imposable engineering challenge to our development team. JavaScript commands in a canvas tag, kind of like a painter's canvas were available in new browsers and the idea was to used our own proprietary video technology and the JavaScript decoder to create a solution that would play everywhere without needing plug-ins to support by the browsers or a chips. A pure JavaScript solution would have huge advantages and be extremely disruptive as it created maximum flexibility, a customer request could be built and rolled out and instantly work everywhere without waiting for adoption. And by comparison if they try to build a new feature into any of the other systems that would require getting browser adoption, getting it put into the chip or having a plug-in. We built other prototype and began filling patents in 2011, we currently have four patents granted and three pending in the U.S. and three granted and dozens pending worldwide. Copycat technology started to appear in 2015 and although that’s a bit flattering five years in, we intent to start enforcing our patent rights in calendar 2016. Our JavaScript is painfully slow and its missing key functionality found in another computer languages and it has taken us many years to perfect our raw engine and it has taken us even more time to build services around the engine such as the Clipstream cloud which we know market to the customers. So in my mind our first service that meet customer needs was our summer release of our cloud product in July when coding took place in the cloud. That release had a number of challenges and so we released a new forward version in October which has been very solid and appreciated by customers. We’re getting really part of the feedback. In particular the October release had a large quality improvement that been as much more competitive with other technologies. That said, there is still a few things we need to address with customers and some of those new features are already in testing for rollouts in our winter release early next year. So some of the stuff has built and being tested now and we anticipate beta releasing in our winter release. In particular we’ve improved our 2011 video codec incrementally over the years, with a new R&D project we’ve been working on a brand new codec that we’ve started from scratch that can completely replace the 2011 codec. I’ve seen early demos and my jaw just dropped as the quality is way better than most commercial solutions as similar bit rates. So we expect to be better at the same bit rate than what’s out there now. We’ve been marking fairly heavily mostly through the search engines, but our initial focus is not just being to get sales, but to talk to customers and figure out what they need for our service to help them. This feedback could be invaluable and has taught us what to build and after the -- after we build some of these things in the winter release we plan to start raising our profile. So the winter release is kind of a one that we’re waiting for. We see our largest opportunity as being in the ad space and have been working with the tech partner where we plan campaigns with millions of impressions per day. But besides the ad space, we see a big opportunity integrating with third parties, where the third-party have the solution that they are selling where video is not the main component, but where they would like to build video-in a feature in their offering. So we released a new API earlier in November which is kind of like a gateway that lets them plug us into their website or software. So as an example, realtors can upload video to their local real estate site, consumers could upload video to classified and dating sites, online retail could let manufacturers provide product videos, ISPs could offer video to their own hosting customers, you get the possibilities are endless, there is tons of businesses out there that would love to build the video-in. So what the API is, it is kind of like a little gateway that they just plug in and they plug all of our Amazon and backend and everything into their system. So we’ve a number of customers currently doing trial integration for testing. So we just released in November and we’ve already got people playing with it trying to integrate it. And we’re fairly far along with a really improved API which we expect to release before Christmas. So this whole API business is something that we’re going to focus on fairly heavily. So I know it's being long and frustrating road for investors, you know it's frustrating for us, if I had known five years ago that it will take five years, I am not sure we would have started down the Clipstream journey, but the good news is we find that five years for R&D were the positive Play MPE cash flow and I think is easy to forget just how much, how profitable Play MPE is. And we now have a fully paid for technology that we have no debt, that we believe is going to be a formidable for us against the incumbents. The advantage of Clipstream are just too compelling what sort of efficiencies are mostly addressed and we expect most of them to be addressed in the winter release. So we’ve been negotiating with a Clipstream resellers in other territories and we expect to sign some, probably early in the New Year and we think we can grow pretty quickly when we’re ready. So just like Play MPE, Clipstream is going to be a nice recurring revenue business, where we either get rewarded royalties from our ad in API partners, we’re recurring monthly revenues from our cloud users. The system will be low churn where once we sell somebody once and incur those upfront costs once, we’re probably going to keep them for many years to come. So as Fred kind of alluded to we have reduced expenses and are trending once again towards profitability. Even though we have doubled our office space with our new location, as Fred said, we have had a turnover of about a third of our staff, brought in a lot of new talent. We have brought in a number of senior people. Some worked and some didn’t. But by and large we’ve been improving our talent pool with new engineers, specialized in video and we have been working with consulting partners with expertise in video hosting. We did all of that without significantly increases expenses. We think that we have been really efficient at creating a foundation for growth but we did it without doing on the backs of existing shareholders. We have tried to be fairly frugal with the way we’ve spent resources. So in closing many of the growth initiatives that we have been working on throughout the year are now in place and we believe that we have laid the foundation for growth going forward. You will not be making forward-looking projections in either business. But I can tell you we are very excited about the progress that we have made this year and our growth prospects for the next several years. So on that note, I will now turn the call over to questions. And thank you.

[Operator Instructions]. Your first question comes from Hubert Mak from Cormark Securities please go ahead.

Hey thanks. First of all on the Play MPE, can you talk about sort of the renewal agreement here with UMG, can you give us a status update on that?

Yes, so Fred is actually working through that contract so, I’ll let him answer that question.

Hi Hubert. Over the summer, we -- I guess in the spring, we finalized the main deal points and then over the summer we have gone through approvals with first their finance group, then their operations people, and right now we are just -- I’m in regular contact with their legal team and that’s moving forward as a last step, as we speak.

Okay and then on the --.

Yes, it’s a little ridiculous how slow the process has been, but we kind of agreed to the core deal points in April. We thought that we would have got something a lot quicker. But the thing that’s important to realize is we are actually under contract with Universal, it’s an old contract. So the new contract and the old contract have very similar revenue impacts like the amount of money that we make next year is going to be similar. So there is lot of things that encourage them to growth the business in the new contract, but we haven’t felt a lot of urgency.

Okay, and sorry I know I missed out last about the growth, but in terms of your constant currency I think you spend year-over-year, this past year was 4% I believe, so is that sort of the growth rate that you are thinking about for the business for next fiscal year?

So like we said, we are not going to give any forward-looking projections. If we were to grow fairly rapidly, what it would involve is getting the majors to go into new markets. So besides Universal getting Warner and Sony active in new countries, it would also involve getting existing customers to use us more and also signing up independents. So some of those are directly under our control and some aren’t. The ones that are under our control are specially signing up the new independents and getting people to use us more, and we’ve been putting a lot of focus on that, so staff have been doing a lot of travel and we have been investing fairly heavily in marketing. We signed up reseller partners. We are syndicating our charts. We are putting in new features that benefit the independence, and we are hopeful that that’s going to start paying off in 2016.

One thing I will add to that is it doesn’t really jump out as you – looking back the results that we signed during the year, we signed Sony in Norway and then immediately following the year which of course doesn’t hit the results, we signed Sony New Zealand and these aren’t large agreements in and of themselves, but they provide a little bit more traction in terms of Play MPE in those local markets.

Yes, and what happens is when we sign up a major event in a brand new market that’s like a magnet, it’s just like gravity that pulls in all the independents and in a lot of markets the independents could be half our revenue. But the thing is we can’t close the independents first, we can’t light up the market with independents, we need the majors to come in and get the traction first.

And then is there sort of a time line of when you think the major will push on sort of these international markets?

So generally, the way the industry works generally; Sony and Warner follow Universal’s lead, and that's why even though we're under contract with Universal, the new contract with the new terms is really important because once that gets signed, Universal is really incented to kind of be the trailblazer and to go into new markets and build them out for us, and And as they go into a market that makes it much easier for us to close Sony and Warner, and once you have the three, it becomes fairly easy to get the independents. So you're asking timeline, some of it’s out of our control, one of the big things is how quickly this Universal contract gets signed.

Okay and then switch over to Clipstream, and can you maybe just hone in on the key sort of technical improvements that you have done or at least is the winter release, what's the timeframe of that really, [indiscernible] early next year and then what technical improvements that you think that we should be aware of and how that would be viewed by the market?

Sure, so the head of developments begged me not to put a month to the winter release, but it will be early in the New Year. Like you said, a lot of the new features are already built in and in testing. One of the things that is changed from a year ago is we actually invest fairly heavily in testing, we do market research, we use third-party testing companies and so we’ve built something and we spent a quite a bit of time before it actually gets into a live release product. But in answer to your question, the June release addressed one of the big issues and that's the old version required you to download an encoder software, and it was Windows-only, and it required you to encode on your computer and that was really slow, so if you had a slow computer, it could take 10 minutes to encode a 1 minute video. And customers just wouldn't put up with it, it wasn't acceptable, so that's why I say our first acceptable version was the June release, June 2015, and that’s when we could upload from any device, you can upload from an iPhone or Mac whatever you want. And it will encode as fast as you want it to encode because we're able to harness as many CPUs as necessary to encode as fast as you want it to be encoded, it's just a matter of payment. That one was missing a bunch of things. One thing we got complaints with was the quality wasn’t comparable to some of the other solutions. We made a big quality improvement with the October release. The October release is a stable version that customers like, it's a very competitive version, and we're getting really good customer feedback on that. So it's been out for about a month and this is all subsequent to year-end. So this is not in the 10-K, but we're getting pretty good feedback from customers with this October release. With that said, it would be great to even get the quality better as we would be making incremental improvements to the current codec and the current codec was built actually in 2010, it was perfected in 2011. We will be making incremental improvements for five years and so what we want to try as an experience is over the last year as we went back to the drawing board and we’re going right back to scratch and then parallel is an R&D project, we've built a brand new codec. And so in the winter release, we plan to swap out the 2010 codec for the new one we’ve done in parallel. And like I said my jaw dropped when I saw it, it compared to like a H.264, it's a significantly better quality. It plays in JavaScript just extremely impressive so we're expecting that to rollout early in the year. Some of the other things that are kind of missing from the current version is your analytics aren't good as other offerings, some of our reporting are pretty weak. So there is a bunch of things that customers have kind of pointed out to us and we're just going down to check the list and then just checking them off and trying to get them all into this next release. So the next release we think that we're going to be happy enough with that that's the one that we're going to get, kind of well with and trying to get some press and get some media attention.

Okay and then just lastly I think just can you talk about balance sheet and I think Fred you mentioned that -- maybe we can talk about the cost structure, how the cost -- I think you said there was some one-time costs incurred in recent quarters so can you comment sort of is the cost structure going to come down, I think in 2016 -- I guess fiscal ’16 and also I am not sure if that conflicts with what I heard earlier in your comments, but I think you just suggested that there is going to be a burn in 2017?

So before you start Fred, just to interject a burn is based on us not increasing revenue if not changing expenses, so our current -- at the current loss that’s how long the cash would last.

Maybe that wasn’t clear for me than, does that mean that you're expecting a burn going forward or is that just you're saying that’s worst case scenario, I’m unclear on what your comment was?

Well, we do have a current burn, but looking back at I guess your question is, it looks at two different things. If you look back I think you're looking -- we do have a number of cost that will not reoccur like there is certain cost associated with the staff turnover that won’t reoccur staff that we’re now replacing that sort of thing. And cost associated with the move both to external server infrastructure that does reoccur very briefly in fiscal 2016 but doesn’t -- isn’t a long-term impact. In terms of cost associated with salaries and wages that you won’t see going forward I expect something along the order of 15% reduction in staff cost. Now having said that, you do see a fairly significant impact from exchange rates toward staffing cost as they are expressed in U.S. dollars, but we fund those expenses in Canadian dollars. So as that rate changes those cost change.

So just to be clear then if I was look at Q4 operating expenses if you're suggesting that might come down about 15%?

I was speaking more from fiscal --.

Fiscal '15?

Yes. Fiscal '15 from the year, but I would expect that cost from Q4 will also decline too.

Yes, so I’ll answer it in a different way, again we’re trying not to give anything forward-looking here, but we will be spending little bit more on marketing and sales resources, but we expect to tie that to increased revenues and that may not match perfectly, one may go a little bit ahead of the other. But the goal for next year is to get back to being cash flow positive again. Moving into loss position was an intentional thing that we did to try and help us grow things little bit more quickly, but if all goes well and Clipstream starts generating revenue that we expect and it starts contributing it’s fair share, then we’re hoping to go back to cash flow positive position.

And that’s in fiscal '16 then?

That’s the goal.

Thank you. Your next question comes from Vergile Ramsey [ph], Private Investor. Please go ahead.

Steve, I’ve been using ESPN3.com to watch basketball games and the quality of my location is much better with your Clipstream demos, then I get on ESPN3. Have you had any contact with or are you doing anything with those sorts of folks in terms of sales?

Yes, I don’t want to be name dropping here, but yes, we’ve been talking to some big groups including some of that have sports properties and sports maybe where we get going first. The big issue with our quality is, it depends on where you are. So in some regions where the ISPs are good and they don’t throttle bandwidth or anything, our quality can be fantastic. We’ve had the most challenge in markets like Manhattan as an example, where bit rates are little bit sporadic and uncertain. So the October version addressed that, I am getting reports from bad markets that the quality is very acceptable. But when we run with the winter release, with the new codec and with the new quality we are expecting that opportunity -- in some cases publishers don’t care, if it’s just a news item or something they don’t care that much about the quality. But in cases like sports where quality is important, yeah we see that as a huge vertical. But most likely you get the [multiple speakers] most likely we get to that vertical through our APIs though. So they would want to just build us into their work flow so that they could upload the video to their site and not have go through us directly. So they would want to go through their own servers first.

Very good. One question regarding the Universal contract I think you had mentioned on a previous conference call that the new contract was going to be more profitable to Destiny, is that the case?

Yes, but over the longer term. So basically the concept is when they go into new market there is some upfront cost and so the contract recognizes that. The terms of the contract are confidential so I can’t really get into it in any detail, but over a couple of years it’s going to generate more money for us. But besides what we get from Universal directly, Universal is the trailblazer, they go into a new market and that follows with revenue from the other majors and from the independents. So it’s actually the other majors and independents that we are really going to be focused on.

Thank you. [Operator Instructions]. Mr. Vestergaard there are no more questions at this time. Please proceed. Sorry Mr. Vestergaard we do have one more question and that question comes from Dave Zelman, private investor. Please go ahead.

Yes, I listened in the last conference call and the revenue, you had some people sign up for Clipstream and we were expecting to see some revenue, a little bit of revenue increased for the Clipstream product that you have to offer in the quarter 4. Did that happen?

Yes so we have got more people signing up for the monthly registration but it’s anywhere from a $20 a month to a $69 a month. So the impact of that in the quarter, if somebody pays us $69 for three months isn’t significant, so revenues that you were seeing was mostly with market research and to some extent the market research has actually been in a little bit of decline. And so the new business from the opportunities we signed up the ad group that is all Q1 stuff, that’s not going to be in the financials. But that’s kind of offsetting some of the stuff that we have lost from existing. So in answer to your question, the new offering, the new cloud offering and the API, the interest in the sales are growing. Nothing to write home about, but that’s not going to show directly in revenues.

You are saying that it looks like this first quarter this fiscal that you did have an increase we are just not reporting at this particular time for year 2015 fiscal?

Yes, so we are intentionally not disclosing what Clipstream is in Q1, we just don’t want to talk forward-looking.

Right.

But yes it’s not going to be too significant because its -- the registrations again at a $69 level don’t sign that up to anything. What our strategy is, is to use those recurring registrations to build like a nice recurring revenue stream, but to use that as almost a marketing tool to sell the bigger deals where we make the bigger money. They mentioned ESPN, that’s the type of whale that we want to target and so we get exposure through our recurring cloud, but we’re going to make the big money by selling the API and by selling the ad services.

Okay and the people are paying the $69 and they are just basically testing that for that price and if they want to go bigger packages later they will do that, is what you are saying?

It depends, it could be somebody small like a Law firm that just want to put a couple of videos on their site, there is a lot of small guys that will come in and use the cloud. But the cloud is giving us exposure to the bigger opportunities so it’s kind of like prudent approach. And then on the bigger side a lot of guys are waiting for our winter release, that’s where they are going to get really excited.

You've also said some total -- it must have been a year so ago when we thought that Clipstream was really going to take off, but there was a few bugs in it that you guys had to fix at that point but you had reported that you were going to use Amazon’s cloud at that point in time because they were [indiscernible] and then you were going to build your own cloud, so now listen to earlier today the conference that you were just not going to do your own cloud, cost effective. You're just going to stick with Amazon form here on out or does that change down the road?

No, so as we're building so we have a choice, so if you like a Google of somebody is cost competitive against Amazon we're not going to be tied to Amazon, we can switch. But there is kind of two pieces, so Clipstream, yes, we built Clipstream into Amazon, I think we first start to go in live early calendar 2015. The July release was the first public one that was all Amazon. This Clipstream is kind of all Amazon now. The Play MPE is mostly on our own cloud, we have five server facilities around the world and that’s -- we could really switch when the records labels are sending songs every couple of seconds, but we're in a slow period, like in Christmas they don't send too much. So between now and Christmas we're moving all the Play MPE infrastructure to Amazon.

[Multiple speakers] work through your own?

We are expecting save a ton of money when we do that but the problem is the transition is expensive, so during the transition we have to bump up in costs.

All right, so another question, how many songs do you have, to your Play MPE -- in your cloud at this point, do you know?

I actually don’t even remember, but if you go to our front page of dsyn.com, on the bottom there is a statistic's link and you can click on it and it gives you real-time stats including the number of songs.

Right, so you've just guest up top your head I know you don't know the exact digit, but just close around about figure?

We’ve been doing this since 2003 and to tell you the truth, I don't look at the stats very often, so I don't even remember.

The reason why I asked the question was, do you see sometime in the future that you can be a streaming service that could be like the other streaming -- music steaming services that are out there -- that you might be getting in?

Yes, the problem is a lot of those streaming services are lost leaders. They're not generating positive cash flow and it's hard to compete in a business where people are willing to lose money. So by enlarge we'd rather be plumbing. So if one of the things we've talked about is helping the majors power their own streaming service. The majors are little uncomfortable competing against their own retail channels, that’s not to say they won't do it, but they're a little reluctant. But by and large, we wouldn't want be customer facing with something like that, we wouldn’t want to be want to be more behind this scene. But yes, we've got the content and we've got the technology and we've got the security, we've got the watermarking, so that is something that we'd be capable of doing.

But you’re saying that you don't really look at doing that because there is not enough revenue to do that?

I think it's going to be a cash intensive business like if you were to just go and start your own streaming service, you would have to put a ton of money into it, there is a lot it can come with so you’d have to fight. And it’s like Wal-Mart or somebody came and wanted to start a streaming service, we would be more than happy to power up for them. But we don't want to be the ones spending money on advertising to get to the consumer.

Speaking on the advertisers, I did see a couple of advertisers just one in Force magazine for Clipstream and also one in [Indiscernible], I’m sure you have a bunch of others out, I just happened to go through something I saw, that looks like that Clipstream [Indiscernible]?

Yes, we have been investing fairly heavily in marketing and like I said with this current version, it is getting up some sales, but the main intention of marketing was to get customer feedback, so the whale customers are coming in and they're telling us exactly what they want and that's what we're building for them. And one of the big things they want is real polished API, so we put out a pretty primitive API beginning of this month. Before Christmas, we actually expect to put out a fairly sophisticated API and so coming January we expect some of the bigger guys to go into intensive testing, it's a process. They test it, that doesn't mean they're going to buy it right away, you could take a while.

Right, okay.

And probably one of our first API customers will be our add partner and so they are going through the process of building our API into their system and then they will be able -- they like what we have already, they are already running ad campaigns, I’m under a confidentiality agreement, so I can’t say who their customers are or who they are, but they are ready to scale once they get the API integrated.

And one more question, but it just skipped my mind. Well, we’re good, looking forward but certainly not going to do, so I guess I can’t ask that question.

You can ask it, but I can’t promise I’ll answer it.

So I haven’t read your quality report yet, what was the total revenue received for the year 2015?

Fred, do you want to take that one?

Sure, the total revenue for fiscal 2015 was 3.323 million.

And that went down little bit because of the exchange rate is what you're saying?

Right, that explains more than the decrease, it's actually would have gone up by about 2% overall and 4% for Play MPE.

So not a significant increase excluding these exchange rates?

Well, one thing the year-over-year kind of really illustrates is how reliable our revenue is. So our revenues has -- we’re kind of at a worst case level because this existing revenue has been really predictable and recurring for many years and we expect it to continue to be predictable and recurring. And it basically covers all our cost, we’re a little bit shy but not much and so we’ve got that base to work with as we add incremental from both Play MPE and Clipstream. And the incremental [multiple speakers] cases.

There is another question I remembered what it was is, a couple of times in the past conferences you talked about Clipstream being YouTube like, now that doesn’t mean that you are going to have a YouTube site where people just go on and look up anything and watching anything, is that correct. So when you say YouTube like, exactly what does that mean?

Again one of these are pluming, as we’ve actually had companies that have services that are similar to YouTube come to us and asked to use Clipstream to power their sites. A lot of them are very niche. So it may not be a general purpose site, it maybe -- I don’t want to say what it is, there has been a few examples. But yes, so there is companies that want to set up YouTube type sites that we expect will become customers. But would we set up our own YouTube site? No, we want to be more behind the scenes.

And then another question is, I know you guys want to be listed on the NASDAQ, do you think that’s kind of happen this 2016 fiscal year by August 31st?

That’s kind of a forward-looking question too. I’ll answer it different way, we do intent to get a NASDAQ listing, we’ve kind have got all the balls in place, everything in place for that, but we would tie it to success. So we would want to do it when we back profitable and Clipstream is kind of firing on all cylinders. So I am not going to say how quickly that’s going to happen because I don’t totally know, but we’re going to do our best to make that happen as quickly as we can and when it does, yes, we will chase NASDAQ.

Alright, well you guys there is still doing a lot of work behind the scenes, so I appreciate that as an investor. One of the comments I made last conference call is, the best thing that I would like to see at this point for me as a private investor and also to tell all of my other investor friends out there about the Clipstream, it's just hard to do it right now without that revenue growth, to me the revenue growth is the key to the share price really, starting to escalate. So that’s what I understand is, that revenue growth -- and I know that you have to get all your bugs out before that revenue growth can really take-off also, I am hoping that it’s through the 2016 fiscal year, that’s just my hope, whether that will actually pan out, I don’t know.

We’re hoping the same thing, no promises. But we’re going to do our best.

I became investor into Destiny Media shareholder back in 2006 and I expected a lot more guys, but I am hanging in there because I see that there is a great potential there.

The good thing is back in 2006 we weren’t doing everything right and we are still not doing everything right, but we are doing a lot more right now than we were back. And I think one of the things we are really doing right is we started 2015 hiring talent and we have got a group that’s really talented and they are able to make things happen for us.

Yes, have you thought about going to Facebook and recruiting some of their talent?

I would rather go to Facebook and get them to license Clipstream.

Yes, there you go, that’s even better. I was just curious because I watch things on YouTube and they put a little -- it's not full screen so there is a video in the screen, so it’s a small one and that’s something that you guys are doing. So I am just wondering Clipstream -- not Clipstream but YouTube it hasn’t utilized that to its fullest or maybe they just figured they’ve got a system that’s better than what you have out there to offer them?

Well they have a certain amount of inertia. Some YouTube employees are probably familiar with us, but not necessarily the decisions makers. But yes YouTube would be one of our targets. I don’t think our current offering is good enough but we are hoping that our winter release will be.

Okay, okay. That you won’t be able to really -- you probably won’t really be reporting that on the first quarter after your winter release by that time first quarter be over with, so you probably won’t have anything to talk about on your first quarter of the fiscal year. Any changes to report on mainly other than the release?

So a different way of answering the question is, anything material we press release. So you can kind of see what happened in the quarter just by looking at the press releases. Probably the biggest thing was our new ad partner.

And who is that, can you name that one yet or no?

No they have asked to be -- they have asked that --.

Okay.

They are fairly big and they’ve asked to hold their name, that their names be confidential.

Okay I was just going to ask about the international, so is fairly so they must be --.

They are North American.

North America, that’s pretty big.

They are North American, but we are talking to some fairly large international potential customers. We are also talking international resellers and we expect to make some progress on that over the next couple of months. Not much happens in December but things are coming together.

Understood. Well I look forward to the next quarter, even more or so the second quarter report where I really would like to see some [multiple speakers].

Q2 is going to be more telling than Q1 for sure.

Yes that’s what I am thinking. I think on that each quarter but I am somewhat disappointed, but like I said I am pretty patient. So I would just like to see it increase a good percentage wise like 10% that would really be exciting to me. So okay really good I will exit this questionnaire and someone else if they want to talk to you.

Okay thank you.

Thank you very much.

I think we are out of questions here so we are going to look to wrap up the call. So I don’t -- the timing has not been the greatest I know that we have got -- I am a Canadian, but I know we have American Thanksgiving. We did have the -- we were kind of targeted to have our financials out for Friday, so we did kind of move it a few days early to at least try and reach some people. But I do kind of understand that the timing has not been the best. So if you were on the call and you felt uncomfortable asking a question or if you listened to this call on one of the repeats either on our website or through the repeat call in-line and you see a question that you wished you’d been able to ask, feel free to reach out to us. So you can reach out to Three Part Advisors. Their phone number is on every press release. You can also reach out directly to Fred or I. e-mail is probably the best thing to get started and we are more than happy to answer questions individually. So on that note, I appreciate everybody taking the timing to participate in the call. And thank you very much.

Ladies and gentlemen, this concludes your conference call today. We thank you for participating and ask that you please disconnect your line.