UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB


           [xx] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                    For the Fiscal Year Ended August 31, 2000

                                       or

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                SECURITIES EXCHANGE ACT OF 1934 [not applicable]

                         Commission File Number: 0-28259

                         Destiny Media Technologies Inc.
                        --------------------------------
        (Exact name of Small Business Issuer as specified in its charter)


           Colorado                                        84-1516745
-------------------------------                ---------------------------------
(State or other Jurisdiction of                (IRS Employer Identification No.)
Incorporation or Organization)

555 West Hastings Street, Suite 950, Vancouver, British Columbia CANADA V6B 4N4
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

                    Issuer's Telephone Number, (604) 609-7736
                                               --------------


       Securities to be registered pursuant to Section 12(b) of the Act:
       -----------------------------------------------------------------
                                      None

        Securities to be registered pursuant to Section 12(g) of the Act:
       -----------------------------------------------------------------
                         Common Stock $0.001 par value
                         -----------------------------
                                (Title of Class)
                                ----------------

                                 Page 1 of xxxxx
                          Index to Exhibits on Page 33
<PAGE>

                         Destiny Media Technologies Inc.

                                   Form 10-KSB
                                TABLE OF CONTENTS
                                     PART I
                                                             Page

Item 1.  Description of Business.............................   3

Item 2.  Management's Discussion and Analysis or Plan of
         Operation...........................................  16

Item 3.  Description of Property.............................  20

Item 4.  Security Ownership of Certain Beneficial Owners
          and Management.....................................  20

Item 5.  Directors, Executive Officers, Promoters
         and Control Persons.................................  22

Item 6.  Executive Compensation..............................  26

Item 7.  Certain Relationships and Related Transactions......  28

Item 8.  Description of Securities...........................  28

                                     PART II

Item 1.  Market Price Of And Dividends on the Registrant's
         Common Equity and Related Stockholder Matters.......  30

Item 2.  Legal Proceedings...................................  30

Item 3.  Changes in and Disagreements with  Accountants......  31

Item 4.  Recent Sales of  Unregistered Securities............  31

Item 5.  Indemnification of  Directors and Officers..........  31

                                    PART F/S

Item 1.  Consolidated Financial Statements...................  31
                                    PART III

Item 1.   Index to Exhibits                                    33

Item 2.   Description of Exhibits
<PAGE>
                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS
--------------------------------

Introduction
------------

Destiny Media Technologies Inc. (hereinafter is also referred to as the
"Company" and/or the "Registrant") is a company in the development phase. The
Company was incorporated in August 1998 in the state of Colorado under the name
Euro Industries Ltd.

The Company was originally involved in the acquisition and exploration of mining
properties;  however in July of 1999 with the start of the process involving the
Company's  acquisition of Destiny Software Productions Inc. and the introduction
of a new management team, the Company became active in the software industry and
ceased all of its work in the mining industry.

On October 20,  1999 the Company  completed  the  process of  acquiring  Destiny
Software  Productions  Inc.("Destiny  Software").  Destiny Software is a Western
Canadian based software  development company specializing in streaming media and
MP3  products.  Destiny  Software  has created its own  proprietary  compression
format and technologies.  It is currently developing the RadioDestiny  Broadcast
NetworkTM,  where  commercial  and hobbyist  radio stations can broadcast on the
internet  using  the free  RadioDestiny  BroadcasterTM.  The  recently  released
Destiny Media PlayerTM is a combination MP3 player/internet radio receiver which
contains a live and  realtime  directory of al the current  broadcasters  on the
Destiny network.

The  Company's  principal  office  is  located  at  555  West  Hastings  Street,
Vancouver,   British   Columbia  V6B  4N4.  The  contact  person  is  Mr.  Steve
Vestergaard, President and Director. The telephone number is (604) 609-7736; the
facsimile  number  is (604)  609-0611.  The  Company  currently  maintains  four
websites which are radiodestiny.com; destiny-software.com;  destinympe.com; and,
streamingaudio.com.

The Company's  authorized  capital includes  100,000,000  shares of common stock
with $0.001 par value.  On December 30, 1999 the  Registrant  announced that the
Board of  Directors  had  approved  a three for one stock  split.  The split was
affected in the form of a 200% stock dividend to the  shareholders  of record on
December 30, 1999. The additional shares were to be distributed by Computershare
Investor Services  (formerly American  Securities  Transfer and Trust Inc.), the
Registrant's  transfer  agent.  Shareholders  were  required to  exchange  their
existing shares as instructed by  Computershare.  The impact of the split was to
increase the outstanding  shares of the Registrant from 7,167,000


                                       3
<PAGE>

as of December 30, 1999 to 21,501,000. All reference to share data in this
document refers to post split data. As of the close of the Company's latest
fiscal year, August 31, 2000, there were 22,501,000 shares of common stock
outstanding.

The  Company's  common stock  trades on the OTC Bulletin  board under the symbol
"DSNY".

The information in this annual report is current as of December 7, 2000
unless otherwise indicated.

Historical Corporate Development
--------------------------------

The Company was  incorporated  in the state of Colorado on August 24, 1998 under
the name Euro  Industries  Ltd.  On October 12, 1999 the name of the Company was
changed to Destiny Media Technologies Inc.

By March 1999,  the Company sold  5,950,000  pre-split  (17,850,000  post-split)
common shares for an aggregate purchase price of $59,500 . Each share was issued
at $0.01 per share.  The shares were purchased by thirty-one  individuals all of
who were unrelated parties.

The shares of common stock in the foregoing  offering,  were offered pursuant to
an exemption to registration provided under Section 3(b), Regulation D, Rule 504
of  the  Securities  Act  of  1933,  as  amended  and  under  the  exemption  to
registration under Section 11-51-308(1)(p) of the Colorado Securities Act.

The shares of the Company began trading on the National Quotation Bureau's "Pink
Sheets" on June 17, 1999.

On June 16, 1999, the Company  entered into an agreement to purchase  control of
Destiny Software Productions Ltd., a company 100% owned by Steve Vestergaard who
subsequently  became  the  president  of the  Registrant.  At the  time  of this
transaction, Mr. Vestergaard owned 3.6 million shares of the Registrant. The 3.6
million shares  represented  20% of the  Registrant's  outstanding  shares.  Mr.
Vestergaard  acquired  all of these  shares from --  unrelated  parties for cash
consideration of $1,200. The detail of these purchases is as follows:

Certificate #     Name                             Number of Shares

131               Lorraine Zaiser             900,000 shares (post split)
102               Elefterras Aligizakis     1,050,000 shares (post split)
129               Hilary Wipf                 750,000 shares (post split)
117               Patricia Parente            600,000 shares (post split)
113               George Paikos               300,000 shares (post split)



                                       4
<PAGE>

Since that time the  business of the Company has  centered on Destiny  Software.
The  purchase  price  of  Destiny  Software  was  600,000  pre-split  (1,800,000
post-split) common shares of the Company. (These shares were restricted and each
certificate  includes the  following  legend:  "The shares  represented  by this
Certificate  have not been  registered  under the  Securities  Act of 1933 ("the
Act") and are "restricted  securities" as that term is defined in Rule 144 under
the Act. The shares may not be offered for sale,  sold or otherwise  transferred
except  pursuant  to the  effective  registration  statement  under the Act,  or
pursuant to an exemption from  registration  under the Act, the  availability of
which  is  to  be  established  to  the  satisfaction  of  the  Company.")  This
transaction  was  finalized on October 20, 1999 when the shares were  physically
issued to the owners of Destiny Software. The contract of sale required that the
Company had to raise  Cdn$1.1  million of which Cdn$1  million would be used for
development  of the Destiny  Software  products.  The  contract of sale  further
stipulated that a minimum amount of Cdn.  $250,000 had to be raised by September
16, 1999 and this was  accomplished  by a loan from Jade & Co., a shareholder of
the Company.

On June 16, 1999 the Company  entered into a private  placement  whereby it sold
1,851,000  shares  of its  common  stock at prices  between  $0.40 and $0.48 per
common share (post split).  The net proceeds of this private  placement  were as
follows:

I.       1,490,724 common shares issued on retirement of debt of $594,236
II.      112,791 common shares issued for services rendered valued at $54,690
III.     247,485 common shares issued for cash of $79,999

This offering officially closed on November 9, 1999.

The Company  completed a private  placement on April 25, 2000 whereby it is sold
1,000,000  units.  Each unit  consisted  of one  common  share  and one  warrant
exercisable  for a  period  of six  months  from  the  closing  of  the  private
placement.  Each unit sold for $1.00 and the warrants  gave the holder the right
to purchase one  additional  share of common stock for $3.00.  This offering was
made under  Regulation S to offshore  investors.  The stock is restricted  for a
period of one year and is then subject To Rule 144.

In early 1999, Mr.  Vestergaard  and Mr. Kolic, an unrelated party and the owner
of a company called Wonderfall Productions  Inc.("Wonderfall"),  were introduced
to each other at an  industry/investor  forum. This meeting  subsequently led to
the  acquisition  by  Destiny   Software  of  Wonderfall  in  June  1999.  Total
compensation  for this  acquisition was $20,000,  which was paid by a promissory
note.

Mr. Ed Kolic was  subsequently  appointed as the Secretary  and Chief  Operating
Officer of the Registrant. Wonderfall had a history in computer games production
and marketing.  WonderFall had two games,  at the time of the sale, that had not
been  commercially  released and the  rationale for the  acquisition  by Destiny
Software of Wonderfall was so that it could exploit the potential of these games
and gain access to Mr. Kolic's marketing skills.

                                       5
<PAGE>

On May 26, 2000 the Company  announced the launch of a prototype  implementation
of its java-based  streaming  video product,  Video  ClipstreamTM.  This product
allows web page  designers to embed  streaming  video directly into a webpage of
HTML compliant e-mail. The product works at a variety of bandwidths,  from basic
modem  speeds to  high-speed  broadband,  allowing  the entire range of Internet
users to receive a video experience.

On June 6, 2000 the Company announced a strategic relationship with a consulting
firm called the McKenna Group.  The McKenna Group indicated that it would broker
relationships with other companies,  on behalf of the Registrant,  which require
media  distribution  and streaming media tools. The McKenna Group also indicated
that it would assist the Registrant in the development of a strategy for gaining
industry adoption of the Registrant's MPE format.

On June 16, 2000 the Company  announced  that it had entered into a  partnership
with  ChoiceRadio.com  for the  distribution  of music using the Company's MPETM
secure media format.

On July 26, 2000 the Company announced that it had signed a licensing  agreement
with a company called  touchMarketing.com for its streaming audio product called
ClipstreamTM.   By   utilizing   ClipstreamTM,   touchMarketing.com   can  offer
audio-enabled e-mails as part of its suite of e-marketing products and services.


                                       6
<PAGE>

BUSINESS
--------

Media Internet Applications

Company Background including Destiny Software
---------------------------------------------

Steve  Vestergaard  who  was  subsequently  appointed  as the  president  of the
Registrant  formed Destiny Software as a private company.  From 1992 until 1995,
Destiny  Software was involved  solely in the  development  and sale of computer
games. In 1992,  Destiny Software  developed a game called  "Creepers" which was
published by a subsidiary of Sony Corporation  called  Psygnosis.  Also, in 1992
Destiny  Software  developed  a game  called  "Solitaire's  Journey"  which  was
published by Quantum Quality  Productions.  In 1993,  Destiny Software developed
two games,  called  "Lucky's  Casino  Adventure"  and "Origamo"  which were also
published by Quantum Quality Productions. Two other games developed in 1993 were
"Time Out Sports Baseball" and "Time Out Sports Basketball" which were published
by  Microleague.  In 1994, a game called  "Blood Bowl" was  developed by Destiny
Software and published by Microleague. Three games were developed in 1995. "Dark
Seed II" for Windows and "Dark Seed II" for  Macintosh  were both  published  by
Cyberdreams,  "MGM" and "Jam" was a Windows  shareware  product.  In December of
1995,  Destiny's first Internet radio prototype was started and this product was
then released in April of 1996.

The Company owns a proprietary media compression format known as ".dny".  ("dny"
is an  intellectual  property  which was developed  in-house with no third party
involvement.  The property is in the form of a trade secret, and can be patented
and  trademarked.  At the present time there have been no patents or  trademarks
taken out for the "dny"  intellectual  property.) This format is used to deliver
real time streaming media, such as Internet radio, on an on-demand basis.

The ".dny"  technology  was  developed  by the Company  because  Internet  radio
requires  massive   compression   levels  and  data  packets  are  not  reliably
transmitted  across the Internet.  The Company's  media  compression  technology
recursively  compresses an audio stream to any target  compression ratio and, at
the same time,  interleaves and buffers data packets and estimates missing audio
information.

Since developing this  technology,  Destiny Software has produced a media player
and a java based  streaming web clip  compressor and player that allows users to
add streaming  audio clips to their web pages.  The Company is also developing a
low latency Internet  telephone;  a voice e-mail package and, a voice based chat
engine.



                                        7
<PAGE>
                               Products

-- ---------------------------- ----------------------- --------------
   Product                      Status                  Revenue
-- ---------------------------- ----------------------- --------------
1  Broadcaster                  Commercially available  None, to date
-- ---------------------------- ----------------------- --------------
2  MP3 Player                   Commercially available  Free item
-- ---------------------------- ----------------------- --------------
3  Repeater (server based)      Commercially available  None, to date
-- ---------------------------- ----------------------- --------------
4  Clipstream: Java             Commercially available  None, to date
-- ---------------------------- ----------------------- --------------
5  Webcam                       Under development       None, to date
-- ---------------------------- ----------------------- --------------
6  Ripper                       Under development       None, to date
-- ---------------------------- ----------------------- --------------
7  Audio Chat                   Under development       None, to date
-- ---------------------------- ----------------------- --------------
8  Internet Phone               Under development       None, to date
-- ---------------------------- ----------------------- --------------
9  Mission to Mars Game (Demo)  Under development       None, to date
-- ---------------------------- ----------------------- --------------


Product Descriptions

Products,  which are complete,  are available for download from the RadioDestiny
website at www.radiodestiny.com.  The voice chat and e-mail applications are not
yet in releasable form.

Destiny Media Player(TM)

The  Destiny  Media  Player(TM)  is a  combination  MP3/Music  player  and radio
receiver.  The Destiny Media Player(TM) will receive two separate formats:  live
or automated broadcasts from the Destiny Station broadcaster and Audio-on-Demand
which will stream from a standard  HTTP server.  In Radio mode a user can listen
to  radio  broadcasts  from  any  of  stations  on  the  RadioDestiny  Broadcast
Network(TM).  Incorporated into the player are features such as a live directory
of stations with direct email and weblink to these  broadcasters.  In Mp3 mode a
user can play MP3 files directly from the player's instant  library.  The player
automatically scans the users hard drive for existing music files and creates an
Mp3  library.  Another  feature is the list of MP3  websites  allowing a user to
easily click a link to access MP3 sources.  The Player also supports playback of
streaming  Mp3's,  .wav and midi files, as well as music CD's. The Destiny Media
Player(TM) is a small,  yet  powerful,  application  and can be  downloaded  and
installed  within two minutes.  It will be distributed free from the Destiny web
site,  partner  sites  and via OEM  agreements  with  computer  and  sound  card
manufacturers.

RadioDestiny Broadcaster(TM)

In live mode,  the user simply  puts their audio  signal into the input of their
sound card,  configures the options and clicks 'start broadcast'.  Their station
is automatically added to the directory of stations at the Destiny portal. It is
extremely easy to use.



                                       8
<PAGE>

In script  mode,  the user  prerecords a set of audio  files,  then  specifies a
schedule for play back. A  broadcaster  could spend a couple of hours setting up
the schedule for the week,  then the automated DJ could play back the content 24
hours per day, 7 days per week.

The  DestinyBroadcaster  will also allow the input of metadata which are digital
files such as album cover graphics,  lyrics and other artist information that is
of interest to music fans.  This metadata then streams out  simultaneously  with
music files to the  Destiny  Media  Player  allowing  the  listener to view this
information  as they are  listening to the songs.  This  technology is unique to
Destiny with no current competition.

ScreamingAudio(TM)
RadioDestiny Web Clip Player and Compressor

The compressor  will convert a .WAV file into a streaming  .DNY format.  Destiny
has developed an online  audio-based  interactive  radio play game based on this
technology. It can be used to stream annual stockholders meetings, home shopping
sites or other games.

Competition

The  market  for  software  and  services  for the  Internet  and  intranets  is
relatively  new,  constantly  changing and intensely  competitive.  As streaming
media evolves into a central and necessary component of the Internet experience,
more companies are entering the market for, and expending ever-greater resources
to develop,  streaming  media  software and services,  and  competition  is thus
intensifying.  Many of the  Company's  current and  potential  competitors  have
longer operating histories,  greater name recognition,  larger overall installed
bases, more employees and significantly greater financial, technical, marketing,
public relations and distribution resources than the Company.

The Company's two principal  competitors in the development and  distribution of
streaming media  technology are  RealNetworks  and Microsoft  Corporation.  Both
Microsoft's and RealNetworks'  commitment to and presence in the streaming media
industry has significantly  increased and will continue to increase  competitive
pressure in the overall market for streaming media software.  This could lead to
increased  pricing  pressure,  which  may  result  in  price  reductions  in the
Company's products.

In  addition  to  Microsoft  and   RealNetworks   the  Company  faces  increased
competition  from other  companies that are  developing and marketing  streaming
media product  offerings.  As more


                                       9
<PAGE>

companies enter the market with products and services that compete with the
Company's players and tools, the competitive landscape could change
significantly to the detriment of the Company.

The Company competes for user traffic and Internet  advertising  revenues with a
wide variety of Web sites,  ISP's and  especially  audio,  video and other media
aggregators,  such as Broadcast.com  and Microsoft's Web Events.  While Internet
advertising  revenues  across the industry  continue to grow,  the number of Web
sites  competing  for  such  revenue  is also  growing  rapidly.  The  Company's
advertising  sales  force  and  infrastructure  are  still  in early  stages  of
development  relative  to  its  competitors.  There  can  be no  assurance  that
advertisers  will place  advertising  with the Company or that revenues  derived
from such  advertising  will be material.  In addition,  if the Company fails to
attract new  customers  or is forced to reduce  proposed  advertising  rates the
Company's  business,  financial  condition  and  results  of  operations  may be
materially adversely affected.

Competitive  factors in the  streaming  media  market  include  the  quality and
reliability of software;  features for creating,  editing and adapting  content;
ease of use and  interactive  user  features;  scalability  and cost  per  user;
pricing and  licensing  terms;  the  emergence of new and better  formats;  and,
compatibility  with the user's existing network components and software systems.
To expand its user base and  further  enhance the user  experience,  the Company
must  continue to innovate  and improve the  performance  of its  products.  The
Company  anticipates  that  consolidation  will continue in the streaming  media
industry  and  related   industries  such  as  computer   software,   media  and
communications.   Consequently,   competitors   may  be  acquired  by,   receive
investments  from or enter into other  commercial  relationships  with,  larger,
well-established and well-financed companies. There can be no assurance that the
Company can establish or sustain a leadership  position in this market  segment.
The Company is  committed to working  toward  market  penetration  of its brand,
products  and  services,  which,  as a  strategic  response  to  changes  in the
competitive environment,  may require pricing,  licensing,  service or marketing
changes  intended to extend its current brand and  technology  franchise.  Price
concessions  or the  emergence of other  pricing or  distribution  strategies by
competitors  may have a  material  adverse  effect  on the  Company's  business,
financial condition and results of operations.

Government Regulation and Legal Uncertainties

The Company is not currently  subject to direct  regulation by any  governmental
agency other than laws and regulations generally


                                       10
<PAGE>
applicable to businesses. It is possible that a number of laws and regulations
may be adopted in both the United States and Canada with particular
applicability to the Internet. Governments have and may continue to enact
legislation applicable to the Company in areas such as content distribution,
performance and copying, other copyright issues, network security, encryption,
the use of key escrow data, privacy protection, caching of content by server
products, electronic authentication or "digital" signatures, illegal or obscene
content, access charges and retransmission activities. The applicability to the
Internet of existing laws governing issues such as property ownership, content,
taxation, defamation and personal privacy is also uncertain. Export or import
restrictions, new legislation or regulation or governmental enforcement of
existing regulations may limit the growth of the Internet, increase the
Company's cost of doing business or increase it legal exposure.

Risk Factors

Dependence On Key Personnel:

The Company's success is dependent,  to a large degree,  upon the efforts of its
current executive officers.  The loss or unavailability of any such person could
have an adverse effect on the Company.  At the present time the Company does not
maintain key man life insurance policies for any of these individuals. Also, the
continued  success and viability of the Company is dependent upon its ability to
attract and retain qualified personnel in all areas of its business,  especially
management  positions.  In the event the Company is unable to attract and retain
qualified personnel, its business may be adversely affected. There are currently
only two  employment  agreements in place.  Management  is;  however,  currently
negotiating agreements with the remaining executive officers of the Company.

Limited Operating History:

The Company has a limited  operating history upon which to base an evaluation of
its business and prospects.  Operating results for future periods are subject to
numerous  uncertainties,  and there can be no  assurance  that the Company  will
achieve or sustain  profitability on an annual or quarterly basis. The Company's
prospects  must be considered in light of the risks  encountered by companies in
the  early  stage of  development,  particularly  companies  in new and  rapidly
evolving  markets.  Future  operating  results  will depend  upon many  factors,
including the demand for the Company's software  products,  the level of product
and price  competition,  the  Company's  success  in  attracting  and  retaining
motivated and qualified personnel, and in


                                       11
<PAGE>

particular, the growth of activity on the Internet World Wide Web as it relates
to the internet broadcast industry.

History of Net Losses:

The Company has had net losses since its inception on August 24, 1998.

In the Period August 24, 1998 (date of inception) to August 31, 2000 the Company
had a net loss of $1,640,229.

There can be no assurance that this trend will not continue.

The Auditors report on the consolidated  financial statements for the year ended
August 31, 2000 includes an additional  explanatory  paragraph which states that
as the company has incurred recurring losses from operations,  and has a working
capital deficiency,  substantial doubt exists about its ability to continue as a
going  concern.  The  consolidated  financial  statements  do  not  include  any
adjustments as a result of this uncertainty.

Possible Dilution to Present and Prospective Shareholders:

The Company's plan of operation,  in part,  contemplates the  accomplishment  of
business  negotiations by the issuance of cash,  securities of the Company, or a
combination of the two, and possibly,  incurring debt. Any transaction involving
the issuance of previously  authorized but unissued  shares of common stock,  or
securities  convertible  into common stock,  would result in dilution,  possibly
substantial, to present and prospective holders of common stock.

Risks of Product Defects and Product Liability:

As a result of their complexity, software products may contain undetected errors
or failures when first introduced or as new versions are released.  There can be
no assurance that, despite testing by the Company and testing and use by current
and  potential  customers,  errors  will  not be  found  in new  products  after
commencement of commercial shipments. The occurrence of such errors could result
in loss of or delay in market acceptance of the Company's products,  which could
have a material adverse effect on the Company's  business,  financial  condition
and results of  operations.  The  Company's  product also may be  vulnerable  to
break-ins  and similar  disruptive  problems  caused by Internet or other users.
Such computer  break-ins and other  disruptions would jeopardize the security of
information  stored in and  transmitted  through  the  computer  systems  of the
Company's  customers,  which may result in significant  liability to the Company
and deter potential  customers.  The sale and support of the Company's  products
may entail the risk of  liability  claims.  A product  liability  claim  brought
against  the  Company  could have a  material  adverse  effect on the  Company's
business, financial condition and results of operations.

The Ability to Manage Growth:



                                       12
<PAGE>
Should  the  Company be  successful  in the sales and  marketing  efforts of its
software products it will experience  significant growth in operations.  If this
occurs,  management  anticipates  that additional  expansion will be required in
order to continue  its  product  development.  Any  expansion  of the  Company's
business would place further demands on its management, operational capacity and
financial  resources.  The  Company  anticipates  that it will  need to  recruit
qualified personnel in all areas of its operations, including management, sales,
marketing, delivery and software development. There can be no assurance that the
Company will be effective  in  attracting  and  retaining  additional  qualified
personnel,  expanding its operational  capacity or otherwise managing growth. In
addition,  there  can  be no  assurance  that  the  Company's  current  systems,
procedures  or  controls  will be  adequate  to support  any  expansion  of it's
operations.  The  failure  to manage  growth  effectively  could have a material
adverse  effect on the Company's  business,  financial  condition and results of
operations.

Risk of System Failure and/or Security Risks:

Despite the  implementation  of  security  measures,  the core of the  Company's
network  infrastructure  could be vulnerable to  unforeseen  computer  problems.
Although the Company  believes it has taken steps to mitigate  much of the risk,
it may in the  future  experience  interruptions  in  service as a result of the
accidental  or  intentional  actions  of  Internet  users,  current  and  former
employees  or others.  Unknown  security  risks may result in  liability  to the
Company  and also may deter new  customers  from  purchasing  its  software  and
services,  and  individuals  from utilizing it.  Although the Company intends to
continue to implement and establish security measures, there can be no assurance
that measures  implemented by it will not be circumvented  in the future,  which
could  have a  material  adverse  effect on the  Company's  business,  financial
condition or results of operations.

Lack of Established Market for Products and Services; Dependence on Internet and
Intranets as Mediums of Commerce and Communications:

The market for the Company's  streaming  media  products and services is new and
evolving rapidly. It depends on increased use of the Internet and intranets.  If
the  Internet  and  intranets  are not  adopted  as  methods  for  commerce  and
communications,  or if the  adoption  rate slows,  the market for the  Company's
products and services may not grow, or may develop more slowly than expected.

The Company believes that increased  Internet use may depend on the availability
of  greater  bandwidth  or data  transmission  speeds


                                       13
<PAGE>

or on other technological improvements, and the Company is largely dependent on
third party companies to provide or facilitate these improvements. Changes in
content delivery methods and emergence of new Internet access devices such as TV
set-tops boxes could dramatically change the market for streaming media products
and services if new delivery methods or devices do not use streaming media or if
they provide a more efficient method for transferring data than streaming media.

The  electronic  commerce  market is relatively  new and evolving.  Sales of the
Company's  products depend in large part on the development of the Internet as a
viable commercial  marketplace.  There are now substantially more users and much
more  "traffic"  over the  Internet  than ever  before,  use of the  Internet is
growing faster than  anticipated,  and the  technological  infrastructure of the
Internet may be unable to support the demands placed on it by continued  growth.
Delays in development or adoption of new technological  standards and protocols,
or increased government regulation, could also affect Internet use. In addition,
issues  related  to  use  of the  Internet  and  intranets,  such  as  security,
reliability, cost, ease of use and quality of service, remain unresolved and may
affect the amount of business that is conducted over the Internet and intranets.

Product Delays and Errors:

The Company has experienced development delays and cost overruns associated with
its product  development.  It may encounter such problems in the future.  Delays
and cost overruns could affect the Company's ability to respond to technological
changes,  evolving  industry  standards,  competitive  developments  or customer
requirements.  The Company's  products also may contain  undetected  errors that
could cause adverse  publicity,  reduced market  acceptance of the products,  or
lawsuits by customers.

Online Commerce Security Risks:

Online   commerce  and   communications   depend  on  the  ability  to  transmit
confidential  information  securely over public networks.  Any compromise of the
Company's  ability to  transmit  confidential  information  securely,  and costs
associated  with the prevention or  elimination  of such problems,  could have a
material adverse effect on the Company's business.

International Operations:

The Company markets and sells its products in both the United States and Canada.
As such,  it is subject  to the normal  risks of doing  business  abroad.  Risks
include  unexpected  changes  in  regulatory  requirements,  export  and  import
restrictions,  tariffs


                                       14
<PAGE>

and trade barriers, difficulties in staffing and managing foreign operations,
longer payment cycles, problems in collecting accounts receivable, potential
adverse tax consequences, exchange rate fluctuations, increased risks of piracy,
limits on the Company's ability to enforce its intellectual property rights,
discontinuity of the Company's infrastructures, limitations on fund transfers
and other legal and political risks. Such limitations and interruptions could
have a material adverse effect on the Company's business. The Company does not
currently hedge its foreign currency exposures.

Dividend Policy:

The Company does not presently  intend to pay cash dividends in the  foreseeable
future,  as any earnings are expected to be retained for use in  developing  and
expanding its business.  However,  the actual amount of dividends  received from
the Company will remain  subject to the  discretion  of the  Company's  Board of
Directors and will depend on results of operations, cash requirements and future
prospects of the Company and other factors.

The Lack of Assurance  That the Company Will Be Able to Meet Its Future  Capital
Requirements:

The  Company  currently  has no source  of  operating  cash flow to fund  future
projects or corporate overhead. The Company has limited financial resources, and
there is no assurance that additional  funding will be available.  The Company's
ability to  continue  to operate  will be  dependent  upon its  ability to raise
significant additional funds in the future.

Risks Associated with Penny Stock Classification:

The  Company's  stock is  subject  to "penny  stock"  rules as  defined  in 1934
Securities  and Exchange Act rule 3151-1.  The Commission has adopted rules that
regulate  broker-dealer  practices  in  connection  with  transactions  in penny
stocks.  The  Company's  common  shares are subject to these penny stock  rules.
Transaction costs associated with purchases and sales of penny stocks are likely
to be higher than those for other securities.  Penny stocks generally are equity
securities  with a  price  of  less  than  U.S.  $5.00  (other  than  securities
registered  on certain  national  securities  exchanges  or quoted on the NASDAQ
system,  provided  that  current  price and volume  information  with respect to
transactions in such securities is provided by the exchange or system).

The penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not  otherwise  exempt  from the  rules,  to deliver a  standardized  risk
disclosure document that provides  information about penny stocks and the nature
and  level of risks in


                                       15
<PAGE>

the penny stock market. The broker-dealer also must provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction, and monthly account
statements showing the market value of each penny stock held in the customer's
account. The bid and offer quotations, and the broker-dealer and salesperson
compensation information, must be given to the customer orally or in writing
prior to effecting the transaction and must be given to the customer in writing
before or with the customer's confirmation.

In  addition,  the penny stock rules  require that prior to a  transaction  in a
penny stock not otherwise exempt from such rules, the broker-dealer  must make a
special written  determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's  written agreement to the transaction.
These  disclosure  requirements  may have the  effect of  reducing  the level of
trading  activity in the  secondary  market for the common  shares in the United
States and shareholders may find it more difficult to sell their shares.



Significant Customers and/or Suppliers
--------------------------------------

The  Company  is  currently  in the  development  stage  and,  as  such,  has no
significant customers and/or suppliers.

Employees
---------

At 12/07/00 the Company  operated with the services of its Directors,  Executive
Officers, 7 additional employees and four independent  contractors.  There is no
collective bargaining agreement in place.


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
------------------------------------------------------------------

SELECTED FINANCIAL DATA
-----------------------

The selected  financial data in Table No. 1 for the period from incorporation on
"August 24, 1998 to August 31, 2000 was derived from the consolidated  financial
statements of the Company.

The selected  financial data was extracted  from the more detailed  consolidated
financial  statements  and related notes  included  herein and should be read in
conjunction with such consolidated financial statements and with the information
appearing under the heading,  "Management's Discussion and Analysis of Financial
Condition and Results of Operations."



                                       16
<PAGE>
<TABLE>
<CAPTION>
                  Table No. 1 (Destiny Media Technologies Inc.)
                          Selected Financial Data (USD 000's$)

---------------------------------- ------------------- ------------------- -------------------
                                   The Period 8/24/98   Fiscal Year Ended   Fiscal Year Ended
                                             (date of           8/31/2000           8/31/1999
                                    incorporation) to
                                         8/31/00
---------------------------------- ------------------- ------------------- -------------------
<S>                                               <C>                 <C>                   <C>
Revenue                                           $85                 $85                   0
---------------------------------- ------------------- ------------------- -------------------
Net Income(Loss)                             ($1,640)            ($1,581)               ($59)
---------------------------------- ------------------- ------------------- -------------------
Earnings (Loss) per Share                     ($0.10)             ($0.07)             ($0.01)
---------------------------------- ------------------- ------------------- -------------------
Dividends per Share                                 0                   0                   0
---------------------------------- ------------------- ------------------- -------------------
Weighted Average Number of Shares          16,472,526          21,512,150          11,479,625
Outstanding
---------------------------------- ------------------- ------------------- -------------------

Working Capital                                    N/A              ($51)                   0
---------------------------------- ------------------- ------------------- -------------------
Long Term Debt                                     N/A               $195                   0
---------------------------------- ------------------- ------------------- -------------------
Shareholders' Equity                               N/A               $273                 N/A
---------------------------------- ------------------- ------------------- -------------------
Total Assets                                       N/A               $731                $594
---------------------------------- ------------------- ------------------- -------------------
</TABLE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATION
--------------------

The following discussion of the Company's  consolidated  financial condition and
results of operations  should be read together with the  consolidated  financial
statements and related notes that are included later in this annual report. This
discussion   contains   forward-looking   statements   that  involve  risks  and
uncertainties.  The Company's  actual results may differ  materially  from those
anticipated in these forward-looking  statements as a result of various factors,
including  those set forth under "Risk Factors" or in other parts of this annual
report.

Cash Balances
-------------

The Company maintains its major cash balances at two financial  institutions One
is  located  in  Vancouver,  British  Columbia,  Canada.  The  balances  in that
institution  are  insured up to $40,200  (Cdn$60,000)  per account by the Canada
Deposit Insurance Corporation.  The second is located in Boulder,  Colorado.

Commitments and Contingencies
-----------------------------

The Company leases its office facility in Vancouver,  British Columbia,  Canada.
The Company  entered into a one year lease in June 2000. The total minimum lease
payments to May 31,2001 under the operating leases are US $65,701.



                                       17
<PAGE>
Liquidity and Capital Resources
-------------------------------

Cash used during the fiscal year ended August 31, 2000 for operating  activities
totaled  $1,227,225  (1999 -  $59,500).  Common  stock was issued  for  services
rendered of $54,690 (1999 - $nil);  stock-based  compensation  to consultants in
the  form of stock  options  totaled  $21,346  (1999 - $nil);  and,  in  process
research and development of $33,846 (1999 - $nil).

Cash flows from investing activities included $250,719 which was acquired on the
acquisition of Destiny Software.  Of this, $79,468 was used to purchase property
and equipment; $1,392 was used to purchase miscellaneous assets; and, $7,070 was
used to purchase short-term investments.  Consequently, the net cash provided by
investing activities totaled $162,789.

Cash flows from financing activities totaled $1,181,384 (1999 - $653,736).  This
was made up of  $1,079,999 in net proceeds from the issuance of common stock and
subscriptions and $101,385 in proceeds from shareholder loans.

The Company had a negative working capital position at August 31,2000 of $51,258
as  compared to a nil working  capital  balance at the fiscal year ended  August
31,1999.

Results of Operations
---------------------

Sales for the period were $85,544.

Operating  expenses  totaled  $1,681,127  (1999 - $59,500).  This  represented a
substantial  increase  over the prior  fiscal year which was  justified  by this
being the first full year of operations for the Company. Major expenses incurred
during  the  period  included  $482,519  in  wages  and  benefits;  $123,805  in
shareholder  related  expenses;  $124,649  in  professional  fees;  $183,749  in
marketing; and, $155,510 in advertising and promotion.

For the Period  August 24, 1998 (Date of  Incorporation)  to August 31, 2000 the
Company reported a net loss of $1,640,229.


                                       18
<PAGE>

During  Fiscal 2001,  ending  8/31/01,  management  plans on  concentrating  its
efforts in the following three areas in order to become profitable:

         1.   Marketng the "Clipstream" java based audio streaming solution.
              Development has been completed and the Company is now embarking on
              a marketing and sales program to fully exploit and maximize
              revenue from this product. Secure online sales are now available
              online at www.clipstream.com. A sales group will be assembled for
              direct sales efforts. This will include both inside and outside
              sales. License agreements and partnership opportunities will be
              sought with larger content providers, aggregators and resellers.

Additional  product  development will take place to extend the product to a rich
media ad banner product targeted to the advertising community and interactive ad
agencies.

         2.   Product development is planned to complete the: Listen Look and
              Buy" streaming metadata component of the RadioDestiny Broadcast
              solution. Once complete, this product will then be launched and
              marketed in the second quarter.
         3.   Continued marketing of the Destiny Media Player to build the
              registered users base is also planned. This will include various
              online promotions and marketing initiative, trade show
              participation and partnership opportunities.

As stated above,  the Registrant will have to raise additional funds to complete
the aforementioned  business plan. As yet, no investment banking agreements have
been reached.  There is no guarantee that the  Registrant  will be able to raise
the  capital  necessary  to complete  the  business  plan for the period  ending
8/31/01.


Known Trends
------------

Management  has determined  that because of the  deficiency in working  capital,
significant  operating  losses and lack of  liquidity,  there is doubt about the
ability of the Company to continue as a going concern unless additional  working
capital  is  obtained.  Consequently  such  trends or  conditions  could  have a
material adverse effect on the Company's financial  position,  future results of
operations,  or liquidity.  The Company  currently has plans to raise sufficient
working capital through equity financing or reorganization of the Company.



                                       19
<PAGE>

Income Taxes
------------

All tax returns due for the Company have been filed.

Inflation
---------

The  Company's  results of  operations  have not been  affected by inflation and
management does not expect inflation to have a material impact on its operations
in the future.


ITEM 3. DESCRIPTION OF PROPERTY
-------------------------------

The Company  leases  approximately  2,400 square feet of space at 950 - 555 West
Hastings Street, Vancouver,  British Columbia, Canada V6B 4N4 for administrative
and sales efforts.  The Company pays approximately  Cdn$10,115 per month, with a
lease term of one year,  for this facility.  The Company  considers the facility
adequate for current purposes.

ITEM 4.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
-----------------------------------------------------------------------

The Registrant is a publicly owned corporation, the shares of which are owned by
United States and Canadian residents.  The Registrant is not controlled directly
or indirectly by another corporation or any foreign government.

Table No. 2 lists as of December 7, 2000 persons/companies the Registrant is
aware of as being the beneficial owner of more than five percent (5%) of the
common stock of the Registrant.




                                       20
<PAGE>

                                   Table No. 2

Title                              Amount and Nature Percent
  of                               of Beneficial     of
Class   Name of Beneficial Owner   Ownership         Class #
------  ------------------------   ----------------- -------

Common  Steve Vestergaard  (1)     5,291,500           23.5%

  TOTAL                            5,291,500           23.5%

# Based on 22,501,000  shares  outstanding  as of August 31, 2000 and options to
purchase shares of common stock.

(1) Does not include a vested option to purchase 221,528 shares of common stock.


Table No. 3 lists as of August 31, 2000 all Directors and Executive Officers who
beneficially own the Registrant's voting securities and the amount of the
Registrant's voting securities owned by the Directors and Executive Officers as
a group.

                                   Table No. 3
                Shareholdings of Directors and Executive Officers


Title                                             Amount and Nature    Percent
  of                                              of Beneficial        of
Class   Name of Beneficial Owner                  Ownership            Class #
------  ---------------------------------------   -----------------  ---------
Common  Steve Vestergaard, Pres. & Director (1)       5,291,500        23.5%
Common  Mark Lotz, Chief Financial Officer (2)              500         0.1%
Common  Ed Kolic, Chief Operating Officer &
          Secretary (3)                                 300,000         1.3%
Common  Greg Foisy, Director (4)                         25,000         0.1%
Common  Howard Louie, Director (5)                      190,500         0.8%
Common  Larry Langs, Director (6)                             0         0.0%

        Total                                        22,501,000        25.8%


#  Based on 22,501,000 shares outstanding as of August 31, 2000.
(1)Does not include vested options to purchase 221,528 shares of common stock.
(2)Does not include vested options to purchase 95,700 shares of common stock.
(3)Does not include vested options to purchase 221,528 shares of common stock.
(4)Does not include vested options to purchase 63,800 shares of common stock.
(5)Does not include vested options to purchase 95,700 shares of common stock.
(6)Does not include vested options to purchase 3,800 shares of common stock.


                                       21
<PAGE>

ITEM 5.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
--------------------------------------------------------------------

Table  No. 4 lists as of  August  31,  2000 the  names of the  Directors  of the
Company.  The Directors have served in their  respective  capacities since their
election and/or  appointment and will serve until the next Annual  Shareholders'
Meeting or until a successor  is duly  elected,  unless the office is vacated in
accordance with the Articles/By-Laws of the Company. All Directors are residents
and citizens of Canada.































                                       22
<PAGE>
                                   Table No. 4
                                    Directors

                                      Date
First
                                                          Elected
Name                                    Age          or Appointed
-----------------------------------------------------------------
Steve Vestergaard (1)                    33             July 1999
Greg Foisy     (1)                       38             Oct. 1999
Howard Louie   (1)                       39             Oct. 1999
Ed Kolic                                 40             July 1999
Lawrence J. Langs                        40             Aug  2000

(1)  Member of Audit Committee.

Table No. 5 lists, as of August 31, 2000, the names of the Executive Officers of
the Company. The Executive Officers serve at the pleasure of the Board of
Directors. All Executive Officers are residents/citizens of Canada.

                                   Table No. 5
                               Executive Officers

Name            Position                                 Date of Board Approval
-------------------------------------------------------------------------------

Steve Vestergaard, President                                         Oct. 1999
Mark Lotz          Chief Financial Officer                           Oct. 1999
Ed Kolic           Chief Operating Officer and Secretary             Oct. 1999

Business Experience

Steve Vestergaard. Mr. Vestergaard is President and a Director of the Company.
He has been employed by the Company since June 1999 when the Company began
negotiations to purchase Destiny Software Productions Inc. His responsibilities
include coordinating strategy, planning, and product development. Mr.
Vestergaard devotes 100% of his time to the affairs of the Company. He has been
involved in the software development industry since 1982 at which time he
founded a private company called Tronic Software. Tronic Software was a
developer of computer games which were sold by mail order. In 1990 he became
employed by Distinctive Software Inc., a company which later changed its name to
Electronic Arts Canada. At Electronic Arts Canada he was involved in developing
game products. In 1991 he became the Chief Executive Officer of Destiny Software
Productions, Inc. At Destiny Software Productions Inc. his responsibilities
included not only general managerial functions, but also supervision of the
development of computer games. Mr. Vestergaard hold an International
Baccalaureate Degree and a Bachelor of Science Degree in Computer Science from
the University of British Columbia.



                                       23
<PAGE>

Ed Kolic. Mr. Kolic is the Chief Operating Officer and Secretary. His
responsibilities include overseeing the marketing efforts of the Company. He
devotes 100% of his time to the affairs of the Company. From 1988 until 1995, he
was employed as the President of Target Canada Production Ltd. His experience
includes the production of documentary television, educational and information
programming for the Canadian Educational Television Networks, large screen
interactive presentation media for international conferences and a range of
communication programs for corporate, government and institutional clients. From
1993 until 1997, he was a partner in a private company called Jacqueline Conoir
Designs Ltd. which is a fashion design house. At Conoir Designs Ltd. he
developed all of the marketing, communications and image strategies for the
company. From 1997 until June of 1999, he was the president of WonderFall
Productions Inc., a computer game development company, which he sold to the
Company in June of 1999.

Mark Lotz. Mr. Lotz is the Chief Financial Officer of the Company. He devotes
100% of his time to the affairs of the Company. Prior to joining the Company in
August 1999, Mr. Lotz was an Examiner with the Vancouver Stock Exchange where he
was responsible for the regulation of Canadian stockbrokerage firms. Prior to
joining the Vancouver Stock Exchange in 1995, Mr. Lotz was employed by Coopers &
Lybrand as an auditor. Mr. Lotz holds the designation of Chartered Accountant.
He graduated from Simon Fraser University in Vancouver, British Columbia where
he received a Bachelors Degree in Business Administration.

Howard Louie. Mr. Louie is a member of the Company's Board of Directors. His
private and public company activity during the past five years includes serving
as the President and a Director of Unimet Capital Corp from 1992 until 1997.
Unimet Capital Corp. is a private investment group which provides advisory
services in corporate finance for both public and private corporations. From
1994 until 1997 he served as the President and a Director of GR Unimet Financial
Corp. which is a joint venture between Unimet Capital Corp. and Grand Resources
Group Joint, a financial institution based in Hong Kong. During 1998 and 1999,
Mr. Louie was a Managing Director of D&G Investment Corp., a private Canadian
company incorporated in the province of British Columbia involved in investing
in private companies located in British Columbia. As a member of the Company's
Board of Directors, Mr. - Louie devotes ten percent of his time to the affairs
of the Company.

Greg Foisy. Mr. Foisy is a member of the Company's Board of Directors. From 1986
until 1991 Mr. Foisy worked in sales with Apollo  Computer,  which  subsequently
became the workstation  division of Hewlett-Packard.  In 1991 he became employed
by a


                                       24
<PAGE>

company called  Interactive  Development  Environments,  a software company
specializing in development  tools. He opened up the first offices in Canada for
Interactive  Development  Environments and was successful in making the Canadian
organization  one of the top  producing  regions  within that  company.  He left
Interactive  Development  Environments  in 1995 and  founded a  private  company
called Red Brick Systems. Red Brick Systems is a provider of database technology
for the Data  Warehousing and Decision  Support market space and was involved in
providing loyalty management and click-stream analysis for companies involved in
e-commerce  or internet  access.  In 1998,  Red Brick Systems was purchased by a
company called Informix.  Mr. Foisy is now employed as the Director of Sales for
Data Warehousing for Informix. As a member of the Board of Directors,  Mr. Foisy
devotes 5% of his time to the affairs of the Company.

Lawrence J. Langs Mr. Langs most recently worked as Vice President of Business
Development at MP3.com (Nasdaq: MPPP). Prior to MP3.com, Larry had a variety of
experience as a technology and entertainment lawyer, a senior management
consultant as well as a technology advocate. Mr. Langs worked with his
associates at Interactive Media Consulting as legal and business counsel
exclusively to clients in the interactive media industry since 1991. From
1995-96 Mr. Langs was acting Business Development Manager for the New Media
Division of Sybase, where he was involved with strategic interactive television
initiatives. and with developing and executing strategic relationships with
Internet companies. Prior experience also includes several years as an
Investment Banker for Chemical Bank in New York, and Senior Strategic Consultant
for Arthur D. Little in Boston. Mr. Langs holds a Juris Doctorate from Boston
University School of Law, and a Master's Degree in Finance and Management of
Technology from the Sloan School of Management at M.I.T. He is a member of the
New York Bar.


There have been no events  during the last five  years that are  material  to an
evaluation  of the ability or integrity  of any  director,  person  nominated to
become a director, executive officer, promoter or control person including:

a) any bankruptcy petition filed by or against any business of which such person
was a general partner or executive  officer either at the time of the bankruptcy
or within two years prior to that time;

b) any  conviction  in a  criminal  proceeding  or being  subject  to a  pending
criminal proceeding (excluding traffic violations and other minor offenses);



                                       25
<PAGE>

c) being subject to any order,  judgment, or decree, not subsequently  reversed,
suspended  or  vacated,  of any  court of  competent  jurisdiction,  permanently
enjoining,  barring, suspending or otherwise limiting his/her involvement in any
type of business, securities or banking activities;

d) being found by a court of competent  jurisdiction  (in a civil  action),  the
Commission  or the  Commodity  Futures  Trading  Commission  to have  violated a
federal or state  securities or  commodities  law, and the judgment has not been
reversed, suspended, or vacated.

Family Relationships
--------------------

There are no family relationships between any of the officers and/or directors.

Other Relationships/Arrangements
--------------------------------

There are no arrangements or understandings between any two or more Directors or
Executive  Officers,  pursuant  to which  he/she was  selected  as a Director or
Executive Officer.  There are no material arrangements or understandings between
any two or more Directors or Executive Officers.


ITEM 6.  EXECUTIVE COMPENSATION
-------------------------------

The Company has no formal plan for  compensating its Directors for their service
in their  capacity as  Directors.  Directors are entitled to  reimbursement  for
reasonable travel and other  out-of-pocket  expenses incurred in connection with
attendance  at meetings of the Board of  Directors.  The Board of Directors  may
award special  remuneration to any Director  undertaking any special services on
behalf of the Company  other than  services  ordinarily  required of a Director.
During Fiscal 1999, no Director received and/or accrued any compensation for his
services  as  a  Director,  including  committee  participation  and/or  special
assignments.

The Company has no material bonus or profit sharing plans pursuant to which cash
or  non-cash  compensation  is or may be  paid  to the  Company's  Directors  or
Executive  Officers.  The Company has no formal stock option plan which has been
approved by regulatory authorities or other long-term compensation program.

The  CEO/President's  and COO's compensation are outlined in the following table
which also includes the material terms of the two employment agreements:



                                       26
<PAGE>
<TABLE>
<CAPTION>
------------------------------------- ----------------------------------- -----------------------------------
<S>                                   <C>                                 <C>
                                      Steve Vestergaard (CEO)             Ed Kolic (COO)
------------------------------------- ----------------------------------- -----------------------------------
Responsibilities                      All operations of the business      Responsible for all
                                      including financial,                administration, operational,
                                      administration, operational, and    marketing, and product development
                                      software development activities
                                      of the Company, its subsidiaries
                                      and associated companies.
------------------------------------- ----------------------------------- -----------------------------------
Reports to                            Board of Directors                  CEO and the Board of Directors
------------------------------------- ----------------------------------- -----------------------------------
Commencement date                     Aug 01,1999                         Aug 01,1999
------------------------------------- ----------------------------------- -----------------------------------
Term                                  24 months                           24 months
------------------------------------- ----------------------------------- -----------------------------------
Severance - For no cause              6 months                            6 months
------------------------------------- ----------------------------------- -----------------------------------
Severance                             - On change of Control 1 years  salary + 2
                                      years 1 years salary + 2 years performance
                                      bonus  +  waiver  of  performance  bonus +
                                      waiver of vesting on stock options vesting
                                      on stock options
------------------------------------- ----------------------------------- -----------------------------------
Salary                                $86,000  CDN                        $86,000  CDN
------------------------------------- ----------------------------------- -----------------------------------
Salary on completion of second        Salary has been forgone until       Salary has been forgone until
round of financing ($2.5 million      further financing has been          further financing has been
USD)                                  obtained                            obtained
------------------------------------- ----------------------------------- -----------------------------------
</TABLE>

During Fiscal 2000, no funds were set aside or accrued by the Company to provide
pension, retirement or similar benefits for Directors or Executive Officers.

Except as indicated  above,  the Company has no plans or arrangements in respect
of  remuneration  received or that may be received by Executive  Officers of the
Company in Fiscal 2000 to compensate  such officers in the event of  termination
of employment (as a result of resignation,  retirement,  change of control) or a
change of  responsibilities  following a change of  control,  where the value of
such compensation exceeds $60,000 per Executive Officer.

The Company has two written employment agreements.



                                       27
<PAGE>

Other than that disclosed  above, no compensation was paid during Fiscal 1999 to
any of the  officers  or  directors  of the Company to the extent that they were
compensated in excess of $60,000.

ITEM 7.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
-------------------------------------------------------

On October 20, 1999 the Company  completed the purchase of Destiny  Software , a
private corporation wholly owned by Steve Vestergaard,  the current president of
the Company. The purchase price was 1,800,000 shares of restricted common stock.

In June 1999  Destiny  Software  purchased  WonderFall  from Mr.  Ed Kolic,  the
Secretary and Chief Operating Officer of the Registrant.

On  September  ,  1999,  Jade  Co.,  a  company  a  private  company  owned by a
shareholder  of the  Registrant,  loaned the  Registrant  $250,000  to assist in
covering  operating  expenses,  this  amount has since been  repaid  through the
issuance of shares refer to "Historical Corporate Developments" above.

Other than described  above,  there have been no  transactions  since August 24,
1998 (Date of  Inception),  or  proposed  transactions,  which  have  materially
affected or will materially affect the Company in which any Director,  Executive
Officer,  or beneficial holder of more that 10% of the outstanding common stock,
or any of their respective relatives,  spouses, associates or affiliates has had
or will have any direct or material indirect interest.


ITEM 8.  DESCRIPTION OF SECURITIES
----------------------------------

The authorized  capital of the Registrant is 100,000,000  shares of common stock
with a par value of $0.001 per  share.  22,501,000  shares of common  stock were
issued and  outstanding  at August 31, 2000,  the end of the most recent  fiscal
year.

All common shares are equal to each other,  and when issued,  are fully paid and
non-assessable,  and the private property of shareholders who are not liable for
corporate  debts.  Each holder of a common share of record has one vote for each
share of stock outstanding in his name on the books of the Corporation and shall
be entitled to vote said stock.

The common stock of the Company shall be issued for such  consideration as shall
be fixed from time to time by the Board of  Directors.  In the absence of fraud,
the  judgment  of the  directors  as to the value of any  property  or  services
received in full or partial payment for shares shall be conclusive.  When shares
are issued upon payment of the  consideration  fixed by the


                                       28
<PAGE>

Board of Directors, such shares shall be taken to be fully paid stock and shall
be non-assessable.

Except as may otherwise be provided by the Board of Directors, holders of shares
of  stock  of the  Corporation  shall  have no  preemptive  right  to  purchase,
subscribe  for or  otherwise  acquire  shares of stock of the  Company,  rights,
warrants or options to purchase  stocks or  securities  of any kind  convertible
into stock of the Company.

Dividends  in cash,  property or shares of the Company may be paid,  as and when
declared  by the Board of  Directors,  out of funds of the Company to the extent
and in the manner permitted by law.

Upon any liquidation, dissolution or winding up of the Company, and after paying
or adequately providing for the payment of all its obligations, the remainder of
the assets of the Company shall be distributed,  either in cash or in kind, pro-
rata to the holders of the common stock, subject to preferences, if any, granted
to holders of the  preferred  shares.  The Board of Directors  may, from time to
time,  distribute to the shareholders in partial liquidation from stated capital
of the Company,  in cash or property,  without the vote of the shareholders,  in
the manner permitted and upon compliance with limitations imposed by law.

Each  outstanding  share  of  common  stock  is  entitled  to one  vote and each
fractional share of common stock is entitled to a corresponding  fractional vote
on each matter submitted to a vote of shareholders.  Cumulative voting shall not
be allowed in the  election of  Directors  of the company and every  shareholder
entitled  to vote at such  election  shall  have the right to vote the number of
shares  owned by him for as many  persons as there are  Directors to be elected,
and for whose election he has a right to vote.

When, with respect to any action to be taken by the Shareholders of the Company,
the Colorado Corporation Code requires the vote or concurrence of the holders of
two-thirds of the outstanding  shares entitled to vote thereon,  or of any class
or  series,  any and every  such  action  shall be taken,  notwithstanding  such
requirements of the Colorado Corporation Code, by the vote or concurrence of the
holders of a majority of the outstanding shares entitled to vote thereon,  or of
any class or series.

Debt Securities to be Registered. Not applicable.
--------------------------------
American Depository Receipts.  Not applicable.
----------------------------
Other Securities to be Registered.  Not applicable.
---------------------------------

                                     PART II



                                       29
<PAGE>

Item 1.  Market Price Of And Dividends on the Registrant's
----------------------------------------------------------
         Common Equity and Other Shareholder Matters
----------------------------------------------------

The  Company's  common  stock  trades in the OTC  Bulletin  Board in the  United
States,  having the trading symbol "DSNY" and CUSIP#  25063G204.  Trading volume
and  high/low/closing  prices,  on a monthly basis, for the period September 30,
1999 to August 31, 2000 is given in the following table.
<TABLE>
<CAPTION>
                                   Table No. 7
                           DSNY Stock Trading Activity

------------------------- ---------------------- ----------------------- ---------------------- ----------------------
         Month                    High                    Low                    Close                 Volume
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
<S>                            <C>                    <C>                     <C>                   <C>
September, 1999                   $1.03                  $0.83                   $1.02                 457,200
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
October                           $1.04                  $0.68                   $0.99                 880,500
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
November                          $1.02                  $$0.58                  $0.95                 591,600
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
December                          $0.92                  $0.67                   $0.88                1,254,900
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
January, 2000                     $2.70                  $0.55                   $1.40                1,972,608
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
February                          $4.00                  $1.41                   $3.40                1,885,000
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
March                             $3.95                  $2.00                   $2.60                2,271,600
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
April                             $2.60                  $1.20                   $1.65                    0
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
May                               $2.90                  $1.40                   41.70                    0
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
June                              $1.15                  $1.05                   $1.13                 24,300
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
July                              $1.07                  $0.75                   $0.81                 58,200
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
August                            $1.09                  $0.69                   $1.10                 57,000
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
</TABLE>


The Company's  common stock is issued in registered  form.  American  Securities
Transfer and Trust  (located in Denver,  Colorado) is the registrar and transfer
agent for the common stock.

On August 31, 2000 the shareholders' list for the Company's common shares showed
ninety registered shareholders and 22,501,000 of common stock outstanding.

The Company has not  declared any  dividends  since  incorporation  and does not
anticipate that it will do so in the foreseeable  future.  The present policy of
the Company is to retain future earnings for use in its operations and expansion
of its business.

ITEM 2.  LEGAL PROCEEDINGS
--------------------------

The Company knows of no material,  active or pending legal  proceedings  against
them; nor is the Company  involved as a plaintiff in any material  proceeding or
pending litigation.



                                       30
<PAGE>

The Company knows of no active or pending  proceedings against anyone that might
materially adversely affect an interest of the Company.


ITEM 3.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
------------------------------------------------------
                                 Not Applicable


ITEM 4.  RECENT SALES OF UNREGISTERED SECURITIES
------------------------------------------------
On April 25, 2000 the Company  completed a private  placement whereby it is sold
1,000,000  units.  Each unit  consisted  of one  common  share  and one  warrant
exercisable  for a  period  of six  months  from  the  closing  of  the  private
placement.  Each unit sold for $1.00 and the warrants  gave the holder the right
to purchase one  additional  share of common stock for $3.00.  This offering was
made under  Regulation S to offshore  investors.  The stock is restricted  for a
period of one year and is then subject To Rule 144.

Subsequent to year end, the company issued  additional  stock under Regulation S
to offshore investors as follows:

         (a) On October 27, 2000, the Company issued 500,000 common shares to an
         unrelated  individual at a price of $0.10 per share for total  proceeds
         of $50,000.
         (b) On October 27, 2000,  the Company  issued  550,000 common shares to
         unrelated  individuals at a price of $0.10 per share for total proceeds
         of $55,000.
         (c) On November 14, 2000,  the Company  issued 600,000 common shares to
         an unrelated  company at a price of $0.10 per share for total  proceeds
         of $60,000. (d) On November 27, 2000, the Company issued 500,000 common
         shares to an unrelated  company at a price of $0.10 per share for total
         proceeds of $50,000.


ITEM 5.  INDEMNIFICATION OF DIRECTORS AND OFFICERS
--------------------------------------------------
The Company's By-Laws address indemnification under Article Seven (b).

The corporation  shall  indemnify,  to the maximum extent  permitted by Colorado
law, any person who is or was a director,  officer, agent, fiduciary or employee
of the  corporation  against any claim,  liability or expense arising against or
incurred  by such  person  made  party to a  proceeding  because  he is or was a
director, officer, agent, fiduciary or employee of the corporation or because he
is or was  serving  another  entity  or  employee  benefit  plan as a  director,
officer,  partner,  trustee,  employee,  fiduciary or agent at the corporation's
request.  The corporation shall further have the authority to the maximum extent
permitted  by Colorado law to purchase and  maintain  insurance  providing  such
indemnification.


                                    PART F/S

ITEM 1.  FINANCIAL STATEMENTS
-----------------------------
The  financial  statements  and notes  thereto  as  required  under ITEM #13 are
attached hereto and found  immediately  following the text of this  Registration
Statement.  The audit report of KPMG LLP, independent Chartered Accountants,  on
the audited financial  statements is included herein  immediately  preceding the
audited financial statements.

                                       31
<PAGE>
(A-1) Audited Financial Statements: Fiscal 2000

Auditors' Report,  dated October 6, 2000, except as to notes 16(a) and (b) which
are as of October 27, 2000,  note 16(c) which is as of November 14, 2000, note 9
which is as of November  18,  2000 and note 16(d)  which is as of  November  27,
2000.

Consolidated Balance Sheets at August 31, 2000 and 1999
Consolidated  Statements of  Operations  for the years ended August 31, 2000 and
1999; and, for the period from August 24, 1998 (inception) to August 31, 2000.

Consolidated  Statements of Stockholders'  Equity and Comprehensive Loss for the
period from inception to August 31, 2000.

Consolidated  Statements  of Cash Flows for the years ended  August 31, 2000 and
1999; and, for the period from August 24, 1998 (inception) to August 31, 2000

Notes to Consolidated Financial Statements






                                       32
<PAGE>
                                   Consolidated Financial Statements of

                                      DESTINY MEDIA TECHNOLOGIES INC.
                                             AND SUBSIDIARIES
                                       (A Development Stage Company)

                                        (Expressed in U.S. Dollars)

                                         August 31, 2000 and 1999





<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
Destiny Media Technologies Inc.

We have audited the consolidated balance sheets of Destiny Media Technologies
Inc. and subsidiaries (A Development Stage Company) as of August 31, 2000 and
1999 and the consolidated statements of operations, stockholders' equity and
comprehensive loss, and cash flows for the years then ended and for the period
from August 24, 1998 (inception) to August 31, 2000. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Destiny Media
Technologies Inc. and subsidiaries as of August 31, 2000 and 1999 and the
results of their operations and their cash flows for the years then ended and
the period from August 24, 1998 (inception) to August 31, 2000 in conformity
with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in note 2 to the
financial statements, the Company has incurred recurring losses from operations
and has a working capital deficiency that raise substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are also described in note 2. The financial statements do not include
any adjustment that might result from the outcome of this uncertainty.




"KPMG LLP"

KPMG LLP


Chartered Accountants

Vancouver, Canada

October 6, 2000, except as to notes 16(a) and (b) which are as of October 27,
2000, note 16(c) which is as of November 14, 2000, note 9 which is as of
November 18, 2000 and note 16(d) which is as of November 27, 2000

                                       1
<PAGE>
<TABLE>
<CAPTION>
                         DESTINY MEDIA TECHNOLOGIES INC.
                                and subsidiaries
                          (A Development Stage Company)

                           Consolidated Balance Sheets
                           (Expressed in U.S. Dollars)

                              August 31, August 31,
                                                                                     2000                 1999
                                                                           --------------      ---------------
                                        Assets

<S>                                                                        <C>                 <C>
Current assets:
     Cash and cash equivalents                                             $       97,928       $           -
     Short-term investments                                                         7,070                   -
     Accounts receivable                                                           83,495                   -
     Loans receivable (note 5)                                                         -               594,236
     Prepaids                                                                      24,071                   -
                                                                           --------------       --------------

     Total current assets                                                         212,564              594,236

Other assets, net of accumulated amortization of $680                               1,392                   -

Notes receivable (note 6)                                                         111,133                   -

Property and equipment:
     Furniture and fixtures                                                        66,120                   -
     Computer hardware                                                            101,425                   -
     Computer software                                                             10,646                   -
     Leasehold improvements                                                         6,002                   -
                                                                           --------------      ---------------

                                                                                  184,193                   -
     Less accumulated depreciation and amortization                               (47,960)                  -
                                                                           --------------      ---------------

     Net property and equipment                                                   136,233                   -

Intellectual property, net of accumulated amortization of $58,835                  98,057                   -

Goodwill, net of accumulated amortization of $103,222                             172,036                   -
                                                                           --------------       --------------

Total assets                                                               $      731,415       $      594,236
                                                                           ==============       ==============

                         Liabilities and Stockholders' Equity

Current liabilities:
     Accounts payable and accrued liabilities                              $      162,400       $           -
     Related party payable (note 7)                                               101,422              594,236
                                                                           --------------       --------------

     Total current liabilities                                                    263,822              594,236

Long-term debt (note 8)                                                           194,590                   -

Stockholders' equity:
     Common stock, par value $0.001
         Authorized:  100,000,000 shares
         Issued and outstanding:  22,501,000 shares 1999 - 17,850,000 shares       22,501               17,850
     Additional paid-in capital                                                 1,986,553               41,650
     Deferred stock compensation                                                  (87,550)                  -
     Deficit accumulated during the development stage                          (1,640,229)             (59,500)
     Cumulative translation adjustment                                             (8,272)                  -
                                                                           --------------       --------------

     Total stockholders' equity                                                   273,003                   -
                                                                           --------------       --------------

Total liabilities and stockholders' equity                                 $      731,415       $      594,236
                                                                           ==============       ==============
</TABLE>

Commitments (note 13)
Subsequent events (notes 9 and 16)

See accompanying notes to consolidated financial statements.

                                       2
<PAGE>
<TABLE>
<CAPTION>
                         DESTINY MEDIA TECHNOLOGIES INC.
                                AND SUBSIDIARIES
                          (A Development Stage Company)

                      Consolidated Statements of Operations
                           (Expressed in U.S. Dollars)

                                                                                                   Period from
                                                                 Year                Year      August 24, 1998
                                                                ended               ended       (inception) to
                                                           August 31,          August 31,           August 31,
                                                                 2000                1999                 2000
                                                    -----------------     ---------------      ---------------
<S>                                                  <C>                  <C>                  <C>
Sales                                                $         85,544     $            -       $        85,544

Operating expenses:
     Advertising and promotion                                155,510                  -               155,510
     Bad debt expense                                             714                  -                   714
     Bank charges and interest                                  4,811                  -                 4,811
     Consulting                                                42,014                  -                42,014
     Depreciation                                             197,368                  -               197,368
     Filings and listings                                      20,541                 450               20,991
     Financing                                                  3,597                  -                 3,597
     In-process research and development                       33,846                  -                33,846
     Management fees                                            6,071              38,958               45,029
     Marketing                                                183,749                  -               183,749
     Meals and entertainment                                    6,130                  -                 6,130
     Office and miscellaneous                                  25,651               9,374               35,025
     Professional fees                                        124,649               1,968              126,617
     Shareholder relations and transfer agent                 123,805                 750              124,555
     Rent                                                      61,139               8,000               69,139
     Research and development                                   8,984                  -                 8,984
     Repairs and maintenance                                    3,529                  -                 3,529
     Stock-based compensation                                  21,346                  -                21,346
     Subcontracts                                              70,326                  -                70,326
     Trademark                                                  5,751                  -                 5,751
     Telephone and telecommunications                          44,737                  -                44,737
     Travel                                                    54,340                  -                54,340
     Wages and benefits                                       482,519                  -               482,519
                                                    -----------------     ---------------      ---------------

                                                            1,681,127              59,500            1,740,627
                                                    -----------------     ---------------      ---------------

Net loss from operations                                   (1,595,583)            (59,500)          (1,655,083)

Interest income                                                14,854                  -                14,854
                                                    -----------------     ---------------      ---------------

Loss for the period                                  $     (1,580,729)    $       (59,500)     $    (1,640,229)
                                                     ================     ===============      ===============

Net loss per common share, basic and diluted         $         (0.07)     $        (0.01)      $        (0.10)
                                                     ================     ===============      ===============

Weighted average common shares outstanding,
   basic and diluted                                       21,512,150          11,479,625           16,472,526
                                                     ================     ===============      ===============
</TABLE>

See accompanying notes to consolidated financial statements.

                                       3
<PAGE>
<TABLE>
<CAPTION>
                         DESTINY MEDIA TECHNOLOGIES INC.
                                AND SUBSIDIARIES
                          (A Development Stage Company)

     Consolidated Statements of Stockholders' Equity and Comprehensive Loss
                           (Expressed in U.S. Dollars)

                                                                                                   Deficit
                                                                                                 accumulated
                                       Common stock          Other       Deferred     During      cumulative          Total
                                   -------------------     paid-In        stock     development  translation     stockholders'
                                      Shares    Amount     capital    compensation     stage     adjustment         equity
                                   ---------   -------   -----------   ----------  -----------    -----------    -----------
<S>                                <C>         <C>       <C>           <C>         <C>            <C>
Balance, August 24, 1998                  -    $    -    $        -     $       -   $         -     $       -    $          -

    Net loss                              -         -             -             -       (59,500)            -         (59,500)
                                                                                                                  -----------
    Comprehensive loss                                                                                                (59,500)

    Common stock issued for cash   17,850,000   17,850        41,650            -             -             -          59,500
                                   ----------  -------   -----------   ----------   -----------    -----------    -----------

Balance, August 31, 1999           17,850,000   17,850        41,650            -       (59,500)            -              -

    Net loss                                -        -             -            -    (1,580,729)            -      (1,580,729)
    Cumulative translation adjustment       -        -          -               -             -        (8,272)         (8,272)
                                                                                                                  -----------
    Comprehensive loss                                                                                            (1,589,001)

    Common stock issued for cash
      on private placement(note 10) 1,000,000    1,000       999,000            -             -             -       1,000,000
    Common stock issued for cash      247,485      247        79,752            -             -             -          79,999
    Common stock issued on
      acquisition                   1,800,000    1,800        (1,200)           -             -             -             600
    Common stock issued for
      retirement of debt            1,490,724    1,491       592,745            -             -             -         594,236
    Common stock issued for
      services rendered               112,791      113        54,577            -             -             -          54,690
    Deferred stock compensation             -        -        108,896    (108,896)            -             -               -
    Amortization of deferred stock
      compensation                          -        -             -       21,346             -             -          21,346
    Return of profit from shareholder
      from short-swing profit              -         -        111,133           -             -             -         111,133
                                  -----------  -------   -----------    ---------   -----------    -----------    -----------

Balance, August 31, 2000           22,501,000  $22,501   $ 1,986,553    $ (87,550)  $(1,640,229)   $   (8,272)      $ 273,003
                                  ===========  =======   ===========    =========   ===========    ==========       =========
</TABLE>

See accompanying notes to consolidated financial statements.


                                       4
<PAGE>
<TABLE>
<CAPTION>
                         DESTINY MEDIA TECHNOLOGIES INC.
                                AND SUBSIDIARIES
                          (A Development Stage Company)
                      Consolidated Statements of Cash Flows
                           (Expressed in U.S. dollars)
                                                                                                   Period from
                                                                                               August 24, 1998
                                                         Year ended            Year ended       (inception) to
                                                         August 31,            August 31,           August 31,
                                                               2000                  1999                 2000
                                                    ---------------       ---------------      ---------------
<S>                                                 <C>                   <C>                  <C>
Cash flows from operating activities:
Operations:
     Loss for the period                             $   (1,580,729)       $      (59,500)      $   (1,640,229)
     Items not involving cash:
         Depreciation                                       197,368                    -               197,368
         Common stock issued for services
           rendered                                          54,690                    -                54,690
         Stock-based compensation                            21,346                    -                21,346
         In-process research and development                 33,846                    -                33,846
     Changes in operating asset and liabilities:
         Accounts receivable                                (82,937)                   -               (82,937)
         Prepaid expenses                                   (15,872)                   -               (15,872)
         Accounts payable                                   145,063                    -               145,063
                                                     --------------        --------------       ---------------
     Net cash used in operating activities               (1,227,225)              (59,500)          (1,286,725)
                                                     --------------        --------------       --------------

Cash flows from investing activities:
     Cash acquired on acquisition                           250,719                    -               250,719
     Purchase of property and equipment                     (79,468)                   -               (79,468)
     Purchase of other assets                                (1,392)                   -                (1,392)
     Investment in mineral properties                            -                (17,500)             (17,500)
     Investment in short-term investments                    (7,070)              (22,700)             (29,770)
     Proceeds on disposal of mineral properties
       and marketable securities to related party                -                 40,200               40,200
     Long-term loan receivable from related party                -               (594,236)            (494,236)
                                                     --------------        --------------       --------------
     Net cash provided by investing activities              162,789              (594,236)            (331,447)
                                                     --------------        --------------       --------------

Cash flows from financing activities:
     Net proceeds from debt                                 101,385               594,236              595,621
     Net proceeds from issuances of
       common stock and subscriptions                     1,079,999                59,500            1,139,499
                                                     --------------        --------------       --------------
     Net cash provided by financing activities            1,181,384               653,736            1,735,120
                                                     --------------        --------------       --------------
Net increase in cash and cash equivalents
   during the period                                        116,948                    -               116,948

Effect of foreign exchange rate changes on cash             (19,020)                   -               (19,020)

Cash and cash equivalents at beginning of period                 -                     -                    -
                                                     --------------        --------------       --------------

Cash and cash equivalents at end of period           $       97,928        $           -        $       97,928
                                                     ==============        ==============       ==============
Supplementary disclosure:
     Non-cash transactions:
         Stock issued to acquire Destiny Software
           Productions Inc., net of cash acquired    $     (250,119)       $           -        $     (250,119)
         Stock issued for retirement of debt                594,236                    -               619,263
         Stock issued for services rendered                  54,690                    -                54,690
         Deferred stock-based compensation                  108,896                    -               108,896
         Note receivable for return of profit from
           shareholder from short-swing profit              111,133                    -               111,133
                                                     ==============        ==============       ==============
</TABLE>
See accompanying notes to consolidated financial statements.
                                       5
<PAGE>
                         DESTINY MEDIA TECHNOLOGIES INC.
                                AND SUBSIDIARIES
                          (A Development Stage Company)

                   Notes to Consolidated Financial Statements
                           (Expressed in U.S. dollars)

                           Year ended August 31, 2000

--------------------------------------------------------------------------------


1.   Organization:

     Destiny Media  Technologies Inc. (the "Company") was incorporated on August
     24, 1998 as Euro  Industries  Ltd. under the laws of the State of Colorado.
     On October  12,  1999,  the  Company's  name was  changed to Destiny  Media
     Technologies  Inc. The Company  develops  accessible and  consumer-friendly
     Internet audio applications on its proprietary streaming audio format.


2.   Future operations:

     From inception of the business, the Company has incurred cumulative losses
     of $1,640,229 and used cash for operating activities of $1,286,725. As a
     result, substantial doubt exists about its ability to continue as a going
     concern.

     These financial statements have been prepared on the going concern basis
     under which an entity is considered to be able to realize its assets and
     satisfy its liabilities in the ordinary course of business. Operations to
     date have been primarily financed by long-term debt and equity
     transactions. Although subsequent to August 31, 2000, the Company has
     raised cash through the issuance of common shares (note 16), these proceeds
     are not sufficient to meet anticipated costs in fiscal 2001. As a result,
     the Company's future operations are dependent upon the identification and
     successful completion of additional long-term or permanent equity
     financing, the continued support of creditors and shareholders, and,
     ultimately, the achievement of profitable operations. There can be no
     assurances that the Company will be successful. If it is not, the Company
     will be required to reduce operations or liquidate assets. The consolidated
     financial statements do not include any adjustments relating to the
     recoverability of assets and classification of assets and liabilities that
     might be necessary should the Company be unable to continue as a going
     concern.


3.   Significant accounting policies:

     These consolidated financial statements have been prepared using generally
     accepted accounting principles in the United States.

     (a) Principles of consolidation:

         The  financial  statements  include the accounts of the Company and its
         wholly owned subsidiaries,  Destiny Software Productions Inc. ("Destiny
         Software")  and  Wonderfall   Productions  Inc.   ("Wonderfall").   All
         intercompany   balances  and  transactions   have  been  eliminated  on
         consolidation.

         For United States accounting and reporting purposes, the Company is
         considered to be in the development stage as it is devoting all of its
         efforts to developing its business operations and these consolidated
         financial statements are these of a development stage enterprise.



                                       6
<PAGE>

                         DESTINY MEDIA TECHNOLOGIES INC.
                                AND SUBSIDIARIES
                          (A Development Stage Company)

                   Notes to Consolidated Financial Statements
                                            (Expressed in U.S. dollars)

                           Year ended August 31, 2000

--------------------------------------------------------------------------------


3.   Significant accounting policies (continued):

     (b) Basis of presentation:

         Certain other comparative figures have been reclassified to conform to
         the presentation adopted in the current year.

         These financial statements and related notes have been adjusted to give
         retroactive effect to a three-for-one common share stock split which
         occurred December 30, 1999.

         The preparation of the financial statements in conformity with
         generally accepted accounting principles requires management to make
         estimates and assumptions that affect the reported amounts of assets
         and liabilities and disclosure of contingent assets and liabilities at
         the date of the financial statements and the reported amounts of
         revenues and expenses during the period. Significant areas requiring
         the use of estimates include estimating the recoverability of accounts
         receivable and the valuation of deferred development costs, property
         and equipment, intellectual property, goodwill and other assets. Actual
         results could differ from those estimates.

     (c) Cash and cash equivalents:

         For the purposes of the statements of cash flows, the Company considers
         all highly liquid marketable securities with original terms to maturity
         of three months or less when acquired to be cash equivalents. The
         Company had cash equivalents of $68,100 at August 31, 2000 (August 31,
         1999 - $nil).

     (d) Short-term investments:

         Short-term investments are carried at the lower of cost and fair market
value.

     (e) Research and development costs:

         Research and, except as indicated below, development costs are expensed
         as incurred. Software and related development costs, after the
         establishment of technological feasibility and commercial viability,
         are capitalized as software development costs until the product is
         ready for general release to customers. Amortization is provided on a
         product by product basis over the estimated economic life of the
         product, not to exceed three years. Amortization commences when the
         product is available for general release to customers.

     (f) Revenue recognition:

         Revenues relate to the sale of Internet audio applications and software
         developed by the Company. The Company recognizes revenue when title has
         passed to the customer, the collectibility of the consideration is
         reasonably assured and the Company has no significant remaining
         performance obligations.



                                       7
<PAGE>
                         DESTINY MEDIA TECHNOLOGIES INC.
                                AND SUBSIDIARIES
                          (A Development Stage Company)

                   Notes to Consolidated Financial Statements
                                            (Expressed in U.S. dollars)

                           Year ended August 31, 2000

--------------------------------------------------------------------------------

3.   Significant accounting policies (continued):
     (g) Property and equipment:

         Property and equipment are stated at cost. Depreciation is calculated
         using the declining balance method at the following annual rates,
         commencing upon utilization of the assets:

                      -------------------------------------------
                      Asset                                  Rate
                      -------------------------------------------

                      Furniture and fixtures                  20%
                      Computer hardware                       30%
                      Computer software                       50%
                      -------------------------------------------


         Leasehold improvements are amortized on a straight-line basis over the
         term of the lease.

     (h) Intellectual property:

         Intellectual property represents the technologies which were acquired
         on the acquisition of Destiny Software (note 4) and are carried at cost
         less accumulated amortization. Amortization is provided on a
         straight-line basis over two years.

     (i) Goodwill:

         Goodwill represents the excess of the cost of acquisition of Destiny
         Software over the fair market value of the net identifiable assets
         acquired (note 4). These amounts are amortized on a straight-line basis
         over the estimated period of benefit being two years.

     (j) Impairment of long-lived assets:

         The Company assesses the recoverability of its long-lived assets by
         determining whether the carrying value of the long-lived assets can be
         recovered over their remaining life through undiscounted future
         operating cash flows. The amount of impairment, if any, is measured
         based on projected discounted future operating cash flows using a
         discount rate reflecting the Company's average cost of funds. The
         assessment of the recoverability will be impacted if estimated future
         operating cash flows are not achieved. Through August 31, 2000, no
         impairment charges have been recognized.

     (l) Translation of foreign currencies:

         The Company's functional currency is the U.S. dollar. Financial
         statements of foreign operations for which the functional currency is
         the local currency are translated into U.S. dollars using the current
         rate at the balance sheet date. Under this method, assets and
         liabilities are translated into U.S. dollars at the rate of exchange in
         effect at the balance sheet date and revenue and expense items are
         translated at the average rates for the period. Unrealized gains and
         losses resulting from the translation of the financial statements are
         deferred and accumulated in a separate component of stockholders'
         equity, described as cumulative translation adjustments.



                                       8
<PAGE>

                         DESTINY MEDIA TECHNOLOGIES INC.
                                AND SUBSIDIARIES
                          (A Development Stage Company)

                   Notes to Consolidated Financial Statements
                           (Expressed in U.S. dollars)

                           Year ended August 31, 2000

--------------------------------------------------------------------------------


3.   Significant accounting policies (continued):

     (m) Advertising:

         Advertising costs are expensed as incurred. Advertising costs amounted
         to $159,726 and $nil for the years ended August 31, 2000 and 1999,
         respectively.

     (n) Income taxes:

         Income taxes are accounted for under the asset and liability method.
         Deferred tax assets and liabilities are recognized for the future tax
         consequences attributable to differences between the financial
         statement carrying amounts of existing assets and liabilities and their
         respective tax bases and operating loss and tax credit carry forwards.
         Deferred tax assets and liabilities are measured using enacted tax
         rates expected to apply to taxable income in the years in which those
         temporary differences are expected to be recovered or settled. The
         effect on deferred tax assets and liabilities of a change in tax rates
         is recognized in income in the period that includes the enactment date.
         Deferred tax assets are reduced by a valuation allowance to the extent
         that the recoverability of the asset is not considered more likely than
         not.

     (o) Stock option and share purchase plans:

         The Company applies the intrinsic value-based method of accounting
         prescribed by Accounting Principles Board ("APB") Opinion No. 25,
         "Accounting for Stock Issued to Employees," and related
         interpretations, in accounting for awards to employees and directors
         under its stock option and share purchase plans. As such, compensation
         is recorded on the date of grant only if the current market price of
         the underlying stock exceeds the exercise price. SFAS No. 123,
         "Accounting for Stock-Based Compensation," established accounting and
         disclosure requirements using a fair value-based method of accounting
         for stock-based employee compensation plans. As allowed by SFAS No.
         123, the Company has elected to continue to apply the intrinsic
         value-based method of accounting described above for employee grants,
         and has adopted the disclosure requirements of SFAS No. 123. Grants to
         others will be recognized based on the fair value of the equity
         instrument at the date of grant.

         Deferred compensation expense arises when the compensation expense
         relates to future services. Deferred compensation expense is amortized
         to income over the service period.



                                       9
<PAGE>

                         DESTINY MEDIA TECHNOLOGIES INC.
                                AND SUBSIDIARIES
                          (A Development Stage Company)

                   Notes to Consolidated Financial Statements
                           (Expressed in U.S. dollars)

                           Year ended August 31, 2000

--------------------------------------------------------------------------------


4.   Acquisition:

     On October 20, 1999, 1,800,000 common shares were issued for the purchase
     of 100% of Destiny Software Production Inc. Destiny Software is a high-tech
     development company that develops video and audio compression software and
     to a lesser extent design and development of computer games. The
     transaction has been recorded under the purchase method of accounting with
     effect from the date of acquisition. The fair market value of the
     consideration paid for the acquisition was based on the trading price of
     the Company's shares at the time the terms of the transaction were agreed
     to between the parties. At that time, there had been only one significant
     block of shares traded. The per share value of this trade was considered
     representative of fair market value.

     The Company's interest in the net assets acquired, at assigned values are
as follows:

                                                                      U.S.

                  Cash                                           $     250,719
                  Other current assets                                   8,722
                  Property and equipment                                91,977
                  Intellectual property                                156,892
                  Goodwill                                             275,258
                  Acquired in-process research and development          33,846
                  Current liabilities                                  (22,289)
                  Long-term liabilities                               (794,525)
                  -------------------------------------------------------------

                                                                 $         600
                  -------------------------------------------------------------

                  Consideration:
                      1,800,000 common shares                    $         600
                  -------------------------------------------------------------

     Acquired in process research and development is valued based on accumulated
     expenditures incurred by Destiny Software to the acquisition date on
     specifically identified products that are in the early stages of
     development and on which the core technology stage has not been reached.
     Goodwill has been valued as equal to the excess of the fair value of the
     consideration given over the fair value of the net identifiable assets and
     liabilities acquired.

     A 20% shareholder of the Company owned 100% of the outstanding shares of
     Destiny Software at the time of the acquisition.




                                       10
<PAGE>
                         DESTINY MEDIA TECHNOLOGIES INC.
                                AND SUBSIDIARIES
                          (A Development Stage Company)

                   Notes to Consolidated Financial Statements
                           (Expressed in U.S. dollars)

                           Year ended August 31, 2000

--------------------------------------------------------------------------------


4.   Acquisition (continued):

     Pro forma information:

         The following table reflects, on an unaudited pro forma basis, the
         combined results of the Company as if the above acquisitions had taken
         place at the beginning of the respective year presented. Appropriate
         adjustments have been made to reflect the depreciation of the
         accounting bases used in recording these acquisitions. This pro forma
         information does not purport to be indicative of the results of
         operations that would have resulted had the acquisitions been in effect
         for the entire years presented, and is not intended to be a projection
         of future results or trends.

         ----------------------------------------------------------------
                                               2000                 1999
         ----------------------------------------------------------------

         Revenues                    $      102,653         $     10,405
         Net loss                        (1,524,804)            (498,724)
         Loss per share                       (0.07)               (0.04)
         ----------------------------------------------------------------


5.   Long-term debt receivable from related party:

     The long-term loan receivable at August 31, 1999 was owing from Destiny
     Software, a company which was wholly-owned by a 20% shareholder of the
     Company.

     The amount was effectively settled on the acquisition of Destiny Software
     by the Company on October 20, 1999.


6.   Notes receivable:

     During the year ended August 31, 2000, certain officers were required to
     remit proceeds from short-swing profits of $111,133 to the Company.
     Subsequent to year-end, the Company entered into notes receivable for the
     settlement of the proceeds.



                                       11
<PAGE>
                         DESTINY MEDIA TECHNOLOGIES INC.
                                AND SUBSIDIARIES
                          (A Development Stage Company)
                   Notes to Consolidated Financial Statements
                           (Expressed in U.S. dollars)

                           Year ended August 31, 2000
--------------------------------------------------------------------------------
7.   Related party loans payable:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                                                                     2000                 1999
--------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>                  <C>
     Loan payable, due to a shareholder, unsecured, non-interest
       bearing, due on demand                                                $      1,422         $         -

     Loan payable, due to a shareholder, unsecured, non-interest
       bearing, due on demand, and convertible at the Company's
       option into 300,000 common shares                                               -                99,013

     Loan payable, due to a shareholder, unsecured, non-interest
       bearing, due on demand, and convertible at the Company's
       option into 1,190,724 common shares                                             -               495,223

     Loan payable, due to an individual related to a shareholder,
       unsecured, non-interest bearing, due on demand                             100,000                   -
---------------------------------------------------------------------------- -------------------  ------------
                                                                             $    101,422         $    594,236
---------------------------------------------------------------------------- -------------------  ------------
</TABLE>
     The loans payable at August 31, 1999 were converted into common shares
     during the year in accordance with terms set out in the original debt
     agreements.

8.   Long-term debt:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                                                                     2000                 1999
--------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>                  <C>
     Amount is non-interest bearing and repayable in twelve
       monthly instalments commencing on September 30, 2001                  $     85,317         $         -

     Full amount is repayable at the earlier of: (a) the first
       day of production work of a final version of Mission to
       Mars ("Production One") and (b) the sale, transfer,
       assignment, reassignment or other disposition of
       Production One. Interest is payable on any balance
       outstanding from the date that the amount becomes
       repayable at prime plus 2%. No amounts are expected to
       become payable in the next fiscal year as
       the Company has halted production on Production One.                        47,570                   -

     Full amount is repayable at the earlier of: (a) the first
       day of production work of a final version of Penitentiary
       ("Production Two") and (b) the sale, transfer, assignment,
       reassignment or other disposition of Production Two.
       Interest is payable on any balance outstanding from the
       date that the amount becomes repayable at prime plus 2%.
       No amounts are expected to become payable in the next
       fiscal year as the Company has halted production on Production Two.         38,227                   -

     Other                                                                         23,476                   -
---------------------------------------------------------------------------- -------------------- ------------
                                                                                  194,590                   -
     Less current portion                                                              -                    -
---------------------------------------------------------------------------- -------------------- ------------
                                                                             $    194,590         $         -
---------------------------------------------------------------------------- -------------------- ------------
</TABLE>

                                       12
<PAGE>

                         DESTINY MEDIA TECHNOLOGIES INC.
                                AND SUBSIDIARIES
                          (A Development Stage Company)

                   Notes to Consolidated Financial Statements
                           (Expressed in U.S. dollars)

                           Year ended August 31, 2000

--------------------------------------------------------------------------------


9.   Private placement equity financing:

     On April 25, 2000, the Company completed a private placement which
     consisted of the issuance of 1,000,000 Units at a price of $1.00 each for
     proceeds of $1,000,000. Each Unit consisted of one common share and one
     share purchase warrant. Each share purchase warrant entitles the holder to
     purchase one additional common share at a price of $3.00 for a period of
     six months expiring October 25, 2000. The warrant exercise price was in
     excess of the market price of the Company's common shares at the date of
     the placement.

     In connection with this offering, the Company has agreed to pay Agent's
     Finders fees of $40,000. This finders fees are directly related to the
     private placement and has been offset against paid-in capital at August 31,
     2000.

     Subsequent to year-end, the Company extended the expiry date on the
     warrants to December 15, 2000 and adjusted the warrant exercise price to
     $0.15.


10.  Share capital:

     (a) Stock option plan:

         Pursuant to a stock option plan dated October 12, 1999, the Company has
         reserved 2,679,500 common shares for future issuance under its stock
         option plan.

         Stock option activity for 2000 is presented below:

         --------------------------------------------------------------------
                                                                    Weighted
                                                 Number of           average
                                                    shares    exercise price
         --------------------------------------------------------------------

         Outstanding, August 31, 1998 and 1999          -          $      -
              Granted                            2,439,500              0.11
              Exercised                                 -                 -
              Forfeited
              Expired                                   -                 -
         --------------------------------------------------------------------

         --------------------------------------------------------------------
         Outstanding, August 31, 2000            2,439,500         $    0.11
         --------------------------------------------------------------------



                                       13
<PAGE>

                         DESTINY MEDIA TECHNOLOGIES INC.
                                AND SUBSIDIARIES
                          (A Development Stage Company)

                   Notes to Consolidated Financial Statements
                           (Expressed in U.S. dollars)

                           Year ended August 31, 2000

--------------------------------------------------------------------------------


10.  Share capital (continued):

     (a) Stock option plan (continued):

         The following table summarizes information concerning outstanding and
         exercisable options at August 31, 2000:
<TABLE>
<CAPTION>
         -----------------------------------------------------------------------------------------------------
                                               Options outstanding                     Options exercisable
                               ----------------------------------------------     ----------------------------
                                    Weighted
                                                       average       Weighted                         Weighted
                                                     remaining        average                          average
                                                   contractual       exercise                         exercise
                                      Number              life          price           Number           price
         Exercise prices         outstanding        (in years)      per share      exercisable       per share
         -----------------------------------------------------------------------------------------------------
<S>      <C>                         <C>                  <C>           <C>            <C>               <C>
         $0.83                       240,000              4.12          0.022          160,000           0.022
         $0.85                       150,000              4.95          0.377           18,000           0.377
         $1.00                     1,932,000              4.15          0.075          994,120           0.075
         $1.80                        50,000              4.67          0.759            8,000           0.759
         $2.00                        40,000              4.36          0.208           12,000           0.208
         $2.50                        27,500              4.54          1.128            8,200           1.128
         -----------------------------------------------------------------------------------------------------

                                   2,439,500                                         1,200,320
         -----------------------------------------------------------------------------------------------------
</TABLE>

         At August 31, 2000, 2,439,500 options had been granted and an
         additional 240,000 shares were available for grant under the Plan. The
         per share weighted-average fair value of stock options granted during
         2000 was $0.21 on the date of grant using the Black Scholes
         option-pricing model with the following weighted-average assumptions:
         expected dividend yield - $nil, risk-free interest rate of 5.5%,
         volatility of 70%, and expected lives of 2.08 years. No options were
         granted prior to 2000.

         Of the total options granted during the period, 2,309,000 were granted
         to employees and 130,500 were granted to non-employees of the Company.
         The intrinsic value of the options granted to employees was $75,375,
         calculated in accordance with APB Opinion No. 25. The total value of
         the options granted to non-employees was $33,521, calculated in
         accordance with SFAS 123.


                                       14
<PAGE>

                         DESTINY MEDIA TECHNOLOGIES INC.
                                AND SUBSIDIARIES
                          (A Development Stage Company)

                   Notes to Consolidated Financial Statements
                           (Expressed in U.S. dollars)

                           Year ended August 31, 2000

--------------------------------------------------------------------------------


10.  Share capital (continued):

         The Company applies APB Opinion No. 25 in accounting for its employee
         stock option plan and, accordingly, compensation cost has been
         recognized in the financial statements only to the extent of intrinsic
         value. Had the Company determined compensation cost based on the fair
         value on the measurement date for its employee stock option plan using
         the assumptions for the Black-Scholes valuation model described above,
         the Company's net loss and loss per share for 2000 would have increased
         to the pro forma amounts indicated below:

         Net loss:
              As reported                          $   (1,580,729)
              Pro forma                                (1,627,815)
         Loss per share:
              As reported                          $       (0.07)
              Pro forma                                    (0.08)
         ---------------------------------------------------------

     (b) Non-cash consideration:

         Shares issued for non-cash consideration have been valued at their
         market value at the date the services are provided.

11.  Income taxes:

     -------------------------------------------------------------------------
                                                    2000                 1999
     -------------------------------------------------------------------------

     Deferred tax assets:
         Net operating loss carryforwards   $    757,668         $     20,230
         Book over tax depreciation               20,910                   -
     -------------------------------------------------------------------------

                                                 778,578               20,230
     Less valuation allowance                   (724,898)             (20,230)
     -------------------------------------------------------------------------

     Net deferred tax assets                      53,680                   -

     Deferred tax liabilities:
         Intangible costs                        (53,680)                  -
     -------------------------------------------------------------------------

                                            $         -          $         -
     -------------------------------------------------------------------------

     Based on historical operations, management is not able to demonstrate that
     it is more likely than not that the results of future operations will
     generate sufficient taxable income to realize the net deferred tax assets,
     before the valuation allowance, reflected on the Company's balance sheet.


                                       15
<PAGE>

                         DESTINY MEDIA TECHNOLOGIES INC.
                                AND SUBSIDIARIES
                          (A Development Stage Company)

                   Notes to Consolidated Financial Statements
                           (Expressed in U.S. dollars)

                           Year ended August 31, 2000

--------------------------------------------------------------------------------

11.  Income taxes (continued):

     The reconciliation of income tax attributable to continuing operations
     computed at the U.S. federal statutory tax rates to income tax expense is:

     --------------------------------------------------------------------------
                                                     2000                 1999
     --------------------------------------------------------------------------

     Tax at U.S. statutory rates                    34.0%                34.0%
     Rate difference in other jurisdictions          8.3%                   -
     Change in valuation allowance                (41.2%)              (34.0%)
     Other net                                     (1.1%)                   -
     --------------------------------------------------------------------------

     Tax (expense) recovery                            -                    -
     --------------------------------------------------------------------------

     The reconciliation of losses from operations by geographic region is as
follows:

     --------------------------------------------------------------------------
                                                     2000                 1999
     --------------------------------------------------------------------------

     United States                         $     (360,443)        $    (59,500)
     Canada                                    (1,220,286)                  -
     --------------------------------------------------------------------------

                                           $   (1,580,729)        $    (59,500)
     --------------------------------------------------------------------------


12.  Related party transactions:

     In accordance with terms attached to convertible shareholder loan payable
     agreements, during fiscal 2000, the Company issued 1,490,724 shares to
     settle a long-term note receivable outstanding in the amount of $594,236 to
     shareholders.

     The Company issued 112,791 shares with a market value of $54,690 to a
     shareholder of the Company in return for services provided.


13.  Commitments:

     The Company leases office facilities in British Columbia under an operating
     lease agreement that expires May 31, 2001. Additional premises will be
     leased beginning June 1, 2000. Minimum lease payments to May 31, 2001 under
     these operating leases are $65,701.



                                       16
<PAGE>

                         DESTINY MEDIA TECHNOLOGIES INC.
                                AND SUBSIDIARIES
                          (A Development Stage Company)

                   Notes to Consolidated Financial Statements
                                            (Expressed in U.S. dollars)

                           Year ended August 31, 2000

--------------------------------------------------------------------------------

14.  Financial instruments:

     (a) Fair value disclosures:

         The carrying value of cash and cash equivalents, short-term
         investments, accounts receivable, accounts payable and accrued
         liabilities, and loans payable approximate their fair values due to the
         relatively short periods to maturity of the instruments.

         Due to the related party nature of the amounts owing to shareholder, it
         is not practical to estimate its fair value.

     (b) Foreign currency risk:

         The Company operates internationally, which gives rise to the risk that
         cash flows may be adversely impacted by exchange rate fluctuations.

         The Company has not entered into contracts for foreign exchange hedges.

15.  Recent accounting pronouncements:

     Statement of Financial Accounting Standards No. 133, "Accounting for
     Derivative Instruments and Hedging Activities," as amended ("FAS 133"), is
     effective for fiscal years beginning after June 15, 2000. FAS 133 requires
     that an entity recognize all derivatives as either assets or liabilities in
     the statement of financial position and measure those instruments at fair
     value. Management does not expect FAS 133 to have a material impact on the
     Company's consolidated financial statements.

     Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
     Statements," as amended ("SAB 101"), is effective for fiscal years
     beginning after December 15, 1999 and must be adopted no later than the
     fourth quarter of such fiscal year. Management does not expect SAB101 to
     have an impact on the Company's consolidated financial statements.

16.  Subsequent events:

     (a) On October 27, 2000, the Company issued 500,000 common shares to an
         unrelated individual at a price of $0.10 per share for total proceeds
         of $50,000.

     (b) On October 27, 2000, the Company issued 550,000 common shares to
         unrelated individuals at a price of $0.10 per share for total proceeds
         of $55,000.

     (c) On November 14, 2000, the Company issued 600,000 common shares to an
         unrelated company at a price of $0.10 per share for total proceeds of
         $60,000.

     (d) On November 27, 2000, the Company issued 500,000 common shares to an
         unrelated company at a price of $0.10 per share for total proceeds of
         $50,000.


                                       17
<PAGE>
                                    PART III
Item 1.  INDEX TO EXHIBITS:

27       Financial Data Schedule (submitted by EDGAR).



                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                 DESTINY MEDIA TECHNOLOGIES INC.
                                          (Registrant)


Dated: July 18, 2000             /s/ Steve Vestergaard, President and Director
       -------------             ---------------------------------------------