F-10

As filed with the Securities and Exchange Commission on June 8, 2021

Registration No. 333-               ​

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

FORM F-10

REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933

ACUITYADS HOLDINGS INC.
(Exact name of Registrant as specified in its charter)

Canada	7372	Not Applicable
(Province or other Jurisdiction of Incorporation or Organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

70 University Ave., Suite 1200
Toronto, Ontario M5J 2M4
(416) 218-9888
(Address and telephone number of Registrant’s principal executive offices)

CT Corporation System
28 Liberty Street
New York, NY 10005
(212) 894-8940
(Name, address and telephone number of agent for service in the United States)

Copies to:

Michael J. Solecki
Jones Day
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114-1190
(216) 586-3939 Brian M. Pukier
Stikeman Elliott LLP
5300 Commerce Court West
199 Bay Street
Toronto, Ontario M5L 1B9
(416) 869-5500 Tal Hayek
AcuityAds Holdings Inc.
70 University Ave., Suite 1200
Toronto, Ontario M5J 2M4
(416) 218-9888 Ryan J. Dzierniejko, Esq.
Michael J. Hong, Esq.
Skadden, Arps, Slate, Meagher &
Flom LLP
One Manhattan West
New York, New York 10001
(212) 735-3000 Robert S. Murphy
Daniel Pearlman
Davies Ward Phillips &
Vineberg LLP
155 Wellington Street West
Toronto, Ontario M5V 3J7
(416) 863-0900

Approximate date of commencement of proposed sale of the securities to the public:
From time to time after this Registration Statement becomes effective.

Province of Ontario, Canada
(Principal jurisdiction regulating this offering)

It is proposed that this filing shall become effective (check appropriate box):

A.	☐	Upon filing with the Commission, pursuant to Rule 467(a) (if in connection with an offering being made contemporaneously in the United States and Canada).
B.	☒	At some future date (check the appropriate box below):
​	​	1.	☐	pursuant to Rule 467(b) on (date) at (time).
​	​	2.	☐	pursuant to Rule 467(b) on (date) at (time) because the securities regulatory authority in the review jurisdiction has issued a receipt or notification of clearance on (date).
​	​	3.	☐	pursuant to Rule 467(b) as soon as practicable after notification of the Commission by the Registrant or the Canadian securities regulatory authority of the review jurisdiction that a receipt or notification of clearance has been issued with respect hereto.
​	​	4.	☒	after the filing of the next amendment to this Form (if preliminary material is being filed).

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to the home jurisdiction’s shelf prospectus offering procedures, check the following box. ☒

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Amount to be Registered(1)(2)			Proposed Maximum Aggregate Offering Price(1)(2)(3)			Amount of Registration Fee(3)
Common Shares	​	​	​	​	​	​	​	​	​
Preferred Shares	​	​	​	​	​	​	​	​	​
Subscription Receipts	​	​	​	​	​	​	​	​	​
Debt Securities	​	​	​	​	​	​	​	​	​
Warrants	​	​	​	​	​	​	​	​	​
Units	​	​	​	​	​	​	​	​	​
Total	​	US$	207,075,000	​	US$	207,075,000	​	US$	22,592(4)

(1)

There are being registered under this Registration Statement such indeterminate number of (i) common shares, (ii) preferred shares, (iii) subscription receipts, (iv) debt securities, (v) warrants and/or (vi) units comprised of one or more of the securities of the Registrant listed above in any combination as shall have an aggregate initial offering price not to exceed US$207,075,000. The proposed maximum initial offering price per security will be determined, from time to time, by the Registrant in connection with the sale of the securities under this Registration Statement.

(2)

Determined based on the proposed maximum aggregate offering price in Canadian dollars of C$250,000,000 converted into U.S. dollars based on the average rate of exchange of C$1.00=US$0.8283 on June 7, 2021, as reported by the Bank of Canada.

(3)

Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933 (the “Securities Act”).

(4)

Calculated in accordance with Rule 457(o) of the Securities Act.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registration Statement shall become effective as provided in Rule 467 under the Securities Act or on such date as the Commission, acting pursuant to Section 8(a) of the Securities Act, may determine.

PART I

INFORMATION REQUIRED TO BE DELIVERED TO OFFEREES OR PURCHASERS

Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus supplement shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

Subject to completion, dated June 8, 2021

ACUITYADS HOLDINGS INC.

US$50,000,000

Common Shares

This offering (the “Offering”) is the initial public offering of common shares (the “Common Shares”) of AcuityAds Holdings Inc. (the “Company”, “AcuityAds”, “us”, “we” or “our”) in the United States and a new issue of Common Shares in Canada. This prospectus supplement (the “Prospectus Supplement”), together with the accompanying short form base shelf prospectus dated December 30, 2020 (the “Shelf Prospectus”), qualifies the distribution of      Common Shares at a price of US$      per Common Share (the “Offering Price”).

The Offering consists of a treasury offering by us of       Common Shares (the “Offered Shares”).

Investing in the Common Shares involves significant risk. Prospective investors should consider the risks outlined in this Prospectus Supplement, the accompanying Shelf Prospectus and in the documents incorporated by reference herein and therein. See “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors”.

Our Common Shares are listed and posted for trading on the Toronto Stock Exchange (the “TSX”) under the symbol “AT”. June 7, 2021, the last trading day before the filing of this preliminary form of Prospectus Supplement, the closing price of the Common Shares on the TSX was C$13.94 or US$11.55 (based on the daily exchange rate for the U.S. dollar in terms of Canadian dollars, as quoted by the Bank of Canada, of C$1.00 = US$0.8283).

Price: US$       per Offered Share

​	Price to the Public(1)	Underwriters’ Fee(2)	Net Proceeds to the Company(3)
Per Offered Share	US$	US$	US$
Total Offering(4)	US$	US$	US$

Notes:

(1)

The Offering Price was determined by negotiation between the Company and the Underwriters (as defined herein), with reference to the then-current market price for the Common Shares.

(2)

Pursuant to the terms of the Underwriting Agreement (as defined below) and in consideration of the services rendered by the Underwriters in connection with the Offering, the Underwriters will receive an aggregate fee (the “Underwriters’ Fee”) of US$      representing    % of the gross proceeds of the Offering. For additional information regarding underwriter compensation, see “Plan of Distribution”.

(3)

After deducting the Underwriters’ Fee payable by the Company, but before deducting the other expenses in respect of the Offering estimated to be approximately US$      .

(4)

The Company has granted to the Underwriters an option (the “Over-Allotment Option”), exercisable, in whole or in part, from time to time not later than 30 days after the Closing Date (as defined below), to purchase from the Company up to additional Common Shares (the “Additional Shares”) to be issued by the Company, representing in the aggregate 15% of the total number of Offered Shares offered hereunder, at the Offering Price, less the Underwriters’ Fee. The Underwriters may exercise the Over-Allotment Option solely for the purpose of covering over-allotments, if any. If the Over-Allotment Option is exercised in full, the total “Price to the Public”, “Underwriters’ Fee” and “Net Proceeds to the Company” will be US$     , US$     and US$    , respectively. This Prospectus Supplement also qualifies the grant of the Over-Allotment Option and the distribution of up to Additional Shares to be sold by the Company upon exercise of the Over-Allotment Option. A purchaser who acquires Common Shares forming part of the over-allocation position acquires those shares under this Prospectus Supplement regardless of whether the over-allocation position is ultimately filled through the exercise of the Over-Allotment Option or secondary market purchases. See “Plan of Distribution”.

Canaccord Genuity     Needham & Company

(continued from cover)

The Offering is being made concurrently in each of the provinces and territories of Canada, other than Québec, under the terms of this Prospectus Supplement and in the United States under the terms of the Company’s registration statement on Form F-10 (the “Registration Statement”) filed with the United States Securities and Exchange Commission (the “SEC”).

The Company will use the net proceeds from the Offering of the Offered Shares as described in this Prospectus Supplement. See “Use of Proceeds”.

The Company has applied to list the Offered Shares and the Additional Shares on the TSX and has applied to list the Offered Shares, the Additional Shares and its outstanding Common Shares on The Nasdaq Capital Market (the “Nasdaq”) under the trading symbol “AT”. Listing will be subject to the Company fulfilling all of the listing requirements of the TSX and the Nasdaq, respectively.

All dollar amounts in this Prospectus Supplement are in United States dollars, unless otherwise indicated. See “Currency Presentation and Exchange Rate Information”.

The Offered Shares are being offered in each of the provinces and territories of Canada, other than Québec, by Canaccord Genuity Corp. and       (collectively, the “Canadian Underwriters”) and in the United States by Canaccord Genuity LLC, Needham & Company, LLC and       (collectively, the “U.S. Underwriters”, and together with the Canadian Underwriters, the “Underwriters”) pursuant to an underwriting agreement dated      , 2021 (the “Underwriting Agreement”). Needham & Company, LLC is not registered to sell securities in any Canadian jurisdiction and, accordingly, will not, directly or indirectly, solicit offers to purchase, sell or distribute the Offered Shares in Canada and will act as an underwriter for us only in respect of the offer, sale and distribution of the Offered Shares outside of Canada. See “Plan of Distribution”.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC OR ANY STATE SECURITIES COMMISSION OR ANY U.S. REGULATORY AUTHORITY NOR HAVE THESE AUTHORITIES PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

This Offering is made in the United States by a foreign issuer that is permitted, under a multijurisdictional disclosure system adopted in the United States and Canada, to prepare this Prospectus Supplement and the accompanying Shelf Prospectus in accordance with Canadian disclosure requirements. Prospective investors should be aware that such requirements are different from those of the United States. Financial statements included or incorporated herein, if any, have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”), and may be subject to foreign auditing and auditor independence standards, and thus may not be comparable to financial statements of United States companies.

Prospective investors should be aware that the acquisition of the Offered Shares may have tax consequences both in Canada and the United States. Such consequences for investors who are resident in, or citizens of, Canada or the United States may not be described fully herein. See “Certain Canadian Federal Income Tax Considerations” and “Certain U.S. Federal Income Tax Considerations”.

The enforcement by investors of civil liabilities under the United States federal securities laws may be affected adversely by the fact that the Company is incorporated under and governed by the Canada Business Corporations Act (the “CBCA”), that most of its directors and officers reside principally in Canada, that some or all of the Underwriters or experts named in the Registration Statement may be residents of a foreign country, and that all or a substantial portion of the assets of the Company and said persons may be located outside the United States. See “Enforcement of Civil Liabilities”.

The Underwriters, as principals, conditionally offer the Offered Shares qualified under this Prospectus Supplement and the Shelf Prospectus, subject to prior sale, when, as and if delivered by the to the Underwriters and accepted by them subject to the conditions contained in the Underwriting Agreement, as described under “Plan of Distribution”.

Certain legal matters relating to Canadian law with respect to the Offering will be passed on the Company’s behalf by Stikeman Elliott LLP and on behalf of the Underwriters by Davies Ward Phillips & Vineberg LLP. Certain legal matters relating to United States law with respect to the Offering will be passed upon on the Company’s behalf by Jones Day and on behalf of the Underwriters by Skadden, Arps, Slate, Meagher & Flom LLP. See “Legal Matters”.

Subject to applicable laws, the Underwriters may, in connection with this Offering, over-allot or effect transactions that stabilize or maintain the market price of the Common Shares at levels other than those which might otherwise prevail on the open market. Such transactions, if commenced, may be discontinued at any time. After the Underwriters have made reasonable efforts to sell the Offered Shares at the Offering Price, the Underwriters may offer the Offered Shares to the public at prices lower than the Offering Price. See “Plan of Distribution”.

Subscriptions will be received subject to rejection or allotment in whole or in part and the right is reserved to close the subscription books at any time without notice. Closing of the Offering is expected to take place on or about June    , 2021 (the “Closing Date”), or such earlier or later date as the Company and the Underwriters may agree, but in any event no later than , 2021.

It is expected that the Company will arrange for the instant deposit of the Offered Shares under the book-based system of registration, to be registered to The Depository Trust Company (“DTC”) or its nominee and deposited with DTC on the Closing Date, or as may otherwise be agreed to among the Company and the Underwriters. In the case of certain Canadian purchasers, we may alternatively arrange for the electronic deposit of the Offered Shares distributed under the Offering under the book-based system of registration, to be registered in the name of CDS Clearing and Depository Services Inc. (“CDS”) or its nominee and deposited with CDS on the Closing Date. No certificates evidencing the Offered Shares will be issued to purchasers of the Offered Shares. Purchasers of the Offered Shares will receive only a customer confirmation from the Underwriter or other registered dealer from or through whom a beneficial interest in the Offered Shares is purchased. See “Plan of Distribution”.

Directors of the Company residing outside of Canada have appointed AcuityAds Holdings Inc., 70 University Avenue, Suite 1200, Toronto, Ontario, Canada M5J 2M4, as agent for service of process. Purchasers are advised that it may not be possible for investors to enforce judgments obtained in Canada against any person or company that is incorporated, continued or otherwise organized under the laws of a foreign jurisdiction or that resides outside of Canada, even if the party has appointed an agent for service of process. See “Enforcement of Judgments Against Foreign Persons”.

The Company’s principal and registered office is located at 70 University Avenue, Suite 1200, Toronto, Ontario, Canada M5J 2M4.

TABLE OF CONTENTS FOR THIS PROSPECTUS SUPPLEMENT

ABOUT THIS PROSPECTUS SUPPLEMENT	S-1
DOCUMENTS INCORPORATED BY REFERENCE	S-1
MARKETING MATERIALS	S-2
U.S. REGISTRATION STATEMENT	S-3
ENFORCEMENT OF CIVIL LIABILITIES	S-3
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS	S-3
NON-IFRS MEASURES AND INDUSTRY METRICS	S-5
MARKET AND INDUSTRY DATA	S-6
CURRENCY PRESENTATION AND EXCHANGE RATE INFORMATION	S-6
WHERE YOU CAN FIND MORE INFORMATION	S-7
ACUITYADS HOLDINGS INC.	S-8
USE OF PROCEEDS	S-10

DESCRIPTION OF THE SHARE CAPITAL OF THE COMPANY	S-11
CONSOLIDATED CAPITALIZATION	S-11
PRIOR SALES	S-12
TRADING PRICE AND VOLUME	S-15
PLAN OF DISTRIBUTION	S-16
CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS	S-22
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS	S-25
RISK FACTORS	S-31
ENFORCEMENT OF JUDGMENTS AGAINST FOREIGN PERSONS	S-38
LEGAL MATTERS	S-38
AUDITORS, REGISTRAR AND TRANSFER AGENT	S-38
DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT	S-39
ELIGIBILITY FOR INVESTMENT	S-39
STATUTORY RIGHTS OF WITHDRAWAL AND RESCISSION	S-39

TABLE OF CONTENTS FOR THE SHELF PROSPECTUS

ABOUT THIS PROSPECTUS	1
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS	1
CURRENCY PRESENTATION AND EXCHANGE RATE INFORMATION	2
NON-IFRS MEASURES	3
DOCUMENTS INCORPORATED BY REFERENCE	3
TRADEMARKS AND TRADENAMES	5
THE CORPORATION	6
RECENT DEVELOPMENTS	7
CONSOLIDATED CAPITALIZATION	7
SELLING SECURITYHOLDERS	8
USE OF PROCEEDS	8
PLAN OF DISTRIBUTION	8
DESCRIPTION OF SHARE CAPITAL	9
DESCRIPTION OF SUBSCRIPTION RECEIPTS	10

DESCRIPTION OF DEBT SECURITIES	11
DESCRIPTION OF WARRANTS	12
DESCRIPTION OF UNITS	13
EARNINGS COVERAGE RATIOS	13
PRIOR SALES	14
TRADING PRICE AND VOLUME	14
TAX CONSIDERATIONS	14
RISK FACTORS	15
AUDITORS, TRANSFER AGENT AND REGISTRAR	15
ENFORCEMENT OF JUDGMENTS AGAINST FOREIGN PERSONS OR COMPANIES	15
EXEMPTIVE RELIEF	15
LEGAL MATTERS AND INTERESTS OF EXPERTS	15
STATUTORY RIGHTS OF WITHDRAWAL AND RESCISSION	16

S-i

ABOUT THIS PROSPECTUS SUPPLEMENT

This document is composed of two parts. The first part is this Prospectus Supplement, which describes the specific terms of the Offering and adds to and supplements information contained in the accompanying Shelf Prospectus and the documents incorporated by reference therein. The second part is the Shelf Prospectus, which gives more general information, some of which may not apply to the Offering. This Prospectus Supplement is deemed to be incorporated by reference into the Shelf Prospectus solely for the purpose of this Offering.

Neither the Company nor the Underwriters has authorized any person to provide readers with information different from that contained in this Prospectus Supplement and the accompanying Shelf Prospectus (or incorporated by reference herein or therein) and any such information should not be relied upon. Neither the Company nor the Underwriters take responsibility for, or can provide any assurance as to the reliability of, any other information that others may give readers of this Prospectus Supplement and the accompanying Shelf Prospectus. If the description of the Offered Shares or any other information varies between this Prospectus Supplement and the accompanying Shelf Prospectus (including the documents incorporated by reference herein and therein), the information in this Prospectus Supplement supersedes the information in the accompanying Shelf Prospectus. The Offered Shares are not being offered in any jurisdiction where the offer or sale is not permitted.

Readers should not assume that the information contained or incorporated by reference in this Prospectus Supplement and the accompanying Shelf Prospectus is accurate as of any date other than the date of this Prospectus Supplement and the accompanying Shelf Prospectus or the respective dates of the documents incorporated by reference herein or therein, unless otherwise noted herein or as required by law. It should be assumed that the information appearing in this Prospectus Supplement, the accompanying Shelf Prospectus and the documents incorporated by reference herein and therein are accurate only as of their respective dates. The business, financial condition, results of operations and prospects of the Company may have changed since those dates.

This Prospectus Supplement shall not be used by anyone for any purpose other than in connection with the Offering. We do not undertake to update the information contained or incorporated by reference herein or in the Shelf Prospectus, except as required by applicable securities laws. Information contained on, or otherwise accessed through, our website, https://www.acuityads.com/​, shall not be deemed to be a part of this Prospectus Supplement, the accompanying Shelf Prospectus or any document incorporated by reference herein or therein and such information is not incorporated by reference herein or therein and prospective investors should not rely on such information when deciding whether or not to invest in the Offered Shares.

DOCUMENTS INCORPORATED BY REFERENCE

This Prospectus Supplement is deemed to be incorporated by reference into the accompanying Shelf Prospectus solely for the purposes of this Offering. Other documents are also incorporated, or are deemed to be incorporated by reference, into the Shelf Prospectus and reference should be made to the Shelf Prospectus for full particulars thereof.

Copies of the documents incorporated by reference in this Prospectus Supplement and the accompanying Shelf Prospectus may be obtained on request without charge from the Chief Financial Officer of the Company at 70 University Avenue, Suite 1200 Toronto, Ontario, Canada M5J 2M4, by telephone at (416) 218-9888, and are also available electronically on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com and on the Electronic Data Gathering, Analysis, and Retrieval System (“EDGAR”) at www.sec.gov.

The following documents, filed by the Company with securities commissions or similar regulatory authorities in each of the provinces and territories of Canada, are specifically incorporated by reference into, and form an integral part of, this Prospectus Supplement and the accompanying Shelf Prospectus:

(a)

the annual information form of the Company dated March 1, 2021 for the year ended December 31, 2020 (the “Annual Information Form”);

S-1

(b)

the audited consolidated financial statements of the Company as at and for the years ended December 31, 2020 and 2019, together with the notes thereto and the independent auditor’s report thereon (the “Annual Financial Statements”);

(c)

the management’s discussion and analysis of financial condition and results of operations of the Company for the years ended December 31, 2020 and 2019 (the “Annual MD&A”);

(d)

the unaudited condensed interim consolidated financial statements of the Company as at March 31, 2021 and for the three-month periods ended March 31, 2021 and 2020, together with the notes thereto (the “Interim Financial Statements”);

(e)

the management’s discussion and analysis of financial condition and results of operations of the Company for the three-month period ended March 31, 2021 (the “Interim MD&A”); and

(f)

the management information circular of the Company dated May 13, 2021 in connection with the annual meeting of shareholders of the Company to be held on June 16, 2021 (the “Proxy Circular”).

Any statement contained in this Prospectus Supplement, in the accompanying Shelf Prospectus or in any document incorporated or deemed to be incorporated by reference herein or therein shall be deemed to be modified or superseded, for purposes of this Prospectus Supplement, to the extent that a statement contained herein or in the accompanying Shelf Prospectus or in any other subsequently filed document which also is, or is deemed to be, incorporated by reference herein or in the accompanying Shelf Prospectus modifies or supersedes such prior statement. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document that it modifies or supersedes. The making of a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to prevent a statement that is made from being false or misleading in the circumstances in which it was made. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute part of this Prospectus Supplement.

Any document of the type required by National Instrument 44-101 — Short Form Prospectus Distributions to be incorporated by reference into a short form prospectus, including any annual information forms, material change reports (except confidential material change reports), business acquisition reports, interim financial statements, annual financial statements and the independent auditor’s report thereon, management’s discussion and analysis and information circulars of the Company, filed by the Company with securities commissions or similar authorities in each of the provinces and territories of Canada, after the date of this Prospectus Supplement and for the duration of the Offering, shall be deemed to be incorporated by reference into this Prospectus Supplement. In addition, all documents filed on Form 6-K or Form 40-F by the Company with the SEC on or after the date of this Prospectus Supplement shall be deemed to be incorporated by reference into the Registration Statement of which this Prospectus Supplement forms a part of, if and to the extent, in the case of any Report on Form 6-K, expressly provided in such document.

Furthermore, any “template version” of any “marketing materials” ​(each such term as defined in National Instrument 41-101 — General Prospectus Requirements) filed in connection with the Offering after the date of the final form of this Prospectus Supplement but prior to the termination of the distribution of the Offered Shares pursuant to the Offering is deemed to be incorporated by reference in the final form of this Prospectus Supplement and in the accompanying Shelf Prospectus.

The documents incorporated or deemed to be incorporated herein by reference contain meaningful and material information relating to the Company and readers should review all information contained in this Prospectus Supplement, the accompanying Shelf Prospectus and the documents incorporated or deemed to be incorporated by reference herein and therein.

MARKETING MATERIALS

Before filing the final prospectus supplement in respect of the Offering, AcuityAds and the Underwriters intend to hold road shows that potential investors in the United States and in certain of the provinces and territories of Canada will be able to attend. AcuityAds and the Underwriters may provide marketing materials to those potential investors in connection with those road shows.

S-2

In doing so, AcuityAds and the Underwriters are relying on a provision in applicable Canadian securities legislation that allows issuers in certain U.S. cross-border offerings to not have to file marketing materials relating to those road shows on SEDAR or include or incorporate by reference those marketing materials in the final prospectus supplement in respect of the Offering. To rely on this exemption, AcuityAds and the Underwriters must give a contractual right to Canadian investors in the event the marketing materials contain a misrepresentation.

Accordingly, AcuityAds and the Underwriters signing the certificate to be contained in the final prospectus supplement in respect of the Offering have agreed that in the event the marketing materials relating to the road shows described above contain a misrepresentation (as defined in securities legislation in each of the provinces and territories of Canada, other than Québec), a purchaser resident in a province or territory of Canada, other than Québec, who was provided with those marketing materials in connection with the road shows and who purchases Offered Shares under the final prospectus supplement in respect of the Offering during the period of distribution shall have, without regard to whether the purchaser relied on the misrepresentation, rights against AcuityAds and each such Underwriter with respect to the misrepresentation which are equivalent to the rights under the securities legislation of the jurisdiction of Canada where the purchaser is resident, subject to the defenses, limitations and other terms of that legislation, as if the misrepresentation was contained in the final prospectus supplement in respect of the Offering.

However, this contractual right does not apply (i) to the extent that the contents of the marketing materials relating to the road shows have been modified or superseded by a statement in the final prospectus supplement in respect of the Offering, and (ii) to any “comparables” as such term is defined in National Instrument 41-101 — General Prospectus Requirements in the marketing materials provided in accordance with applicable securities legislation.

U.S. REGISTRATION STATEMENT

The Offering is being made concurrently in each of the provinces and territories of Canada, other than Québec, pursuant to this Prospectus Supplement and the accompanying Shelf Prospectus and in the United States pursuant to the Registration Statement filed with the SEC under the United States Securities Act of 1933, as amended (the “Securities Act”). This Prospectus Supplement and the accompanying Shelf Prospectus do not contain all of the information set forth in the Registration Statement, certain items of which are contained in the exhibits to the Registration Statement as permitted or required by the rules and regulations of the SEC.

ENFORCEMENT OF CIVIL LIABILITIES

AcuityAds is a company incorporated under and governed by the CBCA. Most of AcuityAds’ directors and officers reside principally in Canada, and the majority of AcuityAds’ assets and all or a substantial portion of the assets of these persons are located outside the United States.

The Company has appointed an agent for service of process in the United States. It may be difficult for investors who reside in the United States to effect service of process in the United States upon the Company or to enforce a U.S. court judgment predicated upon the civil liability provisions of the U.S. federal securities laws against the Company, its directors and its officers. There is substantial doubt whether an action could be brought in Canada in the first instance predicated solely upon U.S. federal securities laws.

AcuityAds filed with the SEC, concurrently with the Registration Statement of which this Prospectus Supplement forms a part, an appointment of agent for service of process on Form F-X. Under Form F-X, the Company appointed CT Corporation as its agent for service of process in the United States in connection with any investigation or administrative proceeding conducted by the SEC and any civil suit or action brought against or involving AcuityAds in a United States court arising out of or related to or concerning the offering of securities under this Prospectus Supplement.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Prospectus Supplement, the accompanying Shelf Prospectus, and the documents incorporated by reference herein, contains “forward-looking information” under applicable Canadian securities legislation.

S-3

Forward-looking information is characterized by words such as “plan”, “expect”, “budget”, “target”, “project”, “intend”, “believe”, “anticipate”, “estimate”, “should”, “predict”, “potential”, “continue” and other similar words, or statements that certain events or conditions “may” or “will” occur. Except for statements of historical fact relating to the Company, information contained or incorporated by reference herein constitutes forward-looking information, including, but not limited to, statements regarding: the expected Closing of the Offering; the use of proceeds from the Offering; the effect of the COVID-19 pandemic on the Company’s business and operations, the Company’s strategy, plans or future financial or operating performance; the continuing competitiveness of the Company’s Programmatic Marketing Platform (as defined herein) and its service offerings; the continuation and success of the Company’s partnerships with other organizations; the Company’s intentions to improve its Programmatic Marketing Platform and service offerings, strengthen relationships with existing customers, and expand its customer base and its presence in the U.S. and globally; continuing investment in research, development and marketing; the Company’s ability to expand into additional advertising channels, including connected TV, gain market penetration and grow sales and revenue; the Company’s intention to acquire complementary businesses and technologies; the Company’s ability to manage its brand, increase market awareness and generate new advertiser leads; the Company’s ability to meet the needs of digital marketers; and the Company’s expectation that reliance on key customers will decrease over time, that the online advertising channels will continue to be a primary channel used by its customers; regarding the future of legislation and regulation related to online advertising and online data collection and usage; regarding the continued operation of third party tools used by the Acuity platform; the benefits of the acquisition of ADman Media (as defined herein) and the Company’s strategy with respect to ADman Media; the benefits of the acquisition of Magnetic Media (as defined herein); regarding the benefits of the illumin platform and the Company’s strategy with respect to the illumin platform; the future of ad blocking and online media fraud; and the market price for the Common Shares.

Statements containing forward-looking information are based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including management’s perceptions of historical trends, current conditions and expected future developments, as well as other considerations that are believed to be appropriate in the circumstances, including the following: the Canadian and global economy will remain stable over the next 12 months; the Company will be able to meet its future capital commitments; the Company will be able to obtain additional financing on reasonable terms if and when needed; the Company will be able to effectively protect its current and future intellectual property rights; the Company will be able to recruit and retain the services of its key technical, sales, marketing, operations and management personnel; the Company will be able to develop commercially viable solutions as a result of its research and development activities; and that the risks referenced above and herein, collectively or individually, will not have a material impact on the Company. While management considers these assumptions to be reasonable based on currently available information, they may prove to be incorrect. However, given the evolving circumstances surrounding the COVID-19 pandemic, it is difficult to predict how significant the adverse impact of the pandemic will be on the global and domestic economy, the business, operations and financial position of the Company’s clients and the business, operations and financial position of the Company. Many risks, uncertainties and other factors could cause the actual results of AcuityAds to differ materially from the results, performance, achievements or developments expressed or implied by such forward-looking statements. These risks, uncertainties and other factors include, but are not limited to the following: overall economic conditions, rapid technological changes, use of cookies, demand for the Company’s products and services, the introduction of competing technologies, competitive pressures, network restrictions, fluctuations in foreign currency exchange rates, and other similar factors that may cause the actual results, performance or achievements to differ materially from those expressed or implied in these forward-looking statements. In addition, the effects of COVID-19, including the duration, spread and severity of the pandemic, create additional risks and uncertainties for the Company. In particular, the impact of the virus and government authorities’ and public health officials’ responses thereto may affect: the Company’s actual results, performance, prospects or opportunities; domestic and global credit and capital markets and our ability to access capital on favourable terms, or at all; and the health and safety of our employees.

By their nature, forward-looking statements are inherently uncertain, are subject to risk and are based on assumptions including those discussed herein and those discussed in the documents incorporated by reference herein. There is significant risk that predictions and other forward-looking statements will not prove to be accurate. Readers are cautioned to not place undue reliance on forward-looking statements made herein because a number of factors could cause actual future results, conditions, actions or events to differ materially

S-4

from the targets, expectations, estimates or intentions expressed in the forward-looking statements. The forward-looking statements contained herein are expressly qualified in their entirety by the above cautionary statement.

The future outcomes that relate to forward-looking statements may be influenced by many factors, including, but not limited to, the Company’s discretion in the use of proceeds of the Offering and any future sales or issuances of securities of the Company, and the risk factors described under the heading “Risk Factors” in the Company’s Annual Information Form. The Company cautions that the foregoing list of factors is not exhaustive, and that, when relying on forward-looking statements to make decisions with respect to the Company or the Offered Shares, investors and others should carefully consider these factors, as well as other uncertainties and potential events, and the inherent uncertainty of forward-looking statements.

Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Such information is based on numerous assumptions regarding present and future business strategies and the environment in which the Company will operate in the future, including expected revenues from certain contracts, client roll-out plans for specific products and ability to achieve goals. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Forward-looking statements are provided as of the date of this Prospectus or such other date specified herein, and the Company assumes no obligation to update or revise such forward-looking statements to reflect new events or circumstances except as required under applicable securities laws.

All of the forward-looking information contained in this Prospectus Supplement, the accompanying Shelf Prospectus and the documents incorporated by reference herein or therein are expressly qualified by the foregoing cautionary statements.

NON-IFRS MEASURES AND INDUSTRY METRICS

This Prospectus Supplement, the accompanying Shelf Prospectus and/or the documents incorporated by reference herein or therein make reference to certain non-IFRS measures and industry metrics, such as “Net Revenue”, “Net Revenue margin”, “Adjusted EBITDA” and “Adjusted Net Income (Loss)”.

The term “Net Revenue” ​(or “Gross Profit” as referred to in our financial statements) refers to the net amount of revenue after deducting direct media costs. Net Revenue or Gross Profit is used for internal management purposes as an indicator of the performance of the Company’s solution in balancing the goals of delivering excellent results to advertisers while meeting the Company’s margin objectives.

The term “Net Revenue margin” ​(or “Gross Margin”) refers to the amount that “Net Revenue” or “Gross Profit” represents as a percentage of total revenue for a given period.

“Adjusted EBITDA” refers to net income (loss) after adjusting for finance costs, impairment loss, fair value gain, income taxes, foreign exchange gain (loss), depreciation and amortization, share-based compensation, acquisition and related integration costs, severance expenses and adjustments to the carrying value of investment tax credits receivable. The Company believes that Adjusted EBITDA is useful supplemental information as it provides an indication of the results generated by the Company’s main business activities before taking into consideration how those activities are financed and taxed and also prior to taking into consideration depreciation of property and equipment and certain other items listed above. It is a key measure used by the Company’s management and board of directors to understand and evaluate the Company’s operating performance, to prepare annual budgets and to help develop operating plans.

“Adjusted Net Income (Loss)” refers to net income (loss) after adjusting for non-cash items such as impairment loss, fair value gain, depreciation and amortization, non-cash income tax adjustment, share-based compensation and foreign exchange gain/loss. The Company believes that Adjusted Net Income (Loss) is useful supplemental information as it provides an indication of the results generated by the Company’s main business activities on a cash basis. It is another key measure used by the Company’s management and board of directors to understand and evaluate the Company’s operating performance, to prepare annual budgets and to help develop operating plans.

S-5

“Net Revenue”, “Net Revenue margin”, “Adjusted EBITDA” and “Adjusted Net Income (Loss)” are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management’s perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. This Prospectus Supplement also makes reference to certain industry metrics and operating metrics used in our industry. These non-IFRS measures and industry metrics are used to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. We also believe that securities analysts, investors and other interested parties frequently use non-IFRS measures and industry metrics in the evaluation of issuers. Our management also uses non-IFRS measures and industry metrics in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation. See “Non-IFRS Financial Measures” in our Annual MD&A for further information regarding these measures.

MARKET AND INDUSTRY DATA

Market and industry data presented throughout this Prospectus Supplement, the accompanying Shelf Prospectus and/or the documents incorporated by reference herein or therein was obtained from independent industry and third-party sources and industry reports, including from eMarketer, and from publications, websites and other publicly available information, as well as industry and other data prepared by us or on our behalf on the basis of our knowledge of the markets in which we operate, including information provided by suppliers, partners, customers and other industry participants.

We believe that the market and economic data presented throughout this Prospectus Supplement, the accompanying Shelf Prospectus and/or the documents incorporated by reference herein or therein is accurate and, with respect to data prepared by us or on our behalf, that our estimates and assumptions are currently appropriate and reasonable, but there can be no assurance as to the accuracy or completeness thereof. The accuracy and completeness of the market and economic data presented throughout this Prospectus Supplement, the accompanying Shelf Prospectus and/or the documents incorporated by reference herein or therein are not guaranteed and none of us or any of the Underwriters makes any representation as to the accuracy of such data. Actual outcomes may vary materially from those forecast in such reports or publications, and the prospect for material variation can be expected to increase as the length of the forecast period increases. Although we believe it to be reliable, none of us or any of the Underwriters has independently verified any of the data from third-party sources referred to in this Prospectus Supplement, the accompanying Shelf Prospectus and/or the documents incorporated by reference herein or therein, analyzed or verified the underlying studies or surveys relied upon or referred to by such sources, or ascertained the underlying market, economic and other assumptions relied upon by such sources. Market and economic data are subject to variations and cannot be verified due to limits on the availability and reliability of data inputs, the voluntary nature of the data gathering process and other limitations and uncertainties inherent in any statistical survey. In addition, certain of these publications, studies and reports were published before the global COVID-19 pandemic and therefore do not reflect any impact of the COVID-19 pandemic on any specific market or globally.

CURRENCY PRESENTATION AND EXCHANGE RATE INFORMATION

We express all amounts in this Prospectus Supplement in U.S. dollars, except where otherwise indicated. References to “$” and “US$” are to U.S. dollars and references to “C$” are to Canadian dollars.

S-6

The following table sets forth, for the periods indicated, the high, low, average and end of period daily average exchange rates for one U.S. dollar, expressed in Canadian dollars, published by the Bank of Canada during the respective periods.

​	Fiscal Quarter Ended March 31,				Year Ended December 31,
	2021		2020		2019		2018
Highest rate during the period	​	1.2828	​	1.4496	​	1.3600	​	1.3642
Lowest rate during the period	​	1.2455	​	1.2718	​	1.2988	​	1.2288
Average for the period	​	1.2660	​	1.3415	​	1.3269	​	1.2957
Period end	​	1.2575	​	1.2732	​	1.2988	​	1.3642

On June 7, 2021, the Bank of Canada daily average exchange rate was US$1.00 = C$1.2073.

WHERE YOU CAN FIND MORE INFORMATION

AcuityAds is subject to the full informational requirements of the securities commissions or similar regulatory authority in each of the provinces and territories of Canada. Purchasers are invited to read and copy any reports, statements or other information, other than confidential filings, that AcuityAds files with the Canadian provincial and territorial securities commissions or similar regulatory authority, which are available on SEDAR at www.sedar.com. Except as expressly provided herein, documents filed on SEDAR are not, and should not be considered, part of this Prospectus Supplement or the accompanying Shelf Prospectus.

AcuityAds has filed with the SEC under the Securities Act the Registration Statement relating to the securities being offered hereunder, of which this Prospectus Supplement and the accompanying Shelf Prospectus form a part. This Prospectus Supplement and the accompanying Shelf Prospectus do not contain all of the information set forth in the Registration Statement, certain items of which are contained in the exhibits to the Registration Statement as permitted or required by the rules and regulations of the SEC. Items of information omitted from this Prospectus Supplement but contained in the Registration Statement will be available on the SEC’s website at www.sec.gov.

As a foreign private issuer, AcuityAds is exempt from the rules under the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”), prescribing the furnishing and content of proxy statements, and AcuityAds’ officers and directors are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. AcuityAds’ reports and other information filed or furnished with or to the SEC are available from EDGAR at www.sec.gov, as well as from commercial document retrieval services.

S-7

ACUITYADS HOLDINGS INC.

Business of the Company

AcuityAds is a technology company that enables marketers to connect intelligently with audiences across video, mobile, social and online display advertising campaigns. We provide marketers with a powerful and holistic solutions for digital advertising across all ad formats and screens, to amplify reach and Share of Attention® throughout the customer journey. Via our unique, data-driven insights, real-time analytics and industry-leading activation platform based on proprietary artificial intelligence technology, AcuityAds leverages an integrated ecosystem of partners for data, inventory, brand safety and fraud prevention, offering unparalleled, trusted solutions that the most demanding marketers require to be successful in the digital era.

Our key customers include both advertising agencies and brands, including large Fortune 500 enterprises and small to mid-sized businesses. On March 22, 2021, our Common Shares were added by Dow Jones Canadian Index Services to the S&P/TSX Composite Index. The Composite Index includes the largest companies on the TSX and is the principal benchmark measure for the Canadian equity markets. On June 2, 2021, the Company announced that Jonathan Pollack, its Chief Financial Officer, will retire from the Company later this calendar year once his successor has been identified. Following the appointment of his successor, Mr. Pollack has agreed to remain in an advisory role with the Company to assist the incoming Chief Financial Officer and to help ensure a smooth transition.

AcuityAds’ programmatic marketing platform (the “Programmatic Marketing Platform”), powered by proprietary machine learning technology, is at the core of its business, accompanied by proprietary solutions for analytics-led video and mobile targeting that leverages data. AcuityAds empowers marketers by offering near real-time reporting and analytics, bringing accountability to programmatic advertising to deliver business results and help solve some of the key challenges that digital advertisers face. AcuityAds is headquartered in Toronto and has offices in the U.S., Canada, Spain and throughout Latin America.

AcuityAds’ technology enables programmatic advertising, which is the automated buying and selling of advertising inventory electronically. The Programmatic Marketing Platform is based on proprietary machine learning technology, the branch of artificial intelligence involving systems that learn from data inputs and outputs and can perform actions without the need for explicit programming. The Programmatic Marketing Platform has the capability to process billions of bid requests on a daily basis.

The Programmatic Marketing Platform allows advertisers to purchase online advertisements in real-time using an ad-buying method whereby open online ad spots (called impressions) are traded via auctions on digital exchanges at market clearing prices in milliseconds. AcuityAds purchases impressions on behalf of advertisers through agreements with publishers directly and through agreements with supply side platforms and exchanges. Its technology platform benefits advertisers by enabling them to target audience segments based on a variety of first-, second-, and third-party data as well as manage their real-time bids for the advertising inventory most relevant for their campaigns. Realtime reporting enables advertisers to monitor relevant performance metrics and adjust budget allocations to optimize for audience reach and ad frequency and business outcomes (key performance indicators).

The Programmatic Marketing Platform is offered to AcuityAds’ customers through four primary service approaches to meet their digital advertising needs as follows:

•

Self-Serve:   In the self-serve model, the advertiser runs its digital advertising campaigns directly within the Self-Serve Programmatic Marketing Platform, or programmatically using another system, after training and onboarding. A dedicated AcuityAds’ account manager is assigned to each account and provides proactive support and guidance to help achieve campaign success. Advertisers typically enter into one-year agreements with a renewal option, to gain access to the self-serve platform, which includes real-time campaign dashboards and reporting features and revenue is generated per impression. Customers under the self-serve model, which include both brands and advertising agencies, are provided with training, documentation and online access to the Programmatic Marketing Platform to run their digital advertising campaigns independently.

•

Full-Serve (Managed Services):   In this model, AcuityAds fully manages the campaign directly on behalf of the advertiser via its team of advertising operations and campaign managers and provides

S-8

reporting on campaign metrics on key performance indicators as determined by the advertiser. These campaigns are typically governed by 30- to 90-day agreements and are crafted and tailored to the advertisers’ requirements and needs. Revenue is generated per campaign based on a pre-set budget from the advertiser. Under the Full-Serve model, AcuityAds’ advertising operations staff creates, develops and manages a complete and comprehensive digital advertising campaign, based on the customer’s target audience, strategic goals and desired results.

•

Hybrid:   AcuityAds also offers advertisers a “Hybrid” option, which is a combination of the self-serve and Full-Serve options described above and for advertisers that are not ready to run digital campaigns independently but are planning to become an AcuityAds’ self-serve partner. This Hybrid option provides access to a dedicated AcuityAds account manager and campaign manager for three to six months, as the advertiser strengthens its own resources in programmatic advertising. During this time, the advertiser gains exposure to the Programmatic Marketing Platform and works together with AcuityAds’ ad operations team to create and launch campaigns and, when fully trained and proficient on the platform, the advertisers may progress to the self-serve model.

•

illumin™:   In October 2020, following a beta testing period of approximately six months, AcuityAds launched its new advertising automation platform under the brand name, illumin™. illumin is the next generation of advertising automation technology, offering advertisers the ability to plan, buy, optimize and report on omnichannel advertising programs from a single, intuitive user-interface. Advertisers can map consumer journey playbooks across devices and communication channels, and execute in real-time using programmatic technology. illumin enables the delivery of custom creative advertising based on audience receptivity (time, place and context), which has proven to increase both efficiency and overall return on advertising investments. The Company anticipates that this product will further grow its existing market share by expanding the scope of prospective clients that are seeking a more intuitive and easy-to-use programmatic advertising solution.

In addition, the Programmatic Marketing Platform has the following key features:

•

Audience targeting.   The Programmatic Marketing Platform makes use of consumer profiling technology which gives advertisers access to over 500 million consumer profiles. Information available for each consumer profile varies. Based on this and other data, the Programmatic Marketing Platform estimates the probability of a consumer performing an advertiser’s desired action, and translates these predicted consumer response probabilities into a precise monetary value for each advertising impression. As AcuityAds gathers more data during the course of its advertising campaigns, the Programmatic Marketing Platform continually updates and refines the accuracy of its predictions, without requiring human intervention.

•

Tracking results.   The Programmatic Marketing Platform can track and measure audience reach, frequency and engagement goals through specific consumer actions, such as clicks, advertisement interactions and video completions.

•

Retargeting.   Retargeting uses the Programmatic Marketing Platform to help return previous or similar consumers to advertisers’ websites, focusing specifically on the consumers most likely to perform a desired action because of actions they have already performed. This allows an advertiser to focus on consumers who represent high-value opportunities for re-engagement, aiming to reconnect with these users at an optimal time and in an optimal context, to achieve the advertiser’s goals.

•

Weather targeting.   AcuityAds’ weather targeting capabilities allow marketers to target their campaigns based on a range of weather conditions such as current temperature, wind speeds and humidity. These realtime targeting capabilities help to enable advertisers to achieve stronger digital marketing campaign performance, driven by more meaningful consumer interactions. Weather targeting allows advertisers to show consumers customized advertising based on certain weather conditions. For example, AcuityAds’ weather targeting technology enables a tire brand to show consumers ads for winter tires on snowy days and an online retailer to show ads for swimwear on hot summer days.

Growth Strategies

We strive to grow our business both organically and through strategic and value-enhancing acquisitions. Key elements of our growth strategy include the following:

S-9

•

Growth of illumin.   Following a beta-testing period, illumin launched in October 2020. illumin allows users to build, visualize and customize their consumer journey using a new, streamlined planning canvas. The Company anticipates that this product will further grow its existing market share by expanding the scope of prospective clients that are seeking a more intuitive advertising platform. The Company intends to continue developing its illumin platform to expand the scope of offerings within the platform as opportunities arise and enhance consumer experience. It also intends to expand the scope of prospective clients seeking a more intuitive and easy-to-use programmatic advertising solution.

•

Increasing Connected TV, display, mobile, social and video market penetration.   AcuityAds intends to continue investing in research and development and marketing to expand the capabilities of its Programmatic Marketing Platform in video, mobile, social and online display advertising in order to increase its customer base, gain market penetration and grow revenue from these channels. AcuityAds will continue to offer its services on a full-serve and a self-serve basis. According to eMarketer, U.S. connected TV advertising was forecasted to be an $8.1 billion market in 2020 and was forecasted to grow to $18.3 billion in 2024, a 23% CAGR.. Connected TV includes over-the-top content delivered through a connected device over the internet.

•

Expansion into additional advertising channels.   AcuityAds expects to continue developing its Programmatic Marketing Platform to expand into additional advertising channels as opportunities arise and market conditions permit which may include programmatic TV.

•

Continuing domestic and international expansion.   AcuityAds currently operates in Canada, the U.S., Europe and Latin America. Our growth is attributable to both organic growth strategies and a selective approach to acquisition-based growth. We identify possible acquisition targets with a view to entering new but complementary markets and expanding our product and technology offerings.

AcuityAds completed the acquisition of ADman Interactive S.L.U (“ADman Media”), the largest video supply side platform for Spanish-speaking markets in Europe in Latin America, in June 2018. The acquisition of ADman Media has: (i) expanded the Company’s total addressable market by entering the publisher-direct video supply market; (ii) provided complementary and incremental revenue opportunities for the Company to leverage ADman Media’s unique inventory and video ad streaming platform in the United States, which is the second largest Spanish-speaking country in the world, according to the Instituto Cervantes; and (iii) extended the Company’s global footprint across additional markets in Europe, Latin America and the United States.

On September 1, 2018, the Company acquired certain assets of Magnetic Media Online Holdings Inc. (“Magnetic Media”), a United States-based artificial intelligence adtech company. The acquisition of Magnetic Media has: (i) increased the Company’s sales team and presence in the U.S. market; (ii) contributed new customer relationships and expanded its sales pipeline; and (iii) enhanced its industry and artificial intelligence sales experience.

We leverage our accrued sales and marketing expertise to facilitate our continued global expansion both organically and in integrating the companies we acquire. AcuityAds also intends to continue expanding its presence in the key markets it serves by expanding its sales resources and partners for its Programmatic Marketing Platform.

Head and Registered Office

Our head and registered office is located at 70 University Ave., Suite 1200, Toronto, Ontario M5J 2M4, and our telephone number is (416) 218-9888.

USE OF PROCEEDS

The aggregate net proceeds to be received by us from the sale of the Offered Shares under the Offering are estimated to be approximately US$     after deducting the Underwriters’ Fee relating to the Offered Shares and other expenses relating to the Offering, which are estimated to be US$    .

The principal reasons for the sale of the Offered Shares under the Offering are to increase our capitalization and financial flexibility. We intend to use the net proceeds from the Offering to strengthen our

S-10

financial position and allow us to pursue our growth strategies, which include: funding ongoing operations; building on successes in digital advertising and marketing solutions, and other general corporate purposes. We may also use a portion of the net proceeds of the Offering to expand our current business through acquisitions of, or investments in, other complementary businesses, products or technologies. However, we have no agreements or commitments with respect to any acquisitions or investments at this time.

As a result of our significant growth in recent periods and the fact that we operate in a dynamic and rapidly-evolving market, we do not believe we can provide the approximate amounts of the net proceeds that will be allocated to each of these purposes with certainty. As such, we have not specifically allocated the net proceeds amongst these purposes as at the date of this Prospectus Supplement. Such decisions will depend on market and competitive factors, as they evolve over time. Pending their use, we intend to invest the net proceeds from this Offering in short-term, investment grade, interest bearing instruments or hold them as cash.

While we currently anticipate that we will use the net proceeds of the Offering as set forth above, we may use the net proceeds differently, after giving consideration to our strategy relative to market and other conditions, as well as other factors described under “Risk Factors”.

DESCRIPTION OF THE SHARE CAPITAL OF THE COMPANY

Our authorized share capital consists of an unlimited number of Common Shares of which 54,710,324 were issued and outstanding as of June 7, 2021, and an unlimited number of preference shares (“Preference Shares”), issuable in series, none of which were issued and outstanding as of June 7, 2021.

See “Description of the Share Capital — Common Shares” and “Description of Share Capital — Preference Shares” in the Shelf Prospectus for a detailed description of the attributes of our Common Shares and Preference Shares.

CONSOLIDATED CAPITALIZATION

The following table sets forth our consolidated cash and cash equivalents and consolidated capitalization as at March 31, 2021 (i) on an actual basis and (ii) on an adjusted basis to give effect to the completion of the Offering (assuming no exercise of the Over-Allotment Option). This table should be read in conjunction with our Interim Financial Statements and Interim MD&A, each of which is incorporated by reference in this Prospectus Supplement.

​	As at March 31, 2021
​	Actual			After giving effect to the Offering
​	(in thousands of C$)(1)
Cash and cash equivalents	​	$	27,010	​	$	(2)
Debt	​	​	​	​	​	​
Long-term debt	​		5,885	​		5,885
Total debt	​	​	8,849	​	​	8,849
Equity	​	​	​	​	​	​
Share capital(3)	​		58,647	​		(4)
Additional paid-in capital	​		7,374.9	​	​	​
Accumulated other comprehensive income	​		754	​		754
Accumulated deficit	​		(31,239)	​	​	(31,239)
Total equity	​	$	35,537	​	$
Total capitalization	​	$	41,421.6	​	$	​

Notes:

(1)

On March 31, 2021, the Bank of Canada daily exchange rate was US$1.00 = C$1.2575. See “Currency Presentation and Exchange Rate Information”.

S-11

(2)

The amount included in the table includes the estimated net proceeds of the Offering to be received by the Company from the sale of the Offered Shares, after deducting the estimated expenses of the Offering, assuming all such estimated expenses were paid at closing. The amount does not reflect the use of proceeds set out under “Use of Proceeds”.

(3)

As at March 31, 2021, the Company’s authorized share capital was comprised of (i) an unlimited number of Common Shares and (ii) an unlimited number of Preference Shares, issuable in series. Immediately following closing of the Offering and assuming no exercise of the Over-Allotment Option,      Common Shares and no Preference Shares will be issued and outstanding.

(4)

The amount included in the table includes additional share capital raised by the Company through the Offering from the sale of the Offered Shares estimated to amount to approximately US$    million, after deducting the estimated expenses of the Offering.

PRIOR SALES

The following table summarizes the issuance by the Company of Common Shares and of securities that are convertible or exchangeable into Common Shares during the 12-month period preceding the date of this Prospectus Supplement (including stock options (“Stock Options”), deferred share units (“DSUs”) and restricted share units (“RSUs”) issued pursuant to the Company’s omnibus incentive plan (the “Omnibus Plan”), Stock Options issued under the Company’s predecessor stock option plan (“Stock Option Plan”) and DSUs issued under the Company’s predecessor deferred share unit plan (“DSU Plan” and together with the Omnibus Plan and the Stock Option Plan, the “Incentive Plans”).

Date of Issuance	Security Issued	Reason for Issuance	Price per Security (C$)	Number of Securities Issued
June 7, 2021	Common Shares	Exercised Stock Options(2)	$1.55	10,000
June 4, 2021	Common Shares	Exercised Stock Options(2)	$1.55	800
June 2, 2021	Common Shares	Exercised Stock Options(2)	$4.60	10,000
June 2, 2021	Common Shares	Exercised Stock Options(2)	$1.55	14,184
June 2, 2021	Common Shares	Exercised DSUs(3)	N/A(5)	5,833
June 1, 2021	Common Shares	Exercised DSUs(3)	N/A(5)	3,333
May 12, 2021	Common Shares	Exercised DSUs(3)	N/A(5)	10,000
May 11, 2021	Common Shares	Exercised Stock Options(2)	$1.13	15,000
May 11, 2021	Common Shares	Exercised DSUs(3)	N/A(5)	3,333
May 1, 2021	Common Shares	Exercised DSUs(3)	N/A(5)	8,333
March 26, 2021	Common Shares	Exercised RSUs	N/A(4)	189,834
March 26, 2021	Common Shares	Exercised Stock Options(2)	$1.71	125,000
March 25, 2021	Common Shares	Exercised Stock Options(2)	$4.12	10,000
March 25, 2021	Common Shares	Exercised DSUs(3)	N/A(5)	1,667
March 22, 2021	Common Shares	Exercised DSUs(3)	N/A(5)	1,667
March 19, 2021	Common Shares	Exercised DSUs(3)	N/A(5)	3,333
March 16, 2021	Common Shares	Exercised DSUs(3)	N/A(5)	5,000
March 15, 2021	Common Shares	Exercised Warrants	$1.55	150
March 15, 2021	Common Shares	Exercised DSUs(3)	N/A(5)	13,333
March 15, 2021	Common Shares	Exercised Stock Options(2)	$1.71	3,333
March 9, 2021	Common Shares	Exercised Stock Options(2)	$1.27	1,666
March 9, 2021	Common Shares	Exercised Stock Options(2)	$4.47	5,000
March 8, 2021	Common Shares	Exercised DSUs(3)	N/A(5)	13,401
March 5, 2021	Common Shares	Exercised Stock Options(2)	$1.59	43,334
March 5, 2021	Common Shares	Exercised DSUs(3)	N/A(5)	32,833
March 4, 2021	RSUs	Issued under the Omnibus Plan	N/A(4)	171,693
March 4, 2021	Common Shares	Exercised Stock Options(2)	$1.94	20,000
March 4, 2021	Common Shares	Exercised Stock Options(2)	$1.06	66,667

S-12

Date of Issuance	Security Issued	Reason for Issuance	Price per Security (C$)	Number of Securities Issued
March 4, 2021	Common Shares	Exercised Stock Options(2)	$1.59	6,666
March 4, 2021	Common Shares	Exercised Stock Options(2)	$0.64	125,000
March 4, 2021	Common Shares	Exercised Stock Options(2)	$1.71	160,000
March 4, 2021	Common Shares	Exercised DSUs(3)	N/A(5)	253,928
March 2, 2021	Common Shares	Exercised Warrants	$1.55	750
February 5, 2021	Common Shares	Exercised Warrants	$1.55	20,994
February 1, 2021	Common Shares	Exercised DSUs(3)	N/A(5)	1,667
January 28, 2021	Common Shares	Exercised Stock Options(2)	$1.06	3,333
January 12, 2021	Common Shares	Exercised Warrants	$1.55	17,927
January 12, 2021	Common Shares	Exercised DSUs(3)	N/A(5)	51,000
December 31, 2020	Common Shares	Exercised DSUs(3)	N/A(5)	51,000
December 30, 2020	Common Shares	Exercised Stock Options(2)	$1.06	13,333
December 30, 2020	Common Shares	Exercised Stock Options(2)	$1.55	10,000
December 30, 2020	Common Shares	Exercised Warrants	$1.55	1,050
December 24, 2020	Common Shares	Exercised Stock Options(2)	$1.06	3,333
December 24, 2020	Common Shares	Exercised Stock Options(2)	$4.47	25,000
December 23, 2020	Common Shares	Exercised DSUs(3)	N/A(5)	125,695
December 22, 2020	Common Shares	Exercised Stock Options(2)	$1.06	3,333
December 22, 2020	Common Shares	Exercised Warrants	$1.55	2,700
December 22, 2020	Common Shares	Exercised DSUs(3)	N/A(5)	2,500
December 18, 2020	Common Shares	Exercised DSUs(3)	N/A(5)	5,000
December 16, 2020	Common Shares	Exercised Warrants	$1.55	750
December 15, 2020	Common Shares	Exercised Stock Options(2)	$1.06	39,666
December 15, 2020	Common Shares	Exercised Stock Options(2)	$1.55	23,333
December 14, 2020	Common Shares	Exercised Stock Options(2)	$4.60	10,000
December 14, 2020	Common Shares	Exercised Stock Options(2)	$1.06	2,000
December 10, 2020	Common Shares	Exercised DSUs(3)	N/A(5)	6,666
December 10, 2020	Common Shares	Exercised Stock Options(2)	$1.94	30,000
December 8, 2020	Common Shares	Exercised Stock Options(2)	$1.71	30,000
December 7, 2020	Common Shares	Exercised Stock Options(2)	$1.71	3,333
December 7, 2020	Common Shares	Exercised RSUs	N/A(4)	97,129
December 7, 2020	Common Shares	Exercised DSUs(3)	N/A(5)	52,500
December 4, 2020	Common Shares	Exercised DSUs(3)	N/A(5)	34,999
December 4, 2020	Common Shares	Exercised Stock Options(2)	$1.06	5,000
December 4, 2020	Common Shares	Exercised Stock Options(2)	$1.55	1,650
December 4, 2020	Common Shares	Exercised Stock Options(2)	$0.96	6,667
December 4, 2020	Common Shares	Exercised Stock Options(2)	$4.47	2,500
December 4, 2020	Common Shares	Exercised Stock Options(2)	$4.60	30,000
December 4, 2020	Common Shares	Issued from treasury and sale by certain of Acuity Ads’ shareholders(1)	$6.10	3,280,000
November 16, 2020	Common Shares	Exercised Warrants	$1.55	2,100

S-13

Date of Issuance	Security Issued	Reason for Issuance	Price per Security (C$)	Number of Securities Issued
November 13, 2020	Common Shares	Exercised DSUs(3)	N/A(5)	2,500
November 12, 2020	RSUs	Issued under the Omnibus Plan	N/A(4)	231,666
November 12, 2020	Common Shares	Exercised Stock Options(2)	$4.47	5,000
November 12, 2020	Common Shares	Exercised Stock Options(2)	$1.34	5,000
November 12, 2020	Common Shares	Exercised DSUs(3)	N/A(5)	21,734
November 12, 2020	Common Shares	Exercised Warrants	$1.55	35,556
November 3, 2020	Common Shares	Exercised Stock Options(2)	$4.12	50,000
October 22, 2020	Common Shares	Exercised Warrants(6)	$1.55	112,369
October 13, 2020	Common Shares	Exercised Warrants(6)	$1.55	3,060
October 7, 2020	Common Shares	Exercised Warrants(6)	$1.55	119,920
September 30, 2020	Common Shares	Exercised Warrants(6)	$1.55	20,038
September 30, 2020	Common Shares	Exercised Stock Options(2)	$0.64	333,333
September 30, 2020	Common Shares	Exercised Warrants(6)	$1.55	750
September 29, 2020	Common Shares	Exercised DSUs(3)	N/A(5)	3,333
September 25, 2020	Common Shares	Exercised DSUs(3)	N/A(5)	15,612
September 24, 2020	Common Shares	Exercised DSUs(3)	N/A(5)	6,666
September 24, 2020	Common Shares	Exercised DSUs(3)	N/A(5)	3,333
September 22, 2020	Common Shares	Exercised DSUs(3)	N/A(5)	2,500
September 21, 2020	Common Shares	Exercised Warrants(6)	$1.55	750
September 17, 2020	Common Shares	Exercised Stock Options(2)	$0.96	66,000
September 17, 2020	Common Shares	Exercised Warrants(6)	$1.55	1,575
September 16, 2020	Common Shares	Exercised DSUs(3)	N/A(5)	5,000
September 16, 2020	Common Shares	Exercised Stock Options(2)	$1.34	3,334
September 15, 2020	Common Shares	Exercised Warrants(6)	$1.55	750
September 10, 2020	Common Shares	Exercised Warrants(6)	$1.55	9,585
September 2, 2020	Common Shares	Exercised Warrants(6)	$1.55	3,300
September 1, 2020	Common Shares	Exercised Stock Options(2)	$1.00	75,000
September 1, 2020	Common Shares	Exercised Stock Options(2)	$1.08	75,000
August 28, 2020	Common Shares	Exercised DSUs(3)	N/A(5)	5,000
August 18, 2020	Common Shares	Exercised DSUs(3)	N/A(5)	13,333
August 17, 2020	Common Shares	Exercised Stock Options(2)	$0.94	90,000
August 17, 2020	Common Shares	Exercised DSUs(3)	N/A	7,499
August 14, 2020	Stock Options	Issued under the Omnibus Plan	$2.09	45,000
August 14, 2020	RSUs	Issued under the Omnibus Plan	N/A(4)	1,089,408
August 10, 2020	Common Shares	Exercised Warrants(6)	$1.55	1,204
July 28, 2020	Common Shares	Exercised Stock Options(2)	$0.83	100,000
June 15, 2020	Common Shares	Exercised Warrants(7)	$1.01	312,665
June 11, 2020	Common Shares	Exercised Warrants(7)	$1.01	83,333

Notes:

(1)

Comprised of 1,968,000 Common Shares issued from treasury and 1,312,000 Common Shares sold by certain of AcuityAds’ shareholders in connection with the Company’s 2020 bought deal offering, pursuant to a final short form prospectus dated November 27, 2020, for gross proceeds of C$20,008,000.

S-14

(2)

Common Shares issued pursuant to the exercise of Stock Options issued under the Stock Option Plan.

(3)

Common Shares issued pursuant to the exercise of DSUs issued under the DSU Plan.

(4)

The value of each RSU is equal to the price of the Common Shares at the time the RSU is awarded and increases/decreases as the price of the Common Shares increases/decreases.

(5)

The value of each DSU is equal to the price of the Common Shares at the time the DSU is awarded and increases/decreases as the price of the Common Shares increases/decreases.

(6)

Warrants issued to a syndicate of underwriters in connection with the Company’s 2019 bought deal offering.

(7)

Warrants issued in connection with a C$7,300,000 subordinated term loan from a group of private lenders.

TRADING PRICE AND VOLUME

The Common Shares trade on the TSX under the symbol “AT”. As of August 29, 2019, the Common Shares also trade on the OTCQX® Best Market with DTC eligibility under the symbol “ACUIF”. The following table sets forth, for the period indicated, the reported high and low market prices of our Common Shares on the TSX in Canadian dollars.

Month	High Trading Price (C$)	Low Trading Price (C$)	Aggregate Monthly Trading Volume (#)
May 2020	1.20	0.91	2,170,582
June 2020	1.23	1.00	2,808,821
July 2020	2.01	1.09	7,873,662
August 2020	2.55	1.84	6,175,840
September 2020	3.79	2.33	14,026,915
October 2020	4.99	3.52	17,184,603
November 2020	8.22	4.47	17,058,056
December 2020	22.44	7.46	39,543,759
January 2021	22.70	12.06	12,760,100
February 2021	33.08	18.81	15,120,400
March 2021	29.74	15.26	23,839,700
April 2021	17.96	12.80	13,287,300
May 2021	14.84	10.18	12,665,868
June 2021	14.71	13.23	2,241,755

Notes:

(1)

Source: Capital IQ

S-15

PLAN OF DISTRIBUTION

General

Pursuant to the Underwriting Agreement, the Company has agreed to issue and sell and the Underwriters have agreed to purchase, as principals, severally and not jointly (within the meaning of such terms under the laws of the State of New York) on the Closing Date, or such earlier or later date as the Company and the Underwriters may agree, but in any event no later than , 2021, the number of Offered Shares set out opposite their respective names below, representing an aggregate of       Offered Shares, at a price of US$ per Offered Share, for an aggregate gross consideration of US$      , payable in cash against delivery of the Offered Shares. The Offering Price was determined by negotiation between the Company and the Underwriters, with reference to the then-current market price for the Common Shares.

Underwriter	Number of Offered Shares
Canaccord Genuity LLC
Needham & Company, LLC	​
	​
	​
Total

The Offered Shares are being offered in the United States by the U.S. Underwriters and in each of the provinces and territories of Canada, other than Québec, by the Canadian Underwriters pursuant to the Underwriting Agreement. The Offering is being made concurrently in each of the provinces and territories of Canada, other than Québec, under the terms of the Shelf Prospectus and this Prospectus Supplement and in the United States under the terms of the Registration Statement, of which the Shelf Prospectus and this Prospectus Supplement form part, through the Underwriters and/or affiliates thereof registered to offer the Offered Shares for sale in such jurisdictions in accordance with applicable securities laws and such other registered dealers as may be designated by the Underwriters. Needham & Company, LLC and          are not registered to sell securities in any Canadian jurisdiction and, accordingly, will not, directly or indirectly, solicit offers to purchase, sell or distribute the Offered Shares in Canada and will act as an underwriter for us only in respect of the offer, sale and distribution of Offered Shares outside of Canada.Subject to applicable law, the Underwriters, their affiliates, or such other registered dealers as may be designated by the Underwriters, may offer the Offered Shares outside of Canada and the United States.

The Underwriting Agreement provides that the Company will pay the Underwriters at the time of closing of the Offering an Underwriters’ Fee of US$ per Offered Share sold pursuant to the Offering, including any Additional Shares sold pursuant to the exercise of the Over-Allotment Option. The Company has agreed to reimburse the Underwriters for FINRA and other expenses in an amount not to exceed US$35,000. The Company has granted to the Underwriters an Over-Allotment Option, in whole or in part, from time to time not later than 30 days after the Closing Date, to purchase from the Company the Additional Shares on the same terms as set out above solely to cover the Underwriters’ over-allocation position, if any. The Over-Allotment Option is comprised of      Common Shares to be issued by the Company. This Prospectus Supplement also qualifies the grant of the Over-Allotment Option and the distribution of up to      Additional Shares to be sold by the Company upon exercise of the Over-Allotment Option. A purchaser who acquires Common Shares forming part of the over-allocation position acquires those shares under this Prospectus Supplement regardless of whether the over allocation position is ultimately filled through the exercise of the Over-Allotment Option or secondary market purchases.

The obligations of the Underwriters under the Underwriting Agreement are several and not joint (within the meaning of such terms under the laws of the State of New York) and are subject to certain closing conditions. The Underwriters may terminate their obligations under the Underwriting Agreement by notice given by Canaccord Genuity LLC and Needham & Company, LLC (the “Managers”) to the Company, if after the execution and delivery of the Underwriting Agreement and prior to the Closing Date (i) trading generally shall have been suspended or materially limited on, or by, as the case may be, any of the New York Stock Exchange, the NYSE American, the Nasdaq or the TSX, (ii) trading of any securities of the Company shall have been suspended on the Nasdaq or TSX, (iii) a material disruption in securities settlement, payment

S-16

or clearance services in the United States or Canada shall have occurred, (iv) any moratorium on commercial banking activities shall have been declared by U.S. Federal or New York State or Canadian authorities or (v) there shall have occurred any outbreak or escalation of hostilities, or any change in financial markets, currency exchange rates or controls or any calamity or crisis that, in the Managers’ judgment, is material and adverse and which, singly or together with any other event specified in this clause (v), makes it, in the Managers’ judgment, impracticable or inadvisable to proceed with the offer, sale or delivery of the Offered Shares on the terms and in the manner contemplated in this Prospectus Supplement. The Underwriters are, however, obligated to take up and pay for all of the Offered Shares if any Offered Shares are purchased under the Underwriting Agreement.

Subject to the terms of the Underwriting Agreement, the Company has also agreed to indemnify the Underwriters and their respective directors, officers, employees and agents against certain liabilities civil liabilities under Canadian and United States securities legislation, or to contribute to any payments the Underwriters may be required to make in respect thereof. The Underwriters, as principals, conditionally offer the Offered Shares qualified under this Prospectus Supplement and the Shelf Prospectus, subject to prior sale, when, as and if delivered to and accepted by them, subject to approval of legal matters by their counsel, including the validity of the Offered Shares, and other conditions contained in the Underwriting Agreement, such as the receipt by the Underwriters of officers’ certificates and legal opinions. The Underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.

Pursuant to the Underwriting Agreement, the Company has agreed that until the date that is 90 days following the date of the Underwriting Agreement (the “Restricted Period”), it will not, directly or indirectly, and will not publicly disclose any intention to, without the prior written consent of the Managers, subject to certain exceptions: (i) issue, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any Common Shares or any securities convertible into or exercisable or exchangeable for Common Shares, (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Shares, or (iii) file any registration statement with the SEC or prospectus with any Canadian securities regulatory authority relating to the offering of any Common Shares or any securities convertible into or exercisable or exchangeable for Common Shares. The exceptions include: (a) the Offered Shares (and any Additional Shares) to be sold in the Offering; (b) the issuance of incentive compensation or equity (including the Common Shares) under the existing Omnibus Plan, as such plan may be amended or restated, (c) any Common Shares issued pursuant to any existing non-employee director stock plan or dividend reinvestment plan of the Company, (d) the filing of one or more registration statements on Form S-8 relating to stock options, other equity awards, or employee benefit plans of the Company, including plans to be adopted during the Restricted Period, provided that any awards issued pursuant to such plans adopted during the Restricted Period shall not vest during the restricted period; (e) Common Shares or other securities issued in connection with an acquisition or a transaction that includes a commercial relationship (including joint ventures, collaborations, partnership or other strategic acquisitions, but excluding stock options); provided certain conditions are met, including that (i) the aggregate amount of Common Shares issued in connection with such transactions does not exceed 10% of the total shares outstanding of the Company upon consummation of the Offering, and, (ii) in the case of any such issuance prior to the expiration of the Restricted Period, each such recipient of Common Shares or securities agrees to be bound by restrictions applicable to the Company’s directors and officers detailed below or (f) the establishment of a trading plan pursuant to Rule 10b5-1 under the Exchange Act or similar plan under Canadian securities laws for the transfer of Common Shares, provided that certain conditions are met, including that such plan does not provide for the transfer of Common Shares during the Restricted Period, and to the extent a public announcement or filing under the Exchange Act, if any, is required of or voluntarily made by or on behalf of the Company regarding the establishment of such plan, such announcement or filing shall include a statement to the effect that no transfer of Common Shares may be made under such plan during the Restricted Period.

In addition, each of the directors and officers of the Company have executed “lock-up” letters pursuant to which, until the date that is 90 days following the date of the final prospectus supplement relating to this Offering, they have agreed that they will not, and will not publicly disclose the intention to, without the consent of the Managers, subject to certain exceptions: (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase,

S-17

lend, or otherwise transfer or dispose of, directly or indirectly, any Common Shares beneficially owned (as such term is used in Rule 13d-3 of the Exchange Act) by them or any securities convertible into or exercisable or exchangeable for Common Shares, or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Shares. The exceptions include: (a) the Offered Shares and Additional Shares sold in the Offering; (b), provided that certain conditions are met transactions relating to Common Shares or other securities acquired in open market transactions after completion of the Offering; (c) a bona fide gift of Common Shares or securities convertible into Common Shares; (d) distributions of Common Shares or any security convertible into Common Shares to limited partners, members or stockholders or other equity holders of the signatory; (e) transfers of Common Shares or any security convertible into Common Shares to certain affiliates of the signatory, subject to certain exceptions, (f) receipt of securities (including on a “net” basis with transfers to the Company) solely made in connection with exercises of outstanding stock options or warrants or vesting and/or redemptions of restricted share units, performance share units or other equity awards of the Company, provided that certain conditions are met; (g) a bona fide third-party tender offer, take-over bid, plan or arrangement, merger, consolidation or other similar transaction made to all holders of Common Shares involving a change of control of the Company, provided that certain conditions are met; and (h) the establishment of a trading plan pursuant to Rule 10b5-1 under the Exchange Act or similar plan under Canadian securities laws for the transfer of Common Shares, provided that certain conditions are met, including that such plan does not provide for the transfer of Common Shares during the restricted period of the “lock-up” letter.

The Company’s Common Shares are listed and posted for trading on the TSX under the symbol “AT”. The Company has applied to list the Offered Shares and the Additional Shares on the TSX and has applied to list the Offered Shares, the Additional Shares and its outstanding Common Shares on the Nasdaq under the trading symbol “AT”. Listing will be subject to the Company fulfilling all of the listing requirements of the TSX and the Nasdaq, respectively.

The Underwriters propose to offer the Offered Shares initially at the Offering Price. After the Underwriters have made reasonable efforts to sell the Offered Shares at the Offering Price, the Underwriters may offer the Offered Shares to the public at prices lower than the Offering Price, and the compensation realized by the Underwriters pursuant to the Offering will effectively be decreased by the amount that the price paid by purchasers for the Offered Shares is less than the original Offering Price. Any such reduction will not affect the net proceeds of the Offering received by the Company.

Pursuant to the rules and policy statements of certain Canadian securities regulatory authorities, the Underwriters may not, throughout the period of distribution under this Prospectus Supplement, bid for or purchase Common Shares. The foregoing restriction is subject to certain exceptions. These exceptions include a bid or purchase permitted under the by-laws and rules of applicable Canadian regulatory authorities and the TSX including the Universal Market Integrity Rules for Canadian Marketplaces administered by the Investment Industry Regulatory Organization of Canada relating to market stabilization and market-balancing activities and a bid or purchase made on behalf of a client where the client’s order was not solicited during the period of distribution.

Subject to applicable laws, the Underwriters may, in connection with this Offering, over-allot or effect transactions that stabilize or maintain the market price of the Common Shares at levels other than those which might otherwise prevail on the open market, including: stabilizing transactions; short sales; purchases to cover positions created by short sales; imposition of penalty bids; and syndicate covering transactions. Such transactions, if commenced, may be discontinued at any time.

Stabilizing transactions consist of bids or purchases made for the purpose of preventing or delaying a decline in the market price of the Common Shares while the Offering is in progress. Short sales involve the sale by the Underwriters of a greater number of Common Shares than they are required to purchase in the Offering. Short sales may be “covered short sales”, which are short positions in an amount not greater than the Over-Allotment Option, or may be “naked short sales”, which are short positions in excess of that amount.

The Underwriters may close out any covered short position either by exercising the Over-Allotment Option, in whole or in part, or by purchasing Common Shares in the open market. In making this determination, the Underwriters will consider, among other things, the price of the Common Shares available for purchase in the open market compared with the price at which they may purchase Common Shares through

S-18

the Over-Allotment Option. If, following the closing of the Offering, the market price of the Common Shares decreases, the short position created by the over-allocation position in the Common Shares may be filled through purchases in the open market, creating upward pressure on the price of the Common Shares. If, following the closing of the Offering, the market price of Common Shares increases, the over-allocation position in the Common Shares may be filled through the exercise of the Over-Allotment Option.

The Underwriters must close out any naked short position by purchasing Common Shares in the open market. A naked short position is more likely to be created if the Underwriters are concerned that there may be downward pressure on the price of the Common Shares in the open market that could adversely affect investors who purchase in the Offering. Any naked short position would form part of the Underwriters’ over-allocation position. A purchaser who acquires Common Shares forming part of the Underwriters’ over-allocation position resulting from any covered short sales or naked short sales will acquire such Common Shares under this Prospectus Supplement, regardless of whether the over-allocation position is ultimately filled through the exercise of the Over-Allocation Option or secondary market purchases.

Subscriptions will be received subject to rejection or allotment in whole or in part and the Underwriters reserve the right to close the subscription books at any time without notice. It is expected that the Company will arrange for the instant deposit of the Offered Shares by the Underwriters under the book-based system of registration, to be registered to DTC or its nominee and deposited with DTC on the Closing Date, or as otherwise may be agreed to among the Company and the Underwriters. No certificates evidencing the Offered Shares will be issued to purchasers of the Offered Shares. Purchasers of the Offered Shares will receive only a customer confirmation from the Underwriter or other registered dealer from or through whom a beneficial interest in the Offered Shares is purchased.

Relationship Between the Company and Certain Underwriters

The Underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and other financial and non-financial activities and services.

In the ordinary course of their various business activities, the Underwriters and their respective affiliates, officers, directors and employees may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments for their own account and for the accounts of their customers, and such investment and trading activities may involve or relate to assets, securities and/or instruments of the issuer (directly, as collateral securing other obligations or otherwise) and/or persons and entities with relationships with the Company. The Underwriters and their respective affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments.

Selling Restrictions

European Economic Area and United Kingdom

In relation to each Member State of the EEA and the United Kingdom (each a “Relevant State”), no Common Shares have been offered or will be offered pursuant to the Offering to the public in that Relevant State prior to the publication of a prospectus in relation to the Common Shares which has been approved by the competent authority in that Relevant State or, where appropriate, approved in another Relevant State and notified to the competent authority in that Relevant State, all in accordance with the Prospectus Regulation, except that offers of Common Shares may be made to the public in that Relevant State at any time under the following exemptions under the Prospectus Regulation:

(a)

to any legal entity which is a qualified investor as defined under the Prospectus Regulation;

(b)

to fewer than 150 natural or legal persons (other than qualified investors as defined under the Prospectus Regulation), subject to obtaining the prior consent of the Underwriters for any such offer; or

S-19

(c)

in any other circumstances falling within Article 1(4) of the Prospectus Regulation;

provided that no such offer of Common Shares shall require the Company or any Underwriter to publish a prospectus pursuant to Article 3 of the Prospectus Regulation or supplement a prospectus pursuant to Article 23 of the Prospectus Regulation.

For the purposes of this provision, the expression an “offer to the public” in relation to any Common Shares in any Relevant State means the communication in any form and by any means of sufficient information on the terms of the offer and the Common Shares to be offered so as to enable an investor to decide to purchase or subscribe for any Common Shares, and the expression “Prospectus Regulation” means Regulation (EU) 2017/1129.

Each Underwriter has represented and agreed that: (a) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (FSMA) received by it in connection with the issue or sale of the Common Shares in circumstances in which Section 21(1) of the FSMA does not apply to the Company; and (b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Common Shares in, from or otherwise involving the United Kingdom.

Notice to Prospective Investors in Switzerland

This Prospectus Supplement is not intended to constitute an offer or solicitation to purchase or invest in the Common Shares. The Common Shares may not be publicly offered, directly or indirectly, in Switzerland within the meaning of the Swiss Financial Services Act (“FinSA”), and no application has or will be made to admit the Common Shares to trading on any trading venue (exchange or multilateral trading facility) in Switzerland. Neither this Prospectus Supplement nor any other offering or marketing material relating to the Common Shares constitutes a prospectus pursuant to the FinSA, and neither this Prospectus Supplement nor any other offering or marketing material relating to the Common Shares may be publicly distributed or otherwise made publicly available in Switzerland.

Notice to Prospective Investors in the Dubai International Financial Centre

This Prospectus Supplement relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority (“DFSA”). This Prospectus Supplement is intended for distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this Prospectus Supplement nor taken steps to verify the information set forth herein and has no responsibility for the Prospectus. The Common Shares to which this Prospectus Supplement relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the Common Shares offered should conduct their own due diligence on the Common Shares. If you do not understand the contents of this Prospectus Supplement you should consult an authorized financial advisor.

Hong Kong

The Common Shares have not been offered or sold and will not be offered or sold in Hong Kong, by means of any document, other than (a) to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance; or (b) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance. No advertisement, invitation, or document relating to the Common Shares has been or may be issued or has been or may be in the possession of any person for the purposes of issuance, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to the Common Shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the Securities and Futures Ordinance and any rules made under that Ordinance.

S-20

Japan

No registration pursuant to Article 4, paragraph 1 of the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948, as amended) (FIEL) has been made or will be made with respect to the solicitation of the application for the acquisition of the Common Shares. Accordingly, the Common Shares have not been, directly or indirectly, offered or sold and will not be, directly or indirectly, offered or sold in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or re-sale, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan except pursuant to an exemption from the registration requirements, and otherwise in compliance with, the FIEL and the other applicable laws and regulations of Japan. For Qualified Institutional Investors (QII) please note that the solicitation for newly-issued or secondary securities (each as described in Paragraph 2, Article 4 of the FIEL) in relation to Common Shares constitutes either a “QII only private placement” or a “QII only secondary distribution” ​(each as described in Paragraph 1, Article 23-13 of the FIEL). Disclosure regarding any such solicitation, as is otherwise prescribed in Paragraph 1, Article 4 of the FIEL, has not been made in relation to the Common Shares. The Common Shares may be transferred only to QIIs. For Non-QII Investors please note that the solicitation for newly-issued or secondary securities (each as described in Paragraph 2, Article 4 of the FIEL) in relation to the Common Shares constitutes either a “small number private placement” or a “small number private secondary distribution” ​(each as is described in Paragraph 4, Article 23-13 of the FIEL). Disclosure regarding any such solicitation, as is otherwise prescribed in Paragraph 1, Article 4 of the FIEL, has not been made in relation to the Common Shares. The Common Shares may be transferred only en bloc without subdivision to a single investor.

Singapore

This Prospectus Supplement and the accompanying Shelf Prospectus have not been registered as a prospectus with the Monetary Authority of Singapore under the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”). Accordingly, this Prospectus Supplement and the accompanying Shelf Prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the Common Shares may not be circulated or distributed, nor may the Common Shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the SFA, (ii) to a relevant person, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions, specified in Section 275 of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the Common Shares are subscribed or purchased under Section 275 of the SFA by a relevant person which is: (a) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest in that trust shall not be transferable for six months after that corporation or that trust has acquired the Common Shares under Section 275 of the SFA except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions, specified in Section 275 of the SFA; (2) where no consideration is given for the transfer; (3) by operation of law; (4) pursuant to Section 276(7) of the SFA; or (5) as specified in Regulation 32 of the Securities and Futures (Offer of Investments) (Shares and Debentures) Regulations 2005 of Singapore.

Notification under Section 309B(1)(c) of the SFA

The Company has determined that the Common Shares are (A) prescribed capital markets products (as defined in the Securities and Futures (Capital Markets Products) Regulations 2018) and (B) Excluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).

Solely for the purposes of its obligations pursuant to Section 309B of the SFA, the Company has determined, and hereby notifies all relevant persons (as defined in the CMP Regulations 2018), that the

S-21

Common Shares are “prescribed capital markets products” ​(as defined in the CMP Regulations 2018) and Excluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).

Australia

No “prospectus” or other “disclosure document, as each of those terms are defined in the Corporations Act 2001 of Australia (the “Australian Corporations Act”), in relation to the Common Shares has been, or will be, lodged with the Australian Securities and Investments Commission. Each Underwriter has represented and agreed that it: (a) has not made (directly or indirectly) or invited, and will not make (directly or indirectly) or invite, an offer of the Common Shares for issue or sale in Australia (including an offer or invitation which is received by a person in Australia); and (b) has not distributed or published, and will not distribute or publish, this Prospectus Supplement, the accompanying Shelf Prospectus or any other offering material or advertisement relating to the Common Shares in Australia, unless: (i) the aggregate consideration payable for such Common Shares on acceptance of the offer is at least A $500,000 (or its equivalent in any other currency, in either case calculated in accordance with both section 708(9) of the Australian Corporations Act and regulation 7.1.18 of the Corporations Regulations 2001 of Australia) or the offer or invitation does not otherwise require disclosure to investors under Parts 6D.2 or 7.9 of the Australian Corporations Act; (ii) the offer or invitation constitutes an offer to either a “wholesale client” or “sophisticated investor” for the purposes of Chapter 7 of the Australian Corporations Act; (iii) such action complies with any applicable laws, regulations and directives (including without limitation, the licensing requirements set out in Chapter 7 of the Australian Corporations Act) in Australia; and (iv) such action does not require any document to be lodged with Australian Securities and Investments Commission or any other regulatory authority in Australia.

CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

In the opinion of Stikeman Elliott LLP, Canadian counsel to the Company, and Davies Ward Phillips & Vineberg LLP, Canadian counsel to the Underwriters, the following is a general summary, as of the date hereof, of the principal Canadian federal income tax considerations under the Income Tax Act (Canada) and the regulations thereunder (collectively, the “Tax Act”) generally applicable to a holder who acquires as beneficial owner Common Shares pursuant to this Offering and who, for the purposes of the Tax Act and at all relevant times, holds Common Shares as capital property, deals at arm’s length with the Company or the Underwriters, is not affiliated with the Company or the Underwriters, and has not entered into, with respect to their Common Shares, a “derivative forward agreement”, a “synthetic disposition arrangement” or a “dividend rental arrangement” each as defined under the Tax Act (a “Holder”). A Common Share will generally be capital property to a Holder provided the Holder does not acquire or hold such Common Share in the course of carrying on a business of trading or dealing in securities or as part of an adventure or concern in the nature of trade.

This summary is based upon the current provisions of the Tax Act and counsel’s understanding of the current published administrative policies and assessing practices of the Canada Revenue Agency. The summary also takes into account all specific proposals to amend the Tax Act that have been publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof (the “Tax Proposals”), and assumes that all such Tax Proposals will be enacted in the form proposed. No assurance can be given that the Tax Proposals will be enacted in the form proposed or at all. This summary is not exhaustive of all possible Canadian federal income tax considerations and, except as mentioned above, does not otherwise take into account or anticipate any changes in law, administrative policy or assessing practice, whether by way of legislative, judicial or administrative action, decision or interpretation, nor does it address any provincial, territorial or foreign income tax legislation or considerations, which may differ significantly from the Canadian federal income tax considerations discussed herein.

This summary is of a general nature only and is not intended to be, nor should it be construed to be, legal or tax advice to any particular Holder, and no representations concerning the tax consequences to any particular Holder or prospective Holder are made. Accordingly, Holders are urged to consult their own tax advisors about the specific tax consequences to them of acquiring, holding and disposing of Common Shares.

S-22

Currency Conversion

Generally, for purposes of the Tax Act, all amounts relating to the acquisition, holding or disposition of the Common Shares must be converted into Canadian dollars based on the exchange rates as determined in accordance with the Tax Act. The amount of dividends required to be included in the income of, and capital gains or capital losses realized by, a Holder may be affected by fluctuations in the Canadian / U.S. dollar exchange rate.

Residents of Canada

This portion of the summary is generally applicable to a Holder who, for the purposes of the Tax Act, and at all relevant times, is, or is deemed to be, resident in Canada (“Resident Holder”). This portion of the summary is not applicable to a Resident Holder: (a) that is a “financial institution”, as defined in the Tax Act for purposes of the “mark-to-market rules” contained in the Tax Act; (b) an interest in which would, or for whom a Common Share would, be a “tax shelter investment” as defined in the Tax Act; (c) that is a “specified financial institution” as defined in the Tax Act; (d) that has elected to report its “Canadian tax results”, as defined in the Tax Act, in a currency other than the Canadian currency; or (e) that is exempt from tax under Part I of the Tax Act. Any such Holder to which this summary does not apply should consult its own tax advisor.

Additional considerations, not discussed herein, may be applicable to a Resident Holder that is a corporation resident in Canada and is, or becomes, or does not deal at arm’s length for purposes of the Tax Act with a corporation resident in Canada that is or becomes, as part of a transaction or series of transactions or events that includes the acquisition of Common Shares, controlled by a non-resident corporation (or pursuant to the Tax Proposals, a non-resident person or group of non-resident persons not dealing at arm’s length (comprised of any combination of non-resident corporations, non-resident individuals or non-resident trusts)) for purposes of the “foreign affiliate dumping” rules in section 212.3 of the Tax Act. Such Resident Holders should consult their own tax advisors with respect to the consequences of acquiring Common Shares.

Certain Resident Holders whose Common Shares might not otherwise qualify as capital property may, in certain circumstances, make the irrevocable election pursuant to subsection 39(4) of the Tax Act to have its Common Shares, and every other “Canadian security”, as defined in the Tax Act, owned by such Resident Holder in the taxation year of the election and in all subsequent taxation years, deemed to be capital property. Resident Holders should consult their own tax advisors for advice as to whether an election under subsection 39(4) of the Tax Act is available and advisable in their own circumstances.

Dividends on Common Shares

Dividends received or deemed to be received on a Common Share by a Resident Holder who is an individual (other than certain trusts) will be included in computing such Resident Holder’s income and will be subject to the gross-up and dividend tax credit rules normally applicable under the Tax Act to taxable dividends received from a “taxable Canadian corporation” ​(as defined in the Tax Act), including the enhanced gross-up and dividend tax credit in respect of dividends designated by the Company as “eligible dividends”. There may be limitations on the ability of the Company to designate dividends as “eligible dividends”. Dividends received by a Resident Holder who is an individual (including certain trusts) may result in such Resident Holder being liable for alternative minimum tax under the Tax Act. Resident Holders who are individuals should consult their own tax advisors in this regard.

Dividends received or deemed to be received on a Common Share by a Resident Holder that is a corporation will be included in computing such Resident Holder’s income for the taxation year in which such dividends are received and will generally also be deductible in computing its taxable income for that taxation year. In certain circumstances a dividend received by a Resident Holder that is a corporation may be deemed to be a capital gain pursuant to subsection 55(2) of the Tax Act. Resident Holders should consult their own tax advisors regarding their particular circumstances. A Resident Holder that is a “private corporation” or a “subject corporation”, each as defined in the Tax Act, will generally be liable to pay an additional tax under Part IV of the Tax Act on dividends received or deemed to be received on Common Shares to the extent such dividends are deductible in computing the Resident Holder’s taxable income. Such additional tax may be refundable in certain circumstances. Resident Holders should contact their own tax advisors in this regard.

S-23

Dispositions of a Common Share

Generally, on a disposition, or a deemed disposition, of a Common Share a Resident Holder will realize a capital gain (or a capital loss) equal to the amount by which the proceeds of disposition of the Common Share, net of any reasonable costs of disposition, exceed (or are less than) the adjusted cost base of the Common Share to the Resident Holder immediately before the disposition or deemed disposition. For this purpose, the adjusted cost base to a Resident Holder of a Common Share will be determined at any particular time by averaging the cost of such share with the adjusted cost base of any other Common Shares owned by the Resident Holder as capital property at that time and by making certain other adjustments required under the Tax Act. The Resident Holder’s cost for purposes of the Tax Act of Common Shares will include all amounts paid or payable by the Resident Holder for the Common Shares, subject to certain adjustments under the Tax Act. Such capital gain (or capital loss) will be subject to the treatment described below under “— Taxation of Capital Gains and Capital Losses”.

Taxation of Capital Gains and Capital Losses

Generally, one-half of any capital gain (a “taxable capital gain”) realized by a Resident Holder for a taxation year must be included in computing the Resident Holder’s income for that taxation year. Subject to and in accordance with the provisions of the Tax Act, a Resident Holder is required to deduct one-half of any capital loss (an “allowable capital loss”) realized in a taxation year from taxable capital gains realized in that taxation year and allowable capital losses in excess of taxable capital gains for the taxation year of disposition may be carried back and deducted in any of the three preceding taxation years, or in any subsequent year against net taxable capital gains realized in such years. If the Resident Holder is a corporation, any such capital loss realized on the sale of a Common Share may be reduced by the amount of any dividends, including deemed dividends, which have been received by the Resident Holder on such Common Share to the extent and in circumstances prescribed by the Tax Act. Similar rules may apply where a corporation is a member of a partnership or a beneficiary of a trust that owns Common Shares, directly or indirectly through a partnership or a trust. Such Resident Holder should consult its own tax advisor. Taxable capital gains realized by a Resident Holder who is an individual (including certain trusts) may give rise to alternative minimum tax depending on the Resident Holder’s circumstances.

A Resident Holder that is throughout the year a “Canadian-controlled private corporation” ​(as defined in the Tax Act) may be liable to pay an additional tax on certain investment income, including taxable capital gains (but excluding dividends or deemed dividends deductible in computing taxable income). Such additional tax may be refundable in certain circumstances. Resident Holders should contact their own tax advisors in this regard.

Non-Resident Holders

This portion of the summary is generally applicable to a Holder who, for the purposes of the Tax Act and any relevant income tax treaty or convention, at all relevant times, is not (and is not deemed to be) resident in Canada and will not use or hold (and will not be deemed to use or hold) the Common Shares in, or in the course of, carrying on a business or part of a business in Canada (a “Non-Resident Holder”). This summary does not apply to a Non-Resident Holder that carries on an insurance business in Canada and elsewhere or an “authorized foreign bank” ​(as defined in the Tax Act) and such holders should consult their own tax advisors.

Dividends on Common Shares

A dividend paid or credited, or deemed to be paid or credited, on a Common Share to a Non-Resident Holder will generally be subject to Canadian withholding tax at the rate of 25%, subject to any reduction in the rate of withholding to which that Non-Resident Holder may be entitled under an applicable income tax treaty or convention. For example, the rate of withholding tax applicable to a dividend paid on a Common Share to a Non-Resident Holder who is a resident of the United States for purposes of the Canada-U.S. Income Tax Convention (the “Convention”), beneficially owns the dividend, and is fully entitled to the benefits of the Convention, will generally be reduced to 15%.

Certain entities (including most limited liability companies) that are treated as being fiscally transparent for U.S. federal income tax purposes will not qualify as residents of the United States and therefore will not be

S-24

entitled to relief from Canadian tax under the provisions of the Convention. However, the Convention allows certain U.S. resident owners of transparent entities to enjoy benefits of the Convention under certain circumstances. Non-Resident Holders should consult their own tax advisors to determine their entitlement to relief from Canadian tax under the provisions of the Convention based on their particular circumstances.

Dispositions of Common Shares

A Non-Resident Holder will not be subject to tax under the Tax Act in respect of any capital gain realized by such Non-Resident Holder on a disposition or deemed disposition of a Common Share unless the Common Share constitutes “taxable Canadian property” ​(as defined in the Tax Act) of the Non-Resident Holder and the Non-Resident Holder is not entitled to relief under an applicable income tax treaty or convention between Canada and the country in which the Non-Resident Holder is resident.

Generally, a Common Share will not constitute taxable Canadian property of a Non-Resident Holder at any particular time provided that the Common Share is listed on a “designated stock exchange” for the purposes of the Tax Act (which currently includes the TSX and the Nasdaq), unless at any time during the 60-month period immediately preceding such time: (a) at least 25% or more of the issued shares of any class or series of the capital stock of the Company was owned by or belonged to any combination of (x) the Non-Resident Holder, (y) persons with whom the Non-Resident Holder did not deal at arm’s length (for the purposes of the Tax Act), and (z) partnerships in which the Non-Resident Holder or a person described in (y) holds a membership interest directly or indirectly through one or more partnerships; and (b) more than 50% of the fair market value of the Common Share was derived directly or indirectly from one, or any combination of, real or immovable property situated in Canada, Canadian resource property (as defined in the Tax Act), timber resource property (as defined in the Tax Act) or options in respect of, interests in or for civil law rights in any such property (whether or not such property exists). Notwithstanding the foregoing, a Common Share may also be deemed to be “taxable Canadian property” in certain circumstances. Non-Resident Holders for whom a Common Share is, or may be, taxable Canadian property should consult their own tax advisors.

In the event that a Common Share constitutes taxable Canadian property of a Non-Resident Holder and any capital gain that would be realized on the disposition thereof is not exempt from tax under the Tax Act or pursuant to an applicable income tax treaty or convention, the income tax consequences discussed above for Resident Holders under “Dispositions of a Common Share” will generally apply to the Non-Resident Holder. Such Non-Resident Holders should consult their own tax advisors.

CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS

The following summary of U.S. federal income tax considerations generally applicable to a “U.S. Holder” (defined below) of the ownership and disposition of the Offered Shares. This discussion addresses only holders who acquire Offered Shares pursuant to this prospectus supplement and hold Offered Shares as “capital assets” ​(generally, assets held for investment purposes).

This summary is based on the U.S. Internal Revenue Code of 1986, as amended (the “Code”), U.S. Treasury regulations, administrative pronouncements and rulings of the United States Internal Revenue Service (the “IRS”), and a general interpretation of the Canada-United States Income Tax Convention (1980), as amended, (the “Convention”), all of which are subject to differing interpretations and changes to any of which subsequent to the date of this prospectus supplement may affect the tax consequences described herein, possibly on a retroactive basis. Except as specifically set forth below, this summary does not discuss applicable income tax reporting requirements. This summary does not describe any state, local or foreign tax law considerations, or any aspect of U.S. federal tax law other than income taxation (e.g., estate or gift tax), or the consequences of the alternative minimum tax, or the Medicare tax on certain net investment income. Except as specifically set forth below, this summary does not discuss applicable income tax reporting requirements. U.S. Holders (as defined below) should consult their own tax advisers regarding such matters.

No ruling from the IRS has been requested, or will be obtained, regarding the U.S. federal income tax consequences of the ownership or disposition of Offered Shares. This summary is not binding on the IRS, and the IRS is not precluded from taking a position that is different from, and contrary to, the discussion set forth

S-25

in this summary. In addition, because the authorities on which this summary is based are subject to various interpretations, the IRS and U.S. courts could disagree with one or more of the positions taken in this summary.

This summary does not purport to address all U.S. federal income tax consequences that may be relevant to a U.S. Holder as a result of the ownership and disposition of the Offered Shares, nor does it take into account the specific circumstances of any particular holder, some of which may be subject to special tax rules, including, but not limited to, tax exempt organizations, partnerships and other pass through entities and their owners, banks or other financial institutions, insurance companies, regulated investment companies, qualified retirement plans, individual retirement accounts or other tax-deferred accounts, persons that hold the Offered Shares as part of a straddle, hedging transaction, conversion transaction, constructive sale or other similar arrangements, persons that acquired the Offered Shares in connection with the exercise of employee stock options or otherwise as compensation for services, brokers, dealers in securities or foreign currencies, traders in securities electing to mark to market, U.S. persons whose functional currency (as defined in the Code) is not the U.S. dollar, U.S. expatriates, or persons that own directly, indirectly or by application of the constructive ownership rules of the Code 10% or more of our shares by voting power or by value.

As used herein, a “U.S. Holder” is a beneficial owner of the Offered Shares who, for U.S. federal income tax purposes, is: (1) an individual who is a citizen or resident of the United States; (2) a corporation (or other entity classified as a corporation for U.S. federal income tax purposes) that is created or organized in or under the laws of the United States, any state thereof, or the District of Columbia, (3) an estate whose income is subject to U.S. federal income tax regardless of its source, or (4) a trust (A) if a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (B) that has elected to be treated as a U.S. person for U.S. federal income tax purposes.

If a partnership (or other entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds the Offered Shares, the tax treatment of a partner in the partnership or other entity or arrangement will generally depend upon the status of the partner and the activities of the partnership. Prospective investors who are partners in partnerships (or other entities or arrangements treated as partnerships for U.S. federal income tax purposes) that are beneficial owners of the Offered Shares are urged to consult their own tax advisors regarding the tax consequences of the ownership and disposition of the Offered Shares acquired pursuant to this prospectus supplement.

This summary is of a general nature only and is not intended to be tax advice to any prospective investor, and no representation with respect to the tax consequences to any particular investor is made. Prospective investors are urged to consult their own tax advisors regarding the application of federal income tax laws to their particular circumstances, as well as any state, provincial, local, non-U.S. and other tax consequences of investing in the Offered Shares and acquiring, holding or disposing of the Offered Shares.

Distributions

In general, subject to the passive foreign investment company rules discussed below, the gross amount of any distribution received by a U.S. Holder with respect to the Offered Shares (including amounts withheld to pay Canadian withholding taxes) will be included in the gross income of the U.S. Holder as a dividend to the extent attributable to our current and accumulated earnings and profits, as determined under U.S. federal income tax principles. Because we do not expect to maintain calculations of our earnings and profits in accordance with U.S. federal income tax principles, U.S. Holders should expect that a distribution will generally be treated as a dividend for U.S. federal income tax purposes.

The amount of any distributions paid in Canadian dollars will equal the U.S. dollar value of such distributions determined by reference to the exchange rate on the day they are received by the U.S. Holder (with the value of such distributions computed before any reduction for any Canadian withholding tax), regardless of whether the payment is in fact converted into U.S. dollars at that time. A U.S. Holder will have a tax basis in Canadian dollars equal to their U.S. dollar value on the date of receipt. If the Canadian dollars received are converted into U.S. dollars on the date of receipt, the U.S. Holder will generally not be required to recognize foreign currency gain or loss in respect of the distribution. If the Canadian dollars received are not converted into U.S. dollars on the date of receipt, a U.S. Holder may recognize foreign currency gain or loss

S-26

on a subsequent conversion or other disposition of the Canadian dollars. Such gain or loss generally will be treated as U.S. source ordinary income or loss.

Subject to the rules described below under “— Passive Foreign Investment Company,” dividends paid by a non-U.S. corporation generally will be taxed at the preferential tax rates applicable to long-term capital gain of non-corporate taxpayers if (a) such non-U.S. corporation is eligible for the benefits of certain U.S. treaties or the dividend is paid by such non-U.S. corporation with respect to stock that is readily tradable on an established securities market in the United States, thereby qualifying as a qualified foreign corporation, (b) the U.S. Holder receiving such dividend is an individual, estate, or trust, (c) such dividend is paid on shares that have been held by such U.S. Holder for at least 61 days during the 121-day period beginning 60 days before the “ex-dividend date,” and (d) we are not a passive foreign investment company (as defined below) in the year of the dividend or the immediately preceding year. If the requirements of this paragraph are not satisfied, a dividend paid by a non-U.S. corporation to a U.S. Holder, including a U.S. Holder that is an individual, estate, or trust, generally will be taxed at ordinary income tax rates (and not at the preferential tax rates applicable to long-term capital gains).

Distributions to a U.S. Holder with respect to the Offered Shares may be subject to Canadian non-resident withholding tax. See “Certain Canadian Federal Income Tax Considerations” above. Any Canadian withholding tax paid will not reduce the amount treated as received by the U.S. Holder for U.S. federal income tax purposes. However, subject to limitations imposed by U.S. law, a U.S. Holder may be eligible to receive a foreign tax credit for the Canadian withholding tax. For purposes of calculating a U.S. Holder’s foreign tax credit, dividends received by such U.S. Holder with respect to the shares of a foreign corporation generally constitute foreign source income.

The rules governing the foreign tax credit are complex. U.S. Holders are urged to consult their own tax advisors regarding the availability of the foreign tax credit under their particular circumstances, including the impact of, and any exception available to, the special income sourcing rule described in this paragraph. U.S. Holders who do not elect to claim a foreign tax credit may be able to claim an ordinary income tax deduction for Canadian income tax withheld, but only for a taxable year in which the U.S. Holder elects to do so with respect to all non-U.S. income taxes paid or accrued in such taxable year.

Sale, Exchange or Other Taxable Disposition of Offered Shares

Subject to the passive foreign investment company rules discussed below, upon a sale, exchange or other taxable disposition of the Offered Shares, a U.S. Holder will generally recognize a capital gain or loss equal to the difference between the amount realized on such sale, exchange or other taxable disposition and the adjusted tax basis of such Offered Shares. A U.S. Holder’s initial tax basis in the Offered Shares generally will equal the cost of such Offered Shares. Such gain or loss will be a long-term capital gain or loss if the Offered Shares have been held for more than one year and will be short-term gain or loss if the holding period is equal to or less than one year. Such gain or loss generally will be considered U.S. source gain or loss for U.S. foreign tax credit purposes. Long-term capital gains of certain non-corporate U.S. Holders are eligible for reduced rates of taxation. For both corporate and non-corporate U.S. Holders, limitations apply to the deductibility of capital losses.

Passive Foreign Investment Company

The Code provides special rules regarding certain distributions received by U.S. persons with respect to, and sales, exchanges and other dispositions, including pledges, of, shares of stock in a “passive foreign investment company” ​(a “PFIC”). A non-U.S. corporation will be treated as a PFIC for any taxable year in which either: (1) at least 75 percent of its gross income is “passive income” or (2) at least 50 percent of its gross assets during the taxable year (based on the average of the fair market values of the assets determined at the end of each quarterly period) are “passive assets,” which generally means that they produce passive income or are held for the production of passive income. Passive income for this purpose generally includes, among other things, dividends, interest, rents, royalties, gains from commodities and securities transactions, and gains from assets that produce passive income. In determining whether a foreign corporation is a PFIC, a pro rata portion of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25% interest (by value) is taken into account.

S-27

Although the matter is not free from doubt, we do not believe that we were a PFIC for U.S. federal income tax purposes for the taxable year ended December 31, 2020, and at this time do not anticipate becoming a PFIC for the current or future taxable years. However, our PFIC status must be determined annually and therefore is subject to change. This determination is made annually at the end of each taxable year and is dependent upon a number of factors, some of which are beyond our control, including the amount and nature of our income, as well as on the composition and market valuation of our assets and our spending schedule for our cash balances, including the proceeds of this offering. The value of our assets may be determined in large part by reference to the market value of our Common Shares, which may fluctuate substantially. Our status as a PFIC may also depend in part upon how quickly we utilize the cash proceeds from the offering (and the cash proceeds from other fund-raising activities) in our business. Accordingly, there can be no assurance that we are not and will not become a PFIC. Even though discussed in this section, this summary assumes we are not and will not become a PFIC.

A U.S. Holder that holds Offered Shares during any taxable year in which we qualify as a PFIC is subject to special tax rules with respect to (a) any gain realized on the sale, exchange or other disposition of the Offered Shares and (b) any “excess distribution” by the corporation to the U.S. Holder, unless the U.S. Holder elects to treat the PFIC as a “qualified electing fund,” or QEF, or makes a “mark-to-market” election, each as discussed below. An “excess distribution” is that portion of a distribution with respect to the Offered Shares that exceeds 125% of the annual average of such distributions over the preceding three-year period or, if shorter, the U.S. Holder’s holding period for its Offered Shares. Excess distributions and gains on the sale, exchange or other disposition of Offered Shares of a corporation which was a PFIC at any time during the U.S. Holder’s holding period are allocated ratably to each day of the U.S. Holder’s holding period. Amounts allocated to the taxable year in which the disposition occurs and amounts allocated to any period in the shareholder’s holding period before the first day of the first taxable year that the corporation was a PFIC will be taxed as ordinary income (rather than capital gain) earned in the taxable year of the disposition. Amounts allocated to each of the other taxable years in the U.S. Holder’s holding period are not included in gross income for the year of the disposition, but are subject to the highest ordinary income tax rates in effect for individuals or corporations, as applicable, for each such year and the interest charge generally applicable to income tax deficiencies will be imposed on the resulting tax attributable to each year. The tax liability for amounts allocated to years before the year of disposition or “excess distribution” cannot be offset by any net operating losses for such years, and gains (but not losses) realized on the sale of the Offered Shares cannot be treated as capital, even if a U.S. Holder held such Offered Shares as capital assets.

If we are a PFIC for any taxable year during which a U.S. Holder holds Offered Shares, then we generally will continue to be treated as a PFIC with respect to the U.S. Holder for all succeeding years during which such holder holds Offered Shares, even if we no longer satisfy either the passive income or passive asset tests described above, unless the U.S. Holder terminates this deemed PFIC status by making a “deemed sale” election. If such election is made, a U.S. Holder will be deemed to have sold the Offered Shares at their fair market value on the last day of the last taxable year for which we were a PFIC, and any gain from such deemed sale would be subject to the excess distribution rules as described above. After the deemed sale election, the Offered Shares with respect to which the deemed sale election was made will not be treated as shares in a PFIC unless we subsequently become a PFIC.

If we are or become a PFIC, the excess distribution rules may be avoided if a U.S. Holder makes a QEF election effective beginning with the first taxable year in the U.S. Holder’s holding period in which we are treated as a PFIC with respect to such U.S. Holder. A U.S. Holder that makes a QEF election with respect to a PFIC is required to include in income its pro rata share of the PFIC’s ordinary earnings and net capital gain as ordinary income and capital gain, respectively, subject to a separate election to defer payment of taxes, which deferral is subject to an interest charge. If a foreign corporation ceases to be a PFIC, the U.S. Holder’s QEF election would no longer require an annual income inclusion. However, cessation of a foreign corporation’s status as a PFIC will not terminate a QEF election and if the corporation becomes a PFIC again, an annual income inclusion may be required.

In general, a U.S. Holder makes a QEF election by attaching a completed IRS Form 8621 to a timely filed (taking into account any extensions) U.S. federal income tax return for the year beginning with which the QEF election is to be effective. In certain circumstances, a U.S. Holder may be able to make a retroactive QEF election. A QEF election can be revoked only with the consent of the IRS. In order for a U.S. Holder to make

S-28

a valid QEF election, the corporation must annually provide or make available to the holder certain information. For any taxable year in which we are a PFIC, we will determine in our sole discretion whether we will provide to U.S. Holders the information required to make a QEF election.

As an alternative to making a QEF election, a U.S. Holder may make a “mark-to-market” election with respect to its Offered Shares if the Offered Shares meet certain minimum trading requirements, as described below. If a U.S. Holder makes a valid mark-to-market election for the first taxable year in which such holder holds (or is deemed to hold) Offered Shares in the corporation and for which such corporation is determined to be a PFIC, such holder generally will not be subject to the PFIC rules described above in respect of its Offered Shares. Instead, a U.S. Holder that makes a mark-to-market election will be required to include in income each year an amount equal to the excess, if any, of the fair market value of the Offered Shares that the U.S. Holder owns as of the close of the taxable year over the U.S. Holder’s adjusted tax basis in the Offered Shares. The U.S. Holder will be entitled to a deduction for the excess, if any, of the U.S. Holder’s adjusted tax basis in the Offered Shares over the fair market value of the Offered Shares as of the close of the taxable year; provided, however, that the deduction will be limited to the extent of any net mark-to-market gains with respect to the ADSs included by the U.S. Holder under the election for prior taxable years. The U.S. Holder’s basis in the Offered Shares will be adjusted to reflect the amounts included or deducted pursuant to the election. Amounts included in income pursuant to a mark-to-market election, as well as gain on the sale, exchange or other disposition of the Offered Shares, will be treated as ordinary income. The deductible portion of any mark-to-market loss, as well as loss on a sale, exchange or other disposition of Offered Shares to the extent that the amount of such loss does not exceed net mark-to-market gains previously included in income, will be treated as ordinary loss. If a U.S. Holder makes a valid mark-to-market election, any distributions made by us in a year in which we are a PFIC would generally be subject to the rules discussed above under “— Distributions,” except the lower rate applicable to qualified dividend income would not apply. If we are not a PFIC when a U.S. Holder has a mark-to-market election in effect, gain or loss realized by a U.S. Holder on the sale of our Offered Shares will be a capital gain or loss and taxed in the manner described above under “— Sale, Exchange or Other Taxable Disposition of Offered Shares.”

The mark-to-market election applies to the taxable year for which the election is made and all subsequent taxable years, unless the Offered Shares cease to meet applicable trading requirements (described below) or the IRS consents to its revocation. The excess distribution rules generally do not apply to a U.S. Holder for taxable years for which a mark-to-market election is in effect. If we are a PFIC for any year in which the U.S. Holder owns Offered Shares but before a mark-to-market election is made, the interest charge rules described above will apply to any mark-to-market gain recognized in the year the election is made. Generally, if a foreign corporation ceases to be a PFIC, the U.S. Holder’s mark-to-market election would no longer require the income inclusion described above. However, cessation of a foreign corporation’s status as a PFIC will not terminate a mark-to-market election and if the corporation becomes a PFIC again, mark-to-market income inclusions may be required.

A mark-to-mark election is available only if the Offered Shares are considered “marketable” for these purposes. The Offered Shares will be marketable if they are regularly traded on a national securities exchange that is registered with the SEC (such as the Nasdaq Global Market) or on a non-U.S. exchange or market that the IRS determines has rules sufficient to ensure that the market price represents a legitimate and sound fair market value. For these purposes, Offered Shares will be considered regularly traded during any calendar year during which more than a de minimis quantity of the Offered Shares is traded on at least 15 days during each calendar quarter. Any trades that have as their principal purpose meeting this requirement will be disregarded. Each U.S. Holder should ask its own tax advisor whether a mark-to-market election is available or desirable.

If we are a PFIC for any year in which a U.S. Holder holds Offered Shares, such U.S. Holder must generally file an IRS Form 8621 annually. A U.S. Holder must also provide such other information as may be required by the U.S. Treasury Department if the U.S. Holder (1) receives certain direct or indirect distributions from a PFIC, (2) recognizes gain on a direct or indirect disposition of Offered Shares, or (3) makes certain elections (including a QEF election or a mark-to-market election) reportable on IRS Form 8621.

Under attribution rules, if we are a PFIC, U.S. Holders of our Offered Shares will be deemed to own their proportionate shares of our subsidiaries that are PFICs, if any. Like the determination of whether we are a PFIC, the determination of whether any of our subsidiaries is a PFIC is made annually at the end of each taxable year. Assuming a U.S. Holder does not receive from a PFIC subsidiary the information that the U.S.

S-29

Holder needs to make a QEF election with respect to such a subsidiary, a U.S. Holder generally will be deemed to own a portion of the shares of such lower-tier PFIC and may incur liability for a deferred tax and interest charge if we receive a distribution from, or dispose of all or part of our interest in, or the U.S. Holder otherwise is deemed to have disposed of an interest in, the lower-tier PFIC, even though the U.S. Holder has not received the proceeds of those distributions or dispositions directly.

U.S. Holders are urged to consult their tax advisors as to our status as a PFIC, and, if we are treated as a PFIC, as to the effect on them of, and the reporting requirements with respect to, the PFIC rules and the desirability of making, and the availability of, either a QEF election or a mark-to-market election with respect to our Offered Shares.

Required Disclosure with Respect to Foreign Financial Assets

Certain U.S. Holders are required to report information relating to an interest in the Offered Shares, subject to certain exceptions (including an exception for shares held in accounts maintained by certain financial institutions), by attaching a completed IRS Form 8938, Statement of Specified Foreign Financial Assets, with their tax return for each year in which they hold an interest in the Offered Shares. U.S. Holders are urged to consult their own tax advisors regarding information reporting requirements relating to their ownership of our Offered Shares. In addition to these requirements, U.S. Holders may be required to annually file FinCEN Report 114 (Report of Foreign Bank and Financial Accounts) with the U.S, Department of Treasury. Prospective investors are encouraged to consult their own tax advisors with respect to these and other reporting requirements that may apply to their acquisition of the Offered Shares.

Backup Withholding and Information Reporting

In general, information reporting requirements will apply to distributions made on our Offered Shares within the United States to a non-corporate U.S. Holder and to the proceeds from the sale, exchange, redemption or other disposition of Offered Shares by a non-corporate U.S. Holder to or through a U.S. office of a broker. Payments made (and sales or other dispositions effected at an office) outside the United States will be subject to information reporting in limited circumstances.

In addition, backup withholding of U.S. federal income tax may apply to such amounts if the U.S. Holder fails to provide an accurate taxpayer identification number on a properly completed and executed IRS Form W-9 (or otherwise establishes, in the manner provided by law, an exemption from backup withholding).

Backup withholding is not an additional tax, and the amount of any backup withholding from a payment to a U.S. Holder should be allowed as credit against the U.S. Holder’s U.S. federal income tax liability provided that the appropriate returns are filed.

S-30

RISK FACTORS

An investment in the Offered Shares involves risks. Before purchasing the Offered Shares, prospective investors should carefully consider the information contained in, or incorporated by reference into, this Prospectus Supplement and the Shelf Prospectus, including, without limitation, the risk factors identified in our Interim MD&A incorporated by reference into this Prospectus Supplement and under “Risk Factors” in our Annual Information Form also incorporated by reference herein. If any event arising from these risks occurs, our business, prospects, financial condition, results of operations or cash flows, or your investment in the Offered Shares could be materially adversely affected.

The COVID-19 pandemic may adversely affect our business, operating results and financial condition and this adverse affect could be material.

The Company’s business and operations may be adversely affected by health epidemics, such as the global COVID-19 pandemic. The COVID-19 pandemic and efforts to control its spread have curtailed the movement of people, goods and services worldwide, including in the regions in which the Company and its customers and partners operate, and are significantly impacting economic activity and financial markets. Many marketers, particularly those in the travel, retail and automotive industries, have decreased or paused their advertising spending as a response to the economic uncertainty, decline in business activity, and other COVID-19-related impacts, which may negatively impact, the Company’s revenue and results of operations, the extent and duration of which it may not be able to accurately predict. The spread of an infectious disease may also result in, and, in the case of the COVID-19 pandemic has resulted in, regional quarantines, labor shortages or stoppages, changes in consumer purchasing patterns, disruptions to service providers’ ability to deliver data on a timely basis, or at all, and overall economic instability.

A recession, depression or other sustained adverse market events resulting from the spread of COVID-19 could materially and adversely affect the Company’s business and that of the Company’s customers or potential customers. The Corporation’s customers’ and potential customers’ businesses or cash flows may be negatively impacted by the COVID-19 pandemic, which may lead them to reduce their advertising spending and delay their advertising initiatives or technology spending, or attempt to renegotiate contracts and obtain concessions, which may materially and negatively impact the Company’s business, operating results and financial condition. The Company’s customers may also seek adjustments to their payment terms, delay making payments or default on their payables, any of which may impact the timely receipt and/or collectability of the Company’s receivables. As a result, the Company’s financial condition and results of operations may be adversely impacted if the business or financial condition of the Company’s customers and marketers is negatively affected by the pandemic.

The Company’s operations are subject to a range of external factors related to the COVID-19 pandemic that are not within the Company’s control. The Company has taken precautionary measures intended to minimize the risk of the spread of the virus to its employees, partners and customers, and the communities in which it operates. A wide range of governmental restrictions has also been imposed on the Company’s employees’, customers’ and partners’ physical movement to limit the spread of COVID-19. There can be no assurance that precautionary measures, whether adopted by the Company or imposed by others, will be effective, and such measures could negatively affect the Company’s sales, marketing, and customer service efforts, delay and lengthen the Company’s sales cycles, decrease its employees’ or customers’ or partners’ productivity, or create operational or other challenges, any of which could harm the Company’s business, operating results and financial condition.

The economic uncertainty caused by the COVID-19 pandemic has made and may continue to make it difficult for the Company to forecast revenue and operating results and to make decisions regarding operational cost structures and investments. The Company’s business depends on the overall demand for advertising and on the economic health of its customers that benefit from the Company’s platform. Economic downturns or unstable market conditions may cause the Company’s customers to decrease their advertising budgets, which could reduce usage of the Company’s platform and adversely affect its business, operating results and financial condition. Further, volatility in the capital markets has been heightened during recent months and such volatility may continue, which may cause declines in the price of our Common Shares, increasing the risk that securities class action litigation could be instituted against us, as described under “The market price of our Common Shares may be volatile and your investment could suffer or decline in value.”

S-31

The duration and extent of the impact from the COVID-19 pandemic depend on future developments that cannot be accurately predicted at this time, and if the Company is not able to respond to and manage the impact of such events effectively, its business may be harmed. Such future developments may include, among others, the duration and spread of the outbreak, new information that may emerge concerning the severity of COVID-19 and government actions to contain COVID-19 or treat its impact, the level of relief efforts designed to help businesses and consumers, including any declines in such levels, impact on the Company’s customers and its sales cycles, impact on its customer, industry or employee events, and effect on its advertising inventory partners.

The market for programmatic buying for advertising campaigns is relatively new and evolving. If this market develops slower or differently than we expect, our business, growth prospects and financial condition would be adversely affected.

Much of our revenue has been derived from clients that programmatically purchase advertising inventory through our Programmatic Marketing Platform. We expect that spending on programmatic ad buying will continue to be a primary source of revenue for the foreseeable future and that our revenue growth will largely depend on increasing spend through our platform. The market for programmatic ad buying is an emerging market, and our current and potential clients may not shift to programmatic ad buying from other buying methods as quickly as we expect, which would reduce our growth potential. If the market for programmatic ad buying deteriorates or develops more slowly than we expect, it could reduce demand for our platform, and our business, growth prospects and financial condition would be adversely affected.

In addition, our revenue may not necessarily grow at the same rate as spend on our Programmatic Marketing Platform. As the market for programmatic buying for advertising matures, growth in spend may outpace growth in our revenue due to a number of factors, including pricing competition, quantity discounts and shifts in product, media, client and channel mix. A significant change in revenue as a percentage of spend could reflect an adverse change in our business and growth prospects. In addition, any such fluctuations, even if they reflect our strategic decisions, could cause our performance to fall below the expectations of securities analysts and investors, and adversely affect the price of our Common Shares.

Our proprietary artificial intelligence algorithms may not operate properly or as we expect them to, which could adversely affect our customers’ advertising campaigns. Moreover, our proprietary artificial intelligence algorithms may lead to unintentional bias and discrimination.

We use proprietary artificial intelligence algorithms in our product offerings to evaluate and process the consumer data that we gather. The continuous development, maintenance, and operation of our back-end data analytics engine is expensive and complex, and may involve unforeseen difficulties, including material performance problems, undetected defects or errors. If our data analytics do not function reliably, this could negatively impact either the bidding experience for our customers or our ability to predict a consumer’s behavior accurately. Any of these situations could result in customers’ dissatisfaction with us, which could negatively impact our business. Additionally, our artificial intelligence algorithms may lead to unintentional bias and discrimination, which could subject us to legal or regulatory liability as well as reputational harm. Any of these eventualities could result in a material and adverse effect on our business, financial condition, operating results, cash flows, and prospects.

Our management will have broad discretion in the application of the net proceeds of the Offering.

We cannot specify with certainty the particular uses of the net proceeds we will receive from the Offering. Our management will have broad discretion in the application of the net proceeds, including for any of the purposes described in “Use of Proceeds”. Accordingly, a purchaser of Common Shares will have to rely upon the judgment of our management with respect to the use of the proceeds, with only limited information concerning management’s specific intentions. Our management may spend a portion or all of the net proceeds from this Offering in ways that our shareholders might not desire, that might not yield a favourable return and that might not increase the value of a purchaser’s investment. The failure by our management to apply these funds effectively could have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows. Notably, we have in the past made, and in the future may make, acquisitions and investments that could divert management’s attention, result in operating difficulties and dilution to our

S-32

shareholders and otherwise disrupt our operations and adversely affect our business, operating results or financial position, and involve other risks and uncertainties outlined in this Prospectus Supplement, the accompanying Shelf Prospectus and in the documents incorporated by reference herein and therein. Pending their use, we may invest the net proceeds of the Offering in a manner that does not produce income or that loses value.

We may incur additional costs to maintain legitimate means for our transfer and receipt of personal data from the EEA, or may be unable to maintain such legitimate means.

With regard to transfers to the U.S. of personal data (as such term is defined under the General Data Protection Regulation) from our European employees, customers and users, we relied until recently upon the EU — U.S. Privacy Shield, as well as EU standard contractual clauses in certain circumstances. Both the EU — U.S. Privacy Shield and EU standard contractual clauses have been subject to legal challenge, resulting in the EU — U.S. Privacy Shield being recently invalidated by the Court of Justice of the European Union (CJEU). While the validity of the EU standard contractual clauses was confirmed by the Court, the use of the standard clauses with respect to data transfers to the U.S. may be subject to further challenge. The U.S. Department of Commerce and the European Commission have initiated discussions to evaluate the potential for an enhanced EU — U.S. Privacy Shield framework that would comply with the CJEU decision; however, such an enhancement may not be created, or any such enhancement could be subject to further challenge before the European courts. Accordingly, we may experience reluctance or refusal by current or prospective European customers to use our products, and we may find it necessary or desirable to make further changes to our handling of personal data of EEA residents, including arrangements to store and process such data outside the U.S. We may also be unsuccessful in maintaining legitimate means for our transfer and receipt of personal data from the EEA. The regulatory environment applicable to the handling of EEA residents’ personal data, and our actions taken in response, may cause us to assume additional liabilities or incur additional costs, and could result in our business, operating results and financial condition being harmed. Additionally, should we continue to transfer the personal data of EEA residents to the U.S. without a GDPR-compliant solution, we and our customers may face a risk of enforcement actions by data protection authorities in the EEA relating to personal data transfers to us and by us from the EEA. Any such enforcement actions could result in substantial costs and diversion of resources, distract management and technical personnel and negatively affect our business, operating results and financial condition.

There has been a limited public trading market in the United States for our Common Shares and we do not know whether a robust market for the Common Shares will develop to provide you with adequate liquidity.

Our Common Shares are currently listed on the TSX and on the OTCQX® Best Market. Prior to this Offering, there has been a limited public trading market for our Common Shares in the United States through our over-the-counter listing on the OTCQX® Best Market. If a robust trading market does not develop in the United States subsequent to the Offering, you may have difficulty selling any of the Common Shares that you buy over a U.S. exchange. We cannot predict the extent to which investor interest in the Company will lead to the development of a robust trading market on the Nasdaq or otherwise, or how liquid that market might become. The price of the Common Shares in this Offering may not be indicative of prices that will prevail in the United States trading market or otherwise following the Offering. Listing of our Common Shares on the Nasdaq in addition to the TSX may increase price volatility on the TSX and also result in volatility of the trading price on the Nasdaq because trading will be in two markets, which may result in less liquidity on both exchanges. In addition, different liquidity levels, volumes of trading, currencies and market conditions on the two exchanges may result in different prevailing trading prices.

The market price of our Common Shares may be volatile and your investment could suffer or decline in value.

The market price of our Common Shares has fluctuated in the past and we expect it to fluctuate in the future, and it may decline below the Offering Price. Some of the factors that may cause the market price of our Common Shares to fluctuate include: volatility in the market price and trading volume of comparable companies; actual or anticipated changes or fluctuations in our operating results or in the expectations of market analysts; adverse market reaction to any indebtedness we may incur or securities we may issue in the future; short sales, hedging and other derivative transactions in our Common Shares; litigation or regulatory action against us; investors’ general perception of us and the public’s reaction to our press releases, our other

S-33

public announcements and our filings with applicable securities regulators, including our financial statements; publication of research reports or news stories about us, our competitors or our industry; positive or negative recommendations or withdrawal of research coverage by securities analysts; changes in general political, economic, industry and market conditions and trends, including as a result of the COVID-19 pandemic and the market reaction thereto; sales of our Common Shares by existing shareholders; recruitment or departure of key personnel; significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving us or our competitors; and the other risk factors described in this Prospectus Supplement, the Shelf Prospectus and the documents incorporated by reference herein and therein.

Technology stocks in particular have historically experienced high levels of volatility and AcuityAds cannot predict the prices at which the Common Shares will trade. Fluctuations in the market price of the Common Shares could cause an investor to lose all or part of its investment in Common Shares. Factors that could cause fluctuations in the trading price of the Common Shares by virtue of being a technology stock include: (i) announcements of new offerings, products, services, technologies and technological developments, technology-related regulatory changes, commercial relationships, acquisitions or other events by the Corporation or its competitors; and (ii) significant volatility in the market price and trading volume of technology companies in general and of companies in the digital advertising industry in particular.

Additionally, these factors, as well as other related factors, may cause decreases in asset values that are deemed to be other than temporary, which may result in impairment losses. As well, certain institutional investors may base their investment decisions on consideration of our environmental, governance and social practices and performance against such institutions’ respective investment guidelines and criteria, and failure to satisfy such criteria may result in limited or no investment in our Common Shares by those institutions, which could materially adversely affect the trading price of our Common Shares.

In addition, broad market and industry factors may harm the market price of our Common Shares. Therefore, the price of our Common Shares could fluctuate based upon factors that have little or nothing to do with us, and these fluctuations could materially reduce the price of our Common Shares regardless of our operating performance. Specifically, in recent periods, the stock market has experienced heightened volatility as a result of the COVID-19 pandemic. This volatility has had a negative impact on the market price of securities issued by many companies, including ours and other companies in our industry. There can be no assurance that continuing fluctuations in price and volume will not continue or reoccur. If such increased levels of volatility and market turmoil continue or reoccur for a prolonged period of time, our operations and the trading price of our Common Shares may be materially adversely affected.

In the past, following a significant decline in the market price of a company’s securities, there have been instances of securities class action litigation having been instituted against that company. If we were involved in any similar litigation, we could incur substantial costs, fines and penalties (for which our director and officer liability insurance could be insufficient), our management’s attention and resources could be diverted and it could harm our business, operating results and financial condition.

U.S. investors should consider the impact of the “passive foreign investment company” rules in connection with an investment in our Offered Shares.

A non-U.S. corporation will be treated as a “passive foreign investment company,” or PFIC, and thus subject to special, generally adverse rules for U.S. investors, for any taxable year in which either: (1) at least 75 percent of its gross income is “passive income” or (2) at least 50 percent of its gross assets during the taxable year (based on the average of the fair market values of the assets determined at the end of each quarterly period) are “passive assets,” which generally means that they produce passive income or are held for the production of passive income. Passive income for this purpose generally includes, among other things, dividends, interest, rents, royalties, gains from commodities and securities transactions, and gains from assets that produce passive income. In determining whether a foreign corporation is a PFIC, a pro rata portion of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25% interest (by value) is taken into account.

Although the matter is not free from doubt, we do not believe that we were a PFIC for U.S. federal income tax purposes for the taxable year ended December 31, 2020, and at this time do not anticipate becoming a PFIC for the current or future taxable years. However, our PFIC status must be determined annually and

S-34

therefore is subject to change. This determination is made annually at the end of each taxable year and is dependent upon a number of factors, some of which are beyond our control, including the amount and nature of our income, as well as on the composition and market valuation of our assets and our spending schedule for our cash balances, including the proceeds of this offering. The value of our assets may be determined in large part by reference to the market value of our Common Shares, which may fluctuate substantially. Our status as a PFIC may also depend in part upon how quickly we utilize the cash proceeds from the offering (and the cash proceeds from other fund-raising activities) in our business. Accordingly, there can be no assurance that we are not and will not become a PFIC. Investors should consult with their own tax advisors about the PFIC rules and should carefully review the information under the heading “Certain U.S. Federal Income Tax Considerations — Passive Foreign Investment Company” above.

We do not currently anticipate paying dividends on the Common Shares, and, consequently, purchasers in the Offering may never receive a return on their investment.

Our current policy is to reinvest our earnings to finance the growth of our business. Therefore, we do not anticipate paying any cash dividends on our securities, including the Common Shares, in the foreseeable future. Any future determination to pay dividends on our securities will be at the discretion of our board of directors and will depend on, among other things, our results of operations, current and anticipated cash requirements and surplus, financial condition, contractual restrictions and financing agreement covenants, solvency tests imposed by corporate law and other factors that our board of directors may deem relevant. Until the time that we do pay dividends, which we might never do, our shareholders will not be able to receive a return on their Common Shares unless they sell such Common Shares for a price greater than their acquisition price, and such appreciation may never occur.

Future sales, or the perception of future sales, of Common Shares by existing shareholders or by us, or future dilutive issuances of Common Shares by us, could adversely affect prevailing market prices for the Common Shares.

Subject to compliance with applicable securities laws, sales of a substantial number of Common Shares in the public market could occur at any time. These sales, or the market perception that the holders of a large number of Common Shares or securities convertible into Common Shares intend to sell Common Shares, could reduce the prevailing market price of our Common Shares. We cannot predict the effect, if any, that future public sales of these securities or the availability of these securities for sale will have on the market price of our Common Shares. If the market price of our Common Shares were to drop as a result, this might impede our ability to raise additional capital and might cause remaining shareholders to lose all or part of their investment.

Following the consummation of this Offering, the directors and officers of the Company will be subject to “lock-up” restrictions, as described under “Plan of Distribution”. The applicable Underwriters might waive the provisions of these “lock-up” restrictions and allow the Company to, among other things, issue additional Common Shares. There are no pre-established conditions for the grant of such a waiver by the applicable Underwriters, and any decision by the applicable Underwriters to waive those conditions may depend on a number of factors, which might include market conditions, the performance of our Common Shares in the market and our financial condition at that time. If the “lock-up” restrictions of the Company are waived, additional Common Shares will be issued, subject to applicable securities laws, which, could reduce the prevailing market price for our Common Shares.

In addition, certain holders of options and other share-based awards will have an immediate income inclusion for tax purposes when they exercise their options or when their other awards are share-settled (that is, tax is not deferred until they sell the underlying Common Shares). As a result, these holders may need to sell Common Shares purchased on the exercise of options or issued upon share settlement of share-based awards in the same year that they exercise their options or in which their share-based awards are share-settled. This might result in a greater number of Common Shares being sold in the public market, and reduced long-term holdings of Common Shares by our management and employees.

Our constating documents permit us to issue additional securities in the future, including Common Shares and Preference Shares without additional shareholder approval.

Our articles of incorporation permit us to issue an unlimited number of Common Shares. We anticipate that we will, from time to time, issue additional Common Shares in the future, including in connection with

S-35

potential acquisitions. Subject to the requirements of the TSX and the Nasdaq, we will not be required to obtain the approval of shareholders for the issuance of additional Common Shares. Any further issuances of Common Shares will result in immediate dilution to existing shareholders and may have an adverse effect on the value of their shareholdings.

Our articles of incorporation also permit us to issue an unlimited number of Preference Shares, issuable in series. While we have no present plans to issue any Preference Shares, our board of directors has the authority to issue Preference Shares and determine the price, designation, rights, (including voting and dividend rights), preferences, privileges, restrictions and conditions of such Preference Shares and to determine to whom they shall be issued. Any issuance of Preference Shares may result in further dilution to existing shareholders and have an adverse effect on the value of their shareholdings. We cannot foresee the terms and conditions of any future offerings of Preference Shares nor the effect they may have on the market price of the Common Shares.

If you purchase Common Shares in this Offering, you will suffer immediate and substantial dilution of your investment.

We expect that our Common Shares will be offered at a price that is substantially higher than the net tangible book deficit per share. Therefore, if you purchase our Common Shares in this offering, you will pay a price per share that substantially exceeds our net tangible book deficit per share after this offering.

Based on a public offering price of US$ per Common Share, you would experience immediate dilution of US$ per Common Share, representing the difference between our pro forma net tangible book deficit per share as of March 31, 2021, after giving effect to this offering.

We will incur increased costs as a result of being a public company in the United States, and our management will be required to devote substantial time to United States public company compliance efforts.

As a public company in the United States, we will incur additional legal, accounting, reporting and other expenses that we did not incur as a public company in Canada. The additional demands associated with being a U.S. public company may disrupt regular operations of our business by diverting the attention of some of our senior management team away from revenue-producing activities to additional management and administrative oversight, adversely affecting our ability to attract and complete business opportunities and increasing the difficulty in both retaining professionals and managing and growing our business. Any of these effects could harm our business, results of operations and financial condition.

If our efforts to comply with new United States laws, regulations and standards differ from the activities intended by regulatory or governing bodies, such regulatory bodies or third parties may initiate legal proceedings against us and our business may be adversely affected. As a public company in the United States, it is more expensive for us to obtain director and officer liability insurance, and we will be required to accept reduced coverage or incur substantially higher costs to continue our coverage. These factors could also make it more difficult for us to attract and retain qualified directors.

The U.S. Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal control over financial reporting. In the event that we are not able to demonstrate compliance with the Sarbanes-Oxley Act, that our internal control over financial reporting is perceived as inadequate, or that we are unable to produce timely or accurate financial statements, investors may lose confidence in our operating results and the price of our Common Shares may decline. In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the Nasdaq.

Following a transition period permitted for a newly-public company in the United States, our independent registered public accounting firm will be required to attest to the effectiveness of our internal control over financial reporting. Even if our management concludes that our internal controls over financial reporting are effective, our independent registered public accounting firm may issue a report that is qualified if it is not satisfied with our controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently than we do.

S-36

As a foreign private issuer, we are subject to different U.S. securities laws and rules than a domestic U.S. issuer, which may limit the information publicly available to our shareholders.

We are a “foreign private issuer”, as such term is defined in Rule 405 under the Securities Act, and are permitted, under a multijurisdictional disclosure system adopted by the United States and Canada, to prepare our disclosure documents filed under the Exchange Act in accordance with Canadian disclosure requirements. Under the Exchange Act, we are subject to reporting obligations that, in certain respects, are less detailed and less frequent than those of U.S. domestic reporting companies. As a result, we will not file the same reports that a U.S. domestic issuer would file with the SEC, although we will be required to file or furnish to the SEC the continuous disclosure documents that we are required to file in Canada under Canadian securities laws. In addition, our officers, directors, and principal shareholders are exempt from the reporting and “short swing” profit recovery provisions of Section 16 of the Exchange Act. Therefore, our shareholders may not know on as timely a basis when our officers, directors and principal shareholders purchase or sell shares, as the reporting deadlines under the corresponding Canadian insider reporting requirements are longer.

As a foreign private issuer, we are exempt from the rules and regulations under the Exchange Act related to the furnishing and content of proxy statements. We are also exempt from Regulation FD, which prohibits issuers from making selective disclosures of material non-public information. While we expect to comply with the corresponding requirements relating to proxy statements and disclosure of material non-public information under Canadian securities laws, these requirements differ from those under the Exchange Act and Regulation FD and shareholders should not expect to receive in every case the same information at the same time as such information is provided by U.S. domestic companies.

In addition, as a foreign private issuer, we have the option to follow certain Canadian corporate governance practices, except to the extent that such laws would be contrary to U.S. securities laws, and provided that we disclose the requirements we are not following and describe the Canadian practices we follow instead. We plan to rely on this exemption. As a result, our shareholders may not have the same protections afforded to shareholders of U.S. domestic companies that are subject to all U.S. corporate governance requirements.

The Company is governed by the corporate and securities laws of Canada which in some cases have a different effect on shareholders than the corporate laws of Delaware, U.S. and U.S. securities laws.

The Company is governed by the CBCA and other relevant laws, which may affect the rights of shareholders differently than those of a company governed by the laws of a U.S. jurisdiction, and may, together with the Company’s constating documents, have the effect of delaying, deferring or discouraging another party from acquiring control of the Company by means of a tender offer, a proxy contest or otherwise, or may affect the price an acquiring party would be willing to offer in such an instance. The material differences between the CBCA and General Corporation Law of the State of Delaware (“DGCL”) that may have the greatest such effect include, but are not limited to, the following: (i) for material corporate transactions (such as mergers and amalgamations, other extraordinary corporate transactions or amendments to the Company’s articles) the CBCA generally requires a two-thirds majority vote by shareholders, whereas DGCL generally requires only a majority vote; and (ii) under the CBCA, holders of 5% or more of the Company’s shares that carry the right to vote at a meeting of shareholders can requisition a special meeting of shareholders, whereas such right does not exist under the DGCL.

Securities analysts’ research or report could impact the price of the Common Shares.

The trading market for the Common Shares may be facilitated in part by the research and reports that industry or financial analysts publish about us or our business. If few analysts provide coverage about us or our business, the trading price of the Common Shares could be lower than otherwise. If one or more of the analysts covering us or our business downgrade their evaluations of us, our business or the value of the Common Shares, the price of the Common Shares could decline. If one or more of these analysts cease to cover us or our business, we could lose visibility in the market for the Common Shares, which in turn could cause the price of the Common Shares to decline.

S-37

As the Company is a Canadian corporation and most of its directors and officers reside in Canada or the provinces thereof, it may be difficult for United States shareholders to effect service on the Company to realize on judgments obtained in the United States.Similarly, it may be difficult for Canadian investors to enforce civil liabilities against our directors and officers residing outside of Canada.

The Company is governed by the CBCA with its principal place of business in Canada, most of its directors and officers reside in Canada or the provinces thereof and the majority of the Company’s assets and the all or a substantial portion of the assets of these persons may be located outside the United States. Consequently, it may be difficult for investors who reside in the United States to effect service of process in the United States upon the Company or upon such persons who are not residents of the United States, or to realize upon judgments of courts of the United States predicated upon the civil liability provisions of the U.S. federal securities laws. A judgment of a U.S. court predicated solely upon such civil liabilities may be enforceable in Canada by a Canadian court if the U.S. court in which the judgment was obtained had jurisdiction, as determined by the Canadian court, in the matter. Investors should not assume that Canadian courts: (i) would enforce judgments of U.S. courts obtained in actions against the Company or such persons predicated upon the civil liability provisions of the U.S. federal securities laws or the securities or blue sky laws of any state within the United States, or (ii) would enforce, in original actions, liabilities against the Company or such persons predicated upon the U.S. federal securities laws or any such state securities or blue sky laws. Similarly, some of the Company’s directors and officers are residents of countries other than Canada and all or a substantial portion of the assets of such persons are located outside Canada. As a result, it may be difficult for Canadian investors to initiate a lawsuit within Canada against these persons. In addition, it may not be possible for Canadian investors to collect from these persons judgments obtained in courts in Canada predicated on the civil liability provisions of securities legislation of certain of the provinces and territories of Canada. It may also be difficult for Canadian investors to succeed in a lawsuit in the United States based solely on violations of Canadian securities laws.

ENFORCEMENT OF JUDGMENTS AGAINST FOREIGN PERSONS

One of our directors, namely, Corey Ferengul, resides outside of Canada. Mr. Ferengul has appointed AcuityAds Holdings Inc., 70 University Avenue, Suite 1200, Toronto, Ontario M5J 2M4, as his agent for service of process. Purchasers are advised that it may not be possible for them to enforce judgments obtained in Canada against any person that resides outside of Canada, even if the party has appointed an agent for service of process.

LEGAL MATTERS

Certain legal matters relating to the Offering will be passed upon on our behalf by Stikeman Elliott LLP with respect to Canadian legal matters and Jones Day with respect to U.S. legal matters, and on behalf of the Underwriters by Davies Ward Phillips & Vineberg LLP with respect to Canadian legal matters and Skadden, Arps, Slate, Meagher & Flom LLP with respect to U.S. legal matters. As at the date of this Prospectus Supplement, the partners and associates of each of Stikeman Elliott LLP and Davies Ward Phillips & Vineberg LLP beneficially own, directly and indirectly, less than one percent of our outstanding securities or other property, or that of our affiliates.

AUDITORS, REGISTRAR AND TRANSFER AGENT

Our independent auditor is PricewaterhouseCoopers LLP, Chartered Professional Accountants located at PwC Tower, 18 York Street, Suite 2600, Toronto, Ontario M5J 0B2. PricewaterhouseCoopers LLP has confirmed that it is independent of the Company in accordance with the rules of professional conduct of the Chartered Professional Accountants of Ontario and within the meaning of the Securities Act, and the applicable rules and regulations thereunder adopted by the SEC and the Public Company Accounting Oversight Board (United States).

The transfer agent and registrar for our Common Shares in Canada is TSX Trust Company, at its principal office in Toronto, Ontario, and in the United States is Continental Stock Transfer and Trust Company at its principal office in New York, New York.

S-38

DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT

The following documents have been filed or furnished with the SEC as part of the Registration Statement of which this Prospectus Supplement forms a part: (i) the documents listed under the heading “Documents Incorporated by Reference”; (ii) powers of attorney from AcuityAds’ directors and officers, as applicable; (iii) the consent of PricewaterhouseCoopers LLP; (iv) the consent of Stikeman Elliott LLP; (v) the consent of Davies Ward Phillips & Vineberg; (vi) the Underwriting Agreement; and (vii) the form of indenture relating to debt securities that may be issued under the Shelf Prospectus.

ELIGIBILITY FOR INVESTMENT

In the opinion of Stikeman Elliott LLP, Canadian counsel to the Company, and Davies Ward Phillips & Vineberg LLP, Canadian counsel to the Underwriters, based on the current provisions of the Tax Act and the proposals to amend the Tax Act publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof, on the closing of the Offering (in respect of the Offered Shares) or the closing of the Over-Allotment Option (with respect to the Additional Shares), provided that the Common Shares are listed on a “designated stock exchange” ​(which currently includes the TSX and the Nasdaq) on the closing of the Offering (in respect of the Offered Shares) or the closing of the Over-Allotment Option (with respect to the Additional Shares), the Common Shares will on that date be qualified investments under the Tax Act for trusts governed by registered retirement savings plans (“RRSPs”), registered retirement income funds (“RRIFs”), registered disability savings plans (“RDSPs”), deferred profit sharing plans, registered education savings plans (“RESPs”) and tax-free savings accounts (“TFSAs”) each as defined in the Tax Act.

Notwithstanding that the Common Shares may be qualified investments for a trust governed by a TFSA, RRSP, RRIF, RDSP or RESP, a holder of a TFSA or RDSP, an annuitant of an RRSP or RRIF, or a subscriber of an RESP, as applicable, will be subject to a penalty tax under the Tax Act with respect to Common Shares if the Common Shares are “prohibited investments” for the TFSA, RRSP, RRIF, RDSP or RESP. A Common Share will not be a prohibited investment for trusts governed by a TFSA, RRSP, RRIF, RDSP or RESP provided that the annuitant under the RRSP or RRIF, the holder of the TFSA or RDSP or the subscriber of the RESP, as the case may be, deals at arm’s length with the Company for purposes of the Tax Act, and does not have a “significant interest” ​(as defined in the Tax Act) in the Company for purposes of the Tax Act. In addition, the Common Shares will not be a prohibited investment for trusts governed by a TFSA, RRSP, RRIF, RDSP or RESP if the Common Shares are “excluded property” ​(as defined in the Tax Act) for such trusts. Holders of the Common Shares should consult their own tax advisors with respect to whether the Common Shares would be “prohibited investments” or would be “excluded property” in their particular circumstances.

STATUTORY RIGHTS OF WITHDRAWAL AND RESCISSION

Securities legislation in certain of the provinces and territories of Canada provides purchasers with the right to withdraw from an agreement to purchase securities. This right may only be exercised within two business days after receipt or deemed receipt of a prospectus or a prospectus supplement relating to the securities purchased by a purchaser and any amendment thereto. In several of the provinces and territories, securities legislation further provides the purchaser with remedies for rescission or, in some jurisdictions, revisions of the price or damages if the prospectus or a prospectus supplement relating to the securities purchased by a purchaser and any amendment contains a misrepresentation or is not delivered to the purchaser, provided that such remedies for rescission, revisions of the price or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. A purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for the particulars of these rights or consult with a legal advisor.

S-39

This short form prospectus is a base shelf prospectus. This short form prospectus has been filed under legislation in each of the provinces of and territories of Canada that permits certain information about these securities to be determined after this prospectus has become final and that permits the omission from this prospectus of that information. The legislation requires the delivery to purchasers of a prospectus supplement containing the omitted information within a specified period of time after agreeing to purchase any of these securities.

No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise. This short form prospectus constitutes a public offering of these securities only in those jurisdictions where they may be lawfully offered for sale and therein only by persons permitted to sell such securities.

Information has been incorporated by reference in this short form prospectus from documents filed with securities commissions or similar authorities in Canada.Copies of the documents incorporated herein by reference may be obtained on request without charge from the Chief Financial Officer of AcuityAds Holdings Inc. at 70 University Avenue, Suite 1200 Toronto, Ontario M5J 2M4, by telephone at (416) 218-9888, and are also available electronically at www.sedar.com.

SHORT FORM BASE SHELF PROSPECTUS

New Issue and/or Secondary Offering December 30, 2020

ACUITYADS HOLDINGS INC.

$250,000,000

Common Shares
Preference Shares
Subscription Receipts
Debt Securities
Warrants
Units

AcuityAds Holdings Inc. (the “Corporation”, “AcuityAds”, “we”, “our” or “us”) may from time to time during the 25 months that this short form base shelf prospectus (the “Prospectus”), including any amendments thereto, remains valid, offer for sale and issue common shares of the Corporation (the “Common Shares”), preference shares of the Corporation (the “Preference Shares”), subscription receipts of the Corporation (the “Subscription Receipts”), debt securities of the Corporation (the “Debt Securities”), warrants (the “Warrants”) and units (the “Units”) comprised of one or more of the other securities described in this Prospectus. The Common Shares, the Preference Shares, the Subscription Receipts, the Debt Securities, the Warrants and the Units (collectively, the “Securities”) may be offered separately or together, in separate series, in amounts, at prices and on terms to be set forth in one or more accompanying shelf prospectus supplements (collectively or individually, as the case may be, a “Prospectus Supplement”) to this Prospectus. The Corporation may sell up to $250,000,000 as the aggregate initial offering price of the Securities (or the equivalent thereof, at the date of issue, in any other currency or currencies, as the case may be) during the 25-month period that this Prospectus, including any amendments hereto, remains effective. One or more securityholders of the Corporation may also offer and sell Securities under this Prospectus. See “Selling Securityholders”.

The specific terms of any Securities offered will be described in the applicable Prospectus Supplement, including, where applicable: (i) in the case of Common Shares, the number of Common Shares being offered, the offering price and any other specific terms; (ii) in the case of Preference Shares, the designation of the particular class, series, aggregate principal amount, the number of shares offered, the issue price, the dividend rate, the dividend payment dates, any terms for redemption at the option of the Corporation or the holder, any exchange or conversion terms and any other specific terms; (iii) in the case of Subscription Receipts, the number of Subscription Receipts being offered, the offering price and the conditions and procedures for the exchange of the Subscription Receipts for Debt Securities, Common Shares or Preference Shares, as the case may be; (iv) in the case of Debt Securities, their specific designation, aggregate principal amount, denominations, currency, maturity, rate (which may be fixed or variable) and time of payment of interest, any terms for redemption at the option of the Corporation or the holder, any terms for retraction, any terms for sinking fund payments, any listing on a securities exchange, any conversion or exchange terms, the public offering price (or the manner of determination thereof if offered on a non-fixed price basis), whether the Debt Security is senior or subordinate and any other specific terms; (v) in the case of Warrants, the designation, number and terms of Debt Securities, Common Shares or Preference Shares purchasable upon exercise of Warrants, any procedures that will result in the adjustment of those

(continued on next page)​

(continued from cover)

numbers, the exercise price, dates and periods of exercise, the currency in which the Warrants are issued and any other specific terms; and (vi) in the case of Units, the designation and terms of the Units and of the Securities comprising the Units and any other specific terms. A Prospectus Supplement may include specific variable terms pertaining to the Securities that are not within the alternatives and parameters described in this Prospectus.

The Securities may be sold to or through underwriters or dealers or to purchasers directly or through agents. See “Plan of Distribution”. A Prospectus Supplement will set out the names of any underwriters, dealers or agents involved in the sale of the Securities, the principal amount (if any) to be purchased by any underwriters and the compensation of such underwriters, dealers or agents.

The Common Shares are listed and posted for trading on the Toronto Stock Exchange (the “TSX”) under the symbol “AT”. On December 29, 2020, the last trading day prior to the date of this Prospectus, the closing price of the Common Shares on the TSX was $16.12.

Unless otherwise specified in the applicable Prospectus Supplement, Securities other than Common Shares will not be listed on any securities exchange. There is currently no market through which such Securities other than Common Shares may be sold and purchasers may not be able to resell any such Securities purchased under this Prospectus and the Prospectus Supplement relating to such Securities. This may affect the pricing of such Securities in the secondary market, the transparency and availability of trading prices, the liquidity of such Securities and the extent of issuer regulation.

Owning the Securities may subject you to tax consequences. This Prospectus and any applicable Prospectus Supplement may not describe the tax consequences fully. You should read the tax discussion in any applicable Prospectus Supplement and consult with your own tax advisor with respect to your own particular circumstances.

An investment in the Securities is highly speculative and involves significant risks that should be carefully considered by prospective investors before purchasing such securities. The risks outlined in this Prospectus and in the documents incorporated by reference herein, including the applicable Prospectus Supplement, should be carefully reviewed and considered by prospective investors in connection with an investment in such securities. See “Risk Factors”.

This Prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any of the Securities in any jurisdiction where such an offer or sale is prohibited.

TSX Trust Company, at its office in Toronto, Ontario, is the transfer agent for the Common Shares. See “Auditor, Transfer Agent and Registrar”.

No underwriter has been involved in the preparation of this Prospectus nor had any underwriter performed any review of the contents of this Prospectus.

The registered office and head office of the Corporation is 70 University Avenue, Suite 1200 Toronto, Ontario M5J 2M4.

The sale of Securities may be effected from time to time in one or more transactions at non-fixed prices pursuant to transactions that are deemed to be “at the-market distributions” as defined in National Instrument 44-102 — Shelf Distributions, including sales made directly on the TSX or other existing trading markets for the Securities, and as set forth in the prospectus supplement for such purpose. See “Plan of Distribution”.

In connection with any offering of Securities other than an “at-the-market distribution”, unless otherwise specified in a Prospectus Supplement, underwriters or agents may over-allot or effect transactions which stabilize, maintain or otherwise affect the market price of Securities offered at levels other than those which might otherwise prevail on the open market. Such transactions may be commenced, interrupted or discontinued at any time. No underwriter or dealer involved in an “at-the-market distribution” under this Prospectus, no affiliate of such an underwriter or dealer and no person or company acting jointly or in concert with such underwriter or dealer will over-allot Securities in connection with such distribution or effect any other transactions that are intended to stabilize or maintain the market price of the Securities. See “Plan of Distribution”.

All shelf information permitted under applicable securities legislation to be omitted from this Prospectus will be contained in one or more Prospectus Supplements that will be delivered to purchasers together with this Prospectus. Each Prospectus Supplement will be incorporated by reference into this Prospectus for the purposes of securities legislation as of the date of the Prospectus Supplement and only for the purposes of the distribution of the Securities to which the Prospectus Supplement pertains. You should read this Prospectus and any applicable Prospectus Supplement carefully before you invest in any Securities offered pursuant to this Prospectus.

TABLE OF CONTENTS

ABOUT THIS PROSPECTUS	1
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS	1
CURRENCY PRESENTATION AND EXCHANGE RATE INFORMATION	2
NON-IFRS MEASURES	3
DOCUMENTS INCORPORATED BY REFERENCE	3
TRADEMARKS AND TRADE NAMES	5
THE CORPORATION	6
RECENT DEVELOPMENTS	7
CONSOLIDATED CAPITALIZATION	7
SELLING SECURITYHOLDERS	8
USE OF PROCEEDS	8
PLAN OF DISTRIBUTION	8
DESCRIPTION OF SHARE CAPITAL	9
DESCRIPTION OF SUBSCRIPTION RECEIPTS	10
DESCRIPTION OF DEBT SECURITIES	11
DESCRIPTION OF WARRANTS	12
DESCRIPTION OF UNITS	13
EARNINGS COVERAGE RATIOS	13
PRIOR SALES	14
TRADING PRICE AND VOLUME	14
TAX CONSIDERATIONS	14
RISK FACTORS	15
AUDITORS, TRANSFER AGENT AND REGISTRAR	15
ENFORCEMENT OF JUDGMENTS AGAINST FOREIGN PERSONS OR COMPANIES	15
EXEMPTIVE RELIEF	15
LEGAL MATTERS AND INTERESTS OF EXPERTS	15
STATUTORY RIGHTS OF WITHDRAWAL AND RESCISSION	16

i

ABOUT THIS PROSPECTUS

Except where otherwise indicated, the “Corporation” or “AcuityAds” refers to AcuityAds Holdings Inc. and its subsidiary entities on a consolidated basis and, in the case of references to matters undertaken by a predecessor in interest to the Corporation or its subsidiary entities, includes each such predecessor in interest, unless the context otherwise requires. Any statements in this Prospectus made by or on behalf of management are made in such persons’ capacities as officers of the Corporation and not in their personal capacities.

Prospective investors should rely only on information contained in this Prospectus (including the documents incorporated by reference herein) and are not entitled to rely on parts of the information contained in this Prospectus (including the documents incorporated by reference herein) to the exclusion of others. Neither the Corporation nor any selling securityholders have authorized anyone to provide the reader with different information. Neither the Corporation nor any selling securityholders are making an offer to sell the Securities in any jurisdiction where the offer or sale is not permitted. Unless otherwise stated, the information contained in this Prospectus (including the documents incorporated by reference herein) is accurate only as of the date of this Prospectus (or the date of the document incorporated by reference herein, as applicable), regardless of the time of delivery of this Prospectus or any sale of the Securities. The Corporation’s business, financial condition, results of operations and prospects may have changed since the date of this Prospectus. The Corporation does not undertake to update the information contained or incorporated by reference herein, except as required by applicable securities laws.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Prospectus, including the documents incorporated by reference herein, contains “forward-looking information” under applicable Canadian securities legislation. Forward-looking information is characterized by words such as “plan”, “expect”, “budget”, “target”, “project”, “intend”, “believe”, “anticipate”, “estimate”, “should”, “predict”, “potential”, “continue” and other similar words, or statements that certain events or conditions “may” or “will” occur. Except for statements of historical fact relating to the Corporation, information contained or incorporated by reference herein constitutes forward-looking information, including, but not limited to, statements regarding: the effect of the COVID-19 pandemic on the Corporation’s business and operations, the Corporation’s strategy, plans or future financial or operating performance; the continuing competitiveness of the Corporation’s Programmatic Marketing Platform and its service offerings,; the continuation and success of the Corporation’s partnerships with other organizations; the Corporation’s intentions to improve its Programmatic Marketing Platform and service offerings, strengthen relationships with existing customers, and expand its customer base and its presence in the U.S. and globally; continuing investment in research, development and marketing; the Corporation’s ability to expand into additional advertising channels, including connected TV, gain market penetration and grow sales and revenue; the Corporation’s intention to acquire complementary businesses and technologies; the Corporation’s ability to manage its brand, increase market awareness and generate new advertiser leads; the Corporations’ ability to meet the needs of digital marketers; and the Corporation’s expectation that reliance on key customers will decrease over time, that the online advertising channels will continue to be a primary channel used by its customers; regarding the future of legislation and regulation related to online advertising and online data collection and usage; regarding the continued operation of third party tools used by the Acuity platform; the benefits of the acquisition of ADman Interactive S.L.U. and the Corporation’s strategy with respect to ADman Interactive S.L.U.; the benefits of the acquisition of Magnetic Media Online Holdings Inc..; regarding the benefits of the illumin platform and the Corporation’s strategy with respect to the illumin platform; the future of ad blocking and online media fraud; and the market price for the Securities.

Statements containing forward-looking information are based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including management’s perceptions of historical trends, current conditions and expected future developments, as well as other considerations that are believed to be appropriate in the circumstances, including the following: the Canadian and global economy will remain stable over the next 12 months; the Corporation will be able to meet its future capital commitments; the Corporation will be able to obtain additional financing on reasonable terms if and when needed; the Corporation will be able to effectively protect its current and future intellectual property rights; the Corporation will be able to recruit and retain the services of its key technical, sales, marketing, operations and management personnel; the Corporation will be able to develop commercially viable solutions as a result of its

1

research and development activities; and that the risks referenced above and herein, collectively or individually, will not have a material impact on the Corporation. While management considers these assumptions to be reasonable based on currently available information, they may prove to be incorrect. However, given the evolving circumstances surrounding the COVID-19 pandemic, it is difficult to predict how significant the adverse impact of the pandemic will be on the global and domestic economy, the business, operations and financial position of the Corporation’s clients and the business, operations and financial position of the Corporation. Many risks, uncertainties and other factors could cause the actual results of AcuityAds to differ materially from the results, performance, achievements or developments expressed or implied by such forward-looking statements. These risks, uncertainties and other factors include, but are not limited to the following: overall economic conditions, rapid technological changes, use of cookies, demand for the Corporation’s products and services, the introduction of competing technologies, competitive pressures, network restrictions, fluctuations in foreign currency exchange rates, and other similar factors that may cause the actual results, performance or achievements to differ materially from those expressed or implied in these forward-looking statements. In addition, the effects of COVID-19, including the duration, spread and severity of the pandemic, create additional risks and uncertainties for the Corporation. In particular, the impact of the virus and government authorities’ and public health officials’ responses thereto may affect: the Corporation’s actual results, performance, prospects or opportunities; domestic and global credit and capital markets and our ability to access capital on favourable terms, or at all; and the health and safety of our employees.

By their nature, forward-looking statements are inherently uncertain, are subject to risk and are based on assumptions including those discussed herein and those discussed in the documents incorporated by reference herein. There is significant risk that predictions and other forward-looking statements will not prove to be accurate. Readers are cautioned to not place undue reliance on forward-looking statements made herein because a number of factors could cause actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed in the forward-looking statements. The forward-looking statements contained herein are expressly qualified in their entirety by the above cautionary statement.

The future outcomes that relate to forward-looking statements may be influenced by many factors, including, but not limited to, any future sales or issuances of securities of the Corporation, and the risk factors described under the heading “Risk Factors” in the AIF (as defined herein). The Corporation cautions that the foregoing list of factors is not exhaustive, and that, when relying on forward-looking statements to make decisions with respect to the Corporation or the Securities, investors and others should carefully consider these factors, as well as other uncertainties and potential events, and the inherent uncertainty of forward-looking statements.

Although the Corporation has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Such information is based on numerous assumptions regarding present and future business strategies and the environment in which the Corporation will operate in the future, including expected revenues from certain contracts, client roll-out plans for specific products and ability to achieve goals. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Forward-looking statements are provided as of the date of this Prospectus or such other date specified herein, and the Corporation assumes no obligation to update or revise such forward-looking statements to reflect new events or circumstances except as required under applicable securities laws.

CURRENCY PRESENTATION AND EXCHANGE RATE INFORMATION

In this Prospectus, references to “$” are to Canadian dollars and to “US$” are to U.S. dollars. On December 29, 2020, the Bank of Canada rate of exchange was $1.00 = US$0.7809 or US$1.00 = $1.2806.

The Corporation’s annual financial statements and interim financial statements are reported in Canadian dollars, and are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board.

2

NON-IFRS MEASURES

The documents incorporated by reference in this Prospectus include certain measures which are not defined terms in accordance with IFRS such as “Revenue less media costs”, “Revenue less media costs margin”, “Adjusted EBITDA” and “Adjusted Net Income (Loss)”.

The term “Revenue less media costs” refers to the net amount of revenue after deducting direct media costs. Revenue less media costs is used for internal management purposes as an indicator of the performance of the Corporation’s solution in balancing the goals of delivering excellent results to advertisers while meeting the Corporation’s margin objectives and, accordingly management believes it is useful supplemental information to include in this Prospectus. The term “Revenue less media costs margin” refers to the percentage that revenue less media costs for any period represents as a percentage of total revenue for that period.

“Adjusted EBITDA” refers to net income (loss) after adjusting for finance costs, income taxes, foreign exchange (gain) loss, depreciation and amortization, share-based compensation, acquisition and related integration costs, severance expenses and adjustments to the carrying value of investment tax credits receivable and earnout liabilities. Management believes that Adjusted EBITDA is useful supplemental information as it provides an indication of the results generated by the Corporation’s main business activities prior to taking into consideration how those activities are financed and taxed and also prior to taking into consideration depreciation of property and equipment and the other items listed above. It is a key measure used by the Corporation’s management and board of directors to understand and evaluate the Corporation’s operating performance, to prepare the Corporation’s annual budget, and to develop the Corporation’s operating plans.

“Adjusted Net Income (Loss)” refers to net income (loss) after adjusting for non-cash items such as impairment loss, fair value gain, depreciation and amortization, share-based compensation and foreign exchange gain/loss. The Corporation believes that Adjusted Net Income (Loss) is useful supplemental information as it provides an indication of the results generated by the Corporation’s main business activities on a cash basis. It is another key measure used by the Corporation’s management and board of directors to understand and evaluate the Corporation’s operating performance, to prepare annual budgets and to help develop operating plans.

“Revenue less media costs”, “Revenue less media costs margin”, “Adjusted EBITDA” and “Adjusted Net Income (Loss)” are not measures of performance under IFRS and should not be considered in isolation or as a substitute for comprehensive income (loss) prepared in accordance with IFRS or as a measure of operating performance or profitability. “Revenue less media costs”, “Revenue less media costs margin”, “Adjusted EBITDA” and “Adjusted Net Income (Loss)” do not have a standardized meaning prescribed by IFRS and are not necessarily comparable to similar measures presented by other companies.

DOCUMENTS INCORPORATED BY REFERENCE

Information has been incorporated by reference in this Prospectus from documents filed with securities commissions or similar authorities in Canada. Copies of the documents incorporated herein by reference may be obtained on request without charge from the Chief Financial Officer of the Corporation at its offices located at 70 University Avenue, Suite 1200 Toronto, Ontario M5J 2M4, telephone: (416) 218-9888 or by faxing a written request to (866) 623-6822, and are also available electronically at www.sedar.com.

Except to the extent that their contents are modified or superseded by a statement contained in this Prospectus or in any other subsequently filed document that is also incorporated by reference herein, the following documents of the Corporation, which have been filed with securities commissions or similar authorities in Canada, are specifically incorporated by reference into and form an integral part of this Prospectus:

(a)

the annual information form of the Corporation dated March 5, 2020 for the year ended December 31, 2019 (the “AIF”);

(b)

the audited consolidated financial statements of the Corporation for the years ended December 31, 2019 and December 31, 2018, together with the notes thereto and the auditors’ report thereon;

(c)

management’s discussion and analysis of the financial condition and results of operations of the Corporation for the financial year ended December 31, 2019;

3

(d)

interim consolidated financial statements of the Corporation for three and nine months ended September 30, 2020 and 2019, together with the notes thereto (the “Interim Financial Statements”);

(e)

management’s discussion and analysis of the financial condition and results of operations of the Corporation for the three and nine months ended September 30, 2020 (the “Interim MD&A”);

(f)

the management information circular of the Corporation dated May 8, 2020 with respect to the annual general and special meeting of shareholders to be held on June 16, 2020; and

(g)

the material change report of the Corporation dated November 17, 2020.

Any documents of the type required by National Instrument 44-101 — Short Form Prospectus Distributions to be incorporated by reference in a short form prospectus, together with any “template version” of “marketing materials” ​(each as defined in National Instrument 41-101 — General Prospectus Requirements) which are filed by the Corporation with the securities commissions or similar authorities in any of the provinces and territories of Canada during the term of this Prospectus and prior to the termination of an applicable offering shall be deemed to be incorporated by reference into this Prospectus.

Any Prospectus Supplement containing the specific terms applicable to the issuance of any Securities and other information in relation to such issuance will be delivered, together with this Prospectus, to purchaser and will be deemed to be incorporated by reference into this Prospectus as of the date of such Prospectus Supplement, but only for the purposes of the offering of such Securities to which such Prospectus Supplement pertains.

Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for the purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which is also, or is deemed to be, incorporated by reference herein modifies or supersedes such statement. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document that it modifies or supersedes. The making of a modifying or superseding statement shall not be deemed to be an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus.

Upon a new annual information form and annual consolidated financial statements being filed by the Corporation with the applicable Canadian securities commissions or similar regulatory authorities in Canada during the period that this Prospectus is effective, the previous annual information form, the previous annual consolidated financial statements and all interim consolidated financial statements and in each case the accompanying management’s discussion and analysis of financial condition and results of operations, and material change reports, filed prior to the commencement of the financial year of the Corporation in which the new annual information form is filed shall be deemed to no longer be incorporated into this Prospectus for purpose of future offers and sales of Securities under this Prospectus. Upon interim consolidated financial statements and the accompanying management’s discussion and analysis of financial condition and results of operations being filed by the Corporation with the applicable Canadian securities commissions or similar regulatory authorities during the period that this Prospectus is effective, all interim consolidated financial statements and the accompanying management’s discussion and analysis of financial condition and results of operations filed prior to such new interim consolidated financial statements and management’s discussion and analysis of financial condition and results of operations shall be deemed to no longer be incorporated into this Prospectus for purposes of future offers and sales of Securities under this Prospectus. In addition, upon a new management information circular for an annual meeting of shareholders being filed by the Corporation with the applicable Canadian securities commissions or similar regulatory authorities during the period that this Prospectus is effective, the previous management information circular filed in respect of the prior annual meeting of shareholders shall no longer be deemed to be incorporated into this Prospectus for purposes of future offers and sales of Securities under this Prospectus.

4

TRADEMARKS AND TRADE NAMES

This Prospectus and the documents incorporated by reference herein include certain trademarks and trade names which are protected under applicable intellectual property laws and are our property. Solely for convenience, our trademarks and trade names referred to in this Prospectus and in the documents incorporated by reference herein may appear without the ® or ™ symbol, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights to these trademarks and trade names. All other trademarks used in this Prospectus or the documents incorporated by reference herein are the property of their respective owners.

5

THE CORPORATION

Incorporation

The Corporation was incorporated pursuant to the provisions of the Canada Business Corporations Act on June 28, 2011 as “Wildlaw Capital CPC 2 Inc.” and was a capital pool company under the policies of the TSX Venture Exchange until July 16, 2014 during which period of time it had no commercial operations, and no significant assets other than cash.

Prior to July 16, 2014, the business of the Corporation was carried on by a corporation called AcuityAds Inc. On July 16, 2014, AcuityAds Inc. completed a reverse-takeover of the Corporation, following which AcuityAds Inc. became a wholly-owned subsidiary of the Corporation. The Corporation graduated from the TSX Venture Exchange to the TSX on June 26, 2019.

The registered and head office of AcuityAds is located at 70 University Avenue, Suite 1200 Toronto, Ontario M5J 2M4. AcuityAds maintains a website at www.acuityads.com. Information contained on AcuityAds’ website is not part of this Prospectus nor any Prospectus Supplement, nor is it incorporated by reference herein.

Inter-corporate Relationships

A corporate organizational chart reflecting the corporate structure of the Corporation and the jurisdiction under which each of its wholly-owned subsidiaries was incorporated is set forth below:

6

Business of the Corporation

AcuityAds is a technology company that enables marketers to connect intelligently with audiences across video, mobile, social and online display advertising campaigns. AcuityAds’ Programmatic Marketing Platform, powered by proprietary machine learning technology, is at the core of its business, accompanied by patented solutions for analytics-led video and mobile targeting that leverages data. AcuityAds empowers marketers by offering near real-time reporting and analytics, bringing accountability to programmatic advertising to deliver business results and help solve the key challenges that digital advertisers face. AcuityAds is headquartered in Toronto and has offices in the U.S., Canada, Spain, France, Brazil, Chile, Mexico, Colombia, and Argentina. Its key customers include both agencies and brands, including large Fortune 500 enterprises and small to mid-sized businesses.

AcuityAds’ technology enables programmatic advertising, which is the automated buying and selling of advertising inventory electronically. The platform is based on proprietary machine learning technology, the branch of artificial intelligence involving systems that learn from data inputs and outputs and can perform actions without the need for explicit programming. The platform has the capability to process billions of bid requests on a daily basis.

The AcuityAds Programmatic Marketing Platform allows advertisers to manage their purchasing of online display advertising in real-time using programmatic ad buying, a method of buying online display advertising in which ad spots (called impressions) are released in an auction that occurs in milliseconds. AcuityAds purchases impressions for advertisers through agreements with publishers, ad networks and ad exchanges. Its technology platform benefits advertisers by enabling them to target specific audiences based on demographic and psychographic parameters as well as manage their bid amounts to purchase the advertising inventory that is most relevant for their campaigns. Real-time reporting enables advertisers to monitor specific performance metrics and react and pivot quickly to optimize campaigns to help ensure they achieve consumer targeting goals and key performance indicators.

On October 1, 2020, the Corporation officially launched its new advertising automation platform, illumin™. illumin is an advertising automation technology that offers planning, buying and omnichannel intelligence from a single platform, allowing advertisers to map their consumer journey playbooks across screens and execute in real-time using programmatic technology. illumin enables creation of consumer journeys with custom messages tied to propensity-scored audiences, increasing efficiency and return on advertising investments.

RECENT DEVELOPMENTS

There have been no material development in the business of the Corporation since November 11, 2020, the date of the Corporation’s most recent interim financial statements, which have not been disclosed in this Prospectus or the documents incorporated by reference herein, other than as set forth below:

December 2020 Offering

On December 4, 2020, the Corporation and certain of its shareholders completed a bought deal offering of 3,280,000 common shares at a price of $6.10 per share for aggregate gross proceeds of $23 million, including the full exercise the over-allotment option granted to the underwriters by the selling shareholders (the “December 2020 Offering”). This offering was comprised of 1,968,000 common shares issued from treasury and offered by the Corporation for gross proceeds to the Corporation of approximately $12 million and 1,804,000 common shares offered by certain of the Company’s shareholders, namely 2794606 Ontario Ltd. and OV2 Capital Inc., for gross proceeds to those selling shareholders of approximately $11 million.

CONSOLIDATED CAPITALIZATION

The applicable Prospectus Supplement will describe any material change, and the effect of such material change, on the share and loan capitalization of the Corporation that will result from the issuance of Securities pursuant to such Prospectus Supplement.

Other than as described below, there have been no material changes to the Corporation’s share and loan capitalization since November 11, 2020, the date of the Corporation’s most recent interim financial statements.

7

The Corporation raised gross proceeds of approximately $12 million in connection with the December 2020 Offering.

On May 5, 2020, the Corporation secured a loan of $1,894,693 (US$1,390,294) pursuant to the Paycheck Protection Program as part of the U.S. Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). On October 12, 2020, the Corporation applied for the loan forgiveness in accordance with the terms of the CARES Act and the loan was fully forgiven on November 25, 2020.

SELLING SECURITYHOLDERS

Securities may be sold under this Prospectus by way of secondary offering by or for the account of certain of our securityholders. In connection with any secondary offering, in respect of any selling securityholder that is resident outside of Canada, the Corporation will file a non-issuer’s submission to jurisdiction form on behalf of such selling securityholder with the corresponding Prospectus Supplement. Any Prospectus Supplement that we file in connection with an offering of Securities by selling securityholders will include the following information:

•

the names of the selling securityholders;

•

the number or amount of Securities owned, controlled or directed of the class being distributed by each selling securityholder;

•

the number or amount of Securities of the class being distributed for the account of each selling securityholder;

•

the number or amount of Securities of any class to be owned, controlled or directed by the selling securityholders after the distribution and the percentage that number or amount represents of the total number of our outstanding Securities;

•

whether the Securities are owned by the selling securityholders both of record and beneficially, of record only, or beneficially only; and

•

all other information that is required to be included in the applicable Prospectus Supplement.

USE OF PROCEEDS

The use of proceeds of the sale of the Securities will be described in the Prospectus Supplement relating to that offering of Securities. The Corporation will not receive any proceeds from any sale of any Securities by the selling securityholders.

PLAN OF DISTRIBUTION

We may offer and sell Securities directly to one or more purchasers, through agents, or through underwriters or dealers designated by us from time to time. We may distribute the Securities from time to time in one or more transactions at fixed prices (which may be changed from time to time), at market prices prevailing at the times of sale, at varying prices determined at the time of sale, at prices related to prevailing market prices or at negotiated prices, including sales in transactions that are deemed to be “at-the-market distributions” as defined in National Instrument 44-102 — Shelf Distributions, including sales made directly on the TSX or other existing trading markets for the Securities. A description of such pricing will be disclosed in the applicable Prospectus Supplement. For greater certainty, selling securityholders shall not effect any sales of Securities under an “at-the-market distribution”. We may offer Securities in the same offering, or we may offer Securities in separate offerings.

This Prospectus may also, from time to time, relate to the offering of our Securities by certain selling securityholders (other than “at-the-market distributions”). The selling securityholders may sell all or a portion of our Securities beneficially owned by them and offered thereby from time to time directly or through one or more underwriters, broker-dealers or agents. Our Securities may be sold by the selling securityholders in one or more transactions at fixed prices (which may be changed from time to time), at market prices prevailing at the time of the sale, at varying prices determined at the time of sale, at prices related to prevailing market prices or at negotiated prices.

8

A Prospectus Supplement will set forth the terms of the offering, including the name or names of any underwriters, dealers or agents, the purchase price or prices of the Securities, the proceeds to the Corporation and/or the selling securityholders from the sale of the Securities, any initial offering price (or the manner of determination thereof if offered on a non-fixed price basis), any underwriting discount or commission and any discounts, concessions or commissions allowed or reallowed or paid by any underwriter to other dealers. Any initial offering price and any discounts, concessions or commissions allowed or reallowed or paid to dealers may be changed from time to time.

In connection with any offering of the Securities, the underwriters, dealers or agents may over-allot or effect transactions that stabilize or maintain the market price of the Securities offered at a level above that which might otherwise prevail in the open market. Such transactions, if commenced, may be discontinued at any time. Any underwriters or agents to or through whom the Securities are sold by the Corporation and/or the selling securityholders may make a market in the Securities, but they will not be obligated to do so and may discontinue any market making at any time without notice. No assurance can be given that a trading market in any of the Securities will develop or as to the liquidity of any trading market for the Securities.

No underwriter or dealer involved in an “at-the-market distribution” under this Prospectus, no affiliate of such an underwriter or dealer and no person or company acting jointly or in concert with such underwriter or dealer will over-allot Securities in connection with such distribution or effect any other transactions that are intended to stabilize or maintain the market price of the Securities.

Underwriters, dealers and agents who participate in the distribution of the Securities may be entitled under agreements to be entered into with the Corporation and/or the selling securityholders to indemnification by the Corporation and/or the selling securityholders against certain liabilities, including liabilities under securities legislation, or to contribution with respect to payments that they may be required to make in respect thereof. Such underwriters, dealers and agents may be customers of, engage in transactions with, or perform services for, the Corporation and/or the selling securityholders in the ordinary course of business.

In connection with any offering of Securities other than an “at-the-market distribution”, unless otherwise specified in a Prospectus Supplement, underwriters or agents may over-allot or effect transactions which stabilize, maintain or otherwise affect the market price of Securities offered at levels other than those which might otherwise prevail on the open market. Such transactions may be commenced, interrupted or discontinued at any time. No underwriter or dealer involved in an “at-the-market distribution” under this Prospectus, no affiliate of such an underwriter or dealer and no person or company acting jointly or in concert with such underwriter or dealer will over-allot Securities in connection with such distribution or effect any other transactions that are intended to stabilize or maintain the market price of the Securities.

DESCRIPTION OF SHARE CAPITAL

Common Shares

The Corporation is authorized to issue an unlimited number of Common Shares without par value. As of the date of this Prospectus, there were 52,802,887 Common Shares issued and outstanding.

Holders of Common Shares are entitled to cast one vote per Common Share at all meetings of shareholders of the Corporation; to receive cumulative dividends, if any, as and when declared by the board of directors at its discretion from funds available for distribution; and upon the liquidation, dissolution or winding up of the Corporation, to receive on a pro-rata basis all the property and assets of the Corporation available for distribution. The Common Shares do not carry any pre-emptive rights, conversion or exchange rights, redemption, retraction, purchase for cancellation or surrender provisions, sinking or purchase fund provisions, provisions permitting or restricting the issuance of additional securities or any other material restrictions or provisions requiring a holder of Common Shares to contribute additional capital.

Preference Shares

The Corporation is authorized to issue an unlimited number of Preference Shares. As of the date of this Prospectus, there were no Preference Shares issued and outstanding.

9

The board of directors is authorized to fix before issue the number of, the consideration per share of, the designation of, and the provisions attaching to, the Preference Shares of each series, which may include voting rights, the whole subject to the issue of a certificate of amendment setting forth the designation and provisions attaching to the Preference Shares or shares of the series. Holders of Preference Shares, except as otherwise provided in the terms specific to a series of Preference Shares or as required by law, will not be entitled to vote at meetings of holders of shares, and will not be entitled to vote separately as a class.

The Preference Shares of each series, if and when issued, shall be entitled to priority over the Common Shares and over any other shares of the Corporation ranking junior to the Preference Shares with respect to priority in the payment of dividends and the distribution of assets in the event of the liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, or any other distribution of the assets of the Corporation among its shareholders for the purposes of winding-up its affairs. We currently anticipate that the Preference Shares will not carry any pre-emptive, redemption, conversion, exchange or retraction rights, nor will they contain any purchase for cancellation or surrender provisions, sinking or purchase fund provisions, provisions permitting or restricting the issuance of additional securities and any other material restrictions, or provisions requiring a securityholder to contribute additional capital.

DESCRIPTION OF SUBSCRIPTION RECEIPTS

As of the date of this Prospectus, the Corporation has no Subscription Receipts outstanding. The Corporation may issue Subscription Receipts, separately or together, with Common Shares, Preference Shares, Debt Securities, Warrants or Units or any combination thereof, as the case may be. The Subscription Receipts would be issued under an agreement or indenture. The specific terms and provisions that will apply to any Subscription Receipts that may be offered by us pursuant to this Prospectus will be set forth in the applicable Prospectus Supplement. This description will include, where applicable:

•

the number of Subscription Receipts offered;

•

the price or prices, if any, at which the Subscription Receipts will be issued;

•

the manner of determining the offering price(s);

•

the currency at which the Subscription Receipts will be offered;

•

the Securities into which the Subscription Receipts may be exchanged;

•

conditions to the exchange of Subscription Receipts into other Securities and the consequences of such conditions not being satisfied;

•

the number of Securities that may be issued upon the exchange of each Subscription Receipt and the price per Security or the aggregate principal amount, denominations and terms of the series of Debt Securities that may be issued upon exchange of the Subscription Receipts, and the events or conditions under which the amount of Securities may be subject to adjustment;

•

the dates or periods during which the Subscription Receipts may be exchanged;

•

the circumstances, if any, which will cause the Subscription Receipts to be deemed to be automatically exchanged;

•

provisions applicable to any escrow of the gross or net proceeds from the sale of the Subscription Receipts plus any interest or income earned thereon, and for the release of such proceeds from such escrow;

•

if applicable, the identity of the Subscription Receipt agent;

•

whether the Subscription Receipts will be listed on any securities exchange;

•

whether the Subscription Receipts will be issued with any other Securities and, if so, the amount and terms of these Securities;

•

any minimum or maximum subscription amount;

•

whether the Subscription Receipts are to be issued in registered form, “book-entry only” form, noncertificated inventory system form, bearer form or in the form of temporary or permanent global securities and the basis of exchange, transfer and ownership thereof;

10

•

any material risk factors relating to such Subscription Receipts and the Securities to be issued upon exchange of the Subscription Receipts;

•

any other rights, privileges, restrictions and conditions attaching to the Subscription Receipts and the Securities to be issued upon exchange of the Subscription Receipts; and

•

any other material terms or conditions of the Subscription Receipts and the Securities to be issued upon exchange of the Subscription Receipts.

The terms and provisions of any Subscription Receipts offered under a Prospectus Supplement may differ from the terms described above, and may not be subject to or contain any or all of the terms described above.

Prior to the exchange of any Subscription Receipts, holders of such Subscription Receipts will not have any of the rights of holders of the securities for which the Subscription Receipts may be exchanged, including the right to receive payments of dividends (other than dividend equivalent payments, if any, or as otherwise set forth in any applicable Prospectus Supplement) or the right to vote such underlying securities.

DESCRIPTION OF DEBT SECURITIES

As of the date of this Prospectus, the Corporation has no Debt Securities outstanding. The Corporation may issue Debt Securities, separately or together, with Common Shares, Preference Shares, Warrants, Subscription Receipts or Units or any combination thereof, as the case may be. The Debt Securities will be issued in one or more series under an indenture (the “Indenture”) to be entered into between the Corporation and one or more trustees that will be named in a Prospectus Supplement for a series of Debt Securities. The description of certain provisions of the Indenture in this section do not purport to be complete and are subject to, and are qualified in their entirety by reference to, the provisions of the Indenture. Terms used in this summary that are not otherwise defined herein have the meaning ascribed to them in the Indenture. The particular terms relating to Debt Securities offered by a Prospectus Supplement will be described in the related Prospectus Supplement. This description may include, but may not be limited to, any of the following, if applicable:

•

the specific designation of the Debt Securities;

•

the price or prices at which the Debt Securities will be issued;

•

any limit on the aggregate principal amount of the Debt Securities;

•

the date or dates, if any, on which the Debt Securities will mature and the portion (if less than all of the principal amount) of the Debt Securities to be payable upon declaration of acceleration of maturity;

•

the rate or rates (whether fixed or variable) at which the Debt Securities will bear interest, if any, the date or dates from which any such interest will accrue and on which any such interest will be payable and the record dates for any interest payable on the Debt Securities that are in registered form;

•

the terms and conditions under which we may be obligated to redeem, repay or purchase the Debt Securities pursuant to any sinking fund or analogous provisions or otherwise;

•

the terms and conditions upon which we may redeem the Debt Securities, in whole or in part, at our option;

•

the covenants and events of default applicable to the Debt Securities;

•

the terms and conditions for any conversion or exchange of the Debt Securities for any other securities of the Corporation;

•

whether the Debt Securities will be issuable in registered form or bearer form or both, and, if issuable in bearer form, the restrictions as to the offer, sale and delivery of the Debt Securities which are in bearer form and as to exchanges between registered form and bearer form;

•

whether the Debt Securities will be issuable in the form of registered global securities (“Global Securities”), and, if so, the identity of the depositary for such registered Global Securities;

•

the authorized denominations in which registered Debt Securities and bearer Debt Securities will be issuable, as applicable;

11

•

each office or agency where payments on the Debt Securities will be made and each office or agency where the Debt Securities may be presented for registration of transfer or exchange;

•

the currency in which the Debt Securities are denominated or the currency in which we will make payments on the Debt Securities;

•

any index, formula or other method used to determine the amount of payments of principal of (and premium, if any) or interest, if any, on the Debt Securities; and

•

any other terms of the Debt Securities which apply solely to the Debt Securities.

Each series of Debt Securities may be issued at various times with different maturity dates, may bear interest at different rates and may otherwise vary.

The terms on which a series of Debt Securities may be convertible into or exchangeable for Common Shares or other securities of the Corporation will be described in the applicable Prospectus Supplement. These terms may include provisions as to whether conversion or exchange is mandatory, at the option of the holder or at the option of the Corporation, and may include provisions pursuant to which the number of Common Shares or other securities to be received by the holders of such series of Debt Securities would be subject to adjustment.

This Prospectus does not qualify for issuance Debt Securities in respect of which the payment of principal, premium and/or interest may be determined, in whole or in part, by reference to one or more underlying interests, including, for example, an equity or debt security, a statistical measure of economic or financial performance including, but not limited to, any currency, consumer price or mortgage index, or the price or value of one or more commodities, indices or other items, or any other item or formula, or any combination or basket of the foregoing items. For greater certainty, this Prospectus may qualify for issuance Debt Securities in respect of which the payment of principal, premium and/or interest may be determined, in whole or in part, by reference to published rates of a central banking authority or one or more financial institutions, such as a prime rate or a bankers’ acceptance rate, or to recognized market benchmark interest rates.

To the extent any Debt Securities are convertible into Common Shares or other securities of the Corporation, prior to such conversion the holders of such Debt Securities will not have any of the rights of holders of the securities into which the Debt Securities are convertible, including the right to receive payments of dividends or the right to vote such underlying securities.

DESCRIPTION OF WARRANTS

In the past, the Corporation has issued warrants to acquire equity securities of the Corporation from time to time. The Corporation may issue Warrants, separately or together, with Common Shares, Preference Shares, Debt Securities, Subscription Receipts or Units or any combination thereof, as the case may be. The Warrants would be issued under a separate Warrant agreement or indenture. The specific terms and provisions that will apply to any Warrants that may be offered by us pursuant to this Prospectus will be set forth in the applicable Prospectus Supplement. This description will include, where applicable:

•

the number of Warrants offered;

•

the price or prices, if any, at which the Warrants will be issued;

•

the currency at which the Warrants will be offered and in which the exercise price under the Warrants may be payable;

•

upon exercise of the Warrant, the events or conditions under which the amount of Securities may be subject to adjustment;

•

the date on which the right to exercise such Warrants shall commence and the date on which such right shall expire;

•

if applicable, the identity of the Warrant agent;

•

whether the Warrants will be listed on any securities exchange;

•

whether the Warrants will be issued with any other Securities and, if so, the amount and terms of these Securities;

12

•

any minimum or maximum subscription amount;

•

whether the Warrants are to be issued in registered form, “book-entry only” form, non-certificated inventory system form, bearer form or in the form of temporary or permanent global securities and the basis of exchange, transfer and ownership thereof;

•

any material risk factors relating to such Warrants and the Securities to be issued upon exercise of the Warrants;

•

any other rights, privileges, restrictions and conditions attaching to the Warrants and the Securities to be issued upon exercise of the Warrants; and

•

any other material terms or conditions of the Warrants and the Securities to be issued upon exercise of the Warrants.

The terms and provisions of any Warrants offered under a Prospectus Supplement may differ from the terms described above, and may not be subject to or contain any or all of the terms described above.

Prior to the exercise of any Warrants, holders of such Warrants will not have any of the rights of holders of the securities purchasable upon such exercise, including the right to receive payments of dividends or the right to vote such underlying securities.

DESCRIPTION OF UNITS

As of the date of this Prospectus, the Corporation has no Units outstanding. The Corporation may issue Units, separately or together, with Common Shares, Preference Shares, Debt Securities, Warrants or Subscription Receipts or any combination thereof, as the case may be. Each Unit would be issued so that the holder of the Unit is also the holder of each Security comprising the Unit. Thus, the holder of a Unit will have the rights and obligations of a holder of each applicable Security. The specific terms and provisions that will apply to any Units that may be offered by us pursuant to this Prospectus will be set forth in the applicable Prospectus Supplement. This description will include, where applicable:

•

the number of Units offered;

•

the price or prices, if any, at which the Units will be issued;

•

the manner of determining the offering price(s);

•

the currency at which the Units will be offered;

•

the Securities comprising the Units;

•

whether the Units will be issued with any other Securities and, if so, the amount and terms of these Securities;

•

any minimum or maximum subscription amount;

•

whether the Units and the Securities comprising the Units are to be issued in registered form, “book-entry only” form, non-certificated inventory system form, bearer form or in the form of temporary or permanent global securities and the basis of exchange, transfer and ownership thereof;

•

any material risk factors relating to such Units or the Securities comprising the Units;

•

any other rights, privileges, restrictions and conditions attaching to the Units or the Securities comprising the Units; and

•

any other material terms or conditions of the Units or the Securities comprising the Units, including whether and under what circumstances the Securities comprising the Units may be held or transferred separately.

The terms and provisions of any Units offered under a Prospectus Supplement may differ from the terms described above, and may not be subject to or contain any or all of the terms described above.

EARNINGS COVERAGE RATIOS

Earnings coverage ratios will be provided in the applicable Prospectus Supplement(s) with respect to any issuance and sale of Debt Securities pursuant to this Prospectus.

13

PRIOR SALES

Information regarding prior sales of Securities will be provided as required in a Prospectus Supplement with respect to the issuance of Securities pursuant to such Prospectus Supplement.

TRADING PRICE AND VOLUME

Information regarding trading price and volume of the Securities will be provided as required for all of the Corporation’s issued and outstanding Securities that are listed on any securities exchange, as applicable, in each Prospectus Supplement.

TAX CONSIDERATIONS

The applicable Prospectus Supplement may describe certain Canadian federal income tax consequences to an investor acquiring any Securities offered thereunder. Prospective investors should consult their own tax advisors prior to deciding to purchase any of the Securities.

14

RISK FACTORS

Prospective investors in a particular offering of Securities should carefully consider, in addition to information contained herein, in the Prospectus Supplement relating to that offering and the information incorporated by reference herein and therein, the risks described under the section entitled “Risk Factors” in the AIF and in management’s discussion and analysis, which disclosures are incorporated by reference herein as at the date of the Prospectus Supplement relating to the particular offering of Securities. The risks described herein and in the documents incorporated by reference herein as at the date of the Prospectus Supplement are not the only risks facing the Corporation. Additional risks and uncertainties not currently known to the Corporation, or that the Corporation currently deems immaterial, may also potentially materially and adversely affect its business.

In addition, it is possible that developments related to the COVID-19 pandemic could have material adverse impacts on the Corporation’s operations and financial condition, including loss of available labour, prolonged or temporary closures due to a COVID-19 outbreak, government orders that impact the operations of our business. The COVID-19 pandemic has had, and could continue to have, a negative impact on financial markets and economic conditions, which may adversely impact consumer demand for our products. To the extent any of these events occur, our business, financial condition and operating results could be materially and adversely affected. The duration and severity of the COVID-19 pandemic are not known at this time and these factors could have an unpredictable impact on our operations and financial condition.

AUDITORS, TRANSFER AGENT AND REGISTRAR

PricewaterhouseCoopers LLP are the auditors of the Corporation and are independent of the Corporation in accordance with the rules of professional conduct of the Chartered Professional Accountants of Ontario.

The transfer agent and registrar for the Common Shares is TSX Trust Company at its principal offices in Toronto, Ontario.

ENFORCEMENT OF JUDGMENTS AGAINST FOREIGN PERSONS OR COMPANIES

Corey Ferengul, a director of the Corporation, resides outside of Canada and has appointed AcuityAds Holdings Inc. at its registered office and head office at 70 University Avenue, Suite 1200 Toronto, Ontario M5J 2M4 as agent for service of process. Purchasers are advised that it may not be possible for investors to enforce judgments obtained in Canada against any person who resides outside of Canada, even if the party has appointed an agent for service of process.

EXEMPTIVE RELIEF

Pursuant to a decision of the Autorité des marchés financiers dated December 16, 2020, the Corporation was granted a permanent exemption from the requirement under section 40.1 of the Securities Act (Québec) to translate into French this Prospectus, as well as the documents incorporated by reference herein, and any Prospectus Supplement to be filed in relation to an “at-the-market distribution”. This exemption is granted on the condition that if the Corporation offers securities to Québec purchasers other than in relation to an “at-the-market distribution”, this Prospectus and the documents incorporated by reference herein and the Prospectus Supplement in respect of such offering be translated into French.

LEGAL MATTERS AND INTERESTS OF EXPERTS

Unless otherwise specified in the Prospectus Supplement relating to the Securities, certain legal matters will be passed upon on our behalf by Stikeman Elliott LLP with respect to matters of Canadian law. In addition, certain legal matters in connection with an offering and sale of Securities will be passed upon for any underwriters, dealers or agents by counsel to be designated at the time of such offering and sale by such underwriters, dealers or agents with respect to matters of Canadian and, if applicable, United States or other foreign law. As at the date hereof, the partners and associates of Stikeman Elliott LLP, as a group, own less than 1% of the outstanding securities of the Corporation.

15

STATUTORY RIGHTS OF WITHDRAWAL AND RESCISSION

Securities legislation in certain of the provinces and territories of Canada provides purchasers with the right to withdraw from an agreement to purchase securities. This right may be exercised within two business days after receipt or deemed receipt of a prospectus and any amendment. However, purchasers of securities under an at-the-market distribution by AcuityAds do not have the right to withdraw from an agreement to purchase the securities and do not have remedies of rescission or, in some jurisdictions, revisions of the price, or damages for non-delivery of the prospectus, prospectus supplement, and any amendment relating to securities purchased by such purchaser because the prospectus, prospectus supplement, and any amendment relating to the securities purchased by such purchaser will not be sent or delivered, as permitted under Part 9 of National Instrument 44-102 — Shelf Distributions.

In several of the provinces and territories of Canada, the securities legislation further provides a purchaser with remedies for rescission or, in some jurisdictions, revisions of the price or damages if the prospectus and any amendment contains a misrepresentation or is not delivered to the purchaser, provided that the remedies for rescission, revisions of the price or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province.

Those remedies must be exercised by the purchaser within the time limit prescribed by securities legislation. Any remedies under securities legislation that a purchaser of securities distributed under an at-the-market distribution by AcuityAds may have against AcuityAds or its agents for rescission or, in some jurisdictions, revisions of the price, or damages if the prospectus, prospectus supplement, and any amendment relating to securities purchased by a purchaser contain a misrepresentation will remain unaffected by the non-delivery of the prospectus referred to above.

The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province for the particulars of these rights or consult with a legal adviser.

In addition, original purchasers of convertible, exchangeable or exercisable Securities (unless the Securities are reasonably regarded by the Corporation as incidental to the applicable offering as a whole) will have a contractual right of rescission against the Corporation in respect of the conversion, exchange or exercise of the convertible, exchangeable or exercisable Security. The contractual right of rescission will be further described in any applicable Prospectus Supplement, but will, in general, entitle such original purchasers to receive the amount paid for the applicable convertible, exchangeable or exercisable Security (and any additional amount paid upon conversion, exchange or exercise) upon surrender of the underlying securities acquired thereby, in the event that this Prospectus (as supplemented or amended) contains a misrepresentation, provided that: (i) the conversion, exchange or exercise takes place within 180 days of the date of the purchase of the convertible, exchangeable or exercisable Security under this Prospectus; and (ii) the right of rescission is exercised within 180 days of the date of the purchase of the convertible, exchangeable or exercisable security under this Prospectus.

In an offering of convertible, exchangeable or exercisable Preference Shares, Subscription Receipts, Warrants or convertible, exchangeable or exercisable Debt Securities (or Units comprised partly thereof), investors are cautioned that the statutory right of action for damages for a misrepresentation contained in the prospectus is limited, in certain provincial securities legislation, to the price at which convertible, exchangeable or exercisable Securities are offered to the public under the prospectus offering. This means that, under the securities legislation of certain provinces and territories, if the purchaser pays additional amounts upon the conversion, exchange or exercise of the Security, those amounts may not be recoverable under the statutory right of action for damages that applies in those provinces and territories. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province for the particulars of this right of action for damages or consult with a legal advisor.

16

PART II

INFORMATION NOT REQUIRED TO BE DELIVERED TO OFFEREES OR PURCHASERS

Indemnification of Directors and Officers

Under the Canada Business Corporations Act (the “CBCA”), we may indemnify our current or former directors or officers or another individual who acts or acted at our request as a director or officer, or an individual acting in a similar capacity, of another entity, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved because of his or her association with us or another entity. The CBCA also provides that we may advance moneys to a director, officer or other individual for costs, charges and expenses reasonably incurred in connection with such a proceeding; provided that such individual shall repay the moneys if the individual does not fulfill the conditions described below.

However, indemnification is prohibited under the CBCA unless the individual:

•

acted honestly and in good faith with a view to our best interests, or, as the case may be, the best interests of the other entity for which the individual acted as director or officer or in a similar capacity at our request; and

•

in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the individual had reasonable grounds for believing that his or her conduct was lawful.

Our by-laws require us to indemnify to the fullest extent permitted by the CBCA each of our current or former directors or officers and each individual who acts or acted at our request as a director or officer, or an individual acting in a similar capacity, of another entity, against all costs, charges and expenses, including, an amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved because of his or her association with us or another entity.

Our by-laws authorize us to purchase and maintain insurance for the benefit of each of our current or former directors or officers and each person who acts or acted at our request as a director or officer, or an individual acting in a similar capacity, of another entity. To that effect, we maintain insurance policies relating to certain liabilities that our directors and officers may incur in such capacity.

We have entered into indemnity agreements with our directors and officers (each, an “Indemnified Party”) which provide, among other things, that we will indemnify an Indemnified Party to the fullest extent permitted by law from and against all losses, liabilities, claims, damages, costs, charges, statutory obligations, professional fees, taxes and expenses incurred by such Indemnified Party in respect of any civil, criminal, administrative, investigative or other proceeding which (i) is made or asserted against or affects the Indemnified Party or in which the Indemnified Party is required by law to participate or in which the Indemnified Party participates at our request or where the Indemnified Party is made a witness or participant in any other respect in any such proceeding, and (ii) arises because the Indemnified Party is our director or officer (or serves in a similar capacity) or our former director or officer (or serves in a similar capacity).

In addition, our Board of Directors has authorized us to indemnify and hold harmless our directors and officers in connection with any secondary sales effected by such persons in a public offering undertaken by the Company, including an offering made pursuant to this Registration Statement.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the Registrant pursuant to the foregoing provisions, the Registrant has been informed that in the opinion of the U.S. Securities and Exchange Commission (the “SEC”) such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

II-1

EXHIBITS

The following exhibits have been filed as part of the Registration Statement:

Exhibit No.	Description
3.1	Underwriting Agreement (to be filed by subsequent amendment)
4.1	Annual information form of the Registrant dated March 1, 2021 for the year ended December 31, 2020
4.2	Audited consolidated financial statements of the Registrant at and for the years ended December 31, 2020 and 2019, together with the notes thereto and the independent auditor’s report thereon
4.3	Management’s discussion and analysis of financial condition and results of operations of the Registrant for the years ended December 31, 2020 and 2019
4.4	Unaudited condensed interim consolidated financial statements of the Registrant as at March 31, 2021 and for the three-month periods ended March 31, 2021 and 2020, together with the notes thereto
4.5	Management’s discussion and analysis of financial condition and results of operations of the Registrant for the three months ended March 31, 2021 and 2020
4.6	Management information circular of the Registrant dated May 13, 2021 in connection with the annual meeting of shareholders of the Registrant to be held on June 16, 2021
5.1	Consent of PricewaterhouseCoopers LLP
5.2	Consent of Stikeman Elliott LLP (to be filed by subsequent amendment)
5.3	Consent of Davies Ward Phillips & Vineberg (to be filed by subsequent amendment)
24.1	Powers of Attorney

II-2

PART III

UNDERTAKING AND CONSENT TO SERVICE OF PROCESS

Item 1. Undertaking

The Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the SEC staff, and to furnish promptly, when requested to do so by the SEC staff, information relating to the securities registered pursuant to Form F-10 or to transactions in such securities.

Item 2. Consent to Service of Process

Concurrently with the filing of this Registration Statement on Form F-10, the Registrant is filing with the SEC a written irrevocable consent and power of attorney on Form F-X.

Any change to the name or address of the Registrant’s agent for service shall be communicated promptly to the SEC by amendment to the Form F-X referencing the file number of this Registration Statement.

III-1

SIGNATURES

Pursuant to the requirements of the Securities Act, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-10 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Toronto, Province of Ontario, Country of Canada, on June 8, 2021.

ACUITYADS HOLDINGS INC.

By:

/s/ Tal Hayek

Name: Tal Hayek
Title:   Chief Executive Officer

Pursuant to the requirements of the Securities Act, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Tal Hayek Tal Hayek	Chief Executive Officer and Director (Principal Executive Officer)	June 8, 2021
/s/ Jonathan Pollack Jonathan Pollack	Chief Financial Officer (Principal Financial and Accounting Officer)	June 8, 2021
* Sheldon Pollack	Director and Chairman of the Board of Directors	June 8, 2021
* Igal Mayer	Director	June 8, 2021
* Joe Ontman	Director	June 8, 2021
* Roger Dent	Director	June 8, 2021
* Yishay Waxman	Director	June 8, 2021
* Corey Ferengul	Director	June 8, 2021

*

The undersigned by signing his name hereto does sign and execute this Registration Statement on Form F-10 pursuant to the Power of Attorney executed by the above-named directors and officers of the Registrant, which is being filed herewith on behalf of such directors and officers.

By:

/s/ Jonathan Pollack

Jonathan Pollack
Chief Financial Officer

AUTHORIZED REPRESENTATIVE

Pursuant to the requirements of Section 6(a) of the Securities Act, this Registration Statement on Form F-10 has been signed by the undersigned, solely in its capacity as the duly authorized representative of the Registrant in the United States, on June 8, 2021.

ACUITYADS US INC.
(Authorized Representative in the United States)

By:

/s/ Tal Hayek

Name: Tal Hayek
Title:   Chief Executive Officer and Director

EX-4.1

Exhibit 4.1

 

ACUITYADS HOLDINGS INC.

ANNUAL INFORMATION FORM

FOR THE YEAR ENDED DECEMBER 31, 2020

March 1, 2021

Table of Contents
	Page
MEANING OF CERTAIN REFERENCES	1
FORWARD-LOOKING INFORMATION	1
MARKET AND INDUSTRY DATA	3
TRADEMARKS AND TRADE NAMES	3
CORPORATE STRUCTURE	4
DESCRIPTION AND GENERAL DEVELOPMENT OF THE BUSINESS	5
RISK FACTORS	15
DIVIDENDS AND DISTRIBUTIONS	43
DESCRIPTION OF CAPITAL STRUCTURE	43
MARKET FOR SECURITIES	43
DIRECTORS AND OFFICERS	44
AUDIT COMMITTEE	49
PROMOTERS	51
LEGAL PROCEEDINGS AND REGULATORY ACTIONS	51
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS	51
TRANSFER AGENT AND REGISTRAR	52
MATERIAL CONTRACTS	52
INTERESTS OF EXPERTS	52
ADDITIONAL INFORMATION	52
GLOSSARY	52
APPENDIX A AUDIT COMMITTEE CHARTER	A-1

-i-

MEANING OF CERTAIN REFERENCES

Unless otherwise defined herein, capitalized terms used in this AIF are defined in the “Glossary” section of this AIF. Except where otherwise indicated, all references to dollar amounts and “$” are to Canadian dollars and the “Corporation” or “AcuityAds” refers to AcuityAds Holdings Inc. and its subsidiary entities on a consolidated basis. Any statements in this AIF made by or on behalf of management of the Corporation are made in such persons’ capacities as officers of the Corporation and not in their personal capacities. All information in this AIF is stated as at December 31, 2020, unless otherwise indicated.

FORWARD-LOOKING INFORMATION

This AIF contains “forward-looking information” under applicable Canadian securities legislation. Forward-looking information is characterized by words such as “plan”, “expect”, “budget”, “target”, “project”, “intend”, “believe”, “anticipate”, “estimate”, “should”, “predict”, “potential”, “continue” and other similar words, or statements that certain events or conditions “may” or “will” occur. Except for statements of historical fact relating to the Corporation, information contained herein constitutes forward-looking information, including, but not limited to, statements regarding: the effect of the COVID-19 pandemic on the Corporation’s business and operations, the Corporation’s strategy, plans or future financial or operating performance; the Corporation’s strategy with respect to Magnetic Media; the continuing competitiveness of and strategy relating to the Corporation’s service offerings, such as its Programmatic Marketing Platform and the illumin platform; the continuation and success of the Corporation’s partnerships with other organizations; the Corporation’s intentions to strengthen relationships with existing customers, and expand its customer base and its presence in the U.S. and globally; continuing investment in research, development and marketing; the Corporation’s ability to expand into additional advertising channels, including programmatic TV, gain market penetration and grow sales and revenue; the Corporation’s intention to acquire complementary businesses and technologies; the Corporation’s ability to manage its brand, increase market awareness and generate new advertiser leads; the Corporations’ ability to meet the needs of digital marketers; the Corporation’s expectation that reliance on key customers will decrease over time and that the online advertising channels will continue to be a primary channel used by its customers; the Corporation’s ability to hire and train sufficient numbers of effective sales personnel; the Corporation’s expectation that the sales personnel will obtain new customers and increase existing customers’ spend; the Corporation’s ability to provide sufficient customer training and support for the Corporation’s self-service based platform; regarding the future of legislation and regulation related to online advertising and online data collection and usage; regarding the continued operation of third-party tools used by the Acuity platform; the benefits of the acquisition of ADman Media; the benefits of the acquisition of Magnetic Media; and the future of ad blocking and online media fraud.

Forward-looking information is based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made, and are inherently subject to a variety of risks and uncertainties and other known and unknown factors that could cause actual events or results to differ materially from those projected in the forward-looking information. These factors include deviation from the Corporation’s stated expectations regarding the forward-looking statements identified above, as well as those risk factors discussed or referred to herein and in the Corporation’s annual management’s discussion and analysis filed with the Canadian securities regulatory authorities and available under the Corporation’s SEDAR profile at www.sedar.com. Although the Corporation has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended.

Statements containing forward-looking information are based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including management’s perceptions of historical trends, current conditions and expected future developments, as well as other considerations that are believed to be appropriate in the circumstances, including the following: the Canadian and global economy will remain stable over the next 12 months; the Corporation will be able to meet its future capital commitments; the Corporation will be able to obtain additional financing on reasonable terms if and when needed; the Corporation will be able to effectively protect its current and future intellectual property rights; the Corporation will be able to recruit and retain the services of its key technical, sales, marketing, operations and management personnel; the Corporation will be able to develop commercially viable solutions as a result of its research and development activities; and that the risks referenced above and herein, collectively or individually, will not have a material impact on the Corporation. While management considers these assumptions to be reasonable based on currently available information, they may prove to be incorrect.

The existence of the COVID-19 pandemic creates a unique environment in which to consider the likelihood of forward-looking statements being accurate, and given the evolving circumstances surrounding the COVID-19 pandemic, it is difficult to predict how significant the adverse impact of the pandemic will be on the global and domestic economy, the business, operations and financial position of the Corporation’s clients and the business, operations and financial position of the Corporation. Many risks, uncertainties and other factors could cause the actual results of AcuityAds to differ materially from the results, performance, achievements or developments expressed or implied by forward-looking statements that are contained in this AIF. These risks, uncertainties and other factors include, but are not limited to the following: overall economic conditions, rapid technological changes, use of cookies, demand for the Corporation’s products and services, the introduction of competing technologies, competitive pressures, network restrictions, fluctuations in foreign currency exchange rates, and other factors that may cause the actual results, performance or achievements to differ materially from those expressed or implied in these forward-looking statements. In addition, the effects of COVID-19, including the duration, spread and severity of the pandemic, create additional risks and uncertainties for the Corporation. In particular, the impact of the virus and government authorities’ and public health officials’ responses thereto may affect: the Corporation’s actual results, performance, prospects or opportunities; domestic and global credit and capital markets and the Corporation’s ability to access capital on favourable terms, or at all; and the health and safety of the Corporation’s employees.

By their nature, forward-looking statements are inherently uncertain, are subject to risk and are based on assumptions including those discussed herein. There is significant risk that predictions and other forward-looking statements will not prove to be accurate. Readers are cautioned to not place undue reliance on forward-looking statements made herein because a number of factors could cause actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed in the forward-looking statements. The forward-looking statements contained herein are expressly qualified in their entirety by the above cautionary statement.

2

The future outcomes that relate to forward-looking statements may be influenced by many factors, including, but not limited to, any future sales or issuances of securities of the Corporation, and the risk factors described under the heading “Risk Factors” in this AIF. The Corporation cautions that the foregoing list of factors is not exhaustive, and that, when relying on forward-looking statements to make decisions with respect to the Corporation or the securities of the Corporation, investors and others should carefully consider these factors, as well as other uncertainties and potential events, and the inherent uncertainty of forward-looking statements. The forward-looking information contained herein is presented for the purpose of assisting investors in understanding the Corporation’s expected financial and operational performance and results as at and for the periods ended on the dates presented in the Corporation’s plans and objectives and may not be appropriate for other purposes.

Although the Corporation has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Such information is based on numerous assumptions regarding present and future business strategies and the environment in which the Corporation will operate in the future, including expected revenues from certain contracts, client roll-out plans for specific products and ability to achieve goals. Forward-looking statements are provided as of the date of this AIF or such other date specified herein, and the Corporation assumes no obligation to update or revise such forward-looking statements to reflect new events or circumstances except as required under applicable securities laws.

MARKET AND INDUSTRY DATA

The market and industry data contained in this AIF are based upon information from independent industry and other publications and the Corporation’s management’s knowledge of, and experience in, the industry in which the Corporation operates. Market and industry data are subject to variations and cannot be verified with complete certainty due to limits on the availability and reliability of raw data at any particular point in time, the voluntary nature of the data gathering process or other limitations and uncertainties inherent in any statistical survey. Accordingly, the accuracy and completeness of this data are not guaranteed. AcuityAds has not independently verified any of the data from third party sources referred to in this AIF or ascertained the underlying assumptions relied upon by such sources.

TRADEMARKS AND TRADE NAMES

This AIF includes certain trademarks and trade names which are protected under applicable intellectual property laws and are the property of the Corporation. Solely for convenience, the trademarks and trade names referred to in this AIF may appear without the ® or ™ symbol, but such references are not intended to indicate, in any way, that the Corporation will not assert, to the fullest extent under applicable law, its rights to these trademarks and trade names.

3

CORPORATE STRUCTURE

Incorporation

AcuityAds was incorporated under the Canada Business Corporations Act on June 28, 2011 as “Wildlaw Capital CPC 2 Inc.” and was a capital pool company under the policies of the TSX Venture Exchange until July 16, 2014 during which period of time it had no commercial operations, and no significant assets other than cash.

Prior to July 16, 2014, the business of the Corporation was carried on by a corporation called AcuityAds Inc., which was incorporated on October 9, 2009 under the Business Corporations Act (Ontario). On July 16, 2014, AcuityAds Inc. completed a reverse take-over of the Corporation, following which AcuityAds Inc. became a wholly-owned subsidiary of the Corporation.

The registered and head office of AcuityAds is located at 70 University Avenue, Suite 1200, Toronto, Ontario M5J 2M4. AcuityAds maintains a website at www.acuityads.com. Information contained on AcuityAds’ website is not part of this AIF, nor is it incorporated by reference herein.

Inter-corporate Relationships

A corporate organizational chart reflecting the corporate structure of the Corporation, the jurisdiction under which each of its wholly-owned subsidiaries is incorporated and the percentage of the voting securities which are beneficially owned is set forth below:

 

4

DESCRIPTION AND GENERAL DEVELOPMENT OF THE BUSINESS

Business of the Corporation

AcuityAds is a technology company that enables marketers to connect intelligently with audiences across video, mobile, social and online display advertising campaigns. AcuityAds’ Programmatic Marketing Platform, powered by proprietary machine learning technology, is at the core of its business, accompanied by proprietary solutions for analytics-led video and mobile targeting that leverages data. AcuityAds empowers marketers by offering near real-time reporting and analytics, bringing accountability to programmatic advertising to deliver business results and help solve some of the key challenges that digital advertisers face. AcuityAds is headquartered in Toronto and has offices in the U.S., Canada, Spain and throughout Latin America. Its key customers include both advertising agencies and brands, including large Fortune 500 enterprises and small to mid-sized businesses.

AcuityAds’ technology enables programmatic advertising, which is the automated buying and selling of advertising inventory electronically. The platform is based on proprietary machine learning technology, the branch of artificial intelligence involving systems that learn from data inputs and outputs and can perform actions without the need for explicit programming. The platform has the capability to process billions of bid requests on a daily basis.

The Programmatic Marketing Platform allows advertisers to purchase online advertisements in real-time using an ad-buying method whereby open online ad spots (called impressions) are traded via auctions on digital exchanges at market clearing prices in milliseconds. AcuityAds purchases impressions on behalf of advertisers through agreements with publishers directly and through agreements with supply side platforms (SSPs) and exchanges. Its technology platform benefits advertisers by enabling them to target audience segments based on a variety of first, second, and third-party data as well as manage their real-time bids for the advertising inventory most relevant for their campaigns. Real-time reporting enables advertisers to monitor relevant performance metrics and adjust budget allocations to optimize for audience reach and ad frequency and business outcomes (key performance indicators – KPIs).

In October 2020, AcuityAds officially launched illumin™, the next generation advertising automation technology, that offers advertisers the ability to plan, buy, optimize and report on omnichannel advertising programs from a single, intuitive user-interface. Advertisers can now map consumer journey playbooks across devices and communication channels, and execute in real-time using programmatic technology. illumin enables delivery of custom creative advertising based on audience receptivity (time, place and context), which has proven to increase both efficiency and overall return on advertising investments.

5

Three Year History

Acquisitions

ADman Media

On June 15, 2018, the Corporation completed the acquisition of ADman Interactive S.L.U. (“ADman Media”), the largest video supply side platform for Spanish-speaking markets in Europe and Latin America for aggregate consideration of approximately €2.4 million, which included approximately €1.9 million in cash and approximately €0.5 million worth of Common Shares and a performance based earn-out in the estimated amount of €2 million (up to a maximum amount of €15 million), contingent on certain financial targets over 36 months. The earn-out financial targets have not been met and, as a result, no earn-out payments have been made.

The acquisition of ADman Media has: (i) expanded the Corporation’s total addressable market by entering the publisher-direct video supply market; (ii) provided complementary and incremental revenue opportunities for the Corporation to leverage ADman Media’s unique inventory and video ad streaming platform in the United States, which is the second largest Spanish-speaking country in the world, according to the Instituto Cervantes; and (iii) extended the Corporation’s global footprint across additional markets in Europe, Latin America and the United States. The Corporation expects to continue to realize the growth prospects enabled by the acquisition of ADman Media, and continues to leverage its resulting global footprint to position itself as the premiere advertising platform for brands seeking to reach Spanish-speaking audiences in Europe, Latin America and the United States.

Magnetic Media

On September 1, 2018, the Corporation acquired certain assets of Magnetic Media Online Holdings Inc. (“Magnetic Media”), a United States-based artificial intelligence adtech company for an earn-out of US$2,164,547 (CDN$2,957,982) which was paid on June 5, 2019. The acquisition of Magnetic Media has: (i) increased the Corporation’s sales team and presence in the U.S. market; (ii) contributed new customer relationships and expanded its sales pipeline; and (iii) enhanced its industry and AI sales experience.

Product Expansions

In 2018, AcuityAds acquired a video supply side platform for native formats, through its acquisition of ADman Media. The video supply side platform solution enables the seamless distribution of advertisers’ video content through high quality publishers to achieve optimum engagement with audiences and maximize publisher revenues.

In 2019, AcuityAds implemented the fourth iteration of its proprietary AI algorithm technology that further enhances the Corporation’s ability to deliver a strong return on investment for brands and advertising agencies. Following several months of testing, in October 2019, the Corporation reported an average of 15% improvement in return on investment. The Corporation believes that the technology will further its ability to attract new clients as well as generate additional spend from existing clients.

In October 2020, following a beta testing period of approximately one year, AcuityAds launched its new Self-Serve Advertising Platform under the brand name, illumin™. See “New Products” below for additional detail. The Corporation anticipates that this product will further grow its existing market share by expanding the scope of prospective clients that are seeking a more intuitive and easy-to-use programmatic advertising solution.

6

Financings

On November 12, 2015, AcuityAds obtained a revolving line of credit from Silicon Valley Bank, which has been amended, and amended and restated, on more than one occasion, and is currently available in a maximum principal amount of US$21,850,000, which consists of a revolving facility which matures on April 1, 2022 and term loan facility of up to US$7,750,000 which matures on April 1, 2024.

On April 17, 2018, the Corporation closed a bought deal private placement offering of 4,600,000 Common Shares at a price of $1.00 per Common Share for aggregate gross proceeds to the Corporation of approximately $4,600,000. In connection with this offering, the underwriters were issued an aggregate of 189,526 broker warrants exercisable into Common Shares at an exercise price of $1.00 for a period of 24 months from the closing date of the offering.

On June 15, 2018, the Corporation entered into a $7,263,000 subordinated term loan from a group of private lenders made pursuant to a credit agreement dated as of June 15, 2018, as amended March 21, 2019, between a subsidiary of the Corporation, Cancor Debt Agency (as collateral agent) and the group of private lenders (including certain executives and directors of the Corporation, as well as other arm’s length and non-arm’s length parties, see “Interest of Management and Others in Material Transactions”). The Corporation used the funds from this term loan to complete the acquisition of ADman Media (approximately $2,700,000), repay approximately $800,000 of existing higher-cost term loans, and for general corporate purposes including funding continued growth. This term loan was repaid in full in April 2020.

On May 22, 2019, AcuityAds completed a short form prospectus bought deal offering of 5,936,300 Common Shares at a price of $1.55 per Common Share for aggregate gross proceeds to the Corporation of $9,201,265, which included the full exercise by the underwriters of an over-allotment option.

On May 5, 2020, AcuityAds secured a loan of $1,894,693 (US$1,390,294) pursuant to the Paycheck Protection Program as part of the Coronavirus Aid, Relief and Economic Security Act. On October 12, 2020, the Corporation applied for the loan forgiveness in accordance with the terms of that program and the loan was fully forgiven on November 25, 2020.

On December 4, 2020, AcuityAds and certain of its shareholders completed a short form prospectus bought deal offering comprised of 1,968,000 common shares issued from treasury and offered by the Corporation for gross proceeds to the Corporation of approximately $12 million and 1,804,000 common shares offered by certain of AcuityAds’ shareholders, namely 2794606 Ontario Ltd. and OV2 Capital Inc., for gross proceeds to those selling shareholders of approximately $11 million.

Exchanges

On June 26, 2019, the Corporation’s Common Shares were listed and trading on the TSX and delisted from the TSX Venture Exchange.

On August 29, 2019, the Corporation qualified to trade on the OTCQX® Best Market with DTC eligibility, allowing U.S. investors to clear their trades seamlessly.

7

COVID-19 Global Pandemic

On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 as a global pandemic, which continues to spread throughout Canada and economies around the world. To date, the Canadian federal and provincial governments as well as businesses have mandated various measures, including: travel restrictions, restrictions on public gatherings, stay-at-home orders and advisories, and the quarantine of people who may have been exposed to the virus. In response, AcuityAds has changed its work environment and made arrangements to ensure compliance with all applicable health authority regulations.

Despite the COVID-19 pandemic and the Corporation’s changes to its work environment, AcuityAds continues to operate its business in the normal course. To date, none of the Corporation’s operations have closed down or otherwise been materially affected by the COVID-19 pandemic. Certain of the Corporation’s offices have been subject to government-mandated lockdowns for some periods of time. However, the Corporation’s staff has been able to perform their functions remotely without meaningful reductions in the Corporation’s ability to service its customers.

Based on the most recent trends, the Corporation does not expect the COVID-19 pandemic will have a material impact on its future revenues, as more consumers are consuming media digitally as they work from home, resulting in higher demand for digital advertising. The COVID-19 pandemic has not directly restricted the Corporation’s growth plans as the Corporation’s business is all online, the Corporation’s staff are generally able to work from home and demand for the Corporation’s products and services is growing as the Corporation’s customers increase their digital advertising budgets.

However, there are certain specific client segments, most notably the travel and entertainment industries, that have been more affected by the COVID-19 pandemic than other businesses. COVID-19 has affected the amount of revenues that we earn from our clients in these industries, and the continuation of the pandemic does have an impact on our growth from these clients. See “Risk Factors”.

AcuityAds’ Programmatic Marketing Platform

AcuityAds’ Programmatic Marketing Platform intelligently connects digital advertisers to consumers across major digital advertising channels, including video, mobile, social and online display and is designed to help solve the key challenges that digital advertisers face. The platform is powered by AcuityAds’ proprietary machine learning technology that uses Big Data to intelligently connect digital advertisers with the right consumers, in the right places, at the right times and for the right price. Given the extensibility and flexibility of the Programmatic Marketing Platform, it is able to address the needs of advertisers across a wide range of industry verticals and geographies.

The Programmatic Marketing Platform is offered to AcuityAds’ customers through three primary service approaches to meet their digital advertising needs as follows:

8

Self-Serve: In the self-serve model, the advertiser runs their digital advertising campaigns directly within the Self-Serve Programmatic Marketing Platform, or programmatically using another system, after training and onboarding. A dedicated AcuityAds’ account manager is assigned to each account and provides proactive support and guidance to help achieve campaign success. Advertisers typically enter into one-year agreements with a renewal option, to gain access to the self-serve platform which includes real-time campaign dashboards and reporting features and revenue is generated per impression. Customers under the self-serve model, which include both brands and advertising agencies, are provided with training, documentation and online access to the Programmatic Marketing Platform to run their digital advertising campaigns independently.

Full-Serve (Managed Services): In this model, AcuityAds fully manages the campaign directly on behalf of the advertiser via its team of advertising operations and campaign managers and provides reporting on campaign metrics on key performance indicators as determined by the advertiser. These campaigns are typically governed by 30 to 90 day agreements and are crafted and tailored to the advertisers’ requirements and needs. Revenue is generated per campaign based on a pre-set budget from the advertiser. Under the Full-Serve model, AcuityAds’ advertising operations staff creates, develops and manages a complete and comprehensive digital advertising campaign, based on the customer’s target audience, strategic goals and desired results.

Hybrid: AcuityAds also offers advertisers a “Hybrid” option, which is a combination of the self-serve and Full-Serve options described above and for advertisers that are not ready to run digital campaigns independently but are planning to become an AcuityAds’ self-serve partner. This Hybrid option provides access to a dedicated AcuityAds account manager and campaign manager for three to six months, as the advertiser strengthens its own resources in programmatic advertising. During this time, the advertiser gains exposure to the Programmatic Marketing Platform and works together with AcuityAds’ ad operations team to create and launch campaigns and, when fully trained and proficient on the platform, the advertisers may progress to the self-serve model.

illumin: illumin is the next generation advertising automation technology, that offers advertisers the ability to plan, buy, optimize and report on omnichannel advertising programs from a single, intuitive user-interface. Advertisers can map consumer journey playbooks across devices and communication channels, and execute in real-time using programmatic technology. illumin enables delivery of custom creative advertising based on audience receptivity (time, place and context), which has proven to increase both efficiency and overall return on advertising investments.

For the year ended December 31, 2020, the Corporation’s revenue was $104.9 million in the aggregate, including $80.5 million for the Full-Serve category and $24.4 million for the self-serve category, compared to $119.1 million in the aggregate for the year ended December 31, 2019, including $88.0 million for the Full-Serve category and $31.1 million for the self-serve category.

9

In each case, customers may be provided with access to dedicated resources, comprehensive reporting and metrics regarding the performance of advertising purchases completed through the Programmatic Marketing Platform. In addition, the Programmatic Marketing Platform has the following key features:

· Audience targeting. The Programmatic Marketing Platform makes use of consumer profiling technology which gives advertisers access to over 500 million consumer profiles. Information available for each consumer profile varies. Based on this and other data, the Programmatic Marketing Platform estimates the probability of a consumer performing an advertiser’s desired action, and translates these predicted consumer response probabilities into a precise monetary value for each advertising impression. As AcuityAds gathers more data during the course of its advertising campaigns, the Programmatic Marketing Platform continually updates and refines the accuracy of its predictions, without requiring human intervention.

· Tracking results. The Programmatic Marketing Platform can track and measure audience reach, frequency and engagement goals through specific consumer actions, such as clicks, advertisement interactions and video completions.

· Retargeting. Retargeting uses the Programmatic Marketing Platform to help return previous or similar consumers to advertisers’ websites, focusing specifically on the consumers most likely to perform a desired action because of actions they have already performed. This allows an advertiser to focus on consumers who represent high-value opportunities for re-engagement, aiming to reconnect with these users at an optimal time and in an optimal context, to achieve the advertiser’s goals.

· Weather targeting. AcuityAds’ weather targeting capabilities allow marketers to target their campaigns based on a range of weather conditions such as current temperature, wind speeds and humidity. These real-time targeting capabilities help to enable advertisers to achieve stronger digital marketing campaign performance, driven by more meaningful consumer interactions. Weather targeting allows advertisers to show consumers customized advertising based on certain weather conditions. For example, AcuityAds’ weather targeting technology enables a tire brand to show consumers ads for winter tires on snowy days and an online retailer to show ads for swimwear on hot summer days.

Competitive Conditions

The digital advertising industry is highly competitive and fragmented. AcuityAds competes with large, well-established multi-national companies, digital advertising networks, divisions of certain advertising agencies, including agency trading desks that place digital advertising buys on behalf of the agencies’ clients, and other companies, some of which also use proprietary technology to optimize advertising campaigns. As the Programmatic Marketing Platform and our other solutions are expanded and developed, or as other companies introduce new products and services or enter the marketplace, AcuityAds may become subject to additional competition.

AcuityAds’ current principal competitors include The Trade Desk Inc., Amobee, Inc., MediaMath, Inc. and Google Inc. as well as certain agency trading desks which may include Publicis Groupe (Publicis Media Exchange), WPP Plc (Xaxis platform), IPG Mediabrands Ltd. (Ad tech unit is Cadreon) and Omnicom Media Group (digital trading platform is Accuen). Competition is based on a variety of factors including price, service, technology features and functionality and product performance. Limited information is publicly disseminated regarding these factors, and accordingly, a precise comparison of relative competitive position is difficult.

10

Management of AcuityAds believes that the following competitive strengths differentiate AcuityAds from its competitors:

· Proprietary Algorithm. The Programmatic Marketing Platform is powered by a machine learning algorithm which enables the purchase of impressions based on continually updated campaign performance.

· Scalable Solution. The Programmatic Marketing Platform provides offerings that are potentially extendable across industry verticals and geographies, and, by leveraging the large amounts of inventory available through real-time advertising exchanges, AcuityAds can provide such offerings on a large scale.

· Reach. AcuityAds sees billions of impressions per day across numerous premium inventory exchanges.

· A Range of Channels. The Programmatic Marketing Platform reaches across display, video, mobile and social platforms to reach consumers wherever they are in real-time.

· Connected TV. With the Corporation’s acquisition of Visible Measures Corp. in 2017, AcuityAds believes that it acquired a competitive technological advantage related to Connected TV. Having the technology already capable and built to provide this solution, AcuityAds believes that it maintains a competitive head start over competitors seeking to integrate their solutions with a Connected TV offering.

New Products

In 2020, AcuityAds officially launched its new advertising automation platform, illumin™. illumin is an advertising automation technology that offers planning, buying and omnichannel intelligence from a single platform, allowing advertisers to map their consumer journey playbooks across screens and execute in real-time using programmatic technology. illumin enables creation of consumer journeys with custom messages tied to propensity-scored audiences, increasing efficiency and return on advertising investments.

Growth Strategy

AcuityAds plans to continue the development of its business by continually improving its Programmatic Marketing Platform, strengthening relationships with existing customers and partners, and expanding its customer base. Key growth strategies include:

· Continuing domestic and international expansion. AcuityAds currently operates in Canada, the U.S., Europe and Latin America. AcuityAds intends to continue expanding its presence in the key markets it serves by expanding its sales resources and partners for its Programmatic Marketing Platform.

11

· Growth of illumin. AcuityAds intends to continue developing its illumin platform to expand the scope of offerings within the platform as opportunities arise and enhance consumer experience. It also intends to expand the scope of prospective clients seeking a more intuitive and easy-to-use programmatic advertising solution.

· Increasing Connected TV, display, mobile, social and video market penetration. AcuityAds intends to continue investing in research and development and marketing to expand the capabilities of its Programmatic Marketing Platform in video, mobile, social and online display advertising in order to increase its customer base, gain market penetration and grow revenue from these channels. AcuityAds will continue to offer its services on a full-serve and a self-serve basis. According to eMarketer, U.S. connected TV advertising is forecasted to be an $8.1 billion market in 2020 and forecasted to grow to $18.3 billion in 2024, a 23% CAGR. Connected TV includes over-the-top content delivered through a connected device over the internet.

· Expansion into additional advertising channels. AcuityAds expects to continue developing its Programmatic Marketing Platform to expand into additional advertising channels as opportunities arise and market conditions permit which may include programmatic TV.

Marketing Strategy

The Programmatic Marketing Platform is currently marketed to customers through AcuityAds’ direct sales team, which primarily focuses on advertising agencies and brands. AcuityAds’ direct sales team is currently organized by geography throughout Canada, the U.S., Europe and Latin America, with regional offices in Toronto (head office), New York and Spain and sales offices throughout the US, Canada and Latin America. Customers are assigned to a sales representative who manages the customer relationship alongside a dedicated account manager and/or a campaign manager.

Sales and marketing costs arise from establishing and maintaining customer relationships to generate revenue. The costs are comprised of compensation and benefits for AcuityAds’ sales staff as well as marketing expenses, including advertising and promotion, meals and entertainment and travel.

AcuityAds’ sales are priced in the context of the market and its specific customers. Since most of AcuityAds’ inventory is purchased through programmatic buying, the cost of its sales varies because the cost is based on a number of factors and market dynamics which are largely outside of its control. Inventory may be sold at a premium, at cost, or at a discount to its purchase price, depending upon market conditions, contractual commitments to customers and other factors.

Specialized Skill and Knowledge

The Programmatic Marketing Platform was developed in-house by Dr. Nathan Mekuz, co-founder and Vice President of Artificial Intelligence of the Corporation, Rachel Kapcan, co-founder and Vice President of Client Operations of the Corporation, and a team of software developers, with certain aspects of the Programmatic Marketing Platform having been licensed from third parties. AcuityAds believes that the extensive experience of its management team and staff provide it with a distinct competitive advantage.

12

Intangible Properties

The protection of AcuityAds’ technology and intellectual property is a critical component of its future success.

Other than as disclosed herein, AcuityAds does not have patent protection on its technology or registered any trademarks but instead may, as necessary, rely on a combination of trade secrets, copyright law, nondisclosure agreements, passing-off laws and other common law intellectual property protections in the U.S. and Canada. In addition, AcuityAds uses contracts, confidentiality procedures, non-disclosure agreements, employee disclosure and invention assignment agreements, other contractual rights and technical measures to protect its intellectual property.

The rights to the Programmatic Marketing Platform, other than certain aspects of the platform which have been licensed from third parties, are owned by AcuityAds through its wholly-owned subsidiary, AcuityAds Inc. The Corporation or its wholly-owned subsidiaries also own several United States patents and applications for patents, and registered trademarks and pending trademark applications in both Canada and the United States.

See also “Description and General Development of the Business – Three Year History – Acquisitions – ADman Media”, “Description and General Development of the Business – Three Year History – Acquisitions – Magnetic Media” and “Description and General Development of the Business – Three Year History – Product Expansions” for more information regarding the technology acquired by the Corporation.

Cycles

AcuityAds has rapidly grown since it commenced sales in 2011, which has resulted in a substantial increase in revenue and a corresponding increase in operating expenses to support this growth. The Corporation’s overall revenues have varied from quarter to quarter as a result of a variety of factors, some of which are outside of its control.

This rapid growth has led to uneven overall operating results due to changes in AcuityAds’ investment in sales and marketing and research and development from quarter to quarter and increases in employee headcount. Historical results should not be considered a reliable indicator of AcuityAds’ future results of operations. In the long-term, the seasonality and cyclicality of AcuityAds’ revenues will depend upon the seasonality and cyclicality of the businesses of its customers. For example, some advertisers in the retail sector spend the largest portion of their advertising budgets during the fourth quarter, in preparation for the holiday shopping season, whereas advertisers in the entertainment industry may concentrate their spending to coincide with the launch and display of specific content, such as movies or television shows.

Economic Dependence

See “Risk Factors – Business Risks – Reliance on Key Customers” and “Risk Factors – Business Risks – Reliance on Third Parties.”

13

Employees

As of December 31, 2020, AcuityAds had: (i) 102 full-time employees in Canada, 35 full-time employees in the United States, and 36 full-time employees in other countries; and (ii) 4 full-time contractors in Canada.

Foreign Operations

AcuityAds currently has regional offices in Toronto (head office), New York and Spain and sales offices throughout the U.S., Canada and Latin America. In addition, AcuityAds maintains servers at co-location facilities in the U.S. and in Europe that are used to store data and deliver advertising campaigns for its customers. The servers are housed in space that is leased by AcuityAds.

For the year ended December 31, 2020, U.S. sales accounted for approximately 75% of AcuityAds’ total revenues. AcuityAds expects to expand its business into other local, U.S. and international jurisdictions in the future, and with continued growth, its sales may become dependent on its revenues from international jurisdictions. AcuityAds’ existing and future international operations expose it to currency exchange risk, foreign regulatory policies and global business and industry conditions. See “Risk Factors – Financial and Accounting Risks – Foreign Sales”.

Privacy

AcuityAds recognizes that privacy is important to consumers and advertisers, and has undertaken to maintain its privacy and data protection policies. AcuityAds’ privacy practices are described in its privacy policy, which explains the type of data it collects and uses to provide services to advertisers. AcuityAds’ privacy policy can be found on its website at www.acuityads.com/privacy.

AcuityAds relies on anonymous data about internet users. AcuityAds does not attempt to identify specific individuals, and it takes steps to avoid unlawfully targeting users based on personally identifiable information from any source. The definition of personally identifiable information, or personal data, however, varies by country and is still evolving, and, as a result, AcuityAds’ policy must be assessed in each country in which it does or may do business. Therefore, AcuityAds will have to continually assess its technology platform against an evolving legal landscape.

The Programmatic Marketing Platform can deliver interest-based or Online Behavioural Advertising. AcuityAds participates in the Self-Regulatory Program for Online Behavioural Advertising coordinated by the Digital Analytics Association and the Interactive Advertising Bureau’s AdChoices program. The self-regulatory principles for Online Behavioural Advertising require AcuityAds to provide consumers with notice and choice, including the ability to opt out of interest-based advertising. AcuityAds’ privacy policy offers consumers an opt-out mechanism.

14

Reorganizations

On December 31, 2019, in accordance with New York Business Corporation Law, AcuityAds US Inc. merged its wholly-owned subsidiaries, AcuityAds MM Inc. and Visible Measures Corp., into itself.

On January 1, 2020, AcuityAds Inc. and its wholly-owned subsidiary, 2422330 Ontario Inc., completed a short-form vertical amalgamation under the Business Corporations Act (Ontario).

RISK FACTORS

An investment in securities of AcuityAds involves significant risks. Investors should carefully consider the risks described below, the other information described elsewhere in this AIF and those risks set out in AcuityAds’ management’s discussion and analysis for the year ended December 31, 2020 before making a decision to buy securities of AcuityAds. If any of the following or other risks materialize, AcuityAds’ business, prospects, financial condition, financial performance and cash flows could be materially adversely impacted. In that case, the trading price of securities of AcuityAds could decline and investors could lose all or part of their investment in such securities. There is no assurance that risk management steps taken will avoid future loss due to the occurrence of the below described or other unforeseen risks.

Business Risks

Fluctuation of Financial Results

AcuityAds’ quarterly and annual operating results have fluctuated in the past. Because AcuityAds is a rapidly expanding company, the Corporation’s revenues may be materially affected by the decisions of its management and/or customers, and due to a variety of other factors, many of which may be beyond the Corporation’s control. In addition, expenses may exceed estimates or be incurred in the expectation of sales that do not occur or that occur later than expected. General economic conditions or conditions in the industries in which AcuityAds’ customers compete, technological innovations and the adoption of technical standards can also be expected to affect operating results. Management of AcuityAds expects its operating expenses to continue to increase substantially in the foreseeable future as it continues to expand its business, including by adding employees and contractors in existing and new territories, to support continued investments in AcuityAds’ technology and to support its growth and expansion. Fluctuating results could cause unanticipated quarterly losses and cause the Corporation’s performance to fall below the expectations of investors, which could adversely affect the price of the Common Shares.

In addition, because AcuityAds’ business is changing and evolving rapidly, historical operating results may not be useful in predicting future operating results. Period-to-period comparisons of AcuityAds’ operating results should not be relied upon as an indication of its future performance. Fluctuations in the Corporation’s operating results could cause its performance to fall below the expectations of securities analysts and investors, and adversely affect the price of its Common Shares. Because AcuityAds’ business is changing and evolving rapidly, and the macroeconomic environment continues to evolve as a result of the COVID-19 pandemic, the Corporation’s historical operating results may not be necessarily indicative of AcuityAds’ future operating results. In addition to changes in terms of mix of the Corporation’s different pricing options, factors that may cause AcuityAds’ operating results to fluctuate include the following:

· changes in demand for AcuityAds’ platform, including those related to the seasonal nature of our customers’ spending on digital advertising campaigns;

15

· changes in AcuityAds’ pricing policies, the pricing policies of its competitors and the pricing or availability of inventory, data or other third-party services;

· changes in AcuityAds’ customer base and platform offerings;

· the addition or loss of advertising agencies and marketers as customers;

· changes in advertising budget allocations, agency affiliations or marketing strategies;

· changes to AcuityAds’ channel mix;

· changes and uncertainty in the regulatory and business environment for AcuityAds or its customers (for example, when Apple or Google change policies for their browsers and operating systems);

· changes in the economic prospects of marketers or the economy generally (due to COVID-19, or otherwise), which could alter marketers’ spending priorities, or could increase the time or costs required to complete advertising inventory sales;

· changes in the availability of advertising inventory or in the cost of reaching end consumers through digital advertising;

· disruptions or outages on AcuityAds’ platforms;

· the introduction of new technologies or offerings by AcuityAds’ competitors;

· changes in AcuityAds’ capital expenditures as it acquires the hardware, equipment and other assets required to support its business;

· timing differences between our payments for advertising inventory and our collection of related advertising revenue;

· the length and unpredictability of AcuityAds’ sales cycle;

· costs related to acquisitions of businesses or technologies, or employee recruiting; and

· shifting views and behaviors of consumers concerning use of data.

Based upon the factors above and others beyond the Corporation’s control, AcuityAds has a limited ability to forecast future revenue, costs and expenses, and, as a result, its operating results may, from time to time, fall below estimates or the expectations of securities analysts and investors.

16

Reliance on Key Customers

Historically, a large amount of AcuityAds’ sales have been to relatively few customers. For the 2020 financial year, approximately 9% of its revenues were derived from its top customer, and approximately 39% of its revenues were derived from its top 10 customers. While it is expected that this reliance will decrease over time, the Corporation may continue to depend upon a relatively small number of customers for a significant portion of its revenue for the foreseeable future. The loss of a significant customer or failure to attract new customers could harm AcuityAds’ business and severely impact the future financial success of AcuityAds.

Retaining and Attracting Customers

To sustain or increase AcuityAds’ existing revenue, the Corporation must add new advertisers and encourage existing advertisers, which may be represented by advertising agencies, to purchase additional offerings. As the digital advertising industry matures and as competitors introduce lower cost or differentiated products or services that compete with, or are perceived to compete with, AcuityAds’ products or services, its ability to complete sales with new and existing advertisers based on the Corporation’s current offerings, pricing, technology platform and functionality could be impaired. If the Corporation fails to retain or cultivate the spending of newer, lower-spending advertisers, it will be difficult for it to sustain and grow its revenue. Even with long-time advertisers, the Corporation may reach a point of saturation at which it cannot continue to grow revenue from those advertisers because of internal limits that advertisers may place on the allocation of their advertising budgets to digital media, particular campaigns, a particular provider or for other reasons not known to management.

AcuityAds has invested significant resources in its sales and marketing teams to educate potential and prospective advertisers and advertising agencies about the value of its platform. Sales staff are often required to explain how AcuityAds’ platform can optimize advertising campaigns in real time. AcuityAds’ business depends in part upon advertisers’ confidence, and the confidence of the advertising agencies that represent those advertisers, that the use of real-time advertising exchanges to purchase inventory is superior to other methods of purchasing digital advertising. AcuityAds often spends substantial time and resources responding to requests for proposals from potential advertisers and their advertising agencies, including developing material specific to the needs of such potential advertisers. AcuityAds may not be successful in attracting new advertisers despite its investment in business development, sales and marketing.

AcuityAds continues to be substantially dependent on its sales team to obtain new customers and to drive sales from existing customers. Management of AcuityAds believes that there is significant competition for sales personnel with the skills and technical knowledge that it requires. The Corporation’s ability to achieve significant revenue growth depends, in large part, on its success in recruiting, training, integrating and retaining sufficient numbers of sales personnel to support its growth. New hires require significant training and it may take significant time before they achieve full productivity. Recent hires and planned hires may not become productive as quickly as expected, and the Corporation may be unable to hire or retain sufficient numbers of qualified individuals in the markets where it does business or plans to do business. In addition, if AcuityAds continues to grow rapidly, a large percentage of its sales team will be new to the Corporation and its offerings. If the Corporation is unable to hire and train sufficient numbers of effective sales personnel, or the sales personnel are not successful in obtaining new customers or increasing sales to its existing customer base, its business will be adversely affected.

17

No Long-Term Customer Commitments

AcuityAds’ customers do business with AcuityAds by placing insertion orders for particular advertising campaigns. If AcuityAds performs well on a particular campaign, then the advertisers or the advertising agency representing such advertisers may place new insertion orders with the Corporation for additional advertising campaigns. AcuityAds generally has no commitment from an advertiser beyond the campaign governed by a particular insertion order. Insertion orders may be cancelled by advertisers or their advertising agencies prior to the completion of the campaign without penalty. As a result, AcuityAds’ success is dependent upon its ability to outperform competitors and win repeat business from existing advertisers, while continually expanding the number of advertisers for whom it provides services.

AcuityAds’ customers may have relationships with numerous providers and can use both AcuityAds’ and services of competitors without incurring significant costs or disruption. AcuityAds’ customers may also choose to decrease their overall advertising spend for any reason, including if they do not believe they are receiving a sufficient return on their advertising spend. Accordingly, AcuityAds must continually work to win new customers and retain existing customers, increase their usage of AcuityAds’ services, and capture a larger share of their advertising spend. AcuityAds may not be successful at educating and training customers, particularly newer customers, on their newest product offerings, in order for customers to get the most benefit from AcuityAds’ services.

If these efforts are unsuccessful or customers decide not to continue to maintain or increase their usage of AcuityAds’ for any other reason, or if AcuityAds fails to attract new customers, revenue could remain stagnant or decline, which would materially and adversely harm its business, operating results and financial condition. AcuityAds cannot provide assurance that its customers will continue to use and increase spending or that it will be able to attract a sufficient number of new customers to continue to grow its business and revenue. If customers representing a significant portion of AcuityAds’s business decide to materially reduce their use of AcuityAds’ platform or cease using AcuityAds’ platform altogether, the Corporation’s revenue could be significantly reduced, which could have a material adverse effect on its business, operating results and financial condition. AcuityAds may not be able to replace customers who decrease or cease their usage of its platform with new customers that will use its platform to the same extent.

In addition, it is relatively easy for advertisers and the advertising agencies that represent them to seek an alternative provider for their advertising campaigns because there are no significant switching costs, and agencies often have relationships with many different providers, each of whom may be running portions of the same advertising campaign. Because AcuityAds does not have long-term contracts, management may not accurately predict future revenue streams and there can be no assurance that current advertisers will continue to use AcuityAds’ platform, or that AcuityAds will be able to replace departing advertisers with new advertisers that provide the Corporation with comparable revenue.

18

Failure to Properly Manage Growth

AcuityAds’ business has grown rapidly since its inception. Continued rapid growth may strain AcuityAds’ management, financial, technical and other resources. AcuityAds relies heavily on information technology, or IT, systems to manage critical functions such as advertising campaign management and operations, data storage and retrieval, revenue recognition, budgeting, forecasting and financial reporting. To manage any future growth effectively, AcuityAds must expand its sales, marketing, technology and operational staff, invest in research and development of its Programmatic Marketing Platform and/or new offerings, enhance its financial and accounting systems and controls, integrate new personnel or contractors, and successfully manage expanded operations. If AcuityAds continues its rapid growth, it will incur additional expenses, and its growth may continue to place a strain on resources, infrastructure and ability to maintain the quality of its offering. Accordingly, AcuityAds may not be able to effectively manage and coordinate growth so as to achieve or maximize future profitability.

Failure to Properly Forecast Growth

AcuityAds’ growth forecasts, both those included in this AIF and relied upon by management in day-to-day operations may prove to be inaccurate. In addition, even if the market in which AcuityAds competes achieves forecasted growth, AcuityAds cannot provide assurance that its business will grow at similar rates, if at all. Market growth forecasts are subject to significant uncertainty and are based on assumptions and estimates which may not prove to be accurate. Growth is subject to many factors including success in implementing the Corporation’s business strategy, which is subject to many risks and uncertainties.

Acquisitions by the Corporation

As part of its business strategy, AcuityAds may attempt to acquire businesses or technologies that it believes are a strategic fit with its business. However, it may not be possible to find suitable acquisition candidates, and the Corporation may not be able to complete acquisitions on favourable terms, if at all. Any future acquisition may result in unforeseen operating difficulties and expenditures, and may absorb significant management attention that would otherwise be available for ongoing development of its business. Since the Corporation may not be able to accurately predict these difficulties and expenditures, these costs may outweigh the value it realizes from a future acquisition, and any acquisitions the Corporation completes could be viewed negatively by its advertisers. Future acquisitions could result in issuances of securities that would dilute shareholders’ ownership interest, the incurrence of debt, contingent liabilities, amortization of expenses related to other intangible assets and the incurrence of large, immediate write-offs. In addition, any future acquisitions, joint ventures or similar relationships may cause a disruption in the Corporation’s ongoing business. Further, the Corporation may be unable to realize the revenue improvements, cost savings and other intended benefits of any such transaction. Acquisitions involve numerous other risks, any of which could harm the Corporation’s business, including:

· regulatory hurdles;

· failure of anticipated benefits to materialize;

19

· diversion of management time and focus from operating the Corporation’s business to addressing acquisition integration challenges;

· retention of employees from the acquired company;

· cultural challenges associated with integrating employees from the acquired company into the Corporation’s organization;

· integration of the acquired company’s accounting, management information, human resources and other administrative systems;

· the need to implement or improve controls, procedures and policies at a business that prior to the acquisition may have lacked effective controls, procedures and policies;

· coordination of product development and sales and marketing functions;

· liability for activities of the acquired company before the acquisition, including known and unknown liabilities; and

· litigation or other claims in connection with the acquired company, including claims from terminated employees, users, former stockholders or other third parties.

Lastly, while management believes that it has completed the integration of 140 Proof, Visible Measures Corp., Magnetic Media and ADman Media, there are no assurances that the Corporation will achieve any of the synergies or other expected benefits of these or any of the other acquisitions it pursues.

Reliance on Third Parties

AcuityAds anticipates that it will continue to depend on various third-party relationships in order to grow its business. AcuityAds continues to pursue additional relationships with third-parties, such as technology, data and content providers, real-time advertising exchanges, market research companies, co-location facilities and other strategic partners. Identifying, negotiating and documenting relationships with third parties requires significant time and resources as does integrating third party data and services. AcuityAds’ agreements with channel partners and providers of technology, computer hardware, co-location facilities, content and consulting services and real-time advertising exchanges are typically non-exclusive, in that they do not prohibit these third parties from working with AcuityAds’ competitors or from offering competing services. These third-parties can generally terminate their arrangements with the Corporation at any time. AcuityAds’ competitors may be effective in providing incentives to third-parties to favour their products or services or to prevent or reduce purchases of AcuityAds’ offerings. In addition, these third-parties may not perform as expected under AcuityAds’ agreements with them, and AcuityAds may have disagreements or disputes with such third-parties, which could negatively affect AcuityAds’ brand and reputation.

20

In particular, AcuityAds’ continued growth depends on its ability to source computer hardware, including servers built to its specifications, and the ability to locate those servers and related hardware in co-location facilities in the most desirable locations to facilitate the timely delivery of its services. Similarly, disruptions in the services provided at co-location facilities that AcuityAds relies upon can degrade the level of services that it can provide, which may harm AcuityAds’ business. AcuityAds also relies on its integration with many third-party technology providers to execute its business on a daily basis. AcuityAds must efficiently direct a large amount of network traffic to and from its servers to consider billions of bid requests per day, and each bid typically must take place in approximately 50 milliseconds. AcuityAds relies on a third-party domain name service to direct traffic to its closest data center for efficient processing. If AcuityAds’ domain name service provider experiences disruptions or performance problems, this could result in inefficient balancing of traffic across AcuityAds’ servers as well as impairing or preventing web browser connectivity to AcuityAds’ platform, which may harm its business.

Personnel

The loss of any member of the Corporation’s management team, and in particular, its co-founders, could have a material adverse effect on its business and results of operations. AcuityAds relies on the leadership, knowledge and experience that its management team provides. They foster its corporate culture, which has been instrumental to the Corporation’s ability to attract and retain new talent. AcuityAds also relies on employees in its engineering, technical, product development, support and sales teams to attract and retain key customers. An inability to hire, or the increased costs of new personnel, including members of executive management, could have a material adverse effect on the Corporation’s business and operating results.

At present and for the near future, AcuityAds will depend upon a relatively small number of employees and contractors to develop, market, sell and support its Programmatic Marketing Platform. The expansion of technology, marketing and sales of its platform will require AcuityAds to find, hire, and retain additional capable employees or subcontractors who can understand, explain, market, and sell its technology. There is intense competition for capable personnel in all of these areas, and AcuityAds may not be successful in attracting, training, integrating, motivating, or retaining new personnel, vendors, or subcontractors for these required functions. New employees often require significant training and, in many cases, take significant time before they achieve full productivity. As a result, the Corporation may incur significant costs to attract and retain employees, including significant expenditures related to salaries and benefits and compensation expenses related to equity awards, and may lose new employees to its competitors or other companies before it realizes the benefit of its investment in recruiting and training them.

In addition, as the Corporation moves into new geographies, it will need to attract and recruit skilled employees in those areas. AcuityAds has limited experience with recruiting in geographies outside of Canada and the U.S., and may face additional challenges in attracting, integrating and retaining international employees.

AcuityAds is substantially dependent on its sales and support teams to obtain new customers and to increase usage of our platform by its existing customers. The Corporation believes that there is significant competition for sales personnel with the skills and technical knowledge that it requires. AcuityAds’ ability to achieve revenue growth will depend, in large part, on its success in recruiting, training, integrating and retaining sufficient numbers of sales personnel to support our growth. Due to the complexity of AcuityAds’ platform, a time lag exists between the hiring date of sales and support personnel and the time when they become fully productive. AcuityAds’ recent and planned hires may not become productive as quickly as expected, and the Corporation may be unable to hire or retain sufficient numbers of qualified individuals in the markets where it operates or plans to operate. If AcuityAds is unable to hire and train sufficient numbers of effective sales personnel, or the sales personnel are not successful in obtaining new customers or increasing our existing customers’ spend, its business will be adversely affected.

21

Conflicts of Interest

Certain of the proposed directors and officers of the Corporation are or may become directors or officers of, or have significant shareholdings in, other companies and, to the extent that such other companies may participate in ventures in which the Corporation may participate, the directors and officers of the Corporation may have a conflict of interest in negotiating and concluding terms respecting the extent of such participation. Such other companies may also compete with the Corporation. In the event that any such conflict of interest arises, a director who has such a conflict will disclose the conflict to a meeting of the directors of the Corporation and will abstain from voting for or against the approval of such participation or such terms. In accordance with applicable laws, the directors of the Corporation are required to act honestly, in good faith and in the best interests of the Corporation. In determining whether or not the Corporation will participate in a particular transaction, the directors will primarily consider the potential benefits to the Corporation, the degree of risk to which the Corporation may be exposed and its financial position at that time. See also “Directors and Officers – Conflicts of Interest”.

Dependence on Display Advertising

Historically, AcuityAds’ customers have predominantly used the Programmatic Marketing Platform for display advertising, and the substantial majority of AcuityAds’ revenue is derived from advertisers that use the Programmatic Marketing Platform for display advertising. AcuityAds expects that the online advertising channels it supports will continue to be a primary channel used by its customers. Should customers lose confidence in the value or effectiveness of these channels, the demand for the Programmatic Marketing Platform may decline. While revenues from mobile, social and video advertising have grown rapidly, AcuityAds’ failure to achieve market acceptance of its platform for mobile, social and video advertising would harm its growth prospects, operating results and financial condition.

While the market for programmatic ad buying for desktop and mobile display ads is relatively established, the market in other channels is still emerging, and our current and potential customers may not shift quickly enough to programmatic ad buying from other buying methods, which would reduce our growth potential. If the market for programmatic ad buying deteriorates or develops more slowly than we expect, it could reduce demand for our platform, and our business, growth prospects and financial condition would be adversely affected.

In particular, the market for programmatic buying for advertising campaigns across multiple advertising channels, including connected TV, linear TV, streaming audio and digital billboard channels is an emerging market. Our ability to provide capabilities across multiple advertising channels may be constrained if we are not be able to maintain or grow advertising inventory for such channels, and some of our omnichannel offerings may not gain market acceptance. We may not be able to accurately predict changes in overall industry demand for the channels in which we operate and cannot assure you that our investment in channel development will correspond to any such changes. Furthermore, if our channel mix changes due to a shift in customer demand, such as customers shifting their usage more quickly or more extensively than expected to channels in which we have relatively less functionality, features, or inventory, such as linear TV, then demand for our platform could decrease, and our business, financial condition, and results of operations could be adversely affected.

22

Risks of Self-Service Model

Customers have the option to use AcuityAds’ platform on a self-service basis, which requires the Corporation to commit substantial time and expenses towards training potential customers on how to make full use of the platform. If AcuityAds fails to offer sufficient customer training and support for the platform, it may not be able to attract new customers or maintain our current customers.

Because AcuityAds operates a platform that has many powerful tools and that customers can choose to use on a self-service basis, it is often required to spend a substantial amount of time and effort educating and training current customers and potential customers on how to make full use of the platform. Because potential customers may already be trained to use a competitor’s platform, the Corporation may also be required to spend a significant amount of time cultivating relationships with those potential customers to ensure they understand the potential benefits of AcuityAds’ platform. The relationship building process can take many months and may not result in the Corporation winning an opportunity with any given potential customer. As a result, customer training and support is critical for the successful and continued use of AcuityAds’ platform and for maintaining and increasing spend through the platform from existing and new customers.

Providing training and support requires that AcuityAds’ platform operations personnel have specific domain knowledge and expertise, making it more difficult to hire qualified personnel and to scale up our support operations due to the extensive training required. The importance of high-quality customer service will increase as the Corporation expands its business and pursues new customers. If AcuityAds’ is not responsive and proactive regarding its customers’ advertising needs, or do not provide effective support for its customers’ advertising campaigns, AcuityAds’ ability to retain its existing customers would suffer and its reputation with existing or potential customers would be harmed, which would negatively impact AcuityAds’ business.

Risks Related to COVID-19 pandemic

The Corporation’s business and operations may be adversely affected by health epidemics, such as the global COVID-19 pandemic. The COVID-19 pandemic and efforts to control its spread have curtailed the movement of people, goods and services worldwide, including in the regions in which the Corporation and its customers and partners operate, and are significantly impacting economic activity and financial markets. Many marketers, particularly those in the travel, retail and automotive industries, have decreased or paused their advertising spending as a response to the economic uncertainty, decline in business activity, and other COVID-19-related impacts, which may negatively impact, the Corporation’s revenue and results of operations, the extent and duration of which it may not be able to accurately predict. The spread of an infectious disease may also result in, and, in the case of the COVID-19 pandemic has resulted in, regional quarantines, labor shortages or stoppages, changes in consumer purchasing patterns, disruptions to service providers’ ability to deliver data on a timely basis, or at all, and overall economic instability.

23

A recession, depression or other sustained adverse market events resulting from the spread of COVID-19 could materially and adversely affect the Corporation’s business and that of the Corporation’s customers or potential customers. The Corporation’s customers’ and potential customers’ businesses or cash flows may be negatively impacted by the COVID-19 pandemic, which may lead them to reduce their advertising spending and delay their advertising initiatives or technology spending, or attempt to renegotiate contracts and obtain concessions, which may materially and negatively impact the Corporation’s business, operating results and financial condition. The Corporation’s customers may also seek adjustments to their payment terms, delay making payments or default on their payables, any of which may impact the timely receipt and/or collectability of the Corporation’s receivables. As a result, the Corporation’s financial condition and results of operations may be adversely impacted if the business or financial condition of the Corporation’s customers and marketers is negatively affected by the pandemic.

The Corporation’s operations are subject to a range of external factors related to the COVID-19 pandemic that are not within the Corporation’s control. The Corporation has taken precautionary measures intended to minimize the risk of the spread of the virus to its employees, partners and customers, and the communities in which it operates. A wide range of governmental restrictions has also been imposed on the Corporation’s employees’, customers’ and partners’ physical movement to limit the spread of COVID-19. There can be no assurance that precautionary measures, whether adopted by the Corporation or imposed by others, will be effective, and such measures could negatively affect the Corporation’s sales, marketing, and customer service efforts, delay and lengthen the Corporation’s sales cycles, decrease its employees’ or customers’ or partners’ productivity, or create operational or other challenges, any of which could harm the Corporation’s business, operating results and financial condition.

The economic uncertainty caused by the COVID-19 pandemic has made and may continue to make it difficult for the Corporation to forecast revenue and operating results and to make decisions regarding operational cost structures and investments. The Corporation’s business depends on the overall demand for advertising and on the economic health of its customers that benefit from the Corporation’s platform. Economic downturns or unstable market conditions may cause the Corporation’s customers to decrease their advertising budgets, which could reduce usage of the Corporation’s platform and adversely affect its business, operating results and financial condition. The duration and extent of the impact from the COVID-19 pandemic depend on future developments that cannot be accurately predicted at this time, and if the Corporation is not able to respond to and manage the impact of such events effectively, its business may be harmed. Such future developments may include, among others, the duration and spread of the outbreak, new information that may emerge concerning the severity of COVID-19 and government actions to contain COVID-19 or treat its impact, the level of relief efforts designed to help businesses and consumers, including any declines in such levels, impact on the Corporation’s customers and its sales cycles, impact on its customer, industry or employee events, and effect on its advertising inventory partners.

24

Financial and Accounting Risks

Additional Financing

There can be no certainty that the Corporation’s financial resources and revenue from sales will be sufficient for its future needs. The Corporation may need to incur significant expenses for growth, operations, research and development, as well as sales and marketing of its Programmatic Marketing Platform. In addition, other unforeseen costs could also require additional capital. The ability of the Corporation to arrange such financing in the future will depend in part upon the prevailing capital market conditions as well as the business performance of the Corporation. It may be difficult or impossible for the Corporation to obtain debt financing or equity financing on commercially acceptable terms. This may be further complicated by the limited market liquidity for shares of smaller companies such as the Corporation, restricting access to some institutional investors. There is a risk that interest rates will increase given the current historical low level of interest rates. An increase in interest rates could result in a significant increase in the amount that the Corporation pays to service future debt incurred by the Corporation and affect the Corporation’s ability to fund ongoing operations. If additional financing is raised by the issuance of Common Shares or other securities convertible into Common Shares, control of the Corporation may change and shareholders of the Corporation may suffer dilution. If adequate funds are not available, or not available on acceptable terms, the Corporation may not be able to take advantage of opportunities, or otherwise respond to competitive pressures and continue operations. Any debt financing that is secured in the future could involve restrictive covenants relating to the Corporation’s future capital raising activities and other financial and operational matters, including the ability to pay dividends. This may make it more difficult for the Corporation to obtain additional capital and to pursue business opportunities, including potential acquisitions.

Existing Debt

AcuityAds has granted a security interest in its ownership interests in AcuityAds Inc. and its subsidiaries have granted security interests in all of their assets, including intellectual property, to Silicon Valley Bank as security for borrowings made by AcuityAds. AcuityAds is also required to comply with certain financial covenants in favour of its lender, which covenants are tested on a monthly basis, and AcuityAds has agreed to a number restrictive covenants, which would, among other things, prevent the Corporation from: (i) disposing of or selling its assets; (ii) making any changes in its debt or capital structure or amending its bylaws, (iii) consolidating or merging with other entities; (iv) entering into contracts outside of the normal course of business; (v) purchasing or redeeming any shares; (vi) paying dividends; or (vii) incurring lease obligations or capital expenditures above defined thresholds. A failure by AcuityAds to repay its debt in accordance with its terms or any other default under the credit facilities would entitle the lenders thereunder to, among other things, foreclose on AcuityAds’ assets, which would likely terminate its ability to continue operations.

25

Inability to Offset Increasing Costs

AcuityAds anticipates continued growth that could require substantial financial and other resources to, among other things: (a) expand and develop product offerings; (b) improve technological infrastructure, including investing in internal technology development and acquiring outside technologies; (c) cover general and administrative expenses, including legal, accounting and other expenses necessary to support a larger organization; (d) cover sales and marketing expenses, including a significant expansion of the Corporation’s direct sales organization; (e) cover expenses relating to data collection and consumer privacy compliance, including additional infrastructure, automation and personnel; and (f) explore strategic acquisitions. Investing in the foregoing, however, may not yield anticipated returns. Consequently, as costs increase, AcuityAds may not be able to generate sufficient revenue to achieve or sustain profitability.

Negative Impact of Seasonal Fluctuations

AcuityAds’ revenue, cash flow, operating results and other key operating and performance metrics may vary from quarter to quarter due to the seasonal nature of its customers’ spending on advertising campaigns. For example, in prior years, customers tended to devote more of their advertising budgets to the fourth calendar quarter to coincide with consumer holiday spending. In contrast, the first quarter of the calendar year has typically been the slowest in terms of advertising spend. These patterns may or may not hold true during the COVID-19 pandemic. Political advertising could also cause the Corporation’s revenue to increase during election cycles and decrease during other periods, making it difficult to predict our revenue, cash flow, and operating results, all of which could fall below our expectations.

Payment Risks

AcuityAds is subject to payment-related risks and if its customers do not pay, or dispute their invoices, AcuityAds’ business, operating results and financial condition may be adversely affected. AcuityAds’ may also be involved in disputes with agencies and their marketers over the operation of its platform, the terms of its agreements or billings for purchases made by them through its platform. When the Corporation is unable to collect or make adjustments to its bills to customers, the Corporation incurs write-offs for bad debt, which could have a material adverse effect on its results of operations for the periods in which the write-offs occur. In the future, bad debt may exceed reserves for such contingencies and the Corporation’s bad debt exposure may increase over time. Any increase in write-offs for bad debt could have a materially negative effect on AcuityAds’ business, operating results and financial condition.

AcuityAds may rely on its credit facility to partially or completely fund our working capital requirements. The Corporation cannot provide assurance that as it continues to grow, its business will generate sufficient cash flow from operations or that future borrowings will be available to us under the credit facility in an amount sufficient to fund its working capital needs. If AcuityAds’ cash flows and credit facility borrowings are insufficient to fund its working capital requirements, it may not be able to grow at the rate currently expected or at all. In addition, in the absence of sufficient cash flows from operations, AcuityAds might be unable to meet its obligations under its current or future credit facility and may therefore be at risk of default thereunder. AcuityAds cannot provide assurance that it will be able to access additional financing or increase its borrowing or borrowing capacity under its current or any future credit facility on commercially reasonable terms or at all.

26

Foreign Sales

AcuityAds currently has certain foreign sales that are denominated in U.S. dollars or Euros and may, in the future, have sales denominated in the currencies of other jurisdictions in which it establishes sales offices. In addition, AcuityAds incurs a portion of its operating expenses in U.S. dollars and Euros. In the future, AcuityAds’ international sales may increase, particularly in light of the acquisitions of ADman and Magnetic Media. Such sales may be subject to unexpected regulatory requirements and other barriers. Any fluctuation in the exchange rates of foreign currencies may negatively impact the Corporation’s business, financial condition and results of operations. AcuityAds has not previously engaged in foreign currency hedging. If the Corporation decides to hedge its foreign currency exposure, it may not be able to hedge effectively due to lack of experience, unreasonable costs or illiquid markets. In addition, those activities may be limited in the protection they provide the Corporation from foreign currency fluctuations and can themselves result in losses.

Estimates or Judgments Relating to Critical Accounting Policies

The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. AcuityAds bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, as provided in AcuityAds’ management’s discussion and analysis, the results of which form the basis for making judgments about the carrying values of assets, liabilities, equity, revenue and expenses that are not readily apparent from other sources. AcuityAds’ operating results may be adversely affected if the assumptions change or if actual circumstances differ from those in the assumptions, which could cause AcuityAds’ operating results to fall below the expectations of securities analysts and investors, resulting in a decline in the price of the Common Shares. Significant assumptions and estimates used in preparing the financial statements include those related to the credit quality of accounts receivable, income tax credits receivable, share-based payments, impairment tests for non-financial assets, as well as revenue and cost recognition.

Internal Controls Over Financial Reporting and Disclosure Controls and Procedures

A failure to maintain an effective system of internal controls over financial reporting could harm AcuityAds’ financial performance, its ability to raise capital and its listing on the TSX. AcuityAds is responsible for establishing and maintaining adequate internal control over financial reporting, which is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. Because of AcuityAds’ inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. A failure to prevent or detect errors or misstatements may result in a decline in the price of the Common Shares and harm AcuityAds’ ability to raise capital in the future.

27

If management is unable to certify the effectiveness of AcuityAds’ internal controls or if material weaknesses in its internal controls are identified, AcuityAds could be subject to regulatory scrutiny and a loss of public confidence, which could harm its business and cause a decline in the price of the Common Shares. In addition, if AcuityAds does not maintain adequate financial and management personnel, processes and controls, it may not be able to accurately report its financial performance on a timely basis, which could cause a decline in the price of the Common Shares and harm AcuityAds’ ability to raise capital. Failure to accurately report its financial performance on a timely basis could also jeopardize AcuityAds’ listing on the TSX or any other stock exchange on which the Common Shares may be listed. Delisting of the Common Shares on any exchange would reduce the liquidity of the market for the Common Shares, which would reduce the price of and increase the volatility of the price of the Common Shares.

AcuityAds does not expect that its disclosure controls and procedures and internal controls over financial reporting will prevent all error or fraud. A control system, no matter how well-designed and implemented, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues within an organization are detected. The inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple errors or mistakes. Controls can also be circumvented by individual acts of certain persons, by collusion of two or more people or by management override of the controls. Due to the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected in a timely manner or at all. If AcuityAds cannot provide reliable financial reports or prevent fraud, its reputation and operating results could be materially adversely effected, which could also cause investors to lose confidence in its reported financial information, which in turn could result in a reduction in the trading price of the Common Shares.

Liquidity

Liquidity risk is the risk the Corporation will not be able to meet its financial obligations as they come due. The Corporation’s approach to managing liquidity is to ensure, to the extent possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Corporation’s reputation. The Corporation manages its liquidity risk by continually monitoring forecasted and actual revenue and expenditures and cash flows from operations. While the Corporation currently has sufficient operating capital to meet its day to day operating expenses, it is possible that the Corporation could experience a working capital deficiency in the future, which would have a materially adverse effect on the Corporation’s liquidity.

Management is also actively involved in the review and approval of planned expenditures. The Corporation’s principal cash requirements are for principal and interest payments on its debt, capital expenditures and working capital needs. The Corporation uses its operating cash flows, loans and borrowings and cash balances to maintain liquidity. In the event future cash flows from operations are lower than expected, the Corporation may need to seek additional financing, either by issuing additional equity or by undertaking additional borrowings. There is no certainty that additional financing will be available or that it will be available on attractive terms. Additional information can be found in the Corporation’s Consolidated Financial Statements which is available on SEDAR at www.sedar.com.

28

Interest Rates

Interest rate risk is the risk of financial loss to the Corporation if interest rates increase in interest-bearing instruments. The revolving line of credit with Silicon Valley Bank bears interest at an annual rate equal to the greater of (i) prime plus 1.35% and (ii) 4.60% and the term loans bear interest at a rate equal to the greater of (i) prime plus 1.50% and (ii) 4.75%, each of which the Corporation believes is consistent with market interest rates for this type of debt. Additional information can be found in the Corporation’s Consolidated Financial Statements which is available on SEDAR at www.sedar.com.

Foreign Exchange or Currency

The Corporation is exposed to foreign exchange risk from purchase transactions, as well as recognized financial assets and liabilities denominated in U.S. dollars and Euros. The Corporation’s main objective in managing its foreign exchange risk is to maintain U.S. dollars and Euro cash on hand to support U.S. dollar and Euro forecasted obligations and cash flows. To achieve this objective, the Corporation monitors forecasted cash flows in foreign currencies and attempts to mitigate the risk by modifying the nature of cash held.

Industry Risks

Competition

The existing and anticipated markets for AcuityAds’ Programmatic Marketing Platform are highly competitive. Barriers to enter the market are low and additional companies may enter the market with competing offerings as the size and visibility of the market opportunity continues to increase. Existing industry participants may also develop or improve their own offerings to achieve cost efficiencies and deliver additional value. In addition, AcuityAds’ customers could develop their own in-house solutions. Many of AcuityAds’ competitors have longer operating histories, greater name recognition, substantially greater financial, technical, marketing, management, service, support, and other resources than does AcuityAds. They may be able to respond more quickly than AcuityAds can to new or changing opportunities, technologies, standards, or customer requirements.

In addition to other companies offering programmatic and real time bidding solutions, AcuityAds also competes with services offered through large online portals that have significant brand recognition, such as Yahoo and Google. These large portals have substantial proprietary digital advertising inventory that may provide them with competitive advantages, including far greater access to internet user data, preferential trafficking practices and the ability to significantly influence pricing for digital advertising inventory. AcuityAds also competes for a share of advertisers’ total online advertising budgets, including traditional advertising media, such as direct mail, television, radio, cable and print.

29

Some of the competitors mentioned above also act as suppliers of AcuityAds, putting them in a conflict of interest position. There is a risk that such competitors may, in the future, constrain or entirely cut off AcuityAds from its sources of inventory in order to improve their own competitive position in the markets targeted by AcuityAds.

New products or technologies will likely increase competitive pressures and competition could result in pricing pressures, reduced margins, or the failure of AcuityAds’ offerings to achieve or maintain acceptance in existing or anticipated markets. New technologies and the influx of new entrants into the market also could cause competition to persist and intensify in the future, which could harm AcuityAds’ ability to increase revenue and maintain profitability. The development of competing offerings or technologies by market participants or the emergence of new industry or government standards may adversely affect AcuityAds’ competitive position.

As a result of these and other factors, AcuityAds may be unable to compete effectively with its current or future competitors. Increased competition may result in reduced pricing, increased sales and marketing expense, longer sales cycles or a decrease of AcuityAds’ market share, any of which could negatively affect AcuityAds’ revenue and future operating results and ability to grow its business. Such inability would likely have a material adverse effect on AcuityAds’ business, financial condition and results of operations.

Use of Third-Party Cookies and Other Tracking Technologies

AcuityAds expects to benefit as compared to others in our industry from marketers reducing their reliance on vendors and software platforms that utilize third-party cookies for tracking. However, AcuityAds cannot assure you that the shift away from cookie-based consumer tracking will happen as rapidly as we expect or that such shift will occur at all. Additionally, even if the shift away from cookie-based consumer tracking does occur, AcuityAds may not be as successful in growing our business and increasing our revenue as AcuityAds expects. For example, marketers may not shift their business away from our competitors if our competitors are successful in developing alternative products or services that are not significantly reliant on the cookie-based framework.

Digital advertising and in-app advertising are largely dependent on established technology companies and their operation of the most commonly used Internet browsers (Chrome, Firefox, Internet Explorer and Safari), devices and their operating systems (Android and iOS). These companies may change the operations or policies of their browsers, devices and operating systems in a manner that fundamentally changes our ability to operate our platform or collect data. Users of these browsers, devices or operating systems may also adjust their behaviors and use of technology in ways that change our ability to collect data. Digital advertising and in-app advertising are also dependent, in part, on internet protocols and the practices of internet service providers, including IP address allocation. Changes that these providers make to their practices, or adoption of new internet protocols, may materially limit or alter the availability of data. A limitation or alteration of the availability of data in any of these or other instances may have a material impact on the advertising technology industry, which could decrease advertising budgets and subsequently reduce our revenue and adversely affect our business, operating results and financial condition.

30

For in-app advertising, data regarding interactions between users and devices are tracked mostly through stable, pseudonymous mobile device identifiers that are built into the device operating system with privacy controls that allow users to express a preference with respect to data collection for advertising, including to disable the identifier. These identifiers and privacy controls are defined by the developers of the mobile platforms and could be changed by the mobile platforms in a way that may negatively impact our business. Privacy aspects of other channels for programmatic advertising, such as connected TVs or over-the-top video, are still developing. Technical or policy changes, including regulation or industry self-regulation, could harm our growth in those channels.

Digital advertising is also subject to government regulation which may impact our ability to collect and use data. As the collection and use of data for digital advertising has received ongoing media attention over the past several years, some government regulators, such as the U.S. Federal Trade Commission (“FTC”), and privacy advocates have raised significant concerns around observed data. There has been an array of ‘do-not-track’ efforts, suggestions and technologies introduced to address these concerns. However, the potential regulatory and self-regulatory landscape is inherently uncertain, and there is no consensus definition of tracking, nor agreement on what would be covered by ‘do-not-track’ functionality. There is activity by the major Internet browsers to default set on ‘do-not-track’ functionality, including by Safari and Firefox. It is not clear if other Internet browsers will follow.

Certain international jurisdictions have adopted and implemented legislation that negatively impacts the use of cookies and other tracking technologies for online advertising, and additional jurisdictions may do so in the future. Currently, although Canadian anti-spam legislation (“CASL”) requires consent to install a computer program, CASL provides a deemed express consent for the installation of a cookie. Limitations on the use or effectiveness of cookies or other tracking technologies may impact the performance of the Programmatic Marketing Platform. AcuityAds may be required to, or otherwise may determine that it is advisable to, develop or obtain additional tools and technologies to compensate for any loss of data. AcuityAds may not be able to develop or implement such additional tools. Moreover, even if AcuityAds is able to do so, such additional tools may be subject to further regulation, time consuming to develop or costly to obtain, and less effective than AcuityAds’ current tracking technology.

If AcuityAds’ ability to use cookies were substantially restricted due to the foregoing, or for any other reason, we would have to generate and use other technology or methods that allow the gathering of user data in order to provide services to customers. This change in technology or methods could require significant re-engineering time and resources, and may not be complete in time to avoid negative consequences to AcuityAds’ business. In addition, alternative technology or methods might not be available on commercially reasonable terms, if at all.

31

Potential “Do Not Track” Standards

As the use of cookies has received ongoing media attention in recent years, some government regulators and privacy advocates have suggested creating a “Do Not Track” standard that would allow internet users to express a preference, independent of cookie settings in their browser, not to have website browsing recorded. In 2010, the FTC, issued a staff report criticizing the advertising industry’s self-regulatory efforts as too slow and lacking adequate consumer protections. In 2012, a subsequent staff report was issued by the FTC, indicating that the FTC had brought enforcement actions against various online advertisers for failure to honour consumer opt outs. The FTC emphasized a need for simplified notice, choice and transparency to the consumer regarding collection, use and sharing of data, and suggested implementing a “Do Not Track” browser setting that allows consumers to choose whether to allow “tracking” of their online browsing activities. All major internet browsers have implemented some version of a “Do Not Track” setting. Microsoft Corporation’s Internet Explorer 10 and 11 include a “Do Not Track” setting that is selected by default. However, there is no definition of “tracking,” no consensus regarding what message is conveyed by a “Do Not Track” setting and no industry standards regarding how to respond to a “Do Not Track” preference. The World Wide Web Consortium chartered a “Tracking Protection Working Group” in 2011 to convene a multi-stakeholder group of academics, thought leaders, companies, industry groups and consumer advocacy organizations, to create a voluntary “Do Not Track” standard for the web. The group has yet to agree upon a standard. The “Do-Not-Track Online Act of 2013” was introduced in the U.S. Senate in February 2013. If a “Do Not Track” browser setting is adopted by many internet users, and the standard either imposed by legislation or agreed upon by standard setting groups, prohibits AcuityAds from using non-personal information as it currently does, then that could hinder growth of advertising and content production on the web generally, cause AcuityAds to change its business practices and adversely affect its business.

Legislation and Regulation

Government regulation may increase the costs of doing business online. The Canadian and certain foreign governments have enacted or are considering legislation related to online advertising and management of AcuityAds expects to see an increase in legislation and regulation related to advertising online, the use of geo-location data to inform advertising, the collection and use of anonymous internet user data and unique device identifiers, such as mobile unique device identifiers, and other data protection and privacy regulation. Such legislation could affect the costs of doing business online, and may adversely affect the demand for AcuityAds’ offerings or otherwise harm its business, results of operations and financial condition. For example, a wide variety of provincial, state, national and international laws and regulations apply to the collection, use, retention, protection, disclosure, transfer and other processing of personal information. While AcuityAds takes measures to protect the security of information that it collects, uses and discloses in the operation of its business, if there is a data breach, there is a potential for claims for damages by consumers whose personal information has been disclosed without authorization. Evolving and changing definitions of personal information, within Canada, the United States and elsewhere, especially relating to classification of machine or device identifiers, location data and other information, have in the past, and may cause AcuityAds to, in the future, change business practices, or limit or inhibit AcuityAds’ ability to operate or expand its business. Data protection and privacy-related laws and regulations are evolving and may result in ever-increasing regulatory and public scrutiny and escalating levels of enforcement and sanctions. While AcuityAds takes measures to protect the security of information that it collects, uses and discloses in the operation of its business, and to offer certain privacy protections with respect to such information, such measures may not always be effective.

32

In Europe, the General Data Protection Regulation (“GDPR”), which entered into force in May 2018, provides for new obligations that apply internationally to entities that control or process the personal data of citizens of the European Union. Several of these obligations, if applicable, could require changes to the processes used by AcuityAds. Existing and proposed laws and regulations, in particular in the European Union and the United States, concerning user privacy, use of personal information and on-line tracking technologies could affect the efficacy and profitability of internet-based and digital marketing. For example, the California Consumer Privacy Act (the “CCPA”), which went into effect on January 1, 2020, imposes stringent data privacy and security requirements and obligations with respect to the personal information of California residents, including, among other things, new disclosures to California consumers and providing such consumers new data protection and privacy rights, including the ability to opt out of certain sales of personal information. The CCPA provides for civil penalties for violations, as well as a private right of action for certain data breaches that result in the loss of personal data that may increase the likelihood of, and risks associated with, data breach litigation. It remains unclear how various provisions of the CCPA will be interpreted and enforced, and multiple states have enacted or are expected to enact similar laws. The costs of compliance with these laws may increase in the future as a result of the implementation of new laws or regulations, such as the GDPR or the CCPA, or changes in interpretations of current ones. Any failure on the Corporation’s part to comply with these legal requirements, or their application in an unanticipated manner, could harm its business and result in penalties or significant legal liability.

In addition, while AcuityAds takes steps to avoid unlawful collection of personally identifiable data about consumers, it may inadvertently receive this information from advertisers or advertising agencies or through the process of delivering advertising, in which case it may log this information and may inadvertently release it in contravention of applicable privacy legislation. The Corporation’s failure to comply with applicable laws and regulations, or to protect personal information, could result in enforcement action against the Corporation, including fines, imprisonment of its officers and public censure, claims for damages by consumers and other affected individuals, damage to the Corporation’s reputation and loss of goodwill, any of which could have a material adverse impact on operations, financial performance and business. Even the perception of privacy concerns, whether or not valid, may harm the Corporation’s reputation and inhibit adoption of its offerings by current and future advertisers and advertising agencies.

Ability to Protect AcuityAds’ Proprietary Offering

Any failure to protect AcuityAds’ proprietary Programmatic Marketing Platform could harm its business and competitive position. There can be no assurance that any steps AcuityAds has taken or intends to take will be adequate to defend and prevent misappropriation of technology, including the possibility of reverse engineering and the possibility that potential competitors will independently develop technologies that are designed around and are substantially equivalent or superior to AcuityAds’ technology.

AcuityAds may use a combination of trade secret, copyright law, nondisclosure agreements, passing-off laws, other common law intellectual property protections and technical measures to protect its proprietary technology. AcuityAds has generally entered into confidentiality agreements with and obtains assignments of intellectual property and waivers of moral rights from its employees and contractors and has worked to limit access to and distribution of its technology, documentation and other proprietary information. However, the steps taken may not be adequate to deter misappropriation or independent third-party development of AcuityAds’ technology. If AcuityAds fails to protect its intellectual property rights adequately, its competitors may gain access to the Corporation’s technology, which could have a material adverse effect on its business.

33

Establishing trade secret, copyright, breach of contract or other breach of common law intellectual property law can be difficult and expensive, and the laws, procedures and restrictions may provide only limited protection. It may be possible for unauthorized third parties to copy or reverse engineer aspects of AcuityAds’ technology or otherwise obtain and use information that the Corporation regards as proprietary. Unauthorized third parties may also develop technologies similar or superior to AcuityAds’ technology or design around its proprietary rights, despite the steps the Corporation has taken to protect its proprietary rights.

Policing unauthorized use of technology is difficult. In addition, the laws of some foreign countries do not protect proprietary technology rights to the same extent as do the laws of Canada and the United States. If AcuityAds resorts to legal proceedings to enforce its intellectual property rights, the proceedings could be burdensome and expensive and could involve a high degree of risk to AcuityAds’ proprietary rights if it is unsuccessful in such proceedings. Moreover, AcuityAds’ financial resources may not be adequate to enforce or defend its rights in its technology. Additionally, any patents that AcuityAds may apply for or obtain in the future may not be broad enough to protect all of the technology that is important to its business, and its ownership of patents would not in itself prevent others from securing patents that may prevent AcuityAds from engaging in actions necessary to its business, products, or services.

Infringement of Intellectual Property Rights

If AcuityAds’ proprietary Programmatic Marketing Platform violates or is alleged to violate third-party proprietary rights, AcuityAds may be required to reengineer its technology or seek to obtain licenses from third-parties to continue offering its technology without substantial reengineering. Any such efforts may not be successful or if successful could require payments that may have a material adverse effect on profitability and financial condition. Any litigation involving infringement claims would be expensive and time-consuming, and an adverse outcome may result in payment of damages or injunctive relief that could materially and adversely affect AcuityAds’ business.

Various circumstances could pose a threat to its intellectual property rights. Effective intellectual property protection may not be available in the U.S., Canada or other countries in which the Programmatic Marketing Platform is offered in the future. In addition, the efforts that have been taken to protect AcuityAds’ intellectual property rights may not be sufficient or effective. Any impairment of AcuityAds’ intellectual property rights could harm its business, its ability to compete and harm its operating results.

AcuityAds does not independently verify whether it is permitted to deliver advertising to its advertisers’ internet users or that the content of the advertisements it delivers is legally permitted. AcuityAds receives representations from advertisers that the content of the advertising that AcuityAds places on their behalf is lawful. AcuityAds also relies on representations from its advertisers that they maintain adequate privacy policies that allow AcuityAds to place pixels on their websites and collect valid consents from users that visit those websites to collect and use such user’s information to aid in delivering AcuityAds’ offerings. If any of these representations are untrue and AcuityAds’ advertisers do not abide by laws governing their content or privacy practices, AcuityAds may become subject to legal claims and exposed to potential liability and expense (for which it may or may not be indemnified), and its reputation may be damaged.

34

Use of Open Source Software Components

AcuityAds’ Programmatic Marketing Platform, including its computational infrastructure, relies on software licensed to it by third-party authors under “open source” licenses. The use of open source software may entail greater risks than the use of third-party commercial software, as open source licensors generally do not provide warranties or other contractual protections regarding infringement claims or the quality of the code. Some open source licenses contain requirements that AcuityAds make available source code for modifications or derivative works AcuityAds creates based upon the type of open source software AcuityAds uses. If AcuityAds combines its proprietary software with open source software in a certain manner, AcuityAds could, under certain open source licenses, be required to release the source code of its proprietary software to the public. This would allow AcuityAds’ competitors to create similar solutions with lower development effort and time and ultimately put the Corporation at a competitive disadvantage.

Although AcuityAds monitors its use of open source software to avoid subjecting its products to conditions it does not intend, the terms of many open source licenses have not been interpreted by Canadian courts, and there is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on AcuityAds’ ability to commercialize its services. Moreover, AcuityAds cannot guarantee that its processes for controlling its use of open source software will be effective. If AcuityAds is held to have breached the terms of an open source software license, it could be required to seek licenses from third parties to continue operating its platform on terms that are not economically feasible, to re-engineer its platform or the supporting computational infrastructure to discontinue use of certain code, or to make generally available, in source code form, portions of its proprietary code, any of which could adversely affect the Corporation’s business, operating results and financial condition.

Unanticipated Problems Associated with the Programmatic Marketing Platform

AcuityAds depends upon the sustained and uninterrupted performance of its platform to operate a number of campaigns at any given time; manage its inventory supply; bid on inventory for each campaign; serve or direct a third-party to serve advertising; collect, process and interpret data; and optimize campaign performance in real time and provide billing information. Because AcuityAds’ software is complex, undetected errors and failures may occur, especially when new versions or updates are made. AcuityAds’ Programmatic Marketing Platform may contain undetected errors or “bugs”, which result in system failures, or failure to perform in accordance with industry or customer expectations. Despite AcuityAds’ plans for quality control and testing measures, its Programmatic Marketing Platform, including any enhancements, may contain such bugs or exhibit performance degradation, particularly during periods of rapid expansion. In such an event, the Corporation may be required or choose to expend additional resources to help mitigate any problems resulting from errors in its software. Product or system performance problems could result in loss of or delay in revenue, loss of market share, failure to achieve market acceptance, adverse publicity, diversion of development resources and claims against the Corporation by its customers and other parties.

35

The Corporation may also experience interruptions in its information systems on which its operations depend. Further, the Corporation may face attempts by others to gain unauthorized access through the Internet to its information technology systems, to intentionally hack, interfere with or cause physical or digital damage to or failure of such systems (such as significant viruses or worms), which attempts the Corporation may be unable to prevent. The Corporation could be unaware of an incident or its magnitude and effects until after it is too late to prevent it and the damage it may cause. Any security breaches, unauthorized access, unauthorized usage, virus or similar breach or disruption could result in loss of confidential information, personal data and customer content, damage to the Corporation’s reputation, early termination of contracts, litigation, regulatory investigations or other liabilities.

Operational and performance issues with AcuityAds’ platform, whether real or perceived, including a failure to respond to technological changes or to upgrade its technology systems, may adversely affect AcuityAds’ business, operating results and financial condition. Sustained and uninterrupted performance of AcuityAds’ platform is necessary to manage its inventory supply; acquire inventory for each campaign; collect, process and interpret data; and optimize campaign performance in real time and provide billing information to the Corporation’s financial systems. If AcuityAds’ platform cannot scale to meet demand, if there are errors in AcuityAds’ execution of any of these functions on its platform, or if the Corporation experiences outages, then AcuityAds’ business may be harmed.

As AcuityAds expands its business, continual investment in technology services and equipment is expected. Without these improvements, operations might suffer from unanticipated system disruptions, slow transaction processing, unreliable service levels, impaired quality or delays in reporting accurate information regarding transactions in AcuityAds’ platform, any of which could negatively affect AcuityAds’ reputation and ability to attract and retain customers. In addition, the expansion and improvement of AcuityAds’ systems and infrastructure may require the Corporation to commit substantial financial, operational and technical resources, with no assurance AcuityAds’ business will grow. If AcuityAds fails to respond to technological change or to adequately maintain, expand, upgrade and develop its systems and infrastructure in a timely fashion, its growth prospects and results of operations could be adversely affected.

Operational and performance issues with AcuityAds’ platform could also result in negative publicity, damage to its brand and reputation, loss of or delay in market acceptance of AcuityAds’ platform, increased costs or loss of revenue, loss of the ability to access our platform, loss of competitive position or claims by customers for losses sustained by them. Alleviating problems resulting from such issues could require significant expenditures of capital and other resources and could cause interruptions, delays or the cessation of AcuityAds’ business, any of which may adversely affect its operating results and financial condition.

Failure to Access Advertising Inventory

AcuityAds must maintain a consistent supply of ad inventory. AcuityAds’ success depends on its ability to secure inventory on reasonable terms across a broad range of advertising inventory partners in various verticals and formats. The amount, quality and cost of inventory available to AcuityAds can change at any time. If AcuityAds’ relationships with any of its significant suppliers were to cease, or if the material terms of these relationships were to change unfavourably, AcuityAds’ business would be negatively impacted. AcuityAds’ suppliers are generally not bound by long-term contracts. As a result, there is no guarantee that AcuityAds will have access to a consistent supply of inventory on favorable terms. Inventory suppliers control the sales process for the inventory they supply, and their processes may not always work in AcuityAds’ favor. For example, suppliers may place restrictions on the use of their inventory, including prohibiting the placement of advertisements on behalf of specific marketers.

36

As new types of inventory, such as digital advertising for television, become more readily available, AcuityAds will need to expend significant resources to ensure it has access to such new inventory. AcuityAds’ success depends on consistently adding valued inventory in a cost-effective manner. If AcuityAds is unable to maintain a consistent supply of inventory for any reason, customer retention and loyalty, and our operating results and financial condition could be harmed.

Social Data

AcuityAds’ social data offering is currently based on publicly available social data signals from users on social media platforms. AcuityAds, through its 140 Proof subsidiary, is able to access this social user data for audience targeting. If ActuityAds access to such data is diminished, the effectiveness of its platforms will decrease, in turn harming operation results and financial conditions. Conversely, AcuityAds’ ability to grow its revenue in this channel is closely tied to the availability and access to the social data signals from these social media platforms. These social media platforms may restrict AcuityAds’ access to their publicly available data, intentionally or unintentionally. Additionally, the performance of this type of data in a particular scenario cannot be predicted. Also, data obtained in this way may not always correlate precisely with the target audience resulting in distorted insights. Another risk is that social media companies may cease to exist or become less relevant, based on the size and reach of their platforms which could harm AcuityAds’ social data offering and revenues. Additionally, other players in the market could potentially develop competing tools potentially limiting AcuityAds’ market penetration which in turn could negatively impact revenues.

Mobile Advertising

AcuityAds’ success in the mobile advertising channel depends upon the ability of its Programmatic Marketing Platform to integrate with mobile inventory suppliers and provide advertising for most mobile connected devices, as well as the major operating systems that run on them and the thousands of applications that are downloaded onto them. The design of mobile devices and operating systems is controlled by third parties with whom AcuityAds does not have any formal relationships. These parties frequently introduce new devices, and from time to time they may introduce new operating systems or modify existing ones. Network carriers may also impact the ability to access specified content on mobile devices. If AcuityAds’ platform is unable to work on these devices or operating systems, either because of technological constraints or because a maker of these devices or developer of these operating systems wishes to impair AcuityAds’ ability to provide advertisements on them or AcuityAds’ ability to fulfill advertising space, or inventory, from developers whose applications are distributed through their controlled channels, AcuityAds’ ability to generate revenue could be significantly harmed.

37

Video Advertising

AcuityAds’ analytics-led video offering is currently based on data accessible from key partnerships and API integration with large video portals in providing the data analytics for its TrueReach® platform. As a result, AcuityAds’ ability to grow its revenue in this channel is closely tied to the availability and access to the data from video-based platforms. These video-based platforms may restrict AcuityAds’ access to their API and/or publicly available data, intentionally or unintentionally which could negatively impact AcuityAds’ analytics-led video offering and revenues. Additionally, other players in the market could potentially develop competing tools potentially limiting AcuityAds’ market penetration which in turn could negatively impact revenues.

Fraud

AcuityAds operates as a technology and services provider in a dynamic ecosystem where fraud exists. Typical forms of fraud include robotic traffic, where robots mimic the behaviour of users in order to inflate the number of impressions, clicks, post clicks actions or other metrics associated with the ad; ads that have no potential to be viewed by a human; and activities designed to trick mechanisms for user data collection or attribution models. AcuityAds employs reasonable measures to detect and eliminate fraud to the best of its ability. However, despite its efforts, AcuityAds is not in the fraud detection business and there are no guarantees as to the degree to which fraud can be minimized.

Publisher Protection

AcuityAds offers managed media campaign services and licenses its technology to third parties who use it to carry out media buys. Despite AcuityAds’ efforts to protect its suppliers from unwanted buying activities and ads, misuse of the system by advertising parties cannot be ruled out.

Potential for Liability

Advertising often results in litigation relating to copyright or trademark infringement, public performance royalties or other claims based on the nature and content of advertising that is distributed through AcuityAds’ platform. If the Corporation’s customers do not possess the rights necessary to serve advertisements through AcuityAds’ platform, the Corporation may be exposed to potential liability and its reputation may be damaged. While AcuityAds’ customers are typically obligated to indemnify the Corporation, such indemnification may not fully cover all losses and/or there is potential for collection issues. In addition to settlement costs, AcuityAds may be responsible for its own litigation costs, which can be extensive.

AcuityAds may also face potential liability and harm to its business based on the human factor of inputting information into its platform. While AcuityAds’ platform includes several checks and balances, it is possible for human error to result in over-spending. We offer a number of protections such as daily or overall spending caps, but despite these protections, the ability for overspend exists. For example, campaigns which last for a period of time can be set to pace evenly or as quickly as possible. If a customer with a high credit limit enters an incorrect daily cap with a campaign set to a rapid pace, it is possible for a campaign to accidently go significantly over budget. AcuityAds’ potential liability for such errors may be higher when they occur in situations in which we are executing purchases on behalf of a customer (i.e., Full-Service) rather than the customer using the self-service feature of our platform. AcuityAds is ultimately responsible for paying the inventory providers and may be unable to collect from customers when such issues occur.

38

Ad Blockers

Ad blockers represent an increased risk to the online advertising industry as a whole, as their use has lately risen. Ad blockers prevent ads from being displayed and can interfere with the collection and transmission of data required for the normal operation of the online advertising ecosystem, including user data, measurement and attribution. The industry is taking steps to combat ad blocking and tools have been created to detect ad blockers for use by publishers. These tools allow publishers who rely on ad revenue to withhold content from users with ad blockers. Additionally, in order to discourage the use of ad blockers, the industry is initiating a shift towards ads that are less disruptive to the user experience. Nevertheless, there are no guarantees that these measures will be sufficient to eliminate all ad blocking activities and that AcuityAds will not experience loss of potential revenue as a result of ad blocking.

Obsolescence

AcuityAds’ business is characterized by rapid technological change, frequent new product and service introductions and enhancements, uncertain product life cycles, changes in customer requirements, and evolving industry standards. The introduction of new products embodying new technologies, the emergence of new industry standards, or improvements to existing technologies could render AcuityAds’ platform obsolete or relatively less competitive. AcuityAds’ future success will depend upon its ability to continue to develop and expand its Programmatic Marketing Platform and to address the increasingly sophisticated needs of its customers. AcuityAds may experience delays in releasing new offerings or enhancements in the future. Material delays in introducing new offerings or enhancements may cause customers to forego purchases of AcuityAds’ offering to purchase offerings of competitors instead.

Catastrophic Events

AcuityAds maintains servers at co-location facilities in the United States that it uses to deliver advertising campaigns for its advertisers. Any of its existing and future facilities may be harmed or rendered inoperable by attack or security intrusion by a computer hacker, natural or man-made disasters, including earthquakes, tornadoes, hurricanes, wildfires, floods, nuclear disasters, war, acts of terrorism or other criminal activities, infectious disease outbreaks and power outages, any of which may render it difficult or impossible for AcuityAds to operate its business for some period of time. If AcuityAds were to lose the data stored in one or more of its co-location facilities, it could take several days, if not weeks, to recreate this data from multiple sources, which could result in significant negative impact on its business operations, and potential damage to its advertiser and advertising agency relationships. Any disruptions in AcuityAds’ operations could negatively impact its business and results of operations, and harm its reputation. In addition, AcuityAds may not carry sufficient business interruption insurance to compensate for the losses that may occur. Any such losses or damages could have a material adverse effect on the Corporation’s business, financial condition and results of operations.

39

Economic, Political and Market Conditions

AcuityAds’ business depends on the overall demand for advertising and on the economic health of its current and prospective advertisers. Economic downturns or instability in political or market conditions may cause current or new advertisers to reduce their advertising budgets. Adverse economic conditions and general uncertainty about continued economic recovery are likely to affect the Corporation’s business prospects. This uncertainty may cause general business conditions in the United States and elsewhere to deteriorate or become volatile, which could cause advertisers to delay, decrease or cancel purchases of the Corporation’s offerings, and expose the Corporation to increased credit risk on advertiser orders, which, in turn, could negatively impact its business, financial condition and results of operations. In addition, continued geopolitical turmoil in many parts of the world have and may continue to put pressure on global economic conditions, which could lead to reduced spending on advertising.

Negative Industry Publicity

Unfavourable publicity and negative public perception about online advertising industry, particularly concerns regarding data privacy and security relating to online advertising industry’s technology and practices, and perceived failure to comply with laws and industry self-regulation, could adversely affect AcuityAds’ business and operating results. With the growth of digital advertising and e-commerce, there is increasing awareness and concern among the general public, privacy advocates, mainstream media, governmental bodies and others regarding marketing, advertising, and data privacy matters, particularly as they relate to individual privacy interests and the global reach of the online marketplace. Concerns about industry practices with regard to the collection, use, and disclosure of personal information, whether or not valid and whether driven by applicable laws and regulations, industry standards, customer or inventory provider expectations, or the broader public, may harm AcuityAds’ reputation, result in loss of goodwill, and inhibit use of AcuityAds’ platform by current and future customers. Any unfavourable publicity or negative public perception about AcuityAds, its industry, including its competitors, or even other data focused industries can affect AcuityAds’ business and results of operations, and may lead to digital publishers or AcuityAds’ customers changing their business practices or additional regulatory scrutiny or lawmaking that affects AcuityAds or its industry. For example, in recent years, consumer advocates, mainstream media and elected officials have increasingly and publicly criticized the data and marketing industry for its collection, storage and use of personal data. Additional public scrutiny may lead to general distrust of online advertising industry, consumer reluctance to share and permit use of personal data, increased consumer opt-out rates or increased private class actions, any of which could negatively influence, change or reduce AcuityAds’ current and prospective customers’ demand for AcuityAds’ products and services, subject the Corporation to liability and adversely affect AcuityAds’ business and operating results.

40

Corporate Culture

AcuityAds believes that its corporate culture has been critical to its success and AcuityAds has invested substantial time and resources in building its team within its company culture. However, as AcuityAds grows, it may be difficult to maintain its culture, which could reduce AcuityAds’ ability to innovate and operate effectively and proactively focus on and pursue its corporate objectives. The failure to maintain the key aspects of AcuityAds’ culture as it grows could result in decreased employee satisfaction, increased difficulty in attracting top talent, increased turnover and degraded quality of customer service, all of which are important to AcuityAds’ success and to the effective execution of our business strategy. In the event AcuityAds is unable to maintain its corporate culture as it grows to scale, AcuityAds’ business, operating results and financial condition could be harmed.

Risks Related to the Common Shares

Market for Common Shares

There can be no assurance that an active trading market for the Common Shares will develop or, if developed, that any market will be sustained. Technology stocks have historically experienced high levels of volatility and AcuityAds cannot predict the prices at which the Common Shares will trade. Fluctuations in the market price of the Common Shares could cause an investor to lose all or part of its investment in Common Shares. Factors that could cause fluctuations in the trading price of the Common Shares include (i) announcements of new offerings, products, services, technologies and technological developments, regulatory changes, commercial relationships, acquisitions or other events by the Corporation or its competitors; (ii) price and volume fluctuations in the overall stock market from time to time; (iii) significant volatility in the market price and trading volume of technology companies in general and of companies in the digital advertising industry in particular; (iv) fluctuations in the trading volume of the Common Shares or the size of the Corporation’s public float; (v) actual or anticipated changes or fluctuations in the Corporation’s results of operations; (vi) whether AcuityAds’ results of operations meet the expectations of securities analysts or investors; (vii) actual or anticipated changes in the expectations and/or recommendations of investors or securities research analysts; (viii) litigation involving the Corporation, its industry, or both; (ix) regulatory developments in Canada, the U.S., and foreign countries; (x) general economic conditions and trends, including global financial markets, global economies and general market conditions, such as interest rates; (xi) major catastrophic events; (xii) escrow releases or sales of large blocks of the Common Shares; (xii) departures of key employees or members of management; (xiii) significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving the Corporation or its competitors; or (xiv) an adverse impact on AcuityAds from any of the other risks cited herein.

In addition, if the stock market for technology companies, or the stock market generally, experiences a loss of investor confidence, the trading price of AcuityAds’ Common Shares could decline for reasons unrelated to its business, operating results or financial condition. Share prices of many technology companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. The trading price of AcuityAds’ Common Shares might also decline in reaction to events that affect other companies in its industry even if these events do not directly affect the Corporation. In the past, shareholders have filed securities class action litigation following periods of market volatility. If AcuityAds were to become involved in securities litigation, it could subject it to substantial costs, divert resources and the attention of management from our business, and adversely affect our business.

41

Substantial Control by Insiders

AcuityAds’ directors and executive officers, in the aggregate, beneficially own approximately 23.5% of the Common Shares. As a result, these insiders will be able to influence or control matters requiring approval by the Corporation’s shareholders, including the election of directors and the approval of mergers, acquisitions or other extraordinary transactions. They may also have interests that differ from those of investors and may vote in a manner that is adverse to investors’ interests. This concentration of ownership may have the effect of deterring, delaying or preventing a change of control of the Corporation, could deprive the Corporation’s shareholders of an opportunity to receive a premium for their Common Shares as part of a sale of the Corporation and might ultimately affect the market price of the Common Shares.

Dividend Policy

AcuityAds is not currently paying any dividends on the Common Shares and may not declare or pay any dividends in the future. AcuityAds may, in its discretion, retain any earnings to finance the operation and expansion of its business, and accordingly, may not pay any dividends in the future. As a result, an investor may only receive a return on its investment in the Common Shares if the market price of such shares increases. In addition, the Corporation’s credit facilities with Silicon Valley Bank contains restrictions on AcuityAds’ ability to pay dividends. See “Dividends and Distributions.”

Public Company Implications

As a publicly-listed corporation, AcuityAds is subject to the listing requirements of the TSX and other applicable securities laws, rules and regulations. Compliance with these rules and regulations could become more difficult, time-consuming or costly and increase demand on the Corporation’s systems and resources. Significant resources and management oversight are required to maintain and may be required in the future to improve the Corporation’s controls and procedures and internal controls over financial reporting. As a result, management’s attention may be diverted from other business concerns, which could harm AcuityAds’ business and operating results.

Analyst Coverage

The trading market for the Common Shares will, to some extent, depend on the research and reports that securities or industry analysts publish about the Corporation or its business. The Corporation does not have any control over these analysts. If one or more of the analysts who covers the Corporation should downgrade the Common Shares or change their opinion of the Corporation’s business prospects, the Corporation’s share price would likely decline. If one or more of these analysts ceases coverage of the Corporation or fails to regularly publish reports on the Corporation, the Corporation could lose visibility in the financial markets, which could cause the Corporation’s share price or trading volume to decline.

42

Tax Consequences

There may be income tax consequences in relation to the Common Shares, which will vary according to circumstances of each investor. Shareholders and prospective investors should seek independent advice from their own tax and legal advisers.

DIVIDENDS AND DISTRIBUTIONS

It is not expected that AcuityAds will declare any dividends for the foreseeable future. The Corporation does not have any restrictions on paying dividends, but (i) AcuityAds Inc. is restricted from paying dividends (including to AcuityAds) without the prior consent of Silicon Valley Bank, and (ii) if AcuityAds generates earnings in the foreseeable future, it is expected that they will be retained to finance growth, if any. The Board will determine if and when dividends should be declared and paid in the future based upon AcuityAds’ financial position at the relevant time. Holders of Common Shares are entitled to an equal share in any dividends declared and paid on the Common Shares.

DESCRIPTION OF CAPITAL STRUCTURE

AcuityAds is authorized to issue an unlimited number of Common Shares. As of the date hereof, there are a total of 53,516,945 Common Shares issued and outstanding. In addition, as at such date the Corporation has 1,900,519 stock options issued and outstanding under its existing stock option plan and under the Corporation’s omnibus long-term incentive plan, 1,166,952 deferred share units (“DSUs”) issued and outstanding under its existing deferred share unit plan and 1,223,945 restricted share units (“RSUs”) issued and outstanding under the Corporation’s omnibus long-term incentive plan adopted by the shareholders on June 16, 2020. All stock options and all deferred share units are exercisable to acquire Common Shares.

Holders of Common Shares are entitled to cast one vote per Common Share at all meetings of shareholders of the Corporation; to receive cumulative dividends, if any, as and when declared by the Board at its discretion from funds available for distribution; and upon the liquidation, dissolution or winding up of the Corporation, to receive on a pro-rata basis all the property and assets of the Corporation available for distribution.

MARKET FOR SECURITIES

Trading Price and Volume

The Common Shares trade on the TSX under the symbol “AT”. As of August 29, 2019, the Common Shares also trade on the OTCQX® Best Market with DTC eligibility under the symbol “ACUIF”. The following table sets forth, for the periods indicated, the reported high and low prices and the aggregate volume of trading of the Common Shares on the TSX (January 1, 2020 to December 31, 2020) for the financial year ended December 31, 2020.

Month	High Trading Price ($)		Low Trading Price ($)		Monthly Volume (#)
January 2020		1.65		1.34		3,238,797
February 2020		1.82		1.46		5,186,039
March 2020		1.77		0.73		6,613,859
April 2020		1.20		0.72		2,968,169
May 2020		1.20		0.91		2,170,582
June 2020		1.23		1.00		2,808,821
July 2020		2.01		1.09		7,873,662
August 2020		2.55		1.84		6,175,840
September 2020		3.79		2.33		14,026,915
October 2020		4.99		3.52		17,184,603
November 2020		8.22		4.47		17,058,056
December 2020		22.44		7.46		39,543,759

Notes:

⁽¹⁾  Source: Capital IQ.

43

Prior Sales

During the financial year ended December 31, 2020, the Corporation issued the following securities not listed or quoted on a marketplace:

Date of Issuance	Security	Number of Securities Issued	Exercise Price Per Security($)
November 12, 2020	RSUs	231,666		N/A	(1)
August 14, 2020	Stock Options	45,000	$	2.09
August 14, 2020	RSUs	1,089,408		N/A	(1)
May 8, 2020	DSUs	71,593		N/A	(2)
May 8, 2020	Stock Options	95,000	$	1.13
March 5, 2020	DSUs	132,415		N/A	(2)
March 5, 2020	Stock Options	235,000	$	1.59

Notes:

(1)	The value of each RSU is equal to the price of the Common Shares at the time the RSU is awarded and increases/decreases as the price of the Common Shares increases/decreases.
(2)	The value of each DSU is equal to the price of the Common Shares at the time the DSU is awarded and increases/decreases as the price of the Common Shares increases/decreases.

DIRECTORS AND OFFICERS

The following table sets forth the name, province or state and country of residence, the position held with the Corporation and period(s) during which each director of the Corporation has served as a director, the principal occupation, and the number and percentage of Common Shares beneficially owned by each director and executive officer of the Corporation. The statement as to the Common Shares beneficially owned, controlled or directed, directly or indirectly, by the directors and executive officers hereinafter named is in each instance based upon information furnished by the person concerned and is as at the date hereof. All directors of the Corporation hold office until the next annual meeting of shareholders of the Corporation or until their successors are elected or appointed.

44

Name and Residence	Position with the Corporation and Period(s) Served as a Director	Principal Occupation	Number of Common Shares Beneficially Owned or Controlled	Percentage of Common Shares Beneficially Held
Tal Hayek Ontario, Canada	Co-Founder, Chief Executive Officer and Director since October 9, 2009	Chief Executive Officer of the Corporation	2,640,801	4.9	%
Jonathan Pollack Ontario, Canada	Chief Financial Officer since May 9, 2018	Chief Financial Officer of the Corporation	42,462	0.1	%
Rachel Kapcan Ontario, Canada	Co-Founder and Vice President of Client Operations	Vice President of Client Operations of the Corporation	2,260,240	4.2	%
Joe Ontman Ontario, Canada	Co-Founder, Chief Business Development Officer and Director since October 9, 2009	Chief Business Development Officer of the Corporation	2,287,894	4.3	%
Oren Hisherik, Ontario, Canada	Chief Information and Technology Officer since February 18, 2019	Chief Information and Technology Officer of the Corporation	12,400	0.0	%
Sheldon Pollack(1)(2) Ontario, Canada	Chairman and Director since January 9, 2013	Co-founder of OnX Enterprise Solutions Inc. and early-stage investor	1,759,482	3.3	%
Roger Dent(1)(2) Ontario, Canada	Director since July 16, 2014	Chief Executive Officer of Quinsam Capital Corporation	55,000	0.1	%
Igal Mayer(1)(2) Ontario, Canada	Director since July 16, 2014	Chief Executive Officer of Kanetix Ltd.	51,667	0.1	%
Yishay Waxman(1)(2) Ontario, Canada	Director since July 16, 2014	Co-founder and President, Platterz Inc.	18,700	0.0	%
Corey Ferengul(1)(2) Illinois, U.S.A.	Director since May 28, 2019	Investor with Hyde Park Angels	0	0.0	%

(1) Member of the Compensation and Corporate Governance Committee. Mr. Dent is Chair of the Compensation and Corporate Governance Committee.

(2) Member of the Audit Committee. Mr. Mayer is the Chair of the Audit Committee.

As at the date hereof, the directors and executive officers of the Corporation, as a group, beneficially owned, directly or indirectly, or exercised control over, a total of 12,551,863 Common Shares, representing approximately 23.5% of the issued and outstanding common shares of the Corporation.

The principal occupations, businesses or employments of each of the Corporation’s directors and executive officers within the past five years are disclosed in the brief biographies set out below.

45

Tal Hayek – Co-Founder, Director and Chief Executive Officer. Mr. Hayek has served as AcuityAds’ Chief Executive Officer since October 2009. In 2004, he founded an ad-tech company, which provided a marketing platform focused on lead generation and customer acquisition. This company was subsequently sold in 2006 to a public company. Mr. Hayek continued with the company for two years and was a key contributor in helping the company’s revenue grow to $110 million in 2008.

Jonathan Pollack – Chief Financial Officer. Mr. Pollack has served as AcuityAds’ Chief Financial Officer since May 2018. Mr. Pollack joined AcuityAds from The JMP Group, a private investment and consulting firm where he had been President since 2000. Previously, he served as the Executive Vice President of API Technologies Corp. and as the Chief Financial Officer and Corporate Secretary of Kaboose Inc. He also worked in investment banking in New York. Mr. Pollack received a Master of Science in Accounting and Finance from the London School of Economics and a Bachelor of Commerce from McGill University.

Rachel Kapcan – Co-Founder and Vice President of Client Operations. Ms. Kapcan has served as AcuityAds’ Vice President of Client Operations since September 2019 and previously served as Vice President of Technologies and Chief Information Officer. She began her career in the Israeli Intelligence Corps where she developed and designed contextual information and research systems and led projects developing a full-text retrieval system, including morphological and soundex searches. More recently, Ms. Kapcan has managed multi-million dollar infrastructure projects in the financial services industry.

Joe Ontman – Co-Founder, Director and Chief Business Development Officer. Mr. Ontman has served as AcuityAds’ Chief Business Development Officer since September 2019 and previously served as Chief Revenue Officer. He previously founded a computer supply company servicing large clients including Mount Sinai Hospital, the Hospital for Sick Children, Credit Suisse, the University of Toronto and the Government of Ontario. In 2007, he founded an ad-tech company specializing in client acquisitions via search marketing, email marketing and media buys. He holds a diploma in Computer Repair from Seneca College.

Oren Hisherik – Chief Information and Technology Officer. Mr. Hisherik has served as AcuityAds’ Chief Information and Technology Officer since October 2019 and previously served as Vice President, Engineering. Prior to his time at AcuityAds, Mr. Hisherik held various management and executive-level positions at Amdocs Limited, a leading provider of software services to communications and media companies, and led the successful business transformation of multiple top-tier telecommunications companies. He holds a Degree in Computer Science from Interdisciplinary Center Herzliya.

Sheldon Pollack – Chairman and Director. Mr. Pollack is an entrepreneur, having started his first venture at the age of 16 and has been an early stage investor in AcuityAds since January 2013. He is currently Managing Director of Ov2 Capital. Throughout his career, Mr. Pollack has played an active role in starting and funding a number of successful technology ventures. He co-founded OnX Enterprise Solutions Inc. and has held the position of Vice-Chairman of OnX Enterprise Solutions Inc. until it was acquired in 2017. He took OnX Enterprise Solutions Inc. public in April 2000 and subsequently re-privatized the company in April 2009. Today, OnX Enterprise Solutions Inc. has revenues over $750 million and offices throughout Canada, the United States and the United Kingdom.

46

Roger Dent – Director. Mr. Dent has served as the Chief Executive Officer and a director of Quinsam Capital Corporation since December 2013 and is a director of Omni-Lite Industries Canada, Inc., VitalHub Corp., Deveron UAS Corp., and California Nanotechnologies Corp. From 2003 to 2011, he held various positions, including portfolio manager, with Matrix Fund Management Inc., where he managed the Matrix Strategic Small Cap Fund and the Matrix Small Companies Fund. He was formerly Vice-Chairman of one of Canada’s largest independent investment dealers and was Managing Director and Deputy Manager of Research at CIBC World Markets. He holds a Master of Business Administration from Harvard Business School and a Bachelor of Commerce from Queen’s University.

Igal Mayer – Director. Mr. Mayer has over 30 years of experience in the financial services industry. He is the Chief Executive Officer of Kanetix Ltd. since September 2018, and previously was the Co-Chairman and Chief Executive Officer of RDA Insurance Inc. since January 2014. Prior to that, Mr. Mayer held various positions at Aviva plc and Aviva Canada Inc. for over 23 years, including Executive Director, Chief Executive Officer of Aviva Europe, Chief Executive Officer of Aviva North America, Chief Executive Officer of Aviva UKGI and Chief Executive Officer of Aviva Canada. Mr. Mayer previously served as the Chief Financial Officer at Canadian General Insurance Group, where he led the successful sale of the company. Mr. Mayer is a Certified Public Accountant and Chartered Accountant with the Canadian Institute of Chartered Accountants and holds a Bachelor of Arts in Economics and Commerce from the University of Toronto.

Yishay Waxman – Director. Mr. Waxman is an entrepreneur, investor and start-up advisor and has been the co-founder and President of Platterz Inc. since 2015 and President of YW Consulting, a marketing and advertising consulting company, since June 2005. He has worked in the mobile industry for over 18 years, selling platforms and solutions to more than 350 operators worldwide. Most recently, he was the co-founder of Jumptap, Inc., which was acquired in November 2013 by Millennial Media. He holds a Master of Business Administration from Heriot-Watt University (Israel) and an Honours Bachelor of Arts from McMaster University.

Corey Ferengul – Director. Mr. Ferengul is an experienced technology executive and investor. Most recently (from September 2017 to October 2018) he served as Executive Chairman and CEO of Magnetic Media, a leader in AI powered digital advertising, which was sold to Deloitte Digital. He is also a Board Member and active investor for Hyde Park Angels, a leading Midwest angel investment group. Additionally, he serves on boards of directors for Provi, dScout and Packback as well as advisory boards for several other companies. Mr. Ferengul was CEO of Undertone, a New York based ad-tech company from 2013 until its sale in 2015. Previously he spent six years as an executive of Rovi Corporation (now Tivo) as Executive VP of Product responsible for corporate and product strategy, engineering, & global marketing. Earlier in his career he held many roles in large and small organizations such as Platinum Technology (acquired by CA) and Meta Group (acquired by Gartner Group).

47

Corporate Cease Trade Orders, Bankruptcies, Penalties or Sanctions

No director or executive officer of the Corporation, is, as at the date hereof, or has been, within the ten years before the date hereof, a director, chief executive officer or chief financial officer of any company (including AcuityAds) that:

(a) was subject to a cease trade or similar order, or an order that denied the company access to any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days and that was issued while the director or executive officer was acting in the capacity as director, chief executive officer or chief financial officer; or

(b) was subject to a cease trade or similar order, or an order that denied the relevant company access to any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days, that was issued after the director or executive officer ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as a director, chief executive officer or chief financial officer.

No director or executive officer of the Corporation, or a shareholder holding a sufficient number of securities of the Corporation to affect materially the control of the Corporation:

(a) is, as at the date hereof, or has been within the ten years before the date hereof, a director or executive officer of any company (including AcuityAds) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or

(b) has, within the ten years before the date hereof, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director, executive officer or shareholder.

Other than as set forth below, no director or executive officer of the Corporation, or a shareholder holding a sufficient number of securities of the Corporation to affect materially the control of the Corporation, has been subject to:

(a) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or

(b) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision.

48

Pursuant to the terms of a settlement agreement dated December 17, 2001 between Mr. Roger Dent and the Ontario Securities Commission, Mr. Dent received a reprimand and agreed to pay a penalty of $50,000 plus $10,000 in costs to the Ontario Securities Commission in connection with certain trades in which he was involved while in a conflict of interest position as a result of being an officer and director of Yorkton Securities Inc.

Conflicts of Interest

To the best of the Corporation’s knowledge, and other than as disclosed herein, there are no known existing or potential conflicts of interest between the Corporation and any directors or officers of the Corporation, except that certain of the directors and officers serve as directors, officers, promoters and members of management of other public or private companies and therefore it is possible that a conflict may arise between their duties as a director or officer of the Corporation and their duties as a director, officer, promoter or member of management of such other companies.

The directors and officers of the Corporation are aware of the existence of laws governing accountability of directors and officers for corporate opportunity and requiring disclosures by directors and officers of conflicts of interest and the Corporation will rely upon such laws in respect of any directors’ and officers’ conflicts of interest or in respect of any breaches of duty by any of its directors or officers. All such conflicts will be disclosed by such directors or officers in accordance with the Canada Business Corporations Act and they will govern themselves in respect thereof to the best of their ability in accordance with the obligations imposed upon them by law.

AUDIT COMMITTEE

The Audit Committee is responsible for monitoring the Corporation’s systems and procedures for financial reporting and internal control, reviewing certain public disclosure documents, including the Corporation’s annual audited financial statements and unaudited quarterly financial statements, and monitoring the performance and independence of the Corporation’s external auditors. The Audit Committee is also responsible for reviewing with management the Corporation’s risk management policies, the timeliness and accuracy of the Corporation’s regulatory filings and all related party transactions as well as the development of policies and procedures related to such transactions.

Audit Committee Charter

The Audit Committee Charter sets out its responsibilities and authority, procedures governing meetings, qualifications for membership and particulars governing the role of the Chair. A copy of the Audit Committee Charter is attached hereto as Appendix “A”.

Composition of the Audit Committee

During the year ended December 31, 2020, the Audit Committee was comprised of five directors, all of whom were independent directors within the meaning of National Instrument 52-110 Audit Committees (“NI 52- 110”). The current members of the Audit Committee are: Messrs. Mayer (Chair), Dent, Sheldon Pollack, Waxman and Ferengul. In addition to being independent directors as described above, each member of the Audit Committee is considered “financially literate” pursuant to NI 52-110.

49

Relevant Education and Experience

Each member of our Audit Committee has an understanding of the accounting principles used to prepare financial statements and varied experience as to the general application of such accounting principles, as well as an understanding of the internal controls and procedures necessary for financial reporting. For further information on the relevant education and experience of each of the members of the Corporation’s Audit Committee, please see the biographical summary of each of Messrs. Mayer, Dent, Sheldon Pollack, Waxman and Ferengul under the heading “Directors and Officers”.

Audit Committee Oversight

At no time since January 1, 2020, has any recommendation of the audit committee to nominate or compensate an external auditor not been adopted by the Board.

Pre-Approval Policies and Procedures

The Audit Committee Charter sets out responsibilities regarding the provision of non-audit services by the Corporation’s external auditors and provides that the Audit Committee may pre-approve, in accordance with applicable law, any non-audit services to be provided by the Corporation’s external auditors, with reference to compatibility of the service with the external auditors’ independence.

External Auditor Service Fees

The aggregate fees billed by the Corporation’s external auditor during the years ended December 31, 2020 and December 31, 2019 are set out in the table below.

Year Ended	Audit Fees(1)		Audit Related Fees(2)		Tax Fees(3)		All Other Fees(4)
December 31, 2020	$	210,000	$	57,800	$	0		Nil
December 31, 2019	$	200,000	$	75,000	$	0		Nil

(1)	“Audit Fees” refers to the aggregate fees billed by the Corporation’s external auditor for audit services.
(2)	“Audit-Related Fees” refers to the aggregate fees billed for assurance and related services by the Corporation’s external auditor that are reasonably related to the performance of the audit or review of the Corporation’s financial statements and not reported under Audit Fees. These amounts were incurred in relation to a quarterly review performed by the Corporation’s external auditor.
(3)	“Tax Fees” refers to the aggregate fees billed for professional services rendered by the Corporation’s external auditor for tax compliance, tax advice and tax planning.
(4)	“All Other Fees” refers to the aggregate fees billed for certain other services provided by the Corporation’s external auditor, other than the services reported under the other three columns.

50

PROMOTERS

No person or company has within the two most recently completed financial years, or is during the current financial year, been a promoter of the Corporation or a subsidiary thereof.

LEGAL PROCEEDINGS AND REGULATORY ACTIONS

The Corporation is not and was not, during the year ended December 31, 2020, a party to any material legal proceedings, nor is any of its property, nor was any of its property, during the year ended December 31, 2020, the subject of any material legal proceedings. As at the date hereof, no such material legal proceedings are known to be contemplated.

During the financial year ended December 31, 2020, there were no: (a) penalties or sanctions imposed against the Corporation by a court relating to securities legislation or by a securities regulatory authority; (b) penalties or sanctions imposed by a court or regulatory body against the Corporation that would likely be considered important to a reasonable investor in making an investment decision; or (c) settlement agreements the Corporation entered into before a court relating to securities legislation or with a securities regulatory authority.

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

Other than as disclosed below and herein, none of the directors or executive officers of the Corporation, nor any person or company that beneficially owns, controls, or directs, directly or indirectly, more than 10% of any class or series of outstanding voting securities of the Corporation, nor any associate or affiliate of the foregoing persons, has or has had any material interest, direct or indirect, in any transaction within the three most recently completed financial years or during the current financial year that has materially affected or is reasonably expected to materially affect the Corporation.

Each of Sheldon Pollack, (Director and Chair of the Board), Tal Hayek (Co-Founder, Chief Executive Officer and a director of the Corporation), Rachel Kapcan (Co-Founder and VP of Client Operations), Nathan Mekuz (Co-Founder and VP of Artificial Intelligence), Joe Ontman (Co-Founder, Chief Business Development Officer and a director of the Corporation) and Jonathan Pollack (Chief Financial Officer effective as of May 9, 2018) participated in the private placement completed by the Corporation in 2018. See “Description and General Development of the Business – Three Year History – Financings” and the news release dated April 18, 2018, which is available on the Corporation’s SEDAR profile at www.sedar.com.

In June 2018, the Corporation entered into a subordinated term loan from a group of private lenders, including among others, the executive officers and certain directors of the Corporation, including Sheldon Pollack and relatives of Roger Dent and Igal Mayer. This term loan was repaid in full in April 2020. See “Description and General Development of the Business – Three Year History – Financings” and the material change report dated June 22, 2018, which is available on the Corporation’s SEDAR profile at www.sedar.com.

Each of Sheldon Pollack, (Director and Chair of the Board), Tal Hayek (Co-Founder, Chief Executive Officer and a director of the Corporation), Rachel Kapcan (Co-Founder and VP of Client Operations), and Joe Ontman (Co-Founder, Chief Business Development Officer and a director of the Corporation) sold Common Shares in the short form prospectus bought deal by the Corporation in 2020. See “Description and General Development of the Business – Three Year History – Financings” and the news release dated December 4, 2020, which is available on the Corporation’s SEDAR profile at www.sedar.com.

51

TRANSFER AGENT AND REGISTRAR

The Corporation’s transfer agent and registrar is TSX Trust Company at its principal office in Toronto, Ontario.

MATERIAL CONTRACTS

The Corporation did not enter into any material contracts outside the ordinary course of business during the year ended December 31, 2020, nor has it entered into any material contracts outside the ordinary course of business prior to the year ended December 31, 2020 which are still in effect as at the date of this AIF.

INTERESTS OF EXPERTS

PricewaterhouseCoopers LLP, Chartered Professional Accountants, are the auditors of the Corporation and have confirmed that they are independent within the meaning of the relevant rules and related interpretations prescribed by the relevant professional bodies in Canada and any applicable legislation or regulations

ADDITIONAL INFORMATION

Additional information relating to the Corporation may be found on SEDAR at www.sedar.com.

Additional information, including directors’ and officers’ remuneration and indebtedness, principal holders of the Corporation’s securities and securities authorized for issuance under equity compensation plans for the year ended December 31, 2020 will be contained in the Corporation’s management information circular filed in connection with its 2021 annual meeting of shareholders.

Additional financial information is provided in the Corporation’s annual financial statements and management’s discussion and analysis for the year ended December 31, 2020, each of which is available on SEDAR at www.sedar.com.

GLOSSARY

The following terms used in this AIF have the meanings set out below:

“140 Proof” means 140 Proof Inc., a subsidiary of the Corporation;

“AcuityAds” or the “Corporation” means AcuityAds Holdings Inc. and its subsidiary entities on a consolidated basis;

52

“ADman Media” has the meaning ascribed thereto under “Description and General Development of the Business – Three Year History – Acquisitions”;

“AIF” means this annual information form;

“API” means application program interface which specifies how software components should interact;

“Audit Committee” means the audit committee of the Board;

“Board” means the board of directors of the Corporation;

“Big Data” means a voluminous amount of unstructured and semi-structured data;

“Canadian GAAP” means Canadian generally accepted accounting principles;

“Common Share” mean a common share in the capital of the Corporation;

“DSU” has the meaning ascribed thereto under “Description of Capital Structure”;

“Full-Serve” or “Managed Services” means AcuityAds’ fully-managed online digital campaign execution services;

“IFRS” means International Financial Reporting Standards, as issued by the International Accounting Standards Board and as adopted by the Canadian Institute of Chartered Accountants, as amended from time to time;

“Magnetic Media” has the meaning ascribed thereto under “Description and General Development of the Business – Three Year History – Acquisitions”;

“Programmatic Marketing Platform” means AcuityAds’ proprietary machine-learning technology offered in a SaaS-based model enabling advertisers to independently target and connect with their audiences online via video, social, mobile and display channels through their digital advertising efforts;

“RSU” has the meaning ascribed thereto under “Description of Capital Structure”;

“TrueReach®” is a registered trademark of AcuityAds US Inc. and means products and services which provides the most accurate video viewership metric available and has been vetted, audited, and approved by the Media Rating Council;

“TSX” means the Toronto Stock Exchange; and

“U.S.” means the United States of America

53

APPENDIX A
AUDIT COMMITTEE CHARTER

General

The Board of Directors of the Corporation (the “Board of Directors”) will establish an Audit Committee (the “Audit Committee”). The primary role of the Audit Committee is to assist the Board of Directors in fulfilling its oversight responsibilities regarding the following:

· the accuracy and completeness of the Corporation’s Financial Statements;

· the internal control and financial reporting systems of the Corporation;

· the selection and activities of the Corporation’s external Auditor;|

· the development of the Corporation’s Risk Management Strategy;

· the Corporation’s compliance with legal and regulatory requirements regarding financial reporting; and

· any additional duties set out in this mandate or otherwise delegated to the Audit Committee by the Board of Directors.

Composition and Operation

The Board of Directors will in each year appoint at least three (3) Members of the Board of Directors (the “Board Members”) as Members of the Audit Committee. The majority of the Members of the Audit Committee shall be “Independent” Directors.

All Members of the Audit Committee shall be financially literate. “Financially literate” means the ability to read and understand a set of Financial Statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Corporation’s Financial Statements. Specifically, a Board Member should have the ability to assess the general application of such accounting principles in connection with the accounting for estimates, accruals and reserves.

Board Members who are not Members of the Audit Committee may attend all or any part of Meetings of the Audit Committee, but shall not vote.

Mandate

The Audit Committee’s duties and responsibilities include, but are not limited to the following:

A-1

Financial Reporting and Disclosure

In connection with the financial reporting and disclosure obligations of the Corporation, the Audit Committee will:

· review the Audited Annual Financial Statements of the Corporation (the “Annuals”) as prepared by Management in conjunction with the external Auditors, related Management Discussion and Analysis of operations and financial results of the Corporation (the “MD&A”) and earnings Press Releases for submission to the Board of Directors for approval;

· review the Quarterly Financial Statements of the Corporation (the “Quarterlies”), the related MD&A and earnings Press Releases for submission to the Board of Directors for approval;

· review with Management and the external Auditor, significant accounting practices employed by the Corporation and disclosure issues, including complex or unusual transactions, judgmental areas such as reserves or estimates, significant changes to accounting principles, and alternative treatments under Canadian GAAP and IFRS for material transactions. This review process must be undertaken in order to have reasonable assurance that the Financial Statements are complete, do not contain any misrepresentations, and present fairly the Corporation’s financial position and the results of its operations in accordance with Canadian GAAP and IFRS;

· confirm through discussions with Management that Canadian GAAP and IFRS and all applicable laws or regulations related to financial reporting and disclosure have been complied with;

· review representations made by Management or the Auditor or other experts regarding any fact or event, which could have a material current or future effect on the Corporation’s Financial Statements, and the manner in which these have been disclosed in the Financial Statements;

· discuss with Management the effect of any Off-Balance Sheet transactions, arrangements, obligations and other relationships with unconsolidated entities or other persons that may have a material current or future effect on the Corporation’s financial condition, changes in financial condition, results of operations, liquidity, capital expenditures, capital resources, or significant components or revenues and expenses; and

· satisfy itself that adequate procedures are in place for the review of the Corporation’s public disclosure of financial information extracted from the Corporation’s Financial Statements and periodically assess the adequacy of those procedures.

Oversight of Internal Controls

The Audit Committee will:

· review and assess the adequacy and effectiveness of the Corporation’s system of internal control and Management information systems through discussions with Management and the external Auditor;

A-2

· oversee the system of internal control, by:

· consulting with the external Auditor regarding the adequacy of the Corporation’s internal controls;

· monitoring Policies and Procedures for internal accounting, financial control and Management information, electronic data control and computer security;

· obtaining from Management adequate assurances that all statutory payments and withholdings have been made; and

· taking other actions as considered necessary.

· oversee investigations of alleged fraud and illegality relating to the Corporation’s finances and any resulting actions; and

· establish procedures for the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls or auditing matters, the confidential, anonymous submission by Employees of concerns regarding questionable accounting or auditing matters, and for the protection from retaliation of those who report such complaints in good faith.

External Audit Appointment and Removal

The Audit Committee will:

· recommend the appointment or replacement of the external Auditor to the Board of Directors, who will consider the recommendation prior to submitting the nomination to the Shareholders of the Corporation for their approval;

· review Management’s plans for an orderly transition to a new external Auditor, if required;

· pre-approve, in accordance with applicable law, any non-audit services to be provided to the Corporation by the external Auditor, with reference to compatibility of the service with the external Auditor’s independence; and

· review and approve the Corporation’s hiring policies regarding Partners, Employees and former Partners and Employees of the present and former external Auditor of the Corporation.

A-3

External Audit Liaison

The external Auditor will report directly to the Audit Committee.

In its role as liaison with the external Auditor the Audit Committee will:

· assist and facilitate the resolution of any disagreements between Management and the external Auditor regarding financial reporting;

· review all other material written communications between the external Auditor and Management, including the post-audit Management Letter containing the recommendations of the external Auditor, Management’s response and, subsequently, follow up identified weaknesses; and

· meet with the external Auditor independently from Management and without Management present at least annually to discuss and review specific issues; and as appropriate with respect to any significant matters that the Auditor may wish to bring to the Audit Committee for its consideration.

External Audit Review

The Audit Committee will:

· review with Management, and make recommendations to the Board of Directors, regarding the compensation of the external Auditor. In making a recommendation with respect to compensation, the Audit Committee shall consider the number and nature of reports issued by the external Auditor, the quality of internal controls, the size, complexity and financial condition of the Corporation, and the extent of other support provided by the Corporation to the external Auditor;

· review with Management the terms of the external Auditor’s engagement, accountability, experience, qualifications and performance. Evaluate the performance of the external Auditor;

· review the Audit Plan and scope of the external Audit with the external Auditor and Management, and consider the nature and scope of the planned audit procedures;

· discuss with the external Auditor any significant changes required in the approach or scope of their Audit Plan, Management’s handling of any proposed adjustments identified by the external Auditor, and any actions or inactions by Management that limited or restricted the scope of their work;

· review, independently from Management and without Management present, the results of the Annual External Audit, the Audit Report thereon and the Auditor’s review of the related MD&A, and discuss with the external Auditor the quality (not just the acceptability) of accounting principles used, any alternative treatments of financial information that have been discussed with Management, the ramifications of their use and the Auditor’s preferred treatment, and any other material communications with Management;

· engage the external Auditor to review all Interim Financial Statements and review the results of the Auditor’s review of the Interim Financial Statements and the Auditor’s review of the related MD&A independent of and without Management present;

A-4

· review any other matters related to the external Audit that are to be communicated to the Audit Committee under generally accepted auditing standards or that relate to the external Auditor;

· review with Management and the external Auditor any correspondence with regulators or governmental agencies, Employee complaints or published reports that raise material issues regarding the Corporation’s Financial Statements or Accounting Policies; and

· at least annually, and before the external Auditor issues its report on the Annual Financial Statements, review and confirm the independence of the external Auditor through discussions with the Auditor on their relationship with the Corporation, including details of all non-audit services provided. Consider the safeguards implemented by the external Auditor to minimize any threats to their independence, and take action to eliminate all factors that might impair, or be perceived to impair, the independence of the external Auditor. Consider the number of years the lead audit partner has been assigned to the Corporation, and consider whether it is appropriate to recommend to the Board of Directors a policy of rotating the lead audit partner more frequently than every five years, as is required under the rules of the Canadian Public Accountability Board.

Risk Management

The Audit Committee will:

· review with Management the Corporation’s tolerance for financial risks;

· review with Management its assessment of the significant financial risks facing the Corporation;

· review with Management its assessment of the policies for managing those significant financial risks; and

· review with Management its plans, processes and programs to manage and control such financial risks.

Regulatory Compliance

The Audit Committee will:

· review with Management any comment letters received from regulators and ensure that comments/concerns of the regulators are dealt with satisfactorily and in a timely manner; and

· review with Management the timeliness and accuracy of the Corporation’s filings with regulatory authorities.

A-5

Related Party Transactions

The Audit Committee will review with Management all related party transactions and the development of Policies and Procedures related to those transactions.

Board of Directors Relationship and Reporting|

The Audit Committee will:

· review and assess the adequacy of the Audit Committee mandate annually and submit such amendments as the Audit Committee proposes to the Board of Directors;

· oversee appropriate disclosure of the Audit Committee mandate, and other information required to be disclosed by applicable securities laws, in the Corporation’s AIF and all other applicable disclosure documents, including any Management Information Circular distributed in connection with the solicitation of proxies from the Shareholders of the Corporation; and

· report regularly to the Board of Directors on Audit Committee activities, issues and related recommendations.

Chair

The Board of Directors will in each year appoint a Chairman of the Audit Committee (the “AC Chair”). In the AC Chair’s absence, or if the position is vacant, the Audit Committee may select another member as AC Chair. The AC Chair will have the right to exercise all powers of the Audit Committee between meetings but will attempt to involve all other Members as appropriate prior to the exercise of any powers and will, in any event, advise all other Members of any decisions made or powers exercised.

Meetings

The Audit Committee shall meet at the request of the AC Chair, but in any event it will meet at least four times a year. Notices calling Meetings shall be sent to all Audit Committee Members, to the CEO and to the AC Chair. The external Auditor or any member of the Audit Committee may call a meeting of the Audit Committee.

Quorum

A majority of Members of the Audit Committee, present in person, by teleconference, or by videoconference will constitute a quorum.

Removal and Vacancy

A Member may resign from the Audit Committee, and may be removed and replaced at any time by the Board of Directors, and will automatically cease to be a member as soon as the Member ceases to be a Board Member. The Board of Directors will fill vacancies in the Audit Committee by appointment from among the Directors in accordance with this mandate. Subject to quorum requirements, if a vacancy exists on the Audit Committee, the remaining Members will exercise all its powers.

A-6

Experts and Advisors

In order to carry out its duties, the Audit Committee may retain or appoint, at the Corporation’s expense, such independent counsel and other experts and advisors, as it deems necessary. The Audit Committee shall provide notice to the relevant parties of its actions in this regard.

Access

The Audit Committee may have access to and direct contact with any Employee, contractor, supplier, customer or other person that is engaged in any business relationship with the Corporation to confirm information or to investigate any matter within the mandate of the Audit Committee.

Secretary and Minutes

The AC Chair shall appoint a secretary for each meeting to keep Minutes of such Meeting. The Minutes of the Audit Committee will be in writing and duly entered into the books of the Corporation. The Minutes of the Audit Committee will be available to all Board Members.

A-7

EX-4.2

Exhibit 4.2

AcuityAds Holdings Inc.

Consolidated Financial Statements

December 31, 2020 and 2019
(expressed in Canadian dollars)

 

Independent auditor’s report

To the Shareholders of AcuityAds Holdings Inc.

Our opinion

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of AcuityAds Holdings Inc. and its subsidiaries (together, the Company) as at December 31, 2020 and 2019, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS).

What we have audited

The Company’s consolidated financial statements comprise:

· the consolidated statements of financial position as at December 31, 2020 and 2019;

· the consolidated statements of income (loss) for the years then ended;

· the consolidated statements of comprehensive income (loss) for the years then ended;

· the consolidated statements of changes in shareholders’ equity for the years then ended;

· the consolidated statements of cash flows for the years then ended; and

· the notes to the consolidated financial statements, which include significant accounting policies and other explanatory information.

Basis for opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities in accordance with these requirements.

PricewaterhouseCoopers LLP

PwC Tower, 18 York Street, Suite 2600, Toronto, Ontario, Canada M5J oB2

T: +1 416 863 1133, F: +1 416 365 8215

“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2020. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matter

Impairment assessment of goodwill

Refer to note 2 – Summary of significant accounting policies and note 7 – Goodwill to the consolidated financial statements.

The Company had goodwill of $4,869,841 as at December 31, 2020. Management performs an impairment assessment at each reporting date to determine whether there is any indication of impairment. An impairment loss is recognized if the carrying amount of the cash generating unit (CGU) to which the goodwill relates exceeds its estimated recoverable amount. The recoverable amount was based on the fair value less cost of disposal of goodwill and value-in-use method using a discounted cash flow model. Significant assumptions used in the discounted cash flow model included revenue growth rates, operating margins, tax rates, terminal value, and discount rates. No impairment was recognized as a result of the 2020 impairment review.

We considered this a key audit matter due to (i) the significance of the goodwill balance and (ii) the significant judgment made by management in determining the recoverable amount of the CGU, including the use of significant assumptions. This has resulted in a high degree of subjectivity and audit effort in performing audit procedures to test the significant assumptions.

How our audit addressed the key audit matter

Our approach to addressing the matter involved the following procedures, among others:

· Evaluated how management determined the recoverable amount of the goodwill, which included the following:

- Tested the appropriateness of the method used and the mathematical accuracy of the discounted cash flow model.

- Tested the revenue growth rates applied by management in the discounted cash flow model by comparing them to the budget, management’s strategic plans approved by the Board, and available third party published economic data.

- Performed a sensitivity analysis on key assumptions (revenue growth rates, operating margins, tax rates, terminal value, and discount rates).

- Assessed the reasonableness of discount rates and the terminal value by comparing to externally derived data.

- Tested the underlying data used in the discounted cash flow model.

· Evaluated the sufficiency of the disclosures in the consolidated financial statements.

Other information

Management is responsible for the other information. The other information comprises the Management’s Discussion and Analysis.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of management and those charged with governance for the consolidated financial statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

Auditor’s responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

· Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

· Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

· Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

· Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

· Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

· Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor’s report is Anita McOuat.

/s/ PricewaterhouseCoopers LLP

Chartered Professional Accountants, Licensed Public Accountants

Toronto, Ontario

March 1, 2021

AcuityAds Holdings Inc.

Consolidated Statements of Financial Position

As at December 31, 2020 and 2019

(expressed in Canadian dollars)

	2020		2019
	$		$
Assets
Current assets
Cash and cash equivalents		22,638,300		7,407,122
Accounts receivable		31,859,306		38,234,752
Prepaid expenses and other		1,901,067		2,477,651
Investment tax credits receivable (note 4)		21,922		286,883
		56,420,595		48,406,408
Non-current assets
Restricted cash		-		100,000
Deferred tax asset (note 22)		-		1,262,014
Property and equipment (notes 3 and 5)		7,945,110		6,978,834
Intangible assets (note 6)		3,197,953		7,741,882
Goodwill (note 7)		4,869,841		4,869,841
		72,433,499		69,358,979
Liabilities
Current liabilities
Accounts payable and accrued liabilities		23,232,661		26,330,763
Term loans (note 20)		2,481,550		1,210,500
Revolving line of credit (note 19)		-		15,384,498
International loans (note 21)		1,092,297		1,006,653
Lease obligations (notes 8)		2,850,497		2,748,200
		29,657,005		46,680,614
Non-current liabilities
Term loans (note 20)		5,796,454		2,241,831
International loans (note 21)		887,932		1,436,666
Lease obligations (notes 8)		4,041,520		3,400,403
		40,382,911		53,759,514
Shareholders’ Equity (notes 10)		32,050,588		15,599,465
		72,433,499		69,358,979

AcuityAds Holdings Inc.

Consolidated Statements of Income (Loss)

For the years ended December 31, 2020 and 2019

(expressed in Canadian dollars)

	2020		2019
	$		$
Revenue
Managed services		80,500,355		87,996,085
Self-service		24,393,693		31,138,144
		104,894,048		119,134,229
Media costs		50,808,810		61,711,918
Gross profit		54,085,238		57,422,311
Operating expenses
Sales and marketing		18,127,414		27,019,494
Technology (notes 4 and 6)		13,156,538		13,801,435
General and administrative		5,918,740		7,873,489
Share-based compensation (note 10)		998,307		1,410,467
Acquisition costs		-		1,289,920
Gain on contingent consideration		-		(3,066,799	)
Impairment loss of goodwill (note 7)		-		3,231,048
Depreciation and amortization		8,894,174		8,123,877
		47,095,173		59,682,931
Income (loss) from operations		6,990,065		(2,260,620	)
Finance costs (note 11)		1,663,039		2,493,711
Foreign exchange loss		138,335		699,968
		1,801,374		3,193,679
Net income (loss) before income taxes		5,188,691		(5,454,299	)
Income taxes (note 22)		1,497,701		153,107
Net income (loss) for the year		3,690,990		(5,607,406	)
Net income (loss) per share (note 12)
Basic and diluted		0.07		(0.12	)

AcuityAds Holdings Inc.

Consolidated Statements of Comprehensive Income (Loss)

For the years ended December 31, 2020 and 2019

(expressed in Canadian dollars)

	2020			2019
	$			$
Net income (loss) for the period		3,690,990			(5,607,406	)
Exchange differences on translating foreign operations		(415,049	)		(415,915	)
Comprehensive income (loss) for the period		3,275,941			(6,023,321	)

AcuityAds Holdings Inc.

Consolidated Statements of Changes in Shareholders’ Equity

For the years ended December 31, 2020 and 2019

(expressed in Canadian dollars)

	2020
	Common shares
		Amount	Contributed surplus			Warrants			Other reserves			Deficit			Total
	Number	$	$			$			$			$			$
Balance - December 31, 2019	47,824,212	42,185,794		6,954,447			2,337,372			415,915			(36,294,063	)		15,599,465
Shares issued – options exercised	1,133,482	1,465,658		-			-			-			-			1,465,658
Equity financing (note 10(b))	1,968,000	10,617,887		-			-			-			-			10,617,887
Warrants issues - term loan	-	-		(1,922,271	)		-			-			-			(1,922,271	)
Share-based compensation (note 10(c))	-	-		998,307			-			-			-			998,307
Shares issued - Warrants exercised	1,417,623	1,601,418		1,090,965			(1,090,965	)		-			-			1,601,418
Shares issued - DSUs/RSUs exercised (notes 10(d) and 10(e))	1,078,707	1,112,354		(1,112,354	)		-			-			-			-
Warrants cancelled and forfeited	-	-		1,215,128			(1,215,128	)		-			-			-
Other comprehensive income	-	-		-			-			(866	)		-			(866	)
Net income for the year	-	-		-			-			-			3,690,990			3,690,990
Balance - December 31, 2020	53,422,024	56,983,111		7,224,222			31,279			415,049			(32,603,073	)		32,050,588

	2019
	Common shares
			Amount	Contributed surplus			Warrants		Other reserves		Deficit		Total
	Number		$	$			$		$		$		$
Balance - December 31, 2018		40,951,002	33,552,755		5,252,136		2,472,346		(446,279	)	(30,686,658	)	10,144,300
Shares issued – options exercised		240,167	230,872		-		-		-		-		230,872
Equity financing (note 10(b))		5,936,300	7,724,145		-		274,257		-		-		7,998,402
Share-based compensation (note 10(c))		-	-		1,410,467		-		-		-		1,410,467
Shares issued - Warrants exercised		555,885	560,635		409,231		(409,231	)	-		-		560,635
Shares issued - DSUs/RSUs exercised (notes 10(d) and 10(e))		140,858	117,387		(117,387	)	-		-		-		-
Other comprehensive income		-	-		-		-		862,194		-		862,194
Net loss for the year		-	-		-		-		-		(5,607,405	)	(5,607,405	)
Balance - December 31, 2019		47,824,212	42,185,794		6,954,447		2,337,372		415,915		(36,294,063	)	15,599,465

AcuityAds Holdings Inc.

Consolidated Statements of Cash Flows

For the years ended December 31, 2020 and 2019

(expressed in Canadian dollars)

	2020			2019
	$			$
Cash provided by (used in)
Operating activities
Income (loss) for the year		3,690,990			(5,607,405	)
Adjustments to reconcile net income (loss) to net cash flows
Depreciation and amortization		8,894,174			8,123,877
Finance costs (note 11)		1,663,039			2,493,711
Share-based compensation (note 10(c))		998,307			1,410,467
Gain on contingent consideration		-			(3,066,799	)
Impairment loss (note 7)		-			3,231,048
Change in non-cash operating working capital
Accounts receivable		6,375,446			(4,252,158	)
Prepaid expenses and other		676,584			(1,356,692	)
Investment tax credits receivable		299,051			(20,794	)
Deferred tax asset adjustment		1,278,700			-
Accounts payable and accrued liabilities		(3,201,778	)		1,998,048
Interest paid – net		(1,381,698	)		(2,312,449	)
		19,292,815			640,854
Investing activities
Additions to property and equipment (note 5)		(4,923,514	)		(6,935,818	)
Additions to intangible assets (note 6)		(393,007	)		(1,547,877	)
		(5,316,521	)		(8,483,695	)
Financing activities
Amount drawn from revolving line of credit (note 19)		67,340,097			77,372,076
Repayment of revolving line of credit (note 19)		(83,066,960	)		(75,321,614	)
Proceeds from term loans (note 20)		12,266,281			-
Repayment of term loans principal (note 20)		(9,101,681	)		(1,815,750	)
Additions to international loans		1,719,864			1,377,740
Repayment of international loans		(2,182,955	)		(3,560,923	)
Additions to leases		4,013,250			5,380,084
Earn-out – acquisition		-			(2,927,982	)
Repayment of leases		(3,417,975	)		(2,058,246	)
Net proceeds from equity financing (note 10(b))		10,617,887			7,998,402
Proceeds from the exercise of warrants		1,601,418			560,635
Proceeds from the exercise of stock options		1,465,658			230,872
		1,254,884			7,235,294
Increase (decrease) in cash and cash equivalents		15,231,178			(607,547	)
Cash and cash equivalents – Beginning of year		7,407,122			8,014,668
Cash and cash equivalents – End of year		22,638,300			7,407,121
Supplemental disclosure of non-cash transactions
Additions to property and equipment under leases		4,129,910			6,114,815

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

1 Corporate information

AcuityAds Holdings Inc. (“AcuityAds” or the “Company”), and its wholly owned subsidiaries AcuityAds Inc., AcuityAds US Inc., 140 Proof Inc., Visible Measures Corp. (including its wholly owned subsidiaries, “Visible Measures”), AcuityAds MM Inc., ADman Interactive S.L.U. (“ADman”) and 2422330 Ontario Inc., a company that holds certain technology assets, is a leading provider of targeted digital media solutions, enabling advertisers to connect intelligently with their audiences across online display, video, social and mobile campaigns. AcuityAds is a publicly traded company, incorporated in Canada, and its head office is located at 70 University Ave, Suite 1200, Toronto, Ontario M5J 2M4. The Company’s common shares are listed on the Toronto Stock Exchange in Canada, under the trading symbol “AT”.

Effective January 1, 2020 AcuityAds MM Inc. and Visible Measures were merged into AcuityAds US Inc. and 2422330 Ontario Inc. was amalgamated into AcuityAds Inc.

2 Summary of significant accounting policies

Statement of compliance

These consolidated financial statements have been prepared in accordance with IFRS, as issued by the International Accounting Standards Board. The date the Board of Directors authorized the consolidated financial statements for issue is March 1, 2021.

Basis of presentation

These consolidated financial statements are prepared in Canadian dollars, which is the Company’s functional and reporting currency and have been prepared mainly under the historical cost basis. Other measurement bases used are described in the applicable notes.

Use of estimates and judgements

The preparation of the consolidated financial statements and application of IFRS often involve management’s judgement and the use of estimates and assumptions deemed to be reasonable at the time they are made. The Company reviews estimates and underlying assumptions on an ongoing basis. Revisions are recognized in the period in which estimates are revised and may impact future periods as well.

Other results may be derived with different judgements or using different assumptions or estimates and events may occur that could require a material adjustment.

The following are critical accounting policies subject to such judgements and the key sources of estimation uncertainty that the Company believes could have the most significant impact on the consolidated financial statements.

1

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

· Key sources of estimation uncertainty

i) Accounts receivable – the Company monitors the financial stability of its customers and the environment in which they operate to make estimates regarding the likelihood that the individual trade receivable balances will be paid. Credit risks for outstanding customer receivables are regularly assessed and allowances are recorded for estimated losses.

ii) Share-based payments – the estimated fair value of stock options is determined using the Black-Scholes option pricing model. Inputs to the model are subject to various estimates related to volatility, interest rates, dividend yields and expected life of the stock options issued. Fair value inputs are subject to market factors, as well as internal estimates. In addition to the fair value calculation, the Company estimates the expected forfeiture rate with respect to equity-settled share-based payments based on historical experience.

iii) Goodwill – Impairment – the goodwill impairment test requires a calculation to determine the recoverable amount of goodwill. Management has determined the recoverable amount by determining the higher of fair value less costs of disposal of goodwill and value in use. Determining fair value and value in use requires the use of estimates and assumptions about factors that impact the valuation of goodwill. Such estimates and assumptions include the forecasted financial performance of the Company and market factors applied. Reasonable possible changes in key estimates and assumptions have the potential to cause the recoverable amount of goodwill to change.

· Critical judgements in applying accounting policies

i) Revenue and cost recognition – for revenue from sales of third-party products or services, management’s judgement is applied regarding the determination of whether the Company is a principal or agent to the transactions. In making this judgement, management places significant weight on the fact that the Company has the primary responsibility for providing access to the Company’s Programmatic Marketing Platform, which is critical to the fulfillment of the customer deliverables.

ii) Impairment tests for non-financial assets other than goodwill – judgement is applied in determining whether events or changes in circumstances during the period are indicators that a review for impairment should be conducted.

2

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

COVID-19

On March 11, 2020, the World Health Organization declared the outbreak of COVID-19, which continues to spread throughout Canada and around the world, as a global pandemic. COVID-19 and actions taken to mitigate its spread have had, and are expected to continue to have, an adverse impact on both local and global economies and financial markets, including the geographical areas in which the Company operates.

Despite the COVID-19 pandemic and the Company’s changes to its work environment, AcuityAds continued to operate its business in the normal course. To date, none of the Company’s operations have closed down or have otherwise been materially affected by the COVID-19 pandemic. Certain of the Company’s offices have been subject to government-mandated lockdowns for some periods of time. However, the Company’s staff has been able to perform their functions remotely without meaningful reductions in the Company’s ability to service its customers.

Basis of consolidation

The financial results of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

Intercompany balances and transactions and any unrealized income and expenses arising from such transactions are eliminated upon consolidation.

Revenue

Revenue is recognized based on the five-step model outlined in IFRS 15 – Revenue Recognition from Contracts with Customers. The Company generates revenue from the delivery of targeted digital media solutions, enabling advertisers to connect intelligently with their audiences across online display, video, social and mobile campaigns using its Programmatic Marketing Platform. The Company offers its services on a fully-managed and a self-serve basis, which is recognized over time using the output method when the performance obligation is fulfilled. The performance obligation is satisfied over time as the volume of impressions are delivered up to the contractual maximum for fully-managed revenue and the delivery of media inventory for self-serve revenue.

Revenue arrangements are evidenced by a fully executed insertion order (“IO”). Generally, IOs specify the number and type of advertising impressions to be delivered over a specified time at an agreed upon price and performance objectives for an ad campaign. Performance objectives are generally a measure of targeting as defined by the parties in advance, such as number of ads displayed, consumer clicks on ads or consumer actions (which may include qualified leads, registrations, downloads, inquiries or purchases). These payment models are commonly referred to as CPM (cost per impression), CPC (cost per click) and CPA (cost per action).

3

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

The Company determines collectability by performing ongoing credit evaluations and monitoring its customers’ accounts receivable balances. For new customers and their agents, which may be advertising agencies or other third parties, the Company performs a credit check with an independent credit agency and checks credit references to determine creditworthiness. The Company only recognizes revenue when collection is reasonably assured. If collection is not considered reasonably assured, revenue is recognized only once all amounts are collected. Revenue is recorded net of trade discounts and volume rebates. If it is probable that discounts will be granted and amounts can be measured reliably, then the discount is recognized as a reduction of revenue as the related sales are recognized.

In instances where the Company contracts with third party advertising agencies on behalf of their advertiser clients, a determination is made to recognize revenue on a gross or net basis based on an assessment of whether the Company is acting as the principal or an agent in the transaction. The Company is acting as the principal in these arrangements and therefore revenue earned and costs incurred are recognized on a gross basis as the Company has control and is responsible for fulfilling the advertisement delivery, establishing the selling prices and the delivery of the advertisements for fully managed revenue, providing training and updates for the self-serve proprietary platform and performing all billing and collection activities.

Amounts billed in excess of revenue recognized to date on an arrangement by arrangement basis are classified as deferred revenue, whereas revenue recognized in excess of amounts billed is classified as accrued receivables and included as part of accounts receivable.

Foreign currency transactions

· Transactions and balances in foreign currencies

The Company’s functional and reporting currency is the Canadian dollar (“CAD”). Transactions in foreign currencies are translated to the Company’s functional currency at exchange rates at the dates of transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to the functional currency at the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary assets and liabilities and related depreciation are translated at historical exchange rates. Revenue and expenses other than depreciation are translated at the average rates of exchange for the period.

4

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

· Group companies with a functional currency other than CAD

The assets and liabilities of foreign subsidiaries are translated into CAD at the rate of exchange prevailing at the reporting date, and their income statements are translated at the average rates of exchange for the period.

Exchange rate adjustments arising on translation are recognized in other comprehensive income (loss). On disposal of a foreign subsidiary, the component of other comprehensive income (loss) relating to that particular foreign operation is recognized in net income (loss).

Financial instruments

· Non-derivative financial assets

The Company initially recognizes loans and receivables and deposits on the date they originate. All other financial assets are recognized initially on the trade date at which the Company becomes a party to the contractual provisions of the instrument.

The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred.

Financial assets and liabilities are offset and the net amount is presented in the consolidated statements of financial position when, and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

Financial instruments are, for measurement purposes, grouped into categories. The classification depends on the purpose and is determined on initial recognition. The Company’s non-derivative financial assets comprise loans and receivables.

Cash and cash equivalents comprise cash balances and cash deposits with original maturities of three months or less.

5

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

Loans and receivables, which include cash, accounts receivable and investment tax credits (“ITC”) receivable, are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortized cost using the effective interest method, less any impairment losses. Accounts receivable comprise trade receivables, net of allowance for doubtful accounts. There were no significant adjustments to the amounts recognized in the consolidated financial statements on adoption of IFRS 9 – Financial Instruments (“IFRS 9”) in 2018. The Company has adopted the use of an expected credit loss model rather than an incurred loss analysis when evaluating the allowance for doubtful accounts receivable (note 16).

ITCs receivable comprise refundable Canadian ITCs for qualifying research and development activities in Canada.

The Company’s non-derivative financial liabilities consist of accounts payable and accrued liabilities, revolving line of credit, term loans and amounts due to related parties.

Such financial liabilities are recognized initially at fair value less any directly attributable transaction costs. Subsequent to initial recognition and measurement, these financial liabilities are measured at amortized cost using the effective interest method.

Property and equipment

· Recognition and measurement

Property and equipment are measured at cost less accumulated depreciation and accumulated impairment losses.

Cost includes expenditures that are directly attributable to the acquisition of the asset.

Gains and losses on disposal of an item of property and equipment are determined by comparing the proceeds from disposal with the carrying amount of property and equipment and are recognized in net income (loss). The costs of the day-to-day servicing of property and equipment are recognized in net income (loss) as incurred.

· Depreciation

Depreciation is calculated on the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value. Depreciation is recognized on a straight-line basis over the estimated useful lives of the property and equipment, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset.

6

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

The estimated useful lives for the current and comparative years are as follows:

Furniture and fixtures	5 years
Data centre equipment	4 years
Office computer equipment	3 years
Equipment under finance leases	3 years

Depreciation methods, useful lives and residual values are reviewed at each year-end and adjusted if appropriate.

· Research and development

Expenditures on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, are recognized in net income (loss) as incurred.

Expenditures on development activities involve a plan or design for the production of new or substantially improved products and processes. Development expenditures are capitalized only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Company intends to and has sufficient resources to complete development and to use or sell the asset.

Impairment

· Financial assets (including accounts receivable)

A financial asset is considered impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset that can be estimated reliably. Significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively based on the nature of the asset.

The Company assesses on a forward-looking basis the expected credit loss associated with its financial assets. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade and other receivables, the Company applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognized at the time of initial recognition of the receivables. There was no impact due to this change in accounting policy.

· Non-financial assets

The carrying amounts of the Company’s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

7

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

The recoverable amount of an asset or group of assets (cash-generating unit) (“CGU”) is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that is largely independent of the cash inflows of other assets or CGUs.

An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognized in net income (loss). Impairment losses recognized in respect of CGUs are allocated to reduce the carrying amounts of the other assets in the unit (group of units) on a pro rata basis.

Impairment losses recognized in prior periods, other than those recognized for impairment of goodwill, are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

Share-based payments

Share-based payment arrangements in which the Company receives goods or services as consideration for its own equity instruments are accounted for as equity-settled share-based payment transactions.

The grant date fair value of share-based payment awards such as performance share units (“PSUs”), restricted share units (“RSUs”) and stock options granted to employees is recognized as a compensation cost, with a corresponding increase in contributed surplus, over the vesting period of the award. The amount recognized is adjusted to reflect the number of awards for which the related service and non-market vesting conditions are expected to be met, such that the amount ultimately recognized is based on the number of awards that vest. Upon exercising the options, the fair value of the options exercised that has been expensed to contributed surplus is reclassified to common shares and reflected in the consolidated statements of changes in shareholders’ equity.

8

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

Deferred share units

As part of the Company’s long-term incentives, the Company from time to time issues deferred share units (“DSUs”) under its long-term incentive plans. DSU awards are settled with the issuance of common shares. The compensation expense for DSUs is based on the fair value at the time the award is granted. The expense is recognized as a component of share-based compensation expense with a corresponding increase to contributed surplus within shareholders’ equity. Upon redemption, the fair value of the award is reclassified from contributed surplus to share capital.

Provisions

A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. The timing or amount of the outflow may still be uncertain. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as a finance cost.

Finance costs

Finance costs comprise interest expense on the revolving line of credit, leases and term loans. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognized in net loss using the effective interest method.

Income taxes

Income tax expense for the year comprises current and deferred income taxes. Current taxes and deferred taxes are recognized in the consolidated statements of comprehensive loss, except to the extent that they relate to items recognized in other comprehensive income (“OCI”) or directly in equity. In these cases, the taxes are also recognized in OCI or directly in equity, respectively.

The Company uses the asset and liability method of accounting for deferred income taxes. Under this method, the Company recognizes deferred income tax assets and liabilities for future income tax consequences attributable to temporary differences between the financial statement carrying amounts of assets and liabilities and their respective income tax bases, and on unused tax losses and tax credit carry-forwards. The Company measures deferred income taxes using tax rates and laws that have been enacted or substantively enacted at the reporting date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled. The Company recognizes deferred income tax assets only to the extent that it is probable that future taxable income will be available against which the deductible temporary differences as well as unused tax losses and tax credit carry-forwards can be utilized. Deferred income tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized. The Company recognizes the effect of a change in income tax rates in the year of enactment or substantive enactment.

9

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

Deferred income taxes are not recognized if they arise from the initial recognition of goodwill, nor are they recognized on temporary differences arising from the initial recognition of an asset or liability in a transaction that is not a business combination and that affects neither accounting nor taxable income (loss). Deferred income taxes are also not recognized on temporary differences relating to investments in subsidiaries to the extent that it is probable that the temporary differences will not reverse in the foreseeable future.

The Company records current income tax expense or recovery based on income earned or loss incurred for the year in each tax jurisdiction where it operates, and for any adjustment to taxes payable in respect of previous years, using tax laws that are enacted or substantively enacted at the consolidated statements of financial position dates.

In the ordinary course of business, there are many transactions for which the ultimate tax outcome is uncertain. The final tax outcome of these matters may be different from the estimates originally made by management in determining the Company’s income tax provisions. Management periodically evaluates the positions taken in the Company’s tax returns with respect to situations in which applicable tax rules are subject to interpretation. The Company establishes provisions related to tax uncertainties where appropriate based on its best estimate of the amount that will ultimately be paid to or received from tax authorities.

Investment tax credits

The Company is entitled to certain refundable ITCs for qualifying research and development activities performed. The ITCs are accounted for as a reduction of the related expenditures for items expensed in the consolidated statements of comprehensive loss, being primarily as part of employee compensation and benefits, or as a reduction of the related asset’s cost for items capitalized in the consolidated statements of financial position when the amount is reliably estimable and realization is reasonably assured.

Government assistance

Government grants and subsidies are recognized at fair value when there is reasonable assurance that they will be received, and the Company will comply with the conditions associated with the grants. To the extent that government grants are earned under the conditions of the grant prior to receipt of funds, the Company records a government grants receivable. Government grants related to operating expenses are reflected as a reduction of such expenses in the year when they are incurred (note 14).

10

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

Net income (loss) per share

Basic income (loss) per share is calculated by dividing the net income (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted income (loss) per share is calculated by dividing the net income (loss) for the period by the sum of the weighted average number of common shares outstanding and the dilutive common share equivalents outstanding during the period. Common share equivalents consist of the shares issuable upon exercise of stock options and shares issuable upon exercise of common share unit options calculated using the treasury stock method. Common share equivalents are not included in the calculation of the weighted average number of shares outstanding for diluted net income (loss) per share when the effect would be anti-dilutive.

Media costs

Media costs are considered the Company’s cost of goods sold. The costs include the publishing and real time bidding costs to secure advertising space.

Intangible assets

The useful life of an intangible asset is either finite or indefinite. Intangible assets are initially measured at fair value. Following the initial recognition, intangible assets are carried at the initial fair value less accumulated amortization and impairment losses, if any. Acquired intangible assets are recognized as intangible assets with finite lives. Amortization of customer relationships and technology is based on the estimated useful lives of these assets and is recognized on a straight-line basis over three years. Amortization for the tradename is recognized on a straight-line basis over four years. Intangible assets with finite lives are amortized over their useful economic lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired.

Change in accounting policies

The Company has applied the following standards and amendments for the first time for their annual reporting period commencing January 1, 2020:

· Definition of Material – amendments to IAS 1 – Presentation of Financial Statements and IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors

· Definition of a Business – amendments to IFRS 3 – Business Combinations

11

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

· Interest Rate Benchmark Reform – amendments to IFRS 9 – Financial Instruments, IAS 39 – Financial Instruments: Recognition and Measurement and IFRS 7 – Financial Instruments: Disclosures

· Revised Conceptual Framework for Financial Reporting

The Company also elected to adopt the following amendments early:

· Annual Improvements to IFRS Standards 2018-2020 Cycle.

The amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods.

Certain new accounting standards and interpretations have been published that are not mandatory for December 31, 2020 reporting periods and have not been early adopted by the Company. These standards are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

3 Leases

In 2019, the Company elected to record right-of-use assets based on the corresponding lease liability in accordance with IFRS 16 – Leases (“IFRS 16”). Right-of-use assets and lease obligations of $3,608,085 were recorded as at January 1, 2019, with no net impact on deficit. When measuring lease liabilities, the Company discounted lease payments using its incremental borrowing rate as at January 1, 2019. The weighted average rate applied is 6.75%.

For leases previously classified as finance leases, the entity recognized the carrying amount of the lease asset and lease liability immediately before transition as the carrying amount of the right-of-use asset and the lease liability at the date of initial application. The measurement principles of IFRS 16 are only applied after that date.

The associated right-of-use assets for property leases were measured on a retrospective basis as if the new rules had always been applied. Other right-of use assets were measured at the amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognized in the consolidated statements of financial position as at December 31, 2020 and 2019. There were no onerous lease contracts that would have required an adjustment to the right-of-use assets at the date of initial application.

12

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

Right-of-use assets included in property and equipment (note 5) consist of the following leases:

	As at December 31, 2020 $
Equipment		7,094,280
Buildings		-
Total right-of-use assets		7,094,280

4 Investment tax credits receivable

The Company became a public company in 2014 and accordingly the federal portion of any ITCs claimed on eligible Scientific Research and Experimental Development (“SRED”) expenses following the Company becoming public will no longer be refundable, but will be carried forward as a credit for up to 20 years to reduce future income taxes payable.

As at December 31, 2020, no ITCs and no international tax credits have been recorded relating to 2020 SRED expenditures. As at December 31, 2019, no ITCs and $629,881 in international tax credits have been recorded relating to 2019 SRED expenditures.

5 Property and equipment

	Furniture and fixtures $			Data centre equipment $			Office computer equipment $			Right-of- use assets $			Total $
Net book value – December 31, 2019		373,330			21,351			482,641			6,101,512			6,978,834
Additions		693,599			-			100,005			4,129,910			4,923,514
Depreciation		(216,098	)		(12,527	)		(215,241	)		(3,513,372	)		(3,957,238	)
Net book value – December 31, 2020		850,831			8,824			367,405			6,718,050			7,945,110

13

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

	Furniture and fixtures $			Data centre equipment $			Office computer equipment $			Equipment under finance leases $			Total $
Net book value – December 31, 2018		234,832			34,352			78,507			3,066,555			3,414,246
Additions		239,577			-			581,425			6,114,816			6,935,818
Depreciation		(101,079	)		(13,001	)		(177,291	)		(3,079,859	)		(3,371,230	)
Net book value – December 31, 2019		373,330			21,351			482,641			6,101,512			6,978,834

6 Intangible assets

	Customer relationships $			Tradename $			Technology $			Total $
Net book value – December 31, 2019		1,641,517			336,548			5,763,817			7,741,882
Additions		-			-			393,007.00			393,007.00
Amortization		(1,589,057	)		(336,548	)		(3,011,331	)		(4,936,936	)
Net book value – December 31, 2020		52,460			-			3,145,493			3,197,953

	Customer relationships $			Tradename $			Technology $			Total $
Net book value – December 31, 2018		3,166,482			874,455			6,751,125			10,792,062
Additions		-			-			1,702,508			1,702,508
Amortization		(1,524,965	)		(537,907	)		(2,689,816	)		(4,752,688	)
Net book value – December 31, 2019		1,641,517			336,548			5,763,817			7,741,883

During the year ended December 31, 2020, the Company capitalized $393,008 (2019 – $1,727,852) of development costs relating to revenue generating technology.

7 Goodwill

As at December 31, 2020 the ADman CGU has been incorporated together with the Company CGU into a single CGU, due to operational integration during the period.

As at December 31, 2020, no impairment loss was recognized for the CGU above and no write off of the recoverable amount was required.

14

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

The recoverable amount of the CGU was determined based on value-in-use calculations using discounted cash flow methodology. This approach requires assumptions about revenue growth rates, operating margins, tax rates and discount rates. The maintainable discretionary after-tax cash flows from operations are based on historical results and the Company’s projected results. In arriving at its forecasts, the Company considered past experience, economic trends and inflation as well as industry and market trends. The assumptions used by the Company in its goodwill impairment testing are as follows: discount rate 12.6%, budgeted gross margin 49.7% and terminal growth rate 5%.

Management has considered and assessed reasonably possible changes for other key assumptions and has not identified any other instances that could cause the carrying amount of the CGU to exceed its recoverable amount.

As at December 31, 2019, an impairment loss of $3,231,048 was recognized for the CGU and a write off of $2,522,970 of the recoverable amount was required.

8 Lease obligations

	2020		2019
	$		$
Obligations under leases		6,892,017		6,148,603
Less: Current portion		2,850,497		2,748,200
		4,041,520		3,400,403

The Company has minimum lease payment commitments under leases for the following amounts:

	$
2021		3,366,199
2022		2,127,229
2023		1,574,157
2024		247,912
		7,315,497
Less: Interest		423,480
Present value of minimum lease payments		6,892,017

15

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

9 Related party transactions and balances

Directors and officers are eligible to participate in the Company’s long-term incentive plans. For the year ended December 31, 2020, 987,475 equity-based awards were granted to directors and officers of the Company (note 10(c)), of which 140,000 were stock options. For the year ended December 31, 2019, 50,000 stock options were granted to directors and officers of the Company (note 10(c)).

During the year ended December 31, 2020, the Company issued nil (2019 – 370,125) DSUs to directors and officers of the Company. Of those issued in 2019, 326,075 were granted to officers and 44,050 were granted to directors in lieu of cash bonuses and director fees, all vesting immediately.

During the year ended December 31, 2020, the Company issued 847,475 (2019 – nil) RSUs to directors and officers of the Company. Of those issued in 2020, 847,475 were granted to officers and nil were granted to directors in lieu of cash bonuses and director fees, all vesting immediately.

As at December 31, 2020 $nil (2019 – $1,697,250) of the current outstanding term loans (note 20) relates to amounts loaned by related parties. In 2019, the Company issued to each of the four founders of the Company a non-interest-bearing loan of $60,000. These loans were fully repaid during the year.

· Transactions with executive personnel

The key management personnel of the Company are the officers and the directors. The remuneration of executive personnel during the years ended December 31, 2020 and 2019 was as follows:

	2020		2019
	$		$
Executive compensation and benefits		1,034,500		900,000
Share-based compensation		343,960		916,158
		1,378,460		1,816,158

10 Share capital and share based payments

a) Share capital

As at December 31, 2020, the Company had an unlimited number of common shares authorized for issuance and 53,422,024 common shares outstanding.

16

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

b) Equity financing

On December 4, 2020, the Company closed a bought deal offering comprised of 1,968,000 common shares issued from treasury and offered by the Company at a price of $6.10 per share for total gross proceeds of $12,004,800, including the full exercise by the underwriters of the over-allotment option. The offering was completed by a syndicate of underwriters. In consideration for their services, the underwriters received aggregate cash compensation equal to 6% of the gross proceeds of the offering. The Company incurred additional share issuance costs of $1,386,913 in connection with the offering.

On May 22, 2019, the Company closed a bought deal offering comprised of 5,936,300 common shares issued from treasury and offered by the Company at a price of $1.55 per share for total gross proceeds of $9,201,265, including the full exercise by the underwriters of the over-allotment option. The offering was completed by a syndicate of underwriters. In consideration for their services, the underwriters received aggregate cash compensation equal to 6% of the gross proceeds of the offering and broker warrants equal to 6% of the number of shares sold under the offering. The broker warrants are exercisable for a period of 24 months following closing of the financing at a purchase price per share equal to the common share issuance price. The Company issued 356,178 broker warrants at a fair value of $0.77 per broker warrant that was determined using the Black-Scholes option pricing model using the following assumptions: risk-free interest rate of 1.48%, expected volatility of 102%, expected life of 1.75 years and expected dividends of $nil. The broker warrants’ value of $274,257 was recognized in contributed surplus with a corresponding reduction of share capital. The Company incurred additional share issuance costs of $650,787 in connection with the offering. The broker warrants were issued at an exercise price of $1.55 per share.

c) Stock option plan and Omnibus Incentive Plan

The Company has a stock option plan (the “Stock Option Plan”), deferred share unit plan (the “Deferred Share Unit Plan”) and an omnibus long-term incentive plan (the “Omnibus Incentive Plan”). Since the adoption of the Omnibus Incentive Plan by shareholders on June 16, 2020, the Company has stopped issuing new stock options under its Stock Option Plan and new DSUs under its Deferred Share Unit plan; however, previously issued stock options and DSUs remain outstanding and are governed by the plans under which they were initially issued.

Under the Stock Option Plan, the Board of Directors granted stock options to employees, officers, directors and consultants of the Company. The expiry date of options granted under the Stock Option Plan typically did not exceed five years from the grant date. The vesting schedule was at the discretion of the Board of Directors and was generally annually over a three-year period. The exercise price of options was equal to the market price per share on the day preceding the grant date.

17

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

The Omnibus Incentive Plan allows for a variety of equity-based awards to be granted to officers, directors, employees and consultants (in the case of stock options, PSUs and RSUs) and non-employee directors (in the case of DSUs). Stock options, PSUs, RSUs and DSUs are collectively referred to herein as “Awards”. Each Award represents the right to receive common shares, or in the case of PSUs, RSUs and DSUs, common shares or cash, in accordance with the terms of the Omnibus Incentive Plan.

The maximum number of common shares reserved for issuance, in the aggregate, under the Omnibus Incentive Plan, the Stock Option Plan, the Deferred Share Unit Plan of the Company and any other security based compensation arrangement, collectively, is 15% of the aggregate number of common shares issued and outstanding from time to time.

As at December 31, 2020, the Company was entitled to issue 8,013,304 equity-based awards under the Omnibus Incentive Plan.

The following table summarizes the continuity of options issued under the Stock Option Plan:

	2020					2019
	Number of options			Weighted average exercise price $		Number of options			Weighted average exercise price $
Outstanding – Beginning of year		3,409,886			1.45		3,097,220			1.63
Granted		350,000			1.64		1,153,500			1.60
Forfeited or cancelled		(760,885	)		1.19		(600,668	)		2.84
Exercised		(1,133,482	)		1.29		(240,167	)		0.96
Outstanding – End of year		1,865,519			1.69		3,409,885			1.45
Options exercisable – End of year		1,099,687			2.02		2,258,971			1.46

18

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

The following table summarizes the continuity of options issued under the Omnibus Incentive Plan:

	2020					2019
	Number of options			Weighted average exercise price $		Number of options		Weighted average exercise price $
Outstanding – Beginning of year		-			-		-		-
Granted		45,000			2.09		-		-
Forfeited or cancelled		(10,000	)		2.09		-		-
Exercised		-			-		-		-
Outstanding – End of year		35,000			2.09		-		-
Options exercisable – End of year		-			-		-		-

19

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

A summary of the Company’s stock options outstanding under the above plans is as follows:

	December 31, 2020
Range of exercise prices $	Number of options		Weighted average remaining contractual life (years)		Weighted average number of options exercisable
0.64		166,667		2.42		-
0.96		37,333		2.67		667
1.06		198,835		2.75		110,334
1.13		95,000		4.42		-
1.14		10,000		2.92		6,667
1.15		20,000		3.92		6,667
1.27		10,000		3.67		3,334
1.55		83,017		3.42		4,351
1.59		235,000		4.17		-
1.71		794,667		3.25		752,667
1.94		70,000		0.67		70,000
2.09		35,000		4.67		-
4.12		17,500		1.42		17,500
4.47		27,500		1.67		27,500
4.60		100,000		1.25		100,000
		1,900,519				1,099,687

20

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

	December 31, 2019
Range of exercise prices $	Number of options		Weighted average remaining contractual life (years)		Weighted average number of options exercisable
0.64		500,000		3.36		166,667
0.78		90,000		0.67		90,000
0.83		100,000		1.17		100,000
0.94		90,000		0.92		90,000
0.96		110,000		3.63		36,666
0.98		653,384		0.42		653,385
1.00		75,000		1.50		75,000
1.06		285,500		3.71		95,167
1.08		75,000		1.50		75,000
1.14		10,000		3.88		3,333
1.15		20,000		4.92		-
1.27		10,000		4.67		-
1.34		10,001		1.42		10,001
1.55		118,000		4.42		-
1.71		878,000		4.25		573,750
1.94		100,000		1.83		100,000
4.12		95,000		2.50		63,334
4.47		70,000		2.92		46,668
4.60		120,000		2.25		80,000
		3,409,885				2,258,971

During the year ended December 31, 2020, the Company recorded share-based compensation expense under the Black-Scholes option pricing model, related to stock options granted to employees, officers, directors and consultants of the Company of $998,307 (2019 – $1,410,467).

During the year ended December 31,2020, the Company granted 395,000 (2019 – 1,153,500) stock options with a weighted average exercise price of $1.69 (2019 – $1.60) to employees, officers, directors and consultants of the Company. Of those options, 255,000 (2019 – 1,146,000) options were granted to officers or employees of the Company. $nil (2019 – 7,500) options were granted to consultants as compensation for services rendered at a weighted average price of $nil (2019 – $0.96), all expiring during 2024.

21

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

During the year ended December 31, 2020, 1,133,482 options were exercised at a weighted average exercise price of $1.29 per option, for gross proceeds of $ 1,465,658 (2019 – 240,167 options were exercised at a weighted average exercise price of $0.96 per option, for gross proceeds of $230,560).

Share-based compensation expense was determined based on the fair value of the options at the date of measurement using the Black-Scholes option pricing model with the weighted average assumptions for options granted during the years ended December 31 as follows:

	2020 $			2019 $
Weighted average grant date fair value of options granted		1.45			1.42
Weighted average assumptions used
Expected option life		5 years			5 years
Risk-free interest rate		1.45	%		1.48	%
Expected volatility		101	%		102	%

The expected volatility was estimated based on the historical volatility of the Company’s shares that covers the expected life of the options granted. The expected option life was estimated based on historical data and represents the numbers of years the options are expected to be outstanding. The risk-free rate was estimated based on the Government of Canada marketable bonds with a term that covers the expected life of the options granted.

d)            Deferred share units

During the year ended December 31,2020, the Company issued 204,008 (2019 – 316,304) DSUs to employees, officers, independent directors and consultants of the Company, vesting every year in the measure of one third. During the year ended December 31, 2020, 981,578 DSUs were exercised.

e)            Restricted share units

During the year ended December 31, 2020, the Company issued 1,321,074 (2019 – nil) RSUs to employees, officers, directors and consultants of the Company. During the year ended December 31, 2020, 97,129 (2019 – nil) RSUs were exercised.

22

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

11 Finance costs

	2020		2019
	$		$
Finance costs
Interest on finance leases and other interest		486,508		610,592
Interest and fees on revolving line of credit (note 19)		532,190		1,057,399
Interest and fees on term loans (note 20)		644,341		825,720
		1,663,039		2,493,711

12 Net income (loss) per share

The computations for basic and diluted net income (loss) per share for the years ended December 31, 2020 and 2019 are as follows:

	2020 $		2019 $
Net income (loss) for the year		3,690,990		(5,607,405	)
Weighted average number of shares outstanding – basic and diluted		49,720,186		45,286,998
Net income (loss) per share – basic and diluted		0.07		(0.12	)

Exercisable options to purchase 1,099,687 common shares (2019 – 2,258,971) and 40,621 warrants (2019 – 2,492,040) were outstanding as at December 31, 2020. The weighted average numbers of options and warrants were excluded from the calculation of diluted income (loss) per share for the years ended December 31, 2020 and 2019 because their inclusion would have been anti-dilutive.

13 Segment information

The Company’s assets and operations are substantially located in Canada; however, the Company has employees and customers in the United States, Europe, the Middle East and Africa and generates revenue in each region. Revenue by region for the years ended December 31, 2020 and 2019 is as follows:

	2020		2019
		$		$
United States		78,832,978		85,630,542
Canada		11,847,380		14,751,574
Europe and other		14,213,690		18,752,113
		104,894,048		119,134,229

23

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

During the year ended December 31, 2020, the Company had one customer that represented 9% of total revenue. In 2019, the Company had no customer that represented greater than 5% of total revenue.

14 Government assistance

During the year ended December 31, 2020, the Company received funding under the Government of Canada’s Canada Employment Wage Subsidy program amounting to $ 947,576, of which $ 124,722 was used to reduce salaries related to sales and marketing costs, $ 733,102 was used to reduce salaries related to technology costs, and $ 89,752 was used to reduce general and administrative salaries, on the consolidated statement of income.

During the year ended December 31, 2020, the Company secured a $3,000,000 commitment funding from the National Research Council’s Industrial Research Assistance Program (“IRAP”) that is expected to be paid between May 2020 and October 2021, subject to the Company meeting certain program requirements. During the year ended December 31, 2020, the Company has received $1,386,108 of this commitment from IRAP, and these amounts were used to reduce technology costs on the consolidated statement of income (loss).

15 Financial instruments

Classification of financial instruments

The following table provides the allocation of financial instruments and their associated financial instrument classifications:

	Loans and receivables/
	financial liabilities
	(amortized cost)
	2020		2019
Measurement basis	$		$
Financial assets
Cash and cash equivalents		22,638,300		7,407,122
Restricted cash		-		100,000
Accounts receivable		31,859,306		38,234,752
Investment tax credit receivable		21,922		1,548,898
		54,519,528		47,290,772

24

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

	Loans and receivables/
	financial liabilities
	(amortized cost)
		2020	2019
		$	$
Measurement basis
Financial liabilities
Accounts payable and accrued liabilities		23,232,611	26,330,763
Revolving line of credit		-	15,384,498
Term loans		8,278,004	3,452,331
International loans		1,980,229	2,443,319
Lease obligations		6,892,017	6,148,603
		40,382,911	53,759,514

Fair value measurements

The Company provides disclosure of the three-level hierarchy that reflects the significance of the inputs used in making the fair value measurement. The carrying values of cash and cash equivalents, restricted cash, accounts receivable, ITC receivable, revolving line of credit, repayable government grant, accounts payable and accrued liabilities, current portion of finance lease obligations, current portion of contingent consideration and current portion of term loans approximate their fair values given their short-term nature. The carrying value of the non-current liabilities approximates their fair value, given that the difference between the discount rates used to recognize the liabilities in the consolidated statements of financial position and the market rates of interest is not considered significant. The three levels of fair value hierarchy based on the reliability of inputs are as follows:

· Level 1 – inputs are quoted prices in active markets for identical assets and liabilities;

· Level 2 – inputs are based on observable market data, either directly or indirectly other than quoted prices; and

· Level 3 – inputs are not based on observable market data.

There were no transfers of financial assets during the years ended December 31, 2020 and 2019 between any of the levels.

25

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

16 Capital risk management

The Company’s objectives in managing capital are to ensure sufficient liquidity to pursue its strategy of organic growth combined with strategic acquisitions and to provide returns to its shareholders. The Company defines capital that it manages as the aggregate of its shareholders’ equity, which comprises issued capital, contributed surplus and deficit. The Company manages its capital structure and makes adjustments to it in working capital requirements. In order to maintain or adjust its capital structure, the Company, upon approval from the Board of Directors, may issue shares, repurchase shares, pay dividends or undertake other activities as deemed appropriate under the specific circumstances. The Company is not subject to externally imposed capital requirements, except for certain monthly financial covenants associated with the revolving line of credit as described in note 19.

17 Financial risk management

The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework and reviews the Company’s risk management policies on an annual basis. Management identifies and evaluates financial risks and is charged with the responsibility of establishing controls and procedures to ensure that financial risks are mitigated in accordance with the approved policies.

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises from the Company’s accounts receivable and cash. As at December 31, 2020, five customers represented 32.5% of the gross accounts receivable balance of $32,159,306. As at December 31, 2019, five customers represented 31% of the gross accounts receivable balance of $38,714,512.

The Company reviews the components of these accounts on a regular basis to evaluate and monitor this risk. The Company’s customers are generally financially established organizations, which limits the credit risk relating to the customers. In addition, credit reviews by the Company take into account the counterparty’s financial position, past experience and other factors.

The accounts receivable balances due from these significant customers were current as at December 31, 2020. As at December 31,2020, the allowance for doubtful accounts was $300,000 (2019 – $479,760). In establishing the appropriate allowance for doubtful accounts, management makes assumptions with respect to the future collectability of the receivables. Assumptions are based on an individual assessment of a customer’s credit quality as well as subjective factors and trends. Overdue accounts as at December 31, 2020 were $4,999,819 (2019 – $5,244,450), which is in the normal course of business. Management believes that the allowance is adequate.

26

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

The Company from time to time invests its excess cash in accounts with Schedule I banks, with the objective of maintaining the safety of the principal and providing adequate liquidity to meet current payment obligations and future planned capital expenditures and with the secondary objective of maximizing the overall yield of the portfolio. The Company’s cash as at December 31, 2020 is not subject to external restrictions. Investments must be rated at least investment grade by recognized rating agencies. Given these high credit ratings, the Company does not expect any counterparties to these investments to fail to meet their obligations.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. The Company’s approach to managing liquidity is to ensure, to the extent possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. The Company manages its liquidity risk by continually monitoring forecasted and actual revenue and expenditures and cash flows from operations. Management is also actively involved in the review and approval of planned expenditures. The Company’s principal cash requirements are for principal and interest payments on its debt, capital expenditures and working capital needs. The Company uses its operating cash flows, loans and borrowings and cash balances to maintain liquidity. In the event that future cash flows from operations are lower than expected, the Company may need to seek additional financing, either by issuing additional equity or by undertaking additional borrowings. There is no certainty that additional financing will be available or that it will be available on attractive terms.

27

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

The following are the contractual maturities for the financial liabilities:

	December 31,
	2020
	Carrying amount $		Total contractual cash flows $		Less than 1 year $		1 to 3 Years $		> 3 years $
Accounts payable and accrued liabilities		23,232,661		23,232,661		23,232,661		-		-
Revolving line of credit		-		-		-		-		-
International Loans		1,980,229		1,980,229		1,092,297		887,932		-
Term Loans		8,278,004		8,710,774		2,481,550		6,229,224		-
Lease Obligation		6,892,017		7,315,497		3,366,199		3,949,298		-
		40,382,911		41,239,161		30,172,707		11,066,454		-

	December 31,
	2019
	Carrying amount $	Total contractual cash flows $	Less than 1 year $	1 to 3 Years $	>3 years $
Accounts payable and accrued liabilities	26,330,763	26,330,763	26,330,763	-	-
Revolving line of credit	15,384,498	15,384,498	15,384,498	-	-
International Loans	2,443,319	2,443,319	1,006,653	1,436,666	-
Term loans	3,452,331	3,452,331	1,210,500	2,241,831	-
Lease Obligation	6,148,603	6,499,839	2,990,552	3,252,263	257,024
	53,759,514	54,110,750	46,922,966	6,930,760	257,024

28

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

Interest rate risk

Interest rate risk is the risk of financial loss to the Company if interest rates increase on interest-bearing instruments. The revolving line of credit bears interest at a rate of prime plus 1%. The term loans bear interest at a fixed rate of 6.75%, which the Company believes is consistent with market interest rates for this type of debt.

Foreign exchange or currency risk

The Company is exposed to foreign exchange risk from purchase transactions, as well as recognized financial assets and liabilities denominated in US dollars. The Company’s main objective in managing its foreign exchange risk is to maintain US cash on hand to support US forecasted obligations and cash flows. To achieve this objective, the Company monitors forecasted cash flows in foreign currencies and attempts to mitigate the risk by modifying the nature of cash held.

If a shift in foreign currency exchange rates of 10% were to occur, the foreign exchange gain or loss on the Company’s net monetary assets could change by approximately $156,929 due to the fluctuation and this would be recorded in the consolidated statements of comprehensive loss.

Balances held in US dollars are as follows in CAD:

	December 31, 2020 $		December 31, 2019 $
Cash	9,255,266		5,505,276
Accounts receivable		24,011,673		30,050,955
Accounts payable		14,547,342		9,860,132
Line of credit		-		15,384,498

18 Commitments and contingencies

Restricted Cash

In July 2015, the Company entered into a letter of credit as security for an office lease in Toronto. As at December 31, 2019, the letter of credit is backed up by $100,000 that is held at a Canadian financial institution and is drawn down by the landlord until the end of the lease term. During the year ended December 31, 2020, the Company’s lease term ended, and the restricted cash balance was $nil as at December 31, 2020.

29

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

19 Revolving line of credit

On November 13, 2015, the Company secured a US$3.5 million (approximately CAD$4.6 million) revolving line of credit (the “Line of Credit”) from Silicon Valley Bank (“SVB”). On September 1, 2016, the Company secured an addendum to the Line of Credit increasing the total borrowing limit to US$6.5 million (approximately CAD$8.5 million). On March 30, 2017, the Company secured an addendum to the Line of Credit increasing the total borrowing limit to US$10.0 million (approximately CAD$13.3 million).

On October 18, 2018, the Company and SVB agreed to increase its line of credit to US$15 million (CAD$20 million) from US$10 million (CAD$13 million) and extend the maturity date to March 2020. In addition, the applicable interest rate was reduced from prime plus 3.0% to prime plus 1.50%. At December 31, 2018, the prime rate was 5.25%.

On September 23, 2019, the Company and SVB agreed to increase its line of credit to US$18 million (CAD$24 million) from US$15 million (CAD$20 million) and extend the maturity date to April 1, 2021. In addition, the applicable interest rate was reduced from prime plus 1.5% to prime plus 1.0%.

On December 24, 2020, the Company and SVB agreed to amend the applicable interest rate to the greater of prime plus 1.35% or 4.60%. At December 31, 2020, the prime rate was 3.25%.

The Line of Credit is calculated based on a maximum total amount of 80% of the Company’s accounts receivable and 80% of ITCs receivable.

30

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

The following table outlines the activity of the Line of Credit during the years ended December 31, 2020 and 2019:

	$
Amortized cost – January 1, 2020		15,384,498
Amount drawn from revolving line of credit		67,340,097
Principal amount repaid		(83,066,960	)
Accrued interest on revolving line of credit		532,190
Payment of interest on revolving line of credit		(394,133	)
Foreign exchange differences		204,308
Amortized cost – December 31, 2020		-

	$
Amortized cost – January 1, 2019		13,843,998
Amount drawn from revolving line of credit		(75,321,614	)
Principal amount repaid		77,372,076
Accrued interest on revolving line of credit		1,057,399
Payment of interest on revolving line of credit		(985,109	)
Foreign exchange differences		(582,252	)
Amortized cost – December 31, 2019		15,384,498

During the year ended December 31, 2020, transaction costs incurred securing the Line of Credit were $nil (2019 – $73,223). All transaction costs have been capitalized and deferred. These deferred transaction costs are being amortized over the term of the agreement under the effective interest method and are included in finance costs.

The Line of Credit is secured by a full general security agreement, an assignment of ITCs and a pledge of all shares of any direct or indirect subsidiary of the Company.

20 Term loans

On June 15, 2018, all outstanding principal balances related to previous term loans were repaid and the Company obtained a new $7,263,000 term loan (the “2018 Loan”) from a group of private lenders (the “Lenders”). The 2018 Loan was made pursuant to a credit agreement dated June 15, 2018, between the Company and various Lenders, including several individuals who are non-arms’ length to the Company (the “NAL Lenders”). The NAL Lenders included several officers and directors of the Company who funded an aggregate of $2,263,000 of the 2018 Loan.

31

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

The 2018 Loan was subordinate to the Company’s existing Line of Credit with SVB and had a term of two years. The 2018 Loan accrued interest at the rate of 12.0% per annum and the Lenders were issued an aggregate of 2,420,990 warrants (the “Warrants”) as bonus warrants in connection with the 2018 Loan. Each Warrant entitled the Lender to acquire one common share for a period of two years at an exercise price of $1.01 per common share, which represented the closing price of the common shares on June 14, 2018. At the time of issuance, the 2,420,990 Warrants had a fair value of $0.46 per Warrant. The fair value of the Warrants was determined using the Black-Scholes option pricing model using the following assumptions: risk-free interest rate of 2.18%, expected volatility of 98%, expected life of 1.75 years and expected dividends of $nil.

Transaction costs incurred in securing the 2018 Loan were $256,403. Included in that amount are nominal fees that the Company agreed to pay to two eligible parties assisting in the 2018 Loan. All transaction costs were capitalized and deferred. These deferred transaction costs are being amortized over the term of the agreement under the effective interest rate method and included in the finance costs.

Fifty percent of the principal portion of the 2018 Loan was to be repaid in ten equal quarterly installments beginning January 1, 2019. The remaining 50% of the 2018 Loan was to be paid at maturity.

On March 31, 2019, the Company entered into an amending agreement to its credit agreement dated June 15, 2018, whereby the maturity date of the 2018 Loan was extended from June 15, 2020 to June 15, 2021.

On April 12, 2020, the Company borrowed US$5,400,00 from SVB pursuant to a secured term loan which expires April 1, 2024 (the “Secured Term Loan”), and which bears interest at the annual rate equal to the greater of (i) prime plus 2.0% and (ii) 6.75%. All transaction costs related to the Secured Term Loan have been capitalized and deferred, and are being amortized over the term of the agreement under the effective interest rate method and included in finance costs.

On April 17, 2020, all outstanding principal balances related to the 2018 Loan were repaid in the amount of $5,144,625 and the Company incurred an early repayment penalty of 2.5% totalling $128,616. During the year ended December 31, 2020, $372,188 of transaction costs were incurred securing the Secured Term Loan. All transaction costs have been capitalized and deferred. These deferred transaction costs are being amortized over the term of the agreement under the effective interest method and included in finance costs.

On November 9, 2020, the Company and SVB agreed to increase the availability under the Secured Term Loan by additional US$2,350,000 to a total of US$7,750,000.

On December 24, 2020, the Company and SVB agreed to amend the applicable interest rate to the greater of prime plus 1.50% or 4.75%. At December 31, 2020, the prime rate was 3.25%.

32

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

On May 5, 2020, the Company secured a loan of US$1,390,294 (CAD$1,816,836) pursuant to the Paycheck Protection Program as part of the United States’ Coronavirus Aid, Relief and Economic Security Act. On October 12, 2020 the Company applied for the loan forgiveness in accordance with the terms of that program, and the loan was fully forgiven on November 25, 2020. The total loan of US$1,390,294 (CAD$1,816,836) was used to reduce salary costs on the statement of income (loss), $1,282,208 for sales and marketing costs, $465,481 for technology costs, and $69,147 for general and administrative costs.

The following table outlines the activity of the term loans during the years ended December 31, 2020 and 2019:

	$
Amortized cost – January 1, 2020		3,452,331
Amounts Drawn, net of transaction costs and warrants		12,266,281
Accrued interest		644,342
Payment of interest		(501,057	)
Principal amount repaid		(9,101,681	)
Adjustment for warrants granted for repaid term loan		1,922,271
Exchange		(404,483	)
Balance – December 31, 2020		8,278,004

	$
Amortized cost – January 1, 2019		5,159,109
Accrued interest		825,720
Payment of interest		(716,748	)
Principal amount repaid		(1,815,750	)
Balance – December 31, 2019		3,452,331

21 International loans

On June 15, 2018, as a part of the acquisition of ADman, the Company assumed various government and bank loans and lines of credits.

Term loans

The interest rate and maturity date of each of the unsecured term loans held and the activity during the years ended December 31, 2020 and 2019 are set out in the table below.

33

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

Line of credit

The line of credit is secured against the Company’s accounts receivable. The interest rate and term date of line of credit held and the activity during the years ended December 31, 2020 and 2019 are set out in the table below:

	Balance - January 1, 2020 $		Amount drawn $		Principal amount repaid $		Balance - December 31 2020 $		Interest rate %			Maturity date
Term Loans
Bankinter		80,322		-		60,268		20,054		2.75	%	May 20, 2021
La Caixa		24,305		-		24,305		-		1.96	%	June 1, 2021
Santander		508,026		-		154,368		353,658		2.53	%	May 18, 2023
Banco Sabadell		106,025		-		38,377		67,648		4.60	%	October 20, 2021
Bankinter		197,310		-		77,540		119,770		2.35	%	August 17, 2022
Banco Sabadell		21,918		70,236		92,154		-		3.25	%	October 15, 2022
Santander_ICO		-		390,200		-		390,200		2.03	%	April 8, 2025
Bankinter_ICO 2020		-		58,328		4,748		53,580		2.25	%	May 22, 2024
Sabadell_ICO 2020		-		156,080		-		156,080		1.75	%	May 21, 2025
Banco Sabadell		69,193		-		39,847		29,346		3.25	%	October 15, 2022
CDTI		159,258		-		34,091		125,167		3.00	%	December 31, 2022
Avanza 2013		-		-		-		-		3.00	%	December 20, 2020
Avanza 2014		270,409		-		270,409		-		3.00	%	December 20, 2020
		1,436,766		674,844		796,107		1,315,504
Line of credit
Bankia		-		17,493		6,354		11,139		2.90	%	December 10, 2021
Banco Sabadell		85,045		143,306		228,351		-		1.75	%	May 21, 2023
Bankinter		92,177		144,293		116,329		120,141		Euribor + 2.25		May 19, 2022
Santander		-		-		-		-		Euribor + 1.95		April 16, 2023
Santander suppliers		-		21,288		21,288		-		2.12		May 31, 2021
Santander		523,966		667,001		665,077		525,890		Euribor + 1.75		April 25, 2021
Bankinter		129,794		7,554		129,794		7,554		2.35	%	July 23, 2021
Santander		175,571		44,084		219,655		-		Euribor + 1.75		July 23, 2021
		1,006,553		1,045,020		1,386,849		664,724
Total		2,443,319		1,719,864		2,182,955		1,980,228

34

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

	Balance - January 1, 2019 $		Amount drawn $		Principal amount repaid $		Balance - December 31 2019 $		Interest rate %		Maturity date
Term Loans
Bankinter		144,554		-		64,232		80,322		2.75	May 20, 2021
La Caixa		78,065		-		53,760		24,305		1.96	June 1, 2020
Santander		694,516		-		186,490		508,026		2.53	May 18, 2023
Banco Sabadell		187,376		-		81,351		106,025		4.6	October 20, 2021
Bankinter		287,344		-		90,034		197,310		2.35	August 17, 2022
Banco Sabadell		46,863		195,686		220,634		21,918		3.25	October 15, 2022
Banco Sabadell		88,362		-		19,169		69,193		3.25	October 15, 2022
CDTI		170,507		-		11,249		159,258		3.00	December 31, 2020
Avanza 2013		163,767		-		163,767		-		3.00	December 20, 2019
Avanza 2014		581,089		-		310,680		270,409		3.00	December 20, 2020
		2,445,446		195,686		1,201,366		1,436,666
Line of credit
Bankia		389,740		54,377		418,405		-		2.90	December 10, 2019
Banco Sabadell		71,874		-		168,893		85,045		2.47	October 18, 2020
Bankinter		232,032		-		124,548		92,177			July 23, 2020
La Caixa		153,091		-		142,991		-		2.12	May 31, 2019
Santander		152,926		381,229		-		524,066		Euribor + 1,75	April 25, 2020
Bankinter		-		655,330		525,536		129,794			July 23, 2020
Santander		275,268		542,005		623,542		175,571		Euribor + 1,75	April 25, 2020
		1,274,930		1,632,941		2,003,915		1,006,653
Total		3,917,376		1,828,627		3,044,445		2,443,319

35

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

22 Income taxes

Income tax recovery

The Company has not recorded any deferred income tax recovery on losses in comprehensive income (loss) and will not be until, in the opinion of management, it is probable that the deferred tax assets will be realized. A reconciliation between tax recovery and accounting income multiplied by the Company’s domestic tax rate for the years ended December 31, 2020 and 2019 is as follows:

	2020 $			2019 $
Income (loss) before income taxes		5,188,691			(5,454,299	)
Income tax recovery at the Company’s statutory tax rate of 26.5% (2019 – 26.5%)		1,375,003			(1,445,389	)
Increase (decrease) in income taxes resulting from Permanent differences		173,027			1,385,671
Prior year true-up		(820,603	)		-
Changes in unrecognized SRED pool and temporary differences		2,787,948			1,114,611
Effect of foreign subsidiaries		(2,450	)		298,127
Current year loss for which no benefit recognized		523,274			551,064
Prior year loss applied in current year previously not recognized		(2,705,820	)		(1,778,434	)
Other		167,322			27,457
Income tax expense		1,497,701			153,107

Deferred taxes

· Unrecognized deferred tax asset

Deferred tax assets have not been recognized in respect of the following items:

	2020 $			2019 $
Non-capital loss carryforwards		29,637,520			34,864,311
SRED expenditure pool		1,882,949			7,105,467
(Taxable) Deductible temporary differences		(975,000	)		1,152,977
		30,545,469			43,122,755

36

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(expressed in Canadian dollars)

As at December 31, 2020, the Company had non-capital losses of approximately $404,780 that are available to reduce future taxable income and for which no benefit has currently been recognized in the consolidated financial statements. The non-capital losses will expire as follows: The non-capital losses will expire as follows: 2034 – $564,037; 2035 – $1,523,811; 2036 – $355,512; 2037 – $3,143,271; and 2038 – $2,061,821. The Company had SRED Investment tax credits carry-forward of $858,944 will expire as follows: 2036 – $72,495; 2037 – $383,882; and 2038 – $402,617.

Investment tax credits

The Company is entitled to certain federal and provincial income tax incentives for qualified SRED expenditures based on management’s interpretation of the applicable legislation in the Income Tax Act (Canada). These tax incentives are available to reduce future income taxes payable or are refundable in cash depending on various factors (note 4).

37

EX-4.3

Exhibit 4.3

AcuityAds Holdings Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2020

Dated March 1, 2021

70 University Ave
Suite 1200
Toronto, ON M5J 2M4
www.acuityads.com

AcuityAds Holdings Inc.

Management’s Discussion and Analysis for the three and twelve months ended December 31, 2020

Management’s discussion & analysis

This Management’s Discussion and Analysis (“MD&A”) explains the variations in the consolidated operating results and financial position and cash flows of AcuityAds Holdings Inc. (“AcuityAds” or the “Company”) as at and for the three and twelve months ended December 31, 2020. This analysis should be read in conjunction with AcuityAds’ audited consolidated financial statements for the three and twelve months ended December 31, 2020 and related notes (the “Consolidated Financial Statements”). The Consolidated Financial Statements and extracts of those Consolidated Financial Statements provided in this MD&A, were prepared in Canadian dollars and in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board, using the accounting policies described therein. As a result of the rounding of dollar differences, certain total dollar amounts in this MD&A may not add exactly to their constituent amounts. All amounts are presented in Canadian dollars unless otherwise indicated. Throughout this MD&A, percentage changes are calculated using numbers rounded as they appear. Readers are cautioned that this MD&A contains certain forward-looking information. (Please see the “Forward Looking Statements” section below for a discussion of the use of such information in this MD&A).

The Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries AcuityAds Inc., AcuityAds US Inc., 140 Proof Inc., and ADman Interactive S.L.U. All intercompany balances and transactions have been eliminated on consolidation.

The information in this report is dated as of March 1, 2021.

Non-IFRS Financial Measures

This MD&A includes certain measures which are not defined terms in accordance with IFRS such as “Net Revenue”, “Net Revenue margin”, “Adjusted EBITDA” and “Adjusted Net Income (Loss)”.

The term “Net Revenue” refers to the net amount of revenue after deducting direct media costs. Net Revenue is used for internal management purposes as an indicator of the performance of the Company’s solution in balancing the goals of delivering excellent results to advertisers while meeting the Company’s margin objectives and, accordingly the Company believes it is useful supplemental information to include in this MD&A. The term “Net Revenue margin” refers to the amount that “Net Revenue” represents as a percentage of total revenue for a given period.

“Adjusted EBITDA” refers to net income (loss) after adjusting for finance costs, PPP Loan Forgiveness (as defined below), impairment loss, fair value gain, income taxes, foreign exchange gain (loss), depreciation and amortization, share-based compensation, acquisition and related integration costs, severance expenses and adjustments to the carrying value of investment tax credits receivable. The Company believes that Adjusted EBITDA is useful supplemental information as it provides an indication of the results generated by the Company’s main business activities before taking into consideration how those activities are financed and taxed and also prior to taking into consideration depreciation of property and equipment and certain other items listed above. It is a key measure used by the Company’s management and board of directors to understand and evaluate the Company’s operating performance, to prepare annual budgets and to help develop operating plans.

1

AcuityAds Holdings Inc.

Management’s Discussion and Analysis for the three and twelve months ended December 31, 2020

“Adjusted Net Income (Loss)” refers to net income (loss) after adjusting for non-cash items such as PPP Loan Forgiveness (as defined below), impairment loss, fair value gain, depreciation and amortization, non-cash income tax adjustment, share-based compensation and foreign exchange gain/loss. The Company believes that Adjusted Net Income (Loss) is useful supplemental information as it provides an indication of the results generated by the Company’s main business activities on a cash basis. It is another key measure used by the Company’s management and board of directors to understand and evaluate the Company’s operating performance, to prepare annual budgets and to help develop operating plans.

“Net Revenue”, “Net Revenue margin”, “Adjusted EBITDA” and “Adjusted Net Income (Loss)” are not measures of performance under IFRS and should not be considered in isolation or as a substitute for comprehensive income (loss) prepared in accordance with IFRS or as a measure of operating performance or profitability. “Net Revenue”, “Net Revenue margin”, “Adjusted EBITDA” and “Adjusted Net Income (Loss)” do not have a standardized meaning prescribed by IFRS and are not necessarily comparable to similar measures presented by other companies.

FORWARD-LOOKING STATEMENTS

Certain statements in this MD&A that are not current or historical factual information may constitute “forward-looking” statements within the meaning of applicable securities laws, regarding, among other things, the beliefs, plans, objectives, strategies, estimates, intentions or expectations of the Company, including as they relate to its financial results its ability to execute on its investing and business strategies, the benefits of the illumin platform, and the effect of the COVID-19 pandemic on the Company’s business and operations. When used in this MD&A, forward looking statements can be identified by the use of words such as “may”, or by such words as “will”, “intend”, “believe”, “estimate”, “consider”, “expect”, “anticipate”, and “objective” and similar expressions or variations of such words. Forward-looking statements are, by their nature, not guarantees of the Company’s future operational or financial performance, and are subject to risks and uncertainties and other factors that could cause the Company’s actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. No representation or warranty is intended with respect to anticipated future results, or that estimates or projections will be sustained.

In developing the forward-looking statements in this MD&A, the Company has applied several material assumptions, including the availability of financing on reasonable terms, general business and economic conditions. The existence of the COVID-19 pandemic creates a unique environment in which to consider the likelihood of forward-looking statements being accurate, and given the evolving circumstances surrounding the COVID-19 pandemic, it is difficult to predict how significant the adverse impact of the pandemic will be on the global and domestic economy, the business, operations and financial position of the Company’s clients and the business, operations and financial position of the Company. Many risks, uncertainties and other factors could cause the actual results of AcuityAds to differ materially from the results, performance, achievements or developments expressed or implied by forward-looking statements that are contained in this MD&A. These risks, uncertainties and other factors include, but are not limited to the following: overall economic conditions, rapid technological changes, use of cookies, demand for the Company’s products and services, the introduction of competing technologies, competitive pressures, network restrictions, fluctuations in foreign currency exchange rates, and other factors that may cause the actual results, performance or achievements to differ materially from those expressed or implied in these forward-looking statements. In addition, the effects of COVID-19, including the duration, spread and severity of the pandemic, create additional risks and uncertainties for the Company. In particular, the impact of the virus and government authorities’ and public health officials’ responses thereto may affect the Company’s actual results, performance, prospects or opportunities; domestic and global credit and capital markets and the Company’s ability to access capital on favourable terms, or at all; and the health and safety of the Company’s employees.

2

AcuityAds Holdings Inc.

Management’s Discussion and Analysis for the three and twelve months ended December 31, 2020

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of the MD&A or as of the date otherwise specifically indicated herein. Due to risks and uncertainties, including the risks and uncertainties elsewhere in this MD&A, actual events may differ materially from current expectations. These risks and uncertainties include, among other things, the factors discussed in “Risk Factors” section of this MD&A and under the “Risk Factors” section of the Annual Information Form of the year ended December 31, 2020 (“2020 AIF”) available on SEDAR at www.sedar.com. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. All forward-looking statements contained in the MD&A are expressly qualified in their entirety by this cautionary statement.

OVERVIEW

AcuityAds is a technology company that enables marketers to connect intelligently with audiences across video, mobile, social and online display advertising campaigns. AcuityAds’ programmatic marketing platform (the “Programmatic Marketing Platform”), powered by proprietary machine learning technology, is at the core of its business, accompanied by proprietary solutions for analytics- led video and mobile targeting that leverages data. AcuityAds empowers marketers by offering near real-time reporting and analytics, bringing accountability to programmatic advertising to deliver business results and help solve some of the key challenges that digital advertisers face. AcuityAds is headquartered in Toronto and has offices in the U.S., Canada, Spain and throughout Latin America. Its key customers include both advertising agencies and brands, including large Fortune 500 enterprises and small to mid-sized businesses.

AcuityAds’ technology enables programmatic advertising, which is the automated buying and selling of advertising inventory electronically. The Programmatic Marketing Platform is based on proprietary machine learning technology, the branch of artificial intelligence involving systems that learn from data inputs and outputs and can perform actions without the need for explicit programming. The Programmatic Marketing Platform has the capability to process billions of bid requests on a daily basis.

The Programmatic Marketing Platform allows advertisers to purchase online advertisements in real-time using an ad-buying method whereby open online ad spots (called impressions) are traded via auctions on digital exchanges at market clearing prices in milliseconds. AcuityAds purchases impressions on behalf of advertisers through agreements with publishers directly and through agreements with supply side platforms (SSPs) and exchanges. Its technology platform benefits advertisers by enabling them to target audience segments based on a variety of first, second, and third- party data as well as manage their real-time bids for the advertising inventory most relevant for their campaigns. Real-time reporting enables advertisers to monitor relevant performance metrics and adjust budget allocations to optimize for audience reach and ad frequency and business outcomes (key performance indicators - KPIs).

3

AcuityAds Holdings Inc.

Management’s Discussion and Analysis for the three and twelve months ended December 31, 2020

In October 2020, AcuityAds officially launched illumin™, the next generation advertising automation technology, that offers advertisers the ability to plan, buy, optimize and report on omnichannel advertising programs from a single, intuitive user-interface. Advertisers can now map consumer journey playbooks across devices and communication channels, and execute in real-time using programmatic technology. illumin enables delivery of custom creative advertising based on audience receptivity (time, place and context), which has proven to increase both efficiency and overall return on advertising investments.

RESULTS OF OPERATIONS

Significant developments during the twelve months ended December 31, 2020 and to the date of this report include the following:

On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic, which continues to spread throughout Canada and economies around the world. To date, the Canadian and US governments as well as businesses have mandated various measures, including: travel restrictions, restrictions on public gatherings, stay-at-home orders and advisories, and the quarantine of people who may have been exposed to the virus. In response, AcuityAds has changed its work environment and made arrangements to ensure compliance with all applicable health authority regulations.

Despite the COVID-19 pandemic and the Company’s changes to its work environment, AcuityAds continued to operate its business in the normal course. To date, none of the Company’s operations have closed down or have otherwise been materially affected by the COVID-19 pandemic. Certain of the Company’s offices have been subject to government-mandated lockdowns for some periods of time. However, the Company’s staff has been able to perform their functions remotely without meaningful reductions in the Company’s ability to service its customers.

Based on the most recent trends, the Company does not expect the COVID-19 pandemic will have a material impact on its future revenues, as more consumers are consuming media digitally as they work from home resulting in higher demand for digital advertising. The COVID-19 pandemic has not directly restricted the Company’s growth plans as the Company’s business is all online, the Company’s staff are generally able to work from home and demand for the Company’s products and services is growing as the Company’s customers increase their digital advertising budgets.

However, there are certain specific client segments, most notably the travel and entertainment industries, that have been more affected by the COVID-19 pandemic than other businesses. COVID-19 has affected the amount of revenues that we earn from our clients in these industries, and the continuation of the pandemic does have an impact on our growth from these clients. See “Risk Factors”.

4

AcuityAds Holdings Inc.

Management’s Discussion and Analysis for the three and twelve months ended December 31, 2020

On April 14, 2020, the Company entered into an amended loan and security agreement with Silicon Valley Bank. This amended loan agreement provides up to approximately US$21.85 million of capital, an increase from US$18 million previously, for working capital and general corporate purposes, subject to customary conditions. This amended loan agreement includes increased availability under a revolving credit facility that will mature on April 1, 2022, and a term loan facility of US$5.4 million that matures on April 1, 2024. The proceeds from the term loans were used to repay the Company’s then existing approximately $5 million of 12% subordinated debt, with the balance being available for general corporate purposes. On November 9, 2020 the Company and Silicon Valley Bank agreed to increase the availability under the term loan by an additional US$2.350 million to a total of US$7.75 million.

On May 5, 2020, the Company secured a loan of $1,894,693 (US$1,390,294) pursuant to the Paycheck Protection Program as part of the United States Coronavirus Aid, Relief and Economic Security Act. On October 12, 2020 the Company applied for the loan forgiveness in accordance with the terms of that program, and the loan was fully forgiven on November 25, 2020 (the “PPP Loan Forgiveness”). The total loan of $1,816,836 (US$ 1,390,294) was used to reduce salary costs on the Statement of Comprehensive Income (Loss), $1,282,208 for sales and marketing costs, $465,481 for technology costs, and $69,147 for general and administrative costs.

During the twelve months ended December 31, 2020, the Company received funding under the Government of Canada’s Canada Emergency Wage Subsidy (“CEWS”) program amounting to $947,576 which was used to reduce salary costs on the Comprehensive Statement of Income (Loss), $124,722 for sales and marketing costs, $733,102 for technology costs, and $89,752 for general and administrative costs.

During the twelve months ended December 31, 2020, the Company secured a $3 million commitment from the National Research Council’s Industrial Research Assistance Program (IRAP) that is expected to be paid between May 2020 and October 2021, subject to the Company meeting certain program requirements. During the three and twelve months ended December 31, 2020, the Company has received $567,408 and $1,386,108 of this commitment, and those amounts were used to reduce technology costs on the Consolidated Statement of Income (Loss).

On October 1, 2020, the Company officially launched illumin™, the next generation advertising automation technology, that offers advertisers the ability to plan, buy, optimize and report on omnichannel advertising programs from a single, intuitive user-interface.

On November 18, 2020, the Company received the Deloitte Enterprise Fast 15 award, a new award category as part of the Deloitte Technology Fast 50 program.

On December 4, 2020 the Company closed a bought deal offering comprised of 1,968,000 common shares issued from treasury and offered by the Company for gross proceeds to the Company of approximately $12 million (the “Treasury Offering”) and 1,804,000 common shares offered by certain of AcuityAds’ shareholders, namely 2794606 Ontario Ltd. and OV2 Capital Inc. (together, the “Selling Shareholders”), for gross proceeds to those selling shareholders of approximately $11 million (the “Shareholder Offering” and together with the Treasury Offering, the “Offering”).

5

AcuityAds Holdings Inc.

Management’s Discussion and Analysis for the three and twelve months ended December 31, 2020

SELECTED FINANCIAL INFORMATION

The following table presents selected summarized financial data for the Company for the three most recently completed financial years. The selected consolidated financial information set out below for Fiscal 2020, Fiscal 2019 and Fiscal 2018 has been derived from the Company’s audited annual Consolidated Financial Statements and related notes.

	Fiscal 2020			Fiscal 2019			Fiscal 2018
Revenue	$	104,894,048		$	119,134,229		$	70,236,017
By line of service:
Managed services		80,500,355			87,996,085			54,407,635
Self-service		24,393,693			31,138,144			15,828,382
Media Cost		50,808,810			61,711,918			33,858,046
Gross Profit	$	54,085,238		$	57,422,311		$	36,377,971
Gross Margin		52	%		48	%		52	%
Sales and marketing expenses		18,127,414			27,019,494			20,728,253
Research and development		13,156,538			13,801,435			6,151,332
General and administrative		5,918,740			7,873,489			6,860,473
Share-based compensation		998,307			1,410,467			1,136,757
Acquisition costs		-			1,289,920			2,264,580
Gain on contingent consideration		-			(3,066,799	)		(805,920	)
Impairment loss of intangible assets and goodwill		-			3,231,048			4,072,961
Depreciation and amortization		8,894,174			8,123,877			6,034,389
Income (loss) from operations	$	6,990,065		$	(2,260,619	)	$	(10,064,854	)
Finance costs		1,663,039			2,493,711			2,094,955
Foreign exchange loss		138,335			699,968			21,161
		1,801,374			(5,454,298	)		(12,180,970	)
Income taxes		1,497,701			153,107			(902,779	)
Net income (loss) for the year		3,690,990			(5,607,405	)		(11,278,191	)
Loss per share (basic and diluted)		0.07			(0.12	)		(0.29	)
Adjusted EBITDA		15,798,119			9,714,371			2,840,943
Total Assets		72,433,499			69,358,979			67,599,068
Total non-current liabilities		10,725,906			7,078,899			8,813,530
Working Capital		26,763,590			1,725,793			(4,505,269	)

6

AcuityAds Holdings Inc.

Management’s Discussion and Analysis for the three and twelve months ended December 31, 2020

Results for the three and twelve months ended December 31, 2020 and 2019

The following table provides selected financial information from the consolidated statements of comprehensive income (loss) for the three and twelve months ended December 31, 2020 and 2019:

	Three months ended				Twelve months ended
	December 31, 2020		December 31, 2019		December 31, 2020		December 31, 2019
Revenue	$	35,057,316	$	38,536,725	$	104,894,048	$	119,134,229
By line of service:
Managed services		27,775,862		27,452,636		80,500,355		87,996,085
Self-service		7,281,454		11,084,089		24,393,693		31,138,144
By geography:
US		26,397,973		29,001,337		78,832,978		85,630,542
Canada		4,122,582		4,250,618		11,847,380		14,751,574
Other		4,536,761		5,284,770		14,213,690		18,752,113
Gross Profit (Net Revenue)		18,260,068		19,563,077		54,085,238		57,422,311
Adjusted EBITDA1	$	7,819,969	$	6,012,051	$	15,798,119		9,714,370
Income (loss) from operations		6,577,954		2,832,410		6,990,065		(2,260,619	)
Net income (loss)		4,165,399		1,995,245		3,690,990		(5,607,405	)
Adjusted net income (loss)1	$	7,063,270	$	5,219,674	$	13,183,670	$	4,791,155
Net income (loss) per share (basic and diluted)2		0.08		0.04		0.07		(0.12	)

(1)	As defined in “Non-IFRS Financial Measures”.
(2)	Exercisable options to purchase 1,099,687 (2019 - 2,258,971) common shares and 40,621 (2019 - 2,492,040) warrants were outstanding as at December 31, 2020. The weighted average number of options and warrants were excluded from the calculation of diluted loss per share for the period ended December 31, 2020 and 2019 because their inclusion would have been anti-dilutive.

Three months ended December 31, 2020 and 2019

Revenue for the three months ended December 31, 2020 was $35,057,316, a decrease of $3,479,409 from $38,536,725 for the three months ended December 31, 2019. Sales of the Company’s managed services platform for the three months ended December 31, 2020 were $27,775,862, an increase of $323,326 from $27,452,636 for the three months ended December 31, 2019. Sales of the Company’s self-service platform for the three months ended December 31, 2020 were $7,281,454, a decrease of $3,802,635 from $11,084,089 for the three months ended December 31, 2019. The decrease in total revenue for the three months ended December 31, 2020 was primarily a result of reduced client spend due to the COVID-19 pandemic, primarily from the travel, leisure, and entertainment industries.

Revenue generated in the United States for the three months ended December 31, 2020 was $26,397,973, a decrease of $2,603,364 from $29,001,337 for the three months ended December 31, 2019. Revenue generated in Canada for the three months ended December 31, 2020 was $4,122,582, a decrease of $128,036 from $4,250,618 for the three months ended December 31, 2019.

7

AcuityAds Holdings Inc.

Management’s Discussion and Analysis for the three and twelve months ended December 31, 2020

Adjusted EBITDA for the three months ended December 31, 2020 was $7,819,969, an increase of $1,807,918 from $6,012,051 for the three months ended December 31, 2019. The year-over-year increase in Adjusted EBITDA was primarily attributable to higher gross margins and management’s focus on cost containment.

Net income (loss) for the three months ended December 31, 2020 was $4,165,399, an increase of $2,170,154 from $1,995,245 for the three months ended December 31, 2019. The increase in net income was primarily due to the decrease in costs and higher margins.

Twelve Months Ended December 31, 2020 and 2019

Revenue for the twelve months ended December 31, 2020 was $104,894,048, a decrease of $14,240,181 from $119,134,229 for the twelve months ended December 31, 2019. Sales of the Company’s managed services platform for the twelve months ended December 31, 2020 were $80,500,355, a decrease of $7,495,730 from $87,996,085 for the twelve months ended December 31, 2019. Sales of the Company’s self-service platform for the twelve months ended December 31, 2020 were $24,393,693, a decrease of $6,744,451 from $31,138,144 for the twelve months ended December 31, 2019. The decrease in total revenue for the twelve months ended December 31, 2020 was a result of several factors, including reduced client spend due to the COVID-19 pandemic and management’s focus to reduce low margin customer campaigns.

Revenue generated in the United States for the twelve months ended December 31, 2020 was $78,832,978, a decrease of $6,797,564 from $85,630,542 for the twelve months ended December 31, 2019. Revenue generated in Canada for the twelve months ended December 31, 2020 was $11,847,380, a decrease of $2,904,194 from $14,751,574 for the twelve months ended December 31, 2019.

Adjusted EBITDA for the twelve months ended December 31, 2020 was $15,798,119, an increase of $6,083,748 from $9,714,371 for the twelve months ended December 31, 2019. The year-over-year increase in Adjusted EBITDA was primarily attributable to higher gross margins, management’s focus on cost containment and various Canadian government subsidies.

Net income (loss) for the twelve months ended December 31, 2020 was $3,690,990, an increase of $9,298,395 from ($5,607,405) for the twelve months ended December 31, 2019. The increase in net income of $9,298,395 was primarily due to a decrease in costs.

The Company’s revenues and operating results may vary from quarter to quarter as a result of a variety of factors, some of which are outside of the Company’s control, including seasonality and cyclicality, and, in fiscal 2020, to the implications of the current COVID-19 pandemic.

Seasonality may be affected by customer mix, such that retail advertisers may concentrate their advertising spending with AcuityAds in the fourth quarter while entertainment advertisers may concentrate their spending to coincide with the launch and display of content, such as television shows or movies. The Company’s rapid growth has led to fluctuating overall operating results due to investments in AcuityAds’ sales and marketing and research and development from quarter to quarter and increases in employee headcount. As a result of these factors, one quarter’s operating results are not necessarily indicative of a future quarter’s operating results.

8

AcuityAds Holdings Inc.

Management’s Discussion and Analysis for the three and twelve months ended December 31, 2020

Net Revenue

The following table sets out a reconciliation of Net Revenue to Revenue for each of the periods indicated:

		Three months ended						Twelve months ended
	December 31, 2020				December 31, 2019		December 31, 2020			December 31, 2019
Revenue	$	35,057,316		$	38,536,725		$	104,894,048		$	119,134,229
Media costs		16,797,248			18,973,648			50,808,810			61,711,918
Net Revenue		18,260,068			19,563,077			54,085,238			57,422,311
Net Revenue margin		52	%		51	%		52	%		48	%

Three months ended December 31, 2020 and 2019

Media costs comprise advertising impressions that the Company purchased from real-time advertising exchanges or through other third parties. For the three months ended December 31, 2020, media costs were $16,797,248 compared to $18,973,648 for the three months ended December 31, 2019. The decrease of $2,176,400 in media costs was attributable to the decreased revenue during the period. Net revenue margin was 52% for the three months ended December 31, 2020 compared to 51% for the three months ended December 31, 2019. The increase in margin was attributable to the new enhanced AI platform.

Twelve Months Ended December 31, 2020 and 2019

For the twelve months ended December 31, 2020, media costs were $50,808,810 compared to $61,711,918 for the twelve months ended December 31, 2019. The decrease of $10,903,108 in media costs was attributable to the decreased revenue during the period. Net revenue margin was 52% for the twelve months ended December 31, 2020 compared to 48% for the twelve months ended December 31, 2019. The increase in margin was attributable to both the new enhanced AI platform and management’s focus on reducing low margin customer campaigns.

9

AcuityAds Holdings Inc.

Management’s Discussion and Analysis for the three and twelve months ended December 31, 2020

Reconciliation of net income (loss) to Adjusted EBITDA for the three and twelve months ended December 31, 2020 and 2019

The following table presents a reconciliation of Net Income (Loss) to Adjusted EBITDA for the periods indicated:

		Three months ended					Twelve months ended
	December 31, 2020			December 31, 2019			December 31, 2020				December 31, 2019
Net income (loss) for the period	$	4,165,399		$	1,995,245		$	3,690,990		$	(5,607,405	)
Adjustments:
Finance costs		358,844			571,692			1,663,039			2,493,711
Foreign exchange gain (loss)		669,294			228,491			138,335			699,968
Paycheck Protection Program
loan forgiveness		(1,816,836	)		-			(1,816,836	)		-
Impairment loss		-			3,231,048			-			3,231,048
Fair value gain		-			(3,066,799	)		-			(3,066,799	)
Depreciation and amortization		2,253,557			2,610,214			8,894,174			8,123,877
Income taxes		105,717			36,982			219,001			153,107
Non cash income tax adjustment		1,278,700			-			1,278,700			-
Share-based compensation		513,156			221,475			998,307			1,410,467
Acquisition integration costs		-			-			-			1,289,920
Severance expenses		4,231			117,630			245,365			654,525
Non recurring expenses		287,907			66,073			487,044			331,952
Total adjustments		3,654,570			4,016,806			12,107,129			15,321,776
Adjusted EBITDA	$	7,819,969		$	6,012,051		$	15,798,119		$	9,714,371

Three months ended December 31, 2020 and 2019

Adjusted EBITDA for the three months ended December 31, 2020 was $7,819,969 compared to $6,012,051 for the three months ended December 31, 2019. The year-over-year increase of $1,807,918 in Adjusted EBITDA was primarily attributable to higher gross margins and management’s focus on cost containment.

Twelve Months Ended December 31, 2020 and 2019

Adjusted EBITDA for the twelve months ended December 31, 2020 was $15,798,119 compared to $9,714,371 for the twelve months ended December 31, 2019. The year-over-year increase of $6,083,748 in Adjusted EBITDA was primarily attributable to higher gross margins, management’s focus on cost containment and various Canadian government subsidies.

10

AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and twelve months ended December 31, 2020

Operating Expenses, Finance Costs, and Foreign Exchange

The following table summarizes various expenses for the three and twelve months ended December 31, 2020 and 2019:

	Three months ended				Twelve months ended
	December 31, 2020		December 31, 2019		December 31, 2020		December 31, 2019
Sales and marketing	$	4,503,996	$	8,196,015	$	18,127,414	$	27,019,494
Technology		3,336,948		3,192,994		13,156,538		13,801,435
General and administrative		1,074,457		2,345,720		5,918,740		7,873,489
Share-based compensation		513,156		221,475		998,307		1,410,467
Acquisition integration costs		-		-		-		1,289,920
Depreciation and amortization		2,253,557		2,610,214		8,894,174		8,123,877
Finance costs		358,844		571,692		1,663,039		2,493,711
Foreign exchange (gain) loss		669,294		228,491		138,335		699,968

Sales and marketing expenses

Sales and marketing expenses consist of all costs associated with selling and marketing the Company’s services and products. The costs include all salary and benefit costs, personnel costs, commissions and variable compensation, travel, marketing, payroll taxes and employee health and related benefit expenses, for the sales, marketing, and account management teams. Sales and marketing expenses for the three months ended December 31, 2020 were $4,503,996, a decrease of $3,692,019 compared to the same period of the prior year. The year-over-year decrease was primarily related to management’s execution of cost optimization initiatives. The PPP Loan Forgiveness contributed $1,282,208 in salary-related cost savings. Sales and marketing expenses represented 13% of revenue for the three months ended December 31, 2020, compared to 21% for the same period of the prior year. Excluding the amounts related to the PPP Loan Forgiveness, sales and marketing expenses represented 17% of revenue for the three months ended December 31, 2020.

Sales and marketing expenses for the twelve months ended December 31, 2020 were $18,127,414, a decrease of $8,892,080 compared to the same period of the prior year. The year-over-year decrease was primarily related to management’s execution of cost optimization initiatives and the PPP Loan Forgiveness noted above. Sales and marketing expenses represented 17% for the three months ended December 31, 2020, compared to 23% for the same period of the prior year. Excluding the amounts related to the PPP Loan Forgiveness, sales and marketing expenses represented 19% for the year ended December 31, 2020.

Technology

Technology expenses consist of all costs associated with increasing the Programmatic Marketing Platform’s effectiveness and efficiency. The majority of such costs comprise of salary and benefit costs and costs associated with housing the required computer equipment. Technology expenses for the three months ended December 31, 2020 were $3,336,948, an increase of $143,954 compared to the same period of the prior year. Excluding capitalization, government grants, and the PPP Loan Forgiveness, during the three months ended December 31, 2020, technology expenses increased by $779,095 compared to the same period from the prior year. Excluding capitalization, government grants, and the PPP Loan Forgiveness, for the three months ended December 31, 2020, technology expenses represented 12% of revenue compared to 9% for the same period of the prior year.

11

AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and twelve months ended December 31, 2020

Technology expenses for the twelve months ended December 31, 2020 were $13,156,538, a decrease of $644,897 compared to the same period of the prior year. Excluding capitalization, government grants and the PPP Loan Forgiveness, during the twelve months ended December 31, 2020, technology expenses increased by $997,025 compared to the same period of the prior year. Excluding capitalization, government grants, and the PPP Loan Forgiveness, for the three months ended December 31, 2020, technology expenses represented 12% of revenue compared to 9% for the same period of the prior year. Excluding capitalization, government grants, and the PPP Loan Forgiveness, for the twelve months ended December 31, 2020, technology expenses represented 15% of revenue compared to 13% for the same period of the prior year.

During the three months ended December 31, 2020, the Company capitalized $5,393 of development costs relating to revenue generating technology. During the twelve months ended December 31, 2020, the Company capitalized $393,008 of development costs relating to revenue generating technology.

During the three months ended December 31, 2020, the Company received $567,408 in government grants related to technology from IRAP. During the twelve months ended December 31, 2020, the Company received $2,119,100 in government grants related to technology, $1,386,108 was received from IRAP and $733,102 was received from CEWS.

During the three and twelve months ended December 31, 2020, the Company received $465,481 from the PPP Loan Forgiveness related to technology.

General and administrative

General and administrative expenses include salaries and benefits of the administrative staff, occupancy costs, public company fees, insurance, professional fees, and supplies. General and administrative expenses for the three months ended December 31, 2020 were $1,074,457, a decrease of $1,271,263 compared to the same period of the prior year. General and administrative expenses for the twelve months ended December 31, 2020 were $5,918,740, a decrease of $1,954,749 compared to the same period of the prior year. The PPP Loan Forgiveness reduced General and administrative expenses by $69,147. For the three months ended December 31, 2020, General and administrative expenses represented 3% of revenue compared to 6% for the same period of the prior year. For the twelve months ended December 31, 2020, General and administrative expenses represented 6% of revenue compared to 7% for the same period of the prior year.

Share-based compensation

Share-based compensation expenses for the three months ended December 31, 2020 were $513,156, an increase of $291,681 from $221,475 for the three months ended December 31, 2019. Share-based compensation expenses for the twelve months ended December 31, 2020 were $998,307, a decrease of $412,160 from $1,410,467 for the twelve months ended December 31, 2019.

12

AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and twelve months ended December 31, 2020

Acquisition integration costs

Acquisition integration expenses of $nil were incurred during the three months ended December 31, 2020, compared to $nil incurred for the three months ended December 31, 2019. Acquisition integration expenses of $nil were incurred during the twelve months ended December 31, 2020, compared to $1,289,920 incurred for the twelve months ended December 31, 2019.

Depreciation and amortization

Depreciation and amortization for the three months ended December 31, 2020 were $2,253,557, a decrease of $356,657 compared to the same period of the prior year. Depreciation and amortization for the twelve months ended December 31, 2020 were $8,894,174, an increase of $770,297 compared to the same period of the prior year. The year-over-year increase was attributable to the increase in right of use of assets.

Finance costs

Finance costs for the three months ended December 31, 2020 were $358,844, a decrease of $212,848 compared to the same period of the prior year. Finance costs for the twelve months ended December 31, 2020 were $1,663,039, a decrease of $830,672 compared to the same period of the prior year. The decrease in Finance costs was primarily due to the debt repayment during the period, resulting in a lower outstanding debt balance as compared to the same period of the prior year.

Foreign exchange gain (loss)

Foreign exchange gain (loss) consists of the realized and unrealized exchange differences due to fluctuations between the Canadian dollar, the U.S. dollar and the Euro. The Company recorded a net foreign exchange loss of $669,294 for the three months ended December 31, 2020 compared to $228,491 for the three months ended December 31, 2019. The Company recorded a net foreign exchange loss of $138,335 for the twelve months ended December 31, 2020 compared to $699,938 for the twelve months ended December 31, 2019.

To date, the Company does not hedge foreign currency transactions but may elect to do so in the future if it is determined to be advantageous.

Deferred tax reversal

During the three months ended December 31, 2020, the Company had a deferred tax reversal of $1,278,700 compared to $nil in the same period of the prior year. During the twelve months ended December 31, 2020, the Company had a deferred tax reversal of $1,278,700 compared to $nil in the same period of the prior year.

OUTLOOK

While the impact of the COVID-19 pandemic has created short-term uncertainty with respect to the Company’s revenues, Adjusted EBITDA and net income, the Company still expects to continue to grow these measures in the medium to long term once the impact of the COVID-19 pandemic has subsided.

13

AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and twelve months ended December 31, 2020

See “Forward-Looking Information”.

Summary of Quarterly Results

The following unaudited table sets out selected financial information for the Company on a consolidated basis for the last eight most recently completed quarters. The unaudited quarterly information, other than Adjusted EBITDA, has been prepared in accordance with IFRS.

	Quarter Ended
	Dec 31, 2020		Sept 30, 2020		Jun 30, 2020			Mar 31, 2020		Dec 31, 2019		Sept 30, 2019			Jun. 30, 2019			Mar. 31, 2019
Revenue	$	35,057,316	$	26,064,322	$	19,556,810		$	24,215,600	$	38,536,725	$	26,864,507		$	25,811,114		$	27,921,884
Adjusted EBITDA		7,819,968		4,034,402	$	2,141,178		$	1,802,569	$	6,012,050	$	1,613,770		$	1,072,326		$	1,016,224
Adjusted Net income (loss)	$	7,063,270	$	3,741,924	$	1,378,528		$	999,946	$	5,219,673	$	738,996		$	(662,372	)	$	(505,141	)
Net income (loss)	$	4,165,399	$	921,220	$	(1,600,405	)	$	204,774	$	1,995,245	$	(1,360,006	)	$	(3,461,394	)	$	(2,781,250	)
Net income (loss) per share:	$	0.07	$	0.02	$	(0.03	)	$	0.00	$	0.04	$	(0.03	)	$	(0.07	)	$	(0.07	)
Weighted average number of shares outstanding (000’S)		52,855,998		50,312,701		49,523,122			48,997,938		47,814,816		47,744,143			46,931,380			41,252,050

LIQUIDITY AND CAPITAL RESOURCES

Selected financial information from the statements of financial position as at December 31, 2020 and December 31, 2019 are as follows:

	December 31, 2020		December 31, 2019
Cash and restricted cash	$	22,638,300	$	7,507,122
Working capital(1)		26,763,590		1,725,794
Total assets		72,433,499		69,358,979
Current liabilities		29,657,005		46,680,614
Other non-current liabilities		10,725,906		7,078,900
Shareholders’ equity		32,050,588		15,599,465

(1) Working capital is defined as current assets less current liabilities.

As at December 31, 2020, the Company had cash and cash equivalents and restricted cash of $22,638,300 compared to $7,507,122 as at December 31, 2019.

Cash flows generated from operations were $19,292,815 during the twelve months ended December 31, 2020 as compared to $640,854 during the twelve months ended December 31, 2019. The increase in cash flows generated in operations was primarily a result of increased working capital and reduced costs.

14

AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and twelve months ended December 31, 2020

Cash flows used in investing activities were $5,316,521 during the twelve months ended December 31, 2020, compared to $8,483,695 during the twelve months ended December 31, 2019. The decrease was primarily due to a reduction in capitalized technology costs and reduced capital expenditures.

Cash flows generated from financing activities were $1,254,884 during the twelve months ended December 31, 2020, compared to $7,235,294 during the twelve months ended December 31, 2019. The decrease was primarily due to the increase in repayment of the line of credit and term loan in fiscal 2020 and the equity financing completed in fiscal 2019.

Liquidity risk is the risk the Company will not be able to meet its financial obligations as they come due. The Company’s approach to managing liquidity is to ensure, to the extent possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. The Company manages its liquidity risk by continually monitoring forecasted and actual revenue and expenditures and cash flows from operations. While the Company currently has sufficient operating capital to meet its day-to-day operating expenses, it is possible that the Company could experience a working capital deficiency in the future, which would have a materially adverse effect on the Company’s liquidity.

Management is also actively involved in the review and approval of planned expenditures. The Company’s principal cash requirements are for principal and interest payments on its debt, capital expenditures and working capital needs. The Company uses its operating cash flows, loans and borrowings and cash balances to maintain liquidity. In the event future cash flows from operations are lower than expected, the Company may need to seek additional financing, either by issuing additional equity or by undertaking additional debt. There is no certainty that additional financing, whether debt or equity, will be available or that it will be available on attractive terms. Additional information can be found in the Company’s Consolidated Financial Statements which are available on SEDAR at www.sedar.com

Common Shares

Changes in the number of issued common shares from December 31, 2019 to December 31, 2020 are as follows:

	Number of Common Shares
Balance December 31, 2019		47,824,212
Shares issued - Equity raise		1,968,000
Shares issued -Warrants exercised		1,417,623
Shares issued -Options exercised		1,133,482
Shares issued - DSU’s exercised		1,078,707
Balance December 31, 2020		53,422,024

15

AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and twelve months ended December 31, 2020

Equity Incentive Plans

The Company has an omnibus long-term incentive plan (the “Omnibus Incentive Plan”). Since the adoption of the Omnibus Incentive Plan by shareholders on June 16, 2020, the Company has stopped issuing new stock options under its existing stock option plan, and has stopped issuing new deferred share units (“DSUs”) under its existing deferred share unit plan; however previously issued stock options and DSUs remain outstanding and are governed by the existing plans under which they were initially issued.

The Omnibus Incentive Plan allows for a variety of equity-based awards to be granted to officers, directors, employees and consultants (in the case of stock options, performance share units (“PSUs”) and restricted share units (“RSUs”)) and non-employee directors (in the case of DSUs). Stock options, PSUs, RSUs and DSUs are collectively referred to herein as “Awards”. Each Award represents the right to receive common shares, or in the case of PSUs, RSUs and DSUs, common shares or cash, in accordance with the terms of the Omnibus Incentive Plan.

The maximum number of common shares reserved for issuance, in the aggregate, under the Omnibus Incentive Plan, the stock option plan, the deferred share unit plan of the Company and any other security-based compensation arrangement, collectively, is 15% of the aggregate number of common shares issued and outstanding from time to time. The total availability under the new plan is currently 8,013,304 equity-based awards.

Preference Shares

While the Company is authorized to issue and unlimited number of preference shares, the Company has no preference shares issued and outstanding.

Stock Options

The following table summarizes the continuity of stock options issued by the Company under the Omnibus Incentive Plan and the stock option plan:

	December 31, 2020					December 31, 2019
	Number of options			Weighted average exercise price $		Number of options			Weighted average exercise price $
Options outstanding - Beginning of year		3,409,886			1.45		3,097,220			1.63
Granted		395,000			1.69		1,153,500			1.60
Forfeited or cancelled		(770,885	)		1.20		(600,667	)		2.84
Exercised		(1,133,482	)		1.29		(240,167	)		0.96
Options outstanding - End of period		1,900,519			1.70		3,409,886			1.44
Options exercisable - End of period		1,099,687			2.02		2,258,971			1.46

16

AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and twelve months ended December 31, 2020

Deferred Share Units

During the three and twelve months ended December 31, 2020, the Company issued nil and 204,008 (2019 - 93,804 and 316,304, respectively) DSUs to employees, officers, directors and consultants of the Company. During the three and twelve months ended December 31, 2020, 316,889 and 981,578 (2019 - 74,539 and 140,858, respectively) DSUs were exercised. As of December 31, 2020, the Company had 1,219,619 DSUs outstanding.

Restricted Share Units

During the three and twelve months ended December 31, 2020, the Company issued 231,666 and 1,321,074 (2019 - nil and nil, respectively) RSUs to employees, officers, directors and consultants of the Company. During the three and twelve months ended December 31, 2020, 97,129 and 97,129 (2019 - nil and nil, respectively) RSUs were exercised. As of December 31, 2020, the Company had 1,223,945 RSUs outstanding.

Warrants

For the three months ended December 31, 2020, the Company issued nil warrants and during the same period, 277,505 warrants were exercised. For the twelve months ended December 31, 2020, the Company issued nil warrants and during the same period, 1,417,623 warrants were exercised. As a result, as of December 31, 2020, the Company had 40,621 warrants outstanding.

CONTRACTUAL OBLIGATIONS

The following are the contractual maturities for the financial liabilities:

	December 31, 2020
	Carrying amount $		Total contractual cash flows $		Less than 1 year $		1 to 3 Years $		> 3 years $
Accounts payable and accrued liabilities		23,232,661		23,232,661		23,232,661
International Loans		1,980,229		1,980,229		1,092,297		887,932		-
Term loans		8,278,004		8,710,774		2,481,550		6,229,224		-
Lease Obligations		6,892,017		7,315,497		3,366,199		3,949,298		-
		40,382,911		41,239,161		30,172,707		11,066,454		-

17

AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and twelve months ended December 31, 2020

	December 31, 2019
	Carrying amount $		Total contractual cash flows $		Less than 1 year $		1 to 3 Years $		> 3 years $
Accounts payable and accrued liabilities		26,330,763		26,330,763		26,330,763
Revolving line of credit		15,384,498		15,384,498		15,384,498		-		-
International Loans		2,443,319		2,443,319		1,006,653		1,436,666		-
Term loans		3,452,331		3,452,331		1,210,500		2,241,831		-
Lease Obligations		6,148,603		6,499,839		2,990,552		3,252,263		257,024
		53,759,514		54,110,750		46,922,966		6,930,760		257,024

OFF-BALANCE SHEET ARRANGEMENTS

The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future material adverse effect on its financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

TRANSACTIONS WITH RELATED PARTIES

During the year ended December 31, 2019, the Company issued to each of the four founders of the Company a non-interest loan of $60,000. The loan was fully repaid during the year ended December 31, 2020.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of the Consolidated Financial Statements and application of IFRS often involve management’s judgment and the use of estimates and assumptions deemed to be reasonable at the time they are made. Significant assumptions and estimates used in preparing the financial statements include those related to credit quality of accounts receivable, income tax credits receivable, share-based payments, impairment tests for non-financial assets, as well as revenue and cost recognition. AcuityAds bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets, liabilities, equity, revenue and expenses that are not readily apparent from other sources. The Company reviews estimates and underlying assumptions on an ongoing basis. Revisions are recognized in the period in which estimates are revised and may impact future periods as well. Other results may be derived with different judgments or using different assumptions or estimates and events may occur that could require a material adjustment. Significant accounting policies and estimates under IFRS are found in Note 2 of the Company’s Condensed Interim Consolidated Financial Statements which are available on SEDAR at www.sedar.com.

18

AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and twelve months ended December 31, 2020

CHANGES IN ACCOUNTING POLICIES

Recently adopted accounting pronouncements

For the period the ending December 31, 2020, the Company has not adopted any new accounting policies.

DISCLOSURE CONTROLS AND INTERNAL CONTROLS OVER FINANCIAL REPORTING

Management of AcuityAds is responsible for establishing and maintaining disclosure controls and procedures for the Company as defined under National Instrument 52-109 - Certification of Disclosure in Issuers’ Annual and Interim Filings (“NI 52-109”) issued by the Canadian Securities Administrators. Management has designed such disclosure controls and procedures, or caused them to be designed under its supervision, to provide reasonable assurance that material information relating to the Company, including its consolidated subsidiaries, is made known to the Chief Executive Officer and the Chief Financial Officer by others within those entities on a timely basis, particularly during the period in which the annual filings are being prepared, so that appropriate decisions can be made regarding public disclosure.

As required by NI 52-109, an evaluation of the adequacy of the design (quarterly) and effective operation (annually) of the Company’s disclosure controls and procedures was conducted under the supervision of management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as at December 31, 2020. Based on that evaluation, the CEO and the CFO have concluded that the design and operation of the system of disclosure controls and procedures were effective as at December 31, 2020.

Management of the Company is responsible for designing and evaluating the effectiveness of internal controls over financial reporting for the Company as defined under NI 52-109 issued by the Canadian Securities Administrators. Management has designed such internal controls over financial reporting using the Integrated Control - Integrated Framework: 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission, or caused them to be designed under their supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with IFRS. In designing such controls, it should be recognized that due to inherent limitations, any controls, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and may not prevent or detect misstatements. Additionally, management is required to use judgment in evaluating controls and procedures.

As required by NI 52-109, management, including the CEO and CFO, evaluated the adequacy of the design (quarterly) and the effective operation (annually) of the Company’s internal control over financial reporting as defined in NI 52-109, as at December 31, 2020. In making this assessment, management, including the CEO and CFO, used the framework set forth in the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, the CEO and the CFO have concluded that the design and operation of the Company’s internal controls over financial reporting, as defined by NI 52-109, were effective as at December 31, 2020.

19

AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and twelve months ended December 31, 2020

There have been no changes to AcuityAds’ internal controls over financial reporting that occurred during the quarter and year ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, AcuityAds’ internal control over financial reporting.

OUTSTANDING SHARE DATA

As of March 1, 2021, 53,516,945 common shares and no preference shares were issued and outstanding. In addition, as of March 1, 2021, there were 1,900,519 stock options outstanding, each of which represents the right to acquire one Common Share, with exercise prices ranging from $0.64 to $4.60 per share. As at March 1, 2021, there were 1,166,952 DSUs outstanding under the Company’s deferred share unit plan, each of which represents the right to acquire one common share when the participant is no longer rendering service to the Company. As at March 1, 2021, there were 1,223,945 RSUs outstanding under the Company’s deferred share unit plan, each of which represents the right to acquire one common share when the participant is no longer rendering service to the Company. As at March 1, 2021, there were 1,700 warrants outstanding, each of which represents the right to acquire one Common Share, with exercise prices of $1.55 per share.

RISK FACTORS

AcuityAds is exposed to a variety of business risks, financial and accounting risks and industry risks in the normal course of operations. A detailed description of risk factors associated with the Company’s business is given in the “Risk Factors” section of the 2020 AIF dated March 1, 2021 which is available under the Company’s profile on SEDAR at www.sedar.com.

ADDITIONAL INFORMATION

Additional information relating to the Company, including the Company’s AIF, is posted on SEDAR at www.sedar.com. The Company’s shares are listed on the TSX under the symbol “AT”.

20

EX-4.4

Exhibit 4.4

AcuityAds Holdings Inc.

Condensed Interim Consolidated
Financial Statements
(Unaudited)

Three months ended
March 31, 2021 and 2020

(expressed in Canadian dollars)

AcuityAds Holdings Inc.

Condensed Interim Consolidated Statements of Financial Position

(Unaudited)

(expressed in Canadian dollars)

	March 31, 2021 $		December 31, 2020 $
Assets
Current assets
Cash and cash equivalents		27,010,140		22,638,300
Accounts receivable		27,443,181		31,859,306
Prepaid expenses and other		2,041,419		1,901,067
Investment tax credits receivable		–		21,922
		56,494,740		56,420,595
Non-current assets
Property and equipment (note 3)		6,954,965		7,945,110
Intangible assets (note 4)		2,845,385		3,197,953
Goodwill		4,869,841		4,869,841
		71,164,931		72,433,499
Liabilities
Current liabilities
Accounts payable and accrued liabilities		20,833,225		23,232,661
Term loans (note 16)		2,436,213		2,481,550
International loans (note 17)		528,280		1,092,297
Lease obligations (notes 5)		2,276,678		2,850,497
		26,074,396		29,657,005
Non-current liabilities
Term loans (note 16)		5,102,996		5,796,454
International loans (note 17)		782,418		887,932
Lease obligations (notes 5)		3,667,373		4,041,520
		35,627,183		40,382,911
Shareholders’ Equity (notes 7)		35,537,748		32,050,588
		71,164,931		72,433,499

AcuityAds Holdings Inc.

Condensed Interim Consolidated Statements of Income (Loss)

(Unaudited)

(expressed in Canadian dollars)

	March 31, 2021 $		March 31, 2020 $
Revenue
Managed services		22,256,217		19,318,275
Self-service		5,198,375		4,897,325
		27,454,592		24,215,600
Media costs		13,090,500		12,027,213
Gross profit		14,364,092		12,188,387
Operating expenses
Sales and marketing		4,554,024		4,828,925
Technology (note 11)		3,793,370		4,053,022
General and administrative		1,531,793		1,600,238
Share-based compensation (note 7)		864,392		143,124
Depreciation and amortization		1,383,026		2,166,344
		12,126,605		12,791,653
Income (loss) from operations		2,237,487		(603,266	)
Finance costs (note 8)		274,880		602,392
Foreign exchange (gain) loss		568,483		(1,514,296	)
		843,363		(911,904	)
Net income before income taxes		1,394,124		308,638
Income taxes (note 18)		30,243		103,864
Net income for the year		1,363,881		204,774
Net income per share (note 9)
Basic and diluted		0.03		0.00

AcuityAds Holdings Inc.

Condensed Interim Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

(expressed in Canadian dollars)

	March 31, 2021 $		March 31, 2020 $
Net income for the period		1,363,881		204,774
Exchange differences on translating foreign operations		754,331		664,172
Comprehensive income (loss) for the period		609,550		(459,398	)

AcuityAds Holdings Inc.

Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity

(Unaudited)

For the three-month periods ended March 31, 2021 and 2020

(expressed in Canadian dollars)

	2021
	Common shares
	Number		Amount $		Contributed surplus $			Warrants $			Other reserves $		Deficit $			Total $
Balance – December 31, 2020		53,422,024		56,983,111		7,224,222			31,279			415,049		(32,603,073	)		32,050,588
Shares issued – options exercised		611,666		857,882		–			–			–		–			857,882
Share-based compensation (note 7(c))		–		–		864,392			–			–		–			864,392
Shares issued – Warrants exercised		39,821		61,723		30,663			(30,663	)		–		–			61,723
Shares issued – DSUs/RSUs exercised (notes 7(d) and 7(e))		564,330		744,419		(744,419	)		–			–		–			–
Other comprehensive income		–		–		–			–			339,282		–			339,282
Net income for the year		–		–		–			–			–		1,363,881			1,363,881
Balance – March 31, 2021		54,637,841		58,647,135		7,374,858			616			754,331		(31,239,192	)		35,537,748

	2020
	Common shares
	Number		Amount $		Contributed surplus $			Warrants $			Other reserves $			Deficit $			Total $
Balance – December 31, 2019		47,824,212		42,185,794		6,965,447			2,337,372			415,915			(36,294,063	)		15,599,465
Share-based compensation (note 7(c))		–		–		143,124			–			–			–			143,124
Shares issued – Warrants exercised		706,168		712,502		533,564			(533,564	)		–			–			712,502
Shares issued – DSUs/RSUs exercised (notes 7(d) and 7(e))		593,236		507,623		(507,623	)		–			–			–			–
Other comprehensive income		–		–		–			–			(1,080,086	)		–			(1,080,086	)
Net loss for the year		–		–		–			–			–			204,774			204,774
Balance – March 31, 2020		49,123,616		43,405,919		7,123,512			1,803,808			(664,171	)		(36,089,289	)		15,579,779

AcuityAds Holdings Inc.

Condensed Interim Consolidated Statements of Cash Flows

(Unaudited)

For the three-month periods ended March 31, 2021 and 2020

(expressed in Canadian dollars)

	2021 $			2020 $
Cash provided by (used in)
Operating activities
Income for the year		1,363,881			204,774
Adjustments to reconcile net income to net cash flows
Depreciation and amortization		1,383,026			2,166,344
Finance costs (note 8)		274,880			602,392
Share-based compensation (note 7(c))		864,392			143,124
Change in non-cash operating working capital
Accounts receivable		4,416,125			8,003,584
Prepaid expenses and other		(140,352	)		(540,503	)
Investment tax credits receivable		21,922			65,918
Accounts payable and accrued liabilities		(2,287,367	)		(6,130,551	)
Interest paid – net		(241,264	)		(559,988	)
		5,655,243			3,955,094
Investing activities
Additions to property and equipment (note 3)		(40,313	)		(2,967,097	)
Additions to intangible assets (note 4)		-			(260,929	)
		(40,313	)		(3,228,026	)
Financing activities
Amount drawn from revolving line of credit (note 15)		-			23,690,010
Repayment of revolving line of credit (note 15)		-			(25,893,227	)
Repayment of term loans principal (note 16)		(616,722	)		(302,625	)
Additions to international loans		154,303			-
Repayment of international loans		(823,834	)		(113,766	)
Additions to leases		-			2,424,379
Repayment of leases		(876,442	)		(847,102	)
Proceeds from the exercise of warrants		61,723			712,502
Proceeds from the exercise of stock options		857,882			-
		(1,243,090	)		(329,829	)
Increase (decrease) in cash and cash equivalents		4,371,840			397,239
Cash and cash equivalents - Beginning of year		22,638,300			7,407,122
Cash and cash equivalents - End of year		27,010,140			7,804,361
Supplemental disclosure of non-cash transactions
Additions to property and equipment under leases		-			2,962,605

AcuityAds Holdings Inc.

Notes to Condensed Interim Consolidated Financial Statements

(Unaudited)

March 31, 2021 and 2020

(expressed in Canadian dollars)

1 Corporate information

AcuityAds Holdings Inc. (“AcuityAds” or the “Company”), and its wholly owned subsidiaries AcuityAds Inc., AcuityAds US Inc., 140 Proof Inc., and ADman Interactive S.L.U. (“ADman”), a company that holds certain technology assets, is a leading provider of targeted digital media solutions, enabling advertisers to connect intelligently with their audiences across online display, video, social and mobile campaigns. AcuityAds is a publicly traded company, incorporated in Canada, and its head office is located at 70 University Ave, Suite 1200, Toronto, Ontario M5J 2M4. The Company’s common shares are listed on the Toronto Stock Exchange in Canada, under the trading symbol “AT”.

Effective January 1, 2020 AcuityAds MM Inc. and Visible Measures Corp were merged into AcuityAds US Inc. and 2422330 Ontario Inc. was amalgamated into AcuityAds Inc.

2 Summary of significant accounting policies

Statement of compliance

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board. The date the Board of Directors authorized the consolidated financial statements for issue is May 10, 2021.

Basis of presentation

These condensed interim consolidated financial statements are prepared in Canadian dollars, which is the Company’s functional and reporting currency and have been prepared mainly under the historical cost basis. Other measurement bases used are described in the applicable notes.

Significant accounting policies

The disclosures contained in these unaudited condensed interim consolidated financial statements do not include all the requirements of IFRS for annual financial statements. The unaudited condensed interim consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements for the year ended December 31, 2020.

The unaudited condensed interim consolidated financial statements are based on accounting policies, as described in note 2 to the 2020 audited annual consolidated financial statements.

Risks and uncertainties

On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 which continues to spread throughout Canada and around the world, as a global pandemic. To date, the Canadian federal and provincial governments as well as businesses have mandated various measures, including: travel restrictions, restrictions on public gatherings, stay-at-home orders and advisories, and the quarantine of individuals who have been exposed to the virus. COVID-19 and actions taken to mitigate the spread of it have had, and are expected to continue to have, an adverse impact on the economies and financial markets of many countries, including the geographical area in which the Company operates.

The severity of the impact of the COVID-19 pandemic on the Company’s business will depend on a number of factors, including but not limited to the duration and severity of the pandemic and the extent and severity of the impact on the Company’s customers, all of which are uncertain and cannot be predicted. COVID-19 could cause a further and sustained decline in the Company’s share price or the occurrence of what management would deem to be a triggering event that could, under certain circumstances, cause the Company to perform a goodwill or intangible assets impairment test and result in an impairment charge being recorded for that period.

1 

AcuityAds Holdings Inc.

Notes to Condensed Interim Consolidated Financial Statements

(Unaudited)

March 31, 2021 and 2020

(expressed in Canadian dollars)

As of the date of issuance of these condensed interim consolidated financial statements, the extent to which the COVID-19 pandemic may materially impact the Company’s financial condition, liquidity or results of operations is uncertain.

3 Property and equipment

	Furniture and fixtures $			Data centre equipment $			Office computer equipment $			Equipment under finance leases $			Total $
Net book value – December 31, 2020		850,831			8,824			367,405			6,718,050			7,945,110
Additions		-			-			40,313			-			40,313
Depreciation		(58,521	)		(2,503	)		(69,165	)		(900,269	)		(1,030,458	)
Net book value – March 31, 2021		792,310			6,321			338,553			5,817,781			6,954,965

	Furniture and fixtures $			Data centre equipment $			Office computer equipment $			Equipment under finance leases $			Total $
Net book value – December 31, 2019		373,330			21,351			482,641			6,101,512			6,978,834
Additions		-			-			4,491			2,962,606			2,967,097
Depreciation		(29,966	)		(3,250	)		(56,619	)		(852,272	)		(942,107	)
Net book value – March 31, 2020		343,364			18,101			430,513			8,211,846			9,003,824

4 Intangible assets

	Customer relationships $			Tradename $		Technology $			Total $
Net book value – December 31, 2020		52,460			-		3,145,493			3,197,953
Amortization		(29,912	)		-		(322,656	)		(352,568	)
Net book value – March 31, 2021		22,548			-		2,822,837			2,845,385

	Customer relationships $			Tradename $			Technology $			Total $
Net book value – December 31, 2019		1,641,517			336,548			5,763,817			7,741,883
Additions		-			-			260,929			260,929
Amortization		(381,232	)		(116,473	)		(726,533	)		(1,224,238	)
Net book value – March 31, 2020		1,260,285			220,075			5,298,213			6,778,573

2 

AcuityAds Holdings Inc.

Notes to Condensed Interim Consolidated Financial Statements

(Unaudited)

March 31, 2021 and 2020

(expressed in Canadian dollars)

During the three months ended March 31, 2021, the Company capitalized $nil (2020 – $260,929) of development costs relating to revenue generating technology.

5 Lease obligations

	March 31 2021 $		December 31, 2020 $
Obligations under leases		5,944,051		6,892,017
Less: Current portion		2,276,678		2,850,497
		3,667,373		4,041,520

The Company has minimum lease payment commitments under leases for the following amounts:

	$
2021		2,385,168
2022		2,118,475
2023		1,560,947
2024		542,868
		6,607,458
Less: Interest		663,407
Present value of minimum lease payments		5,944,051

6 Related party transactions and balances

Directors and officers are eligible to participate in the Company’s long-term incentive plans. During the three months ended March 31, 2021, the Company issued nil (2020 – 170,000) stock options to directors and officers of the Company (note 7(c)).

During the three months ended March 31, 2021, the Company issued 97,498 (2020 - nil) RSUs to directors and officers of the Company. Of those issued in 2021, 85,225 were granted to officers and 12,273 were granted to directors in lieu of cash bonuses and director fees, all vesting immediately.

As at March 31, 2021 $nil (2020 - $1,319,625) of the current outstanding term loans (note 16) relates to amounts loaned by related parties.

7 Share capital and share based payments

a) Share capital

As at March 31, 2021, the Company had an unlimited number of common shares authorized for issuance (2020 – unlimited) and 54,637,841 common shares outstanding (2020 – 53,422,024).

b) Equity financing

On December 4, 2020, the Company closed a bought deal offering comprised of 1,968,000 common shares issued from treasury and offered by the Company at a price of $6.10 per share for total gross proceeds of $12,004,800, including the full exercise by the underwriters of the over-allotment option. The offering was completed by a syndicate of underwriters. In consideration for their services, the underwriters received aggregate cash compensation equal to 6% of the gross proceeds of the offering. The Company incurred additional share issuance costs of $1,386,913 in connection with the offering.

3 

AcuityAds Holdings Inc.

Notes to Condensed Interim Consolidated Financial Statements

(Unaudited)

March 31, 2021 and 2020

(expressed in Canadian dollars)

c) Stock option plan and Omnibus Incentive Plan

The Company has a stock option plan (the “Stock Option Plan”), deferred share unit plan (the “Deferred Share Unit Plan”) and an omnibus long-term incentive plan (the “Omnibus Incentive Plan”). Since the adoption of the Omnibus Incentive Plan by shareholders on June 16, 2020, the Company has stopped issuing new stock options under its Stock Option Plan and new DSUs under its Deferred Share Unit plan. Previously issued stock options and DSUs remain outstanding and are governed by the plans under which they were initially issued.

Under the Stock Option Plan, the Board of Directors granted stock options to employees, officers, directors and consultants of the Company. The expiry date of options granted under the Stock Option Plan typically did not exceed five years from the grant date. The vesting schedule was at the discretion of the Board of Directors and was generally annually over a three-year period. The exercise price of options was equal to the market price per share on the day preceding the grant date.

The Omnibus Incentive Plan allows for a variety of equity-based awards to be granted to officers, directors, employees and consultants (in the case of stock options, PSUs and RSUs) and non-employee directors (in the case of DSUs). Stock options, PSUs, RSUs and DSUs are collectively referred to herein as “Awards”. Each Award represents the right to receive common shares, or in the case of PSUs, RSUs and DSUs, common shares or cash, in accordance with the terms of the Omnibus Incentive Plan.

The maximum number of common shares reserved for issuance, in the aggregate, under the Omnibus Incentive Plan, the Stock Option Plan, the Deferred Share Unit Plan of the Company and any other security based compensation arrangement, collectively, is 15% of the aggregate number of common shares issued and outstanding from time to time.

As at March 31, 2021, the Company was entitled to issue a maximum of 8,195,676 equity-based awards, collectively under the Omnibus Incentive Plan, the existing Stock Option Plan, the existing DSU Plan and any other security-based compensation arrangement.

4 

AcuityAds Holdings Inc.

Notes to Condensed Interim Consolidated Financial Statements

(Unaudited)

March 31, 2021 and 2020

(expressed in Canadian dollars)

The following table summarizes the continuity of options issued under the Stock Option Plan:

	March 31, 2021					March 31, 2020
	Number of options			Weighted average exercise price $		Number of options			Weighted average exercise price $
Outstanding – Beginning of year		1,865,519			1.69		3,409,886			1.45
Granted		3,333			1.06		235,000			1.59
Forfeited or cancelled		-			-		(703,385	)		1.03
Exercised		(611,666	)		1.40		-			-
Outstanding – End of year		1,257,186			1.83		2,941,501			1.45
Options exercisable – End of year		780,688			2.14		1,857,836			1.73

The following table summarizes the continuity of options issued under the Omnibus Incentive Plan:

	March 31, 2021				March 31, 2020
	Number of options		Weighted average exercise price $		Number of options		Weighted average exercise price $
Outstanding – Beginning of year		35,000		2.09		-		-
Granted		-		-		-		-
Forfeited or cancelled		-		-		-		-
Exercised		-		-		-		-
Outstanding – End of year		35,000		2.09		-		-
Options exercisable – End of year		-		-		-		-

5 

AcuityAds Holdings Inc.

Notes to Condensed Interim Consolidated Financial Statements

(Unaudited)

March 31, 2021 and 2020

(expressed in Canadian dollars)

A summary of the Company’s combined stock options and Omnibus options outstanding under the above plans is as follows:

	March 31, 2021
Range of exercise prices $	Number of options		Weighted average remaining contractual life (years)		Weighted average number of options exercisable
0.96		37,333		2.42		667
1.06		132,168		2.50		43,667
1.13		95,000		4.17		-
1.14		10,000		2.67		6,667
1.15		20,000		3.67		6,667
1.27		8,334		3.42		1,668
1.55		83,017		3.17		4,351
1.59		185,000		3.92		51,668
1.71		506,334		3.00		485,333
1.94		50,000		0.42		50,000
2.09		35,000		4.42		-
4.12		7,500		1.17		7,500
4.47		22,500		1.42		22,500
4.60		100,000		1.00		100,000
		1,292,186				780,688

	March 31, 2020
Range of exercise prices $	Number of options		Weighted average remaining contractual life (years)		Weighted average number of options exercisable
0.64		500,000		3.17		166,667
0.78		90,000		0.17		90,000
0.83		100,000		0.67		100,000
0.94		90,000		0.42		90,000
0.96		110,000		3.42		36,666
1.00		75,000		0.92		75,000
1.06		285,500		3.50		95,167
1.08		75,000		1.00		75,000
1.14		10,000		3.67		3,333
1.15		20,000		4.67		-
1.27		10,000		4.42		-
1.34		10,001		1.17		10,001
1.55		118,000		4.17		-
1.59		235,000		4.92		-
1.71		828,000		4.00		786,000
1.94		100,000		1.42		100,000
4.12		95,000		2.17		63,334
4.47		70,000		2.42		46,668
4.60		120,000		2.00		120,000
		2,941,501				1,857,836

6 

AcuityAds Holdings Inc.

Notes to Condensed Interim Consolidated Financial Statements

(Unaudited)

March 31, 2021 and 2020

(expressed in Canadian dollars)

During the three months ended March 31, 2021, the Company recorded share-based compensation expense under the Black-Scholes option pricing model, related to stock options granted to employees, officers, directors and consultants of the Company of $864,392 (2020 – $143,124).

During the three months ended March 31, 2021, the Company granted nil (2020 – 235,000) stock options with a weighted average exercise price of $nil (2020 – $1.59) to employees, officers, directors and consultants of the Company. Of those options, nil (2020 – 235,000) options were granted to officers or employees of the Company. Nil (2020 – nil) options were granted to consultants as compensation for services rendered at a weighted average price of $nil (2020 – $nil).

During the three months ended March 31, 2021, 611,666 options were exercised at a weighted average exercise price of $1.40 per option, for gross proceeds of $857,882 (2020 – no options were exercised).

During three months ended March 31, 2021, the Company granted nil (2020 – nil) options under the Omnibus Incentive Plan with a weighted average exercise price of $nil (2020 – nil) to employees, officers, and directors.

During the three months ended March 31, 2021, nil (2020 – nil) options were exercised.

Share-based compensation expense was determined based on the fair value of the options at the date of measurement using the Black-Scholes option pricing model with the weighted average assumptions for options granted during the three months ended March 31 as follows:

	2021 $			2020 $
Weighted average grant date fair value of options granted	$	1.45		$	1.46
Weighted average assumptions used
Expected option life		5 years			5 years
Risk-free interest rate		1.43	%		1.46	%
Expected volatility		143	%		101	%

The expected volatility was estimated based on the historical volatility of the Company’s shares that covers the expected life of the options granted. The expected option life was estimated based on historical data and represents the numbers of years the options are expected to be outstanding. The risk-free rate was estimated based on the Government of Canada marketable bonds with a term that covers the expected life of the options granted.

d) Deferred share units

During the three months ended March 31, 2021, the Company issued nil (2020 – 132,415) DSUs to employees, officers, independent directors and consultants of the Company, vesting every year in the measure of one third. During the three months ended March 31, 2021, 374,496 DSUs were exercised.

e) Restricted share units

During the three months ended March 31, 2021, the Company issued 171,693 (2020 – nil) RSUs to employees, officers, directors and consultants of the Company. During the three months ended March 31, 2021, 189,834 (2020 – nil) RSUs were exercised.

7 

AcuityAds Holdings Inc.

Notes to Condensed Interim Consolidated Financial Statements

(Unaudited)

March 31, 2021 and 2020

(expressed in Canadian dollars)

8 Finance costs

	March 31 2021 $		March 31, 2020 $
Finance costs
Interest on finance leases and other interest		147,593		184,920
Interest and fees on revolving line of credit (note 15)		-		250,736
Interest and fees on term loans (note 16)		127,287		166,736
		274,880		602,392

9 Net income (loss) per share

The computations for basic and diluted net income (loss) per share for the three months ended March 31, 2021 and 2020 are as follows:

	2021 $		2020 $
Net income (loss) for the year		1,363,881		204,774
Weighted average number of shares outstanding – basic and diluted		54,398,478		48,997,938
Net income (loss) per share – basic and diluted		0.03		0.00

Exercisable options to purchase 780,688 common shares (2020 – 1,857,836) and 800 warrants (2020 – 1,785,872) were outstanding as at March 31, 2021. The weighted average numbers of options and warrants were excluded from the calculation of diluted income (loss) per share for the three months ended March 31, 2021 and 2020 because their inclusion would have been anti-dilutive.

10 Segment information

The Company’s assets and operations are substantially located in Canada; however, the Company also has employees and customers in the United States and Europe, and generates revenue in each region. Revenue by region for the three months ended March 31, 2021 and 2020 is as follows:

	2021 $		2020 $
United States		21,430,134		17,829,363
Canada		3,111,483		2,780,381
Europe and other		2,912,975		3,605,856
		27,454,592		24,215,600

During the three months ended March 31, 2021, the Company had one customer that represented 18% (2020 - 18%) of total revenue.

11 Government assistance

During the year ended December 31, 2020, the Company secured a $3,000,000 commitment funding from the National Research Council’s Industrial Research Assistance Program (“IRAP”) that is expected to be paid between May 2020 and October 2021, subject to the Company meeting certain program requirements. During the three months ended March 31, 2021, the Company has received $815,930 of this commitment from IRAP, and these amounts were used to reduce technology costs on the condensed interim consolidated statement of income (loss).

8 

AcuityAds Holdings Inc.

Notes to Condensed Interim Consolidated Financial Statements

(Unaudited)

March 31, 2021 and 2020

(expressed in Canadian dollars)

12 Financial instruments

Classification of financial instruments

The following table provides the allocation of financial instruments and their associated financial instrument classifications:

	Loans and receivables/ financial liabilities (amortized cost)
Measurement basis	March 31, 2021 $		December 31, 2020 $
Financial assets
Cash and cash equivalents		27,010,140		22,638,300
Accounts receivable		27,443,181		31,859,306
Investment tax credit receivable		-		21,922
		54,453,321		54,519,528

	Loans and receivables/ financial liabilities (amortized cost)
Measurement basis		March 31, 2021 $	December 31, 2020 $
Financial liabilities
Accounts payable and accrued liabilities		20,833,225	23,232,661
Term loans		7,539,209	8,278,004
International loans		1,310,698	1,980,229
Lease obligations		5,944,051	6,892,017
		35,627,183	40,382,911

Fair value measurements

The Company provides disclosure of the three-level hierarchy that reflects the significance of the inputs used in making the fair value measurement. The carrying values of cash and cash equivalents, restricted cash, accounts receivable, ITC receivable, revolving line of credit, repayable government grant, accounts payable and accrued liabilities, current portion of finance lease obligations, current portion of contingent consideration and current portion of term loans approximate their fair values given their short-term nature. The carrying value of the non-current liabilities approximates their fair value, given that the difference between the discount rates used to recognize the liabilities in the consolidated statements of financial position and the market rates of interest is not considered significant. The three levels of fair value hierarchy based on the reliability of inputs are as follows:

· Level 1 – inputs are quoted prices in active markets for identical assets and liabilities;

9 

AcuityAds Holdings Inc.

Notes to Condensed Interim Consolidated Financial Statements

(Unaudited)

March 31, 2021 and 2020

(expressed in Canadian dollars)

· Level 2 – inputs are based on observable market data, either directly or indirectly other than quoted prices; and

· Level 3 – inputs are not based on observable market data.

There were no transfers of financial assets during the three months ended March 31, 2021 and 2020 between any of the levels.

13 Capital risk management

The Company’s objectives in managing capital are to ensure sufficient liquidity to pursue its strategy of organic growth combined with strategic acquisitions and to provide returns to its shareholders. The Company defines capital that it manages as the aggregate of its shareholders’ equity, which comprises issued capital, contributed surplus and deficit. The Company manages its capital structure and makes adjustments to it in working capital requirements. In order to maintain or adjust its capital structure, the Company, upon approval from the Board of Directors, may issue shares, repurchase shares, pay dividends or undertake other activities as deemed appropriate under the specific circumstances. The Company is not subject to externally imposed capital requirements, except for certain monthly financial covenants associated with the revolving line of credit as described in note 19.

14 Financial risk management

The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework and reviews the Company’s risk management policies on an annual basis. Management identifies and evaluates financial risks and is charged with the responsibility of establishing controls and procedures to ensure that financial risks are mitigated in accordance with the approved policies.

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises from the Company’s accounts receivable and cash. As at March 31, 2021, one customer represented 18% of the gross accounts receivable balance of $27,743,181 (2020 - $30,734,142).

The Company reviews the components of these accounts on a regular basis to evaluate and monitor this risk. The Company’s customers are generally financially established organizations, which limits the credit risk relating to the customers. In addition, credit reviews by the Company take into account the counterparty’s financial position, past experience and other factors.

The accounts receivable balances due from these significant customers were current as at March 31, 2021. As at March 31, 2021, the allowance for doubtful accounts was $300,000 (2020 – $502,974). In establishing the appropriate allowance for doubtful accounts, management makes assumptions with respect to the future collectability of the receivables. Assumptions are based on an individual assessment of a customer’s credit quality as well as subjective factors and trends. Overdue accounts as at March 31, 2021 were $4,035,829 (2020 – $3,265,926), which is in the normal course of business. Management believes that the allowance is adequate.

The Company from time to time invests its excess cash in accounts with Schedule I banks, with the objective of maintaining the safety of the principal and providing adequate liquidity to meet current payment obligations and future planned capital expenditures and with the secondary objective of maximizing the overall yield of the portfolio. The Company’s cash as at March 31, 2021 is not subject to external restrictions. Investments must be rated at least investment grade by recognized rating agencies. Given these high credit ratings, the Company does not expect any counterparties to these investments to fail to meet their obligations.

10 

AcuityAds Holdings Inc.

Notes to Condensed Interim Consolidated Financial Statements

(Unaudited)

March 31, 2021 and 2020

(expressed in Canadian dollars)

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. The Company’s approach to managing liquidity is to ensure, to the extent possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. The Company manages its liquidity risk by continually monitoring forecasted and actual revenue and expenditures and cash flows from operations. Management is also actively involved in the review and approval of planned expenditures. The Company’s principal cash requirements are for principal and interest payments on its debt, capital expenditures and working capital needs. The Company uses its operating cash flows, loans and borrowings and cash balances to maintain liquidity. In the event that future cash flows from operations are lower than expected, the Company may need to seek additional financing, either by issuing additional equity or by undertaking additional borrowings. There is no certainty that additional financing will be available or that it will be available on attractive terms.

The following are the contractual maturities for the financial liabilities:

	March 31, 2021
		Carrying amount $	Total contractual cash flows $	Less than 1 year $	1 to 3 Years $	>3 years $
Accounts payable and accrued liabilities		20,833,225	20,833,225	20,833,225	-	-
Revolving line of credit		-	-	-	-	-
International Loans		1,310,698	1,310,698	528,280	782,418	-
Term Loans		7,539,209	7,942,577	2,436,213	5,506,364	-
Lease Obligation		5,944,051	6,607,458	2,385,168	4,222,290	-
		35,627,183	36,693,958	26,182,886	10,511,072	-

	December 31, 2021
		Carrying amount $	Total contractual cash flows $	Less than 1 year $	1 to 3 Years $	>3 years $
Accounts payable and accrued liabilities		23,232,661	23,232,661	23,232,661	-	-
Revolving line of credit		-	-	-	-	-
International Loans		1,980,229	1,980,229	1,092,297	887,932	-
Term Loans		8,278,004	8,710,774	2,481,550	6,229,224	-
Lease Obligation		6,892,017	7,315,497	3,366,199	3,949,298	-
		40,382,911	41,239,161	30,172,707	11,066,454	-

11 

AcuityAds Holdings Inc.

Notes to Condensed Interim Consolidated Financial Statements

(Unaudited)

March 31, 2021 and 2020

(expressed in Canadian dollars)

Interest rate risk

Interest rate risk is the risk of financial loss to the Company if interest rates increase on interest-bearing instruments. The revolving line of credit bears interest at 4.6%. The term loans bear interest at a fixed rate of 4.75%, which the Company believes is consistent with market interest rates for this type of debt.

Foreign exchange or currency risk

The Company is exposed to foreign exchange risk from purchase transactions, as well as recognized financial assets and liabilities denominated in US dollars. The Company’s main objective in managing its foreign exchange risk is to maintain US cash on hand to support US forecasted obligations and cash flows. To achieve this objective, the Company monitors forecasted cash flows in foreign currencies and attempts to mitigate the risk by modifying the nature of cash held.

If a shift in foreign currency exchange rates of 10% were to occur, the foreign exchange gain or loss on the Company’s net monetary assets could change by approximately $1,539,421 due to the fluctuation and this would be recorded in the consolidated statements of comprehensive loss.

Balances held in US dollars are as follows in CAD:

	March 31, 2021 $		December 31, 2020 $
Cash		6,474,041		9,255,266
Accounts receivable		21,618,218		24,011,673
Accounts payable		12,698,050		14,547,342
Line of credit		-		-

15 Revolving line of credit

The Company currently has a revolving line of credit with Silicon Valley Bank (“SVB”). The Line of Credit has been amended several times in 2016, 2018, and 2019. Currently the line of credit has a maximum borrowing availability of US$18 million (CAD$22 million). Actual availability from time to time depends on the Company’s borrowing base at such time.

Most recently on December 24, 2020, the Company and SVB agreed to amend the applicable interest rate on the line of credit to the greater of prime plus 1.35% or 4.60%. At March 31, 2021, the prime rate was 3.25%. The line of credit is secured by a general security agreement, an assignment of ITCs and a pledge of all shares of any direct or indirect subsidiary of the Company.

12 

AcuityAds Holdings Inc.

Notes to Condensed Interim Consolidated Financial Statements

(Unaudited)

March 31, 2021 and 2020

(expressed in Canadian dollars)

The following table outlines the activity of the line of credit during the three months ended March 31, 2021 and 2020:

	$
Amortized cost – January 1, 2021	-
Amount drawn from revolving line of credit	-
Principal amount repaid	-
Accrued interest on revolving line of credit	-
Payment of interest on revolving line of credit	-
Foreign exchange differences	-
Amortized cost – March 31, 2021	-

	$
Amortized cost – January 1, 2020	15,384,498
Amount drawn from revolving line of credit	23,690,010
Principal amount repaid	(25,893,227	)
Accrued interest on revolving line of credit	250,736
Payment of interest on revolving line of credit	(221,152	)
Foreign exchange differences	488,808
Amortized cost – March 31, 2021	13,699,673

During the three months ended March 31, 2021, transaction costs incurred securing the line of credit were $nil (2020 – $nil). All transaction costs have been capitalized and deferred. These deferred transaction costs are being amortized over the term of the agreement under the effective interest method and are included in finance costs.

16 Term loans

On June 15, 2018, all outstanding principal balances related to previous term loans were repaid and the Company obtained a new $7,263,000 term loan (the “2018 Loan”) from a group of private lenders (the “Lenders”). The 2018 Loan was made pursuant to a credit agreement dated June 15, 2018, between the Company and various Lenders, including several individuals who are non-arms’ length to the Company (the “NAL Lenders”). The NAL Lenders included several officers and directors of the Company who funded an aggregate of $2,263,000 of the 2018 Loan.

The 2018 Loan was subordinate to the Company’s existing line of credit with SVB and had a term of two years. The 2018 Loan accrued interest at the rate of 12.0% per annum and the Lenders were issued an aggregate of 2,420,990 warrants (the “Warrants”) as bonus warrants in connection with the 2018 Loan. Each Warrant entitled the Lender to acquire one common share for a period of two years at an exercise price of $1.01 per common share, which represented the closing price of the common shares on June 14, 2018. At the time of issuance, the 2,420,990 Warrants had a fair value of $0.46 per Warrant. The fair value of the Warrants was determined using the Black-Scholes option pricing model using the following assumptions: risk-free interest rate of 2.18%, expected volatility of 98%, expected life of 1.75 years and expected dividends of $nil.

Transaction costs incurred in securing the 2018 Loan were $256,403. Included in that amount are nominal fees that the Company agreed to pay to two eligible parties assisting in the 2018 Loan. All transaction costs were capitalized and deferred. These deferred transaction costs are being amortized over the term of the agreement under the effective interest rate method and included in the finance costs.

Fifty percent of the principal portion of the 2018 Loan was to be repaid in ten equal quarterly installments beginning January 1, 2019. The remaining 50% of the 2018 Loan was to be paid at maturity.

13 

AcuityAds Holdings Inc.

Notes to Condensed Interim Consolidated Financial Statements

(Unaudited)

March 31, 2021 and 2020

(expressed in Canadian dollars)

On March 31, 2019, the Company entered into an amending agreement to its credit agreement dated June 15, 2018, whereby the maturity date of the 2018 Loan was extended from June 15, 2020 to June 15, 2021.

On April 12, 2020, the Company borrowed US$5,400,00 from SVB pursuant to a secured term loan which expires April 1, 2024 (the “Secured Term Loan”), and which bears interest at the annual rate equal to the greater of (i) prime plus 2.0% and (ii) 6.75%. All transaction costs related to the Secured Term Loan have been capitalized and deferred and are being amortized over the term of the agreement under the effective interest rate method and included in finance costs.

On April 17, 2020, all outstanding principal balances related to the 2018 Loan were repaid in the amount of $5,144,625 and the Company incurred an early repayment penalty of 2.5% totalling $128,616. During the year ended December 31, 2020, $372,188 of transaction costs were incurred securing the Secured Term Loan. All transaction costs have been capitalized and deferred. These deferred transaction costs are being amortized over the term of the agreement under the effective interest method and included in finance costs.

On November 9, 2020, the Company and SVB agreed to increase the availability under the Secured Term Loan by additional US$2,350,000 to a total of US$7,750,000.

On December 24, 2020, the Company and SVB agreed to amend the applicable interest rate to the greater of prime plus 1.50% or 4.75%. At December 31, 2020, the prime rate was 3.25%.

On May 5, 2020, the Company secured a loan of US$1,390,294 (CAD$1,816,836) pursuant to the Paycheck Protection Program as part of the United States’ Coronavirus Aid, Relief and Economic Security Act. On October 12, 2020 the Company applied for the loan forgiveness in accordance with the terms of that program, and the loan was fully forgiven on November 25, 2020. The total loan of US$1,390,294 (CAD$1,816,836) was used to reduce salary costs on the statement of income (loss), $1,282,208 for sales and marketing costs, $465,481 for technology costs, and $69,147 for general and administrative costs.

The following table outlines the activity of the term loans during the three months ended March 31, 2021 and 2020:

	$
Amortized cost – January 1, 2021		8,278,004
Accrued Interest		127,287
Payment of interest		(93,671	)
Principal amount repaid		(616,722	)
Exchange		(155,689	)
Balance – March 31, 2021		7,539,209

	$
Amortized cost – January 1, 2020		3,452,331
Accrued interest		166,736
Payment of interest		(153,916	)
Principal amount repaid		(302,625	)
Balance – March 31, 2020		3,162,526

14 

AcuityAds Holdings Inc.

Notes to Condensed Interim Consolidated Financial Statements

(Unaudited)

March 31, 2021 and 2020

(expressed in Canadian dollars)

17 International loans

On June 15, 2018, as a part of the acquisition of ADman, the Company assumed various government and bank loans and lines of credits.

Term loans

The interest rate and maturity date of each of the unsecured term loans held and the activity during the three months ended March 31, 2021 and 2020 are set out in the table below.

Line of credit

The line of credit is secured against the Company’s accounts receivable. The interest rate and term date of line of credit held and the activity during the three months ended March 31, 2021 and 2020 are set out in the table below:

	Balance – January 1, 2021 $		Amount drawn $		Principal amount repaid $		Balance – March 31, 2021 $		Interest rate %			Maturity date
Term Loans
Bankinter		20,054		-		14,106		5,948		2.75	%	May 20, 2021
Banco Sabadell		29,346		-		9,904		19,442		3.25	%	October 15, 2022
Bankinter		119,770		-		19,207		100,563		2.35	%	August 17, 2022
Banco Sabadell		67,648		-		9,619		58,029		4.60	%	October 20, 2022
Santander		353,658		-		38,191		315,467		2.53	%	May 18, 2023
Bankinter_ICO 2020		53,580		69,631		5,589		117,622		2.25	%	May 22, 2024
Santander_ICO		390,200		-		-		390,200		2.03	%	April 8, 2025
Sabadell_ICO 2020		156,082		-		-		156,082		1.75	%	May 21, 2025
CDTI		125,167		-		-		125,167		3.00	%	December 31, 2022
		1,315,505		69,631		96,616		1,288,520
Line of credit
Bankinter		7,554		21,986		7,362		22,178		2.65	%	July 17, 2021
Bankinter		120,141		-		120,141		-		Euribor + 2,25		May 19, 2022
Santander		525,890		-		525,890		-		Euribor + 1,95		April 16, 2023
Banco Sabadell		-		62,686		62,686		-		1.75	%	May 21, 2023
Bankia		11,139		-		11,139		-		2.90	%	August 6, 2023
		664,724		84,672		727,218		22,178
Total		1,980,229		154,303		823,834		1,310,698

15 

AcuityAds Holdings Inc.

Notes to Condensed Interim Consolidated Financial Statements

(Unaudited)

March 31, 2021 and 2020

(expressed in Canadian dollars)

	Balance – January 1, 2021 $		Amount drawn $		Principal amount repaid $		Balance – March 31 2021 $			Interest rate %		Maturity date
Term Loans
Bankinter		80,322		-		14,890		65,432			2.75	May 20, 2021
La Caixa		24,305		-		12,987		11,318			1.96	June 1, 2020
Santander		508,026		-		38,172		469,854			2.53	May 18, 2023
Banco Sabadell		106,025		-		9,415		96,610			4.60	October 20, 2021
Bankinter		197,310		-		19,226		178,084			2.35	August 17, 2022
Banco Sabadell		21,918		70,128		70,175		21,871			3.25	October 15, 2022
Banco Sabadell		69,193		-		9,826		59,367			3.25	October 15, 2022
CDTI		159,258		-		-		159,258			3.00	December 31, 2020
Avanza 2014		270,409		-		-		270,409			3.00	December 20, 2020
		1,436,766		70,128		174,691		1,332,203
Line of credit
Bankia		-		97,001		-		97,001			2.90	December 10, 2020
Banco Sabadell		85,045		386,349		443,823		27,570			2.47	October 18, 2020
Bankinter		92,177		361,579		313,071		140,685			2.75	July 23, 2020
La Caixa		-		1,502,025		1,530,252		(28,227	)		2.12	May 31, 2020
Santander		524,066		-		-		524,066			Euribor + 1,75	April 25, 2020
Bankinter		129,794		342,074		221,688		250,180			2.75	July 23, 2020
Santander		175,571		119,761		214,448		80,884			Euribor + 1,75	April 25, 2020
		1,006,653		2,808,789		2,723,282		1,092,160
Total		2,443,419		2,878,917		2,897,973		2,424,363

18 Income taxes

Income tax expense is recognized based on management’s estimate of the weighted average annual income tax rate expected for the full financial year.

16 

EX-4.5

Exhibit 4.5

AcuityAds Holdings Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE THREE MONTHS ENDED MARCH 31, 2021

Dated May 11, 2021

70 University Ave
Suite 1200
Toronto, ON M5J 2M4
www.acuityads.com

Management’s discussion & analysis

This Management’s Discussion and Analysis (“MD&A”) explains the variations in the consolidated operating results and financial position and cash flows of AcuityAds Holdings Inc. (“AcuityAds” or the “Company”) as at and for the three months ended March 31, 2021. This analysis should be read in conjunction with AcuityAds’ condensed interim consolidated financial statements for the three months ended March 31, 2021 and related notes (the “Condensed Interim Consolidated Financial Statements”). The Condensed Interim Consolidated Financial Statements and extracts of those Condensed Interim Consolidated Financial Statements provided in this MD&A, were prepared in Canadian dollars and in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board, using the accounting policies described therein. As a result of the rounding of dollar differences, certain total dollar amounts in this MD&A may not add exactly to their constituent amounts. All amounts are presented in Canadian dollars unless otherwise indicated. Throughout this MD&A, percentage changes are calculated using numbers rounded as they appear. Readers are cautioned that this MD&A contains certain forward-looking information. (Please see the “Forward Looking Statements” section below for a discussion of the use of such information in this MD&A).

The Condensed Interim Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries AcuityAds Inc., AcuityAds US Inc., 140 Proof Inc., and ADman Interactive S.L.U. All intercompany balances and transactions have been eliminated on consolidation.

The information in this report is dated as of May 11, 2021.

Non-IFRS Financial Measures

This MD&A includes certain measures which are not defined terms in accordance with IFRS such as “Net Revenue”, “Net Revenue margin”, “Adjusted EBITDA” and “Adjusted Net Income”.

The term “Net Revenue” refers to the net amount of revenue after deducting direct media costs. Net Revenue is used for internal management purposes as an indicator of the performance of the Company’s solution in balancing the goals of delivering excellent results to advertisers while meeting the Company’s margin objectives and, accordingly the Company believes it is useful supplemental information to include in this MD&A. The term “Net Revenue margin” refers to the amount that “Net Revenue” represents as a percentage of total revenue for a given period.

“Adjusted EBITDA” refers to net income after adjusting for finance costs, impairment loss, fair value gain, income taxes, foreign exchange (gain) loss, depreciation and amortization, share-based compensation, acquisition and related integration costs, severance expenses and adjustments to the carrying value of investment tax credits receivable. The Company believes that Adjusted EBITDA is useful supplemental information as it provides an indication of the results generated by the Company’s main business activities before taking into consideration how those activities are financed and taxed and also prior to taking into consideration depreciation of property and equipment and certain other items listed above. It is a key measure used by the Company’s management and board of directors to understand and evaluate the Company’s operating performance, to prepare annual budgets and to help develop operating plans.

1 

“Adjusted Net Income” refers to net income after adjusting for non-cash items such as depreciation and amortization, share-based compensation and foreign exchange gain/loss. The Company believes that Adjusted Net Income is useful supplemental information as it provides an indication of the results generated by the Company’s main business activities on a cash basis. It is another key measure used by the Company’s management and board of directors to understand and evaluate the Company’s operating performance, to prepare annual budgets and to help develop operating plans.

“Net Revenue”, “Net Revenue margin”, “Adjusted EBITDA” and “Adjusted Net Income” are not measures of performance under IFRS and should not be considered in isolation or as a substitute for comprehensive income (loss) prepared in accordance with IFRS or as a measure of operating performance or profitability. “Net Revenue”, “Net Revenue margin”, “Adjusted EBITDA” and “Adjusted Net Income” do not have a standardized meaning prescribed by IFRS and are not necessarily comparable to similar measures presented by other companies.

FORWARD-LOOKING STATEMENTS

Certain statements in this MD&A that are not current or historical factual information may constitute “forward-looking” statements within the meaning of applicable securities laws, regarding, among other things, the beliefs, plans, objectives, strategies, estimates, intentions or expectations of the Company, including as they relate to its financial results and its projected total revenue growth, its ability to execute on its investing and business strategies, the benefits of the illumin platform, and the effect of the COVID-19 pandemic on the Company’s business and operations. When used in this MD&A, forward looking statements can be identified by the use of words such as “may”, or by such words as “will”, “intend”, “believe”, “estimate”, “consider”, “expect”, “anticipate”, and “objective” and similar expressions or variations of such words. Forward-looking statements are, by their nature, not guarantees of the Company’s future operational or financial performance, and are subject to risks and uncertainties and other factors that could cause the Company’s actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. No representation or warranty is intended with respect to anticipated future results, or that estimates or projections will be sustained. Forward-looking information is provided for the purpose of providing information about management’s current expectations and plans and allowing investors and others to get a better understanding of the Company’s operations. Forward-looking information may not be appropriate for other purposes.

In developing the forward-looking statements in this MD&A, the Company has applied several material assumptions, including the availability of financing on reasonable terms, and general business and economic conditions. The existence of the COVID-19 pandemic creates a unique environment in which to consider the likelihood of forward-looking statements being accurate, and given the evolving circumstances surrounding the COVID-19 pandemic, it is difficult to predict how significant the adverse impact of the pandemic will be on the global and domestic economy, the business, operations and financial position of the Company’s clients and the business, operations and financial position of the Company. Many risks, uncertainties and other factors could cause the actual results of AcuityAds to differ materially from the results, performance, achievements or developments expressed or implied by forward-looking statements that are contained in this MD&A. These risks, uncertainties and other factors include, but are not limited to the following: overall economic conditions, rapid technological changes, use of cookies, demand for the Company’s products and services, the introduction of competing technologies, competitive pressures, network restrictions, fluctuations in foreign currency exchange rates, and other factors that may cause the actual results, performance or achievements to differ materially from those expressed or implied in these forward-looking statements. In addition, the effects of COVID-19, including the duration, spread and severity of the pandemic, create additional risks and uncertainties for the Company. In particular, the impact of the virus and government authorities’ and public health officials’ responses thereto may affect the Company’s actual results, performance, prospects or opportunities; domestic and global credit and capital markets and the Company’s ability to access capital on favourable terms, or at all; and the health and safety of the Company’s employees.

2 

Any financial outlook and future-oriented financial information (as defined in applicable securities laws) contained in this MD&A regarding prospective financial performance, financial position or cash flows, is based on assumptions about future economic conditions or courses of action based on management’s assessment of the relevant information that is currently available. Future-oriented financial information contains forward-looking information and is based on a number of material assumptions and factors, as are set out above. The actual results of the Company’s operations for any period will likely vary from the amounts set forth in these projections and such variations may be material. Actual results will vary from projected results. Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of the MD&A or as of the date otherwise specifically indicated herein. Due to risks and uncertainties, including the risks and uncertainties elsewhere in this MD&A, actual events may differ materially from current expectations. These risks and uncertainties include, among other things, the factors discussed in “Risk Factors” section of this MD&A and under the “Risk Factors” section of the Annual Information Form of the year ended December 31, 2020 (“2020 AIF”) available on SEDAR at www.sedar.com. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. All forward-looking statements contained in the MD&A are expressly qualified in their entirety by this cautionary statement.

OVERVIEW

AcuityAds is a technology company that enables marketers to connect intelligently with audiences across video, mobile, social and online display advertising campaigns. AcuityAds’ programmatic marketing platform (the “Programmatic Marketing Platform”), powered by proprietary machine learning technology, is at the core of its business, accompanied by proprietary solutions for analytics-led video and mobile targeting that leverages data. AcuityAds empowers marketers by offering near real-time reporting and analytics, bringing accountability to programmatic advertising to deliver business results and help solve some of the key challenges that digital advertisers face. AcuityAds is headquartered in Toronto and has offices in the U.S., Canada, Spain and throughout Latin America. Its key customers include both advertising agencies and brands, including large Fortune 500 enterprises and small to mid-sized businesses.

3 

AcuityAds’ technology enables programmatic advertising, which is the automated buying and selling of advertising inventory electronically. The Programmatic Marketing Platform is based on proprietary machine learning technology, the branch of artificial intelligence involving systems that learn from data inputs and outputs and can perform actions without the need for explicit programming. The Programmatic Marketing Platform has the capability to process billions of bid requests on a daily basis.

The Programmatic Marketing Platform allows advertisers to purchase online advertisements in real-time using an ad-buying method whereby open online ad spots (called impressions) are traded via auctions on digital exchanges at market clearing prices in milliseconds. AcuityAds purchases impressions on behalf of advertisers through agreements with publishers directly and through agreements with supply side platforms (SSPs) and exchanges. Its technology platform benefits advertisers by enabling them to target audience segments based on a variety of first, second, and third-party data as well as manage their real-time bids for the advertising inventory most relevant for their campaigns. Real-time reporting enables advertisers to monitor relevant performance metrics and adjust budget allocations to optimize for audience reach and ad frequency and business outcomes (key performance indicators – KPIs).

In October 2020, AcuityAds officially launched illumin™, the next generation advertising automation technology, that offers advertisers the ability to plan, buy, optimize and report on omnichannel advertising programs from a single, intuitive user-interface. Advertisers can now map consumer journey playbooks across devices and communication channels, and execute in real-time using programmatic technology. illumin enables delivery of custom creative advertising based on audience receptivity (time, place and context), which has proven to increase both efficiency and overall return on advertising investments. For the three months ended March 31, 2021 revenue derived from illumin was $3,206,159 compared to $nil in the three months ended March 31, 2020.

RESULTS OF OPERATIONS

Significant developments during the three months ended March 31, 2021 and to the date of this report include the following:

On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic, which continues to spread throughout Canada and economies around the world. To date, the Canadian and US governments as well as businesses have mandated various measures, including: travel restrictions, restrictions on public gatherings, stay-at-home orders and advisories, and the quarantine of people who may have been exposed to the virus. In response, AcuityAds has changed its work environment and made arrangements to ensure compliance with all applicable health authority regulations.

Despite the COVID-19 pandemic and the Company’s changes to its work environment, AcuityAds continued to operate its business in the normal course. To date, none of the Company’s operations have closed down or have otherwise been materially affected by the COVID-19 pandemic. Certain of the Company’s offices have been subject to government-mandated lockdowns for some periods of time. However, the Company’s staff has been able to perform their functions remotely without meaningful reductions in the Company’s ability to service its customers.

4 

Based on the most recent trends, the Company does not expect the COVID-19 pandemic will have a material impact on its future revenues, as more consumers are consuming media digitally as they work from home resulting in higher demand for digital advertising. The COVID-19 pandemic has not directly restricted the Company’s growth plans as the Company’s business is all online, the Company’s staff are generally able to work from home and demand for the Company’s products and services is growing as the Company’s customers increase their digital advertising budgets.

However, there are certain specific client segments, most notably the travel and entertainment industries, that have been more affected by the COVID-19 pandemic than other businesses. COVID19 has affected the amount of revenues that we earn from our clients in these industries, and the continuation of the pandemic does have an impact on our growth from these clients. See “Risk Factors”.

During the twelve months ended December 31, 2020, the Company secured a $3 million commitment from the National Research Council’s Industrial Research Assistance Program (IRAP) that is expected to be paid between May 2020 and October 2021, subject to the Company meeting certain program requirements. The Company received $1,386,108 of this commitment during the twelve months ended December 31, 2020. During the three months ended March 31, 2021, the Company received $815,930 of this commitment, and those amounts were used to reduce technology costs on the Consolidated Statement of Income (Loss) for the same period. The Company has yet to receive $797,962 of the commitment.

On March 22, 2021 the Company’s common shares were added by Dow Jones Canadian Index Services to the S&P/TSX Composite Index. The Composite Index is the headline index for Canada, which includes the largest companies on the TSX and is the principal benchmark measure for the Canadian equity markets.

Results for the three months ended March 31, 2021 and 2020

The following table provides selected financial information from the consolidated statements of comprehensive income (loss) for the three months ended March 31, 2021 and 2020:

	Three months ended March 31, 2021		Three months ended March 31, 2020
Revenue
By line of service:
Managed services		22,256,217		19,318,275
Self-service
By geography:		5,198,375		4,897,325
US		21,430,134		17,829,363
Canada		3,111,483		2,780,381
Other		2,912,975		3,605,856
Gross Profit (Net Revenue)		14,364,092		12,188,387
Adjusted EBITDA1		4,541,454		1,802,567
Income (loss) from operations		2,237,487		(603,266	)
Net income		1,363,881		204,774
Adjusted net income 1		4,179,782		999,946
Net income  per share (basic and diluted) 2		0.03		0.00

(1) As defined in “Non-IFRS Financial Measures”.

(2) Exercisable options to purchase 780,688 (2020 – 1,857,836) common shares and 800 (2020 – 1,785,872) warrants were outstanding as at March 31, 2021. The weighted average number of options and warrants were excluded from the calculation of diluted loss per share for the period ended March 31, 2021 and 2020 because their inclusion would have been anti-dilutive.

5 

Three months ended March 31, 2021 and 2020

Revenue for the three months ended March 31, 2021 was $27,454,592, an increase of $3,238,992 from $24,215,600 for the three months ended March 31, 2020. Sales of the Company’s managed services platform for the three months ended March 31, 2021 were $22,256,217, an increase of $2,937,942 from $19,318,275 for the three months ended March 31, 2020. Sales of the Company’s self-service platform for the three months ended March 31, 2021 were $5,198,375, an increase of $301,050 from $4,897,325 for the three months ended March 31, 2020. The increase in total revenue for the three months ended March 31, 2021 was primarily a result of the new illumin revenue stream, of which a majority was managed services.

Revenue generated in the United States for the three months ended March 31, 2021 was $21,430,134, an increase of $3,600,771 from $17,829,363 for the three months ended March 31, 2020. Revenue generated in Canada for the three months ended March 31, 2021 was $3,111,483, an increase of $331,102 from $2,780,381 for the three months ended March 31, 2020. Other revenue decreased from $3,605,86 to $2,912,975 during the three months ended March 31, 2021.

Adjusted EBITDA for the three months ended March 31, 2021 was $4,541,454, an increase of $2,738,887 from $1,802,567 for the three months ended March 31, 2020. The year-over-year increase in Adjusted EBITDA was primarily attributable to higher net revenues and management’s focus on cost containment.

Net income for the three months ended March 31, 2021 was $1,363,881, an increase of $1,159,107 from $204,774 for the three months ended March 31, 2020. The increase in net income was primarily due to higher net revenues and management’s focus on cost containment.

The Company’s revenues and operating results may vary from quarter to quarter as a result of a variety of factors, some of which are outside of the Company’s control, including seasonality and cyclicality, and, in fiscal 2021, to the implications of the current COVID-19 pandemic.

Seasonality may be affected by customer mix, such that retail advertisers may concentrate their advertising spending with AcuityAds in the fourth quarter while entertainment advertisers may concentrate their spending to coincide with the launch and display of content, such as television shows or movies. The Company’s rapid growth has led to fluctuating overall operating results due to investments in AcuityAds’ sales and marketing and research and development from quarter to quarter and increases in employee headcount. As a result of these factors, one quarter’s operating results are not necessarily indicative of a future quarter’s operating results.

6 

Net Revenue

The following table sets out a reconciliation of Net Revenue to Revenue for each of the periods indicated:

	Three months ended March 31, 2021			Three months ended March 31, 2020
Revenue		27,454,592		$	24,215,600
Media costs		13,090,500			12,027,213
Net Revenue		14,364,092			12,188,387
Net Revenue margin		52	%		50	%

Three months ended March 31, 2021 and 2020

Media costs comprise advertising impressions that the Company purchased from real-time advertising exchanges or through other third parties. For the three months ended March 31, 2021, media costs were $13,090,500 compared to $12,027,213 for the three months ended March 31, 2020. The increase of $1,063,287 in media costs was attributable to the increased revenue during the period. Net revenue margin was 52% for the three months ended March 31, 2021 compared to 50% for the three months ended March 31, 2020. The increase in margin was attributable to the Company’s AI platform.

Reconciliation of net income to Adjusted EBITDA for the three months ended March 31, 2021 and 2020

The following table presents a reconciliation of Net Income to Adjusted EBITDA for the periods indicated:

	Three months ended March 31, 2021		Three months ended March 31, 2020
Net income for the period	$	1,363,881	$	204,774
Adjustments:
Finance costs		274,880		602,392
Foreign exchange (gain) loss		568,483		(1,514,296	)
Depreciation and amortization		1,383,026		2,166,344
Income taxes		30,243		103,864
Share-based compensation		864,392		143,124
Severance expenses		56,549		96,365
Total adjustments		3,177,573		1,597,793
Adjusted EBITDA	$	4,541,454	$	1,802,567

Three months ended March 31, 2021 and 2020

Adjusted EBITDA for the three months ended March 31, 2021 was $4,541,454 compared to $1,802,567 for the three months ended March 31, 2020. The year-over-year increase of $2,738,887 in Adjusted EBITDA was primarily attributable to higher net revenues and management’s focus on cost containment.

7 

Operating Expenses, Finance Costs, and Foreign Exchange

The following table summarizes various expenses for the three months ended March 31, 2021 and 2020:

	Three months ended March 31, 2021		Three months ended March 31, 2020
Sales and marketing	$	4,554,024	$	4,828,925
Technology		3,793,370		4,053,022
General and administrative		1,531,793		1,600,238
Share-based compensation		864,392		143,124
Depreciation and amortization		1,383,026		2,166,344
Finance costs		274,880		602,392,
Foreign exchange (gain) loss		568,483		(1,514,296	)

Sales and marketing expenses

Sales and marketing expenses consist of all costs associated with selling and marketing the Company’s services and products. The costs include all salary and benefit costs, personnel costs, commissions and variable compensation, travel, marketing, payroll taxes and employee health and related benefit expenses, for the sales, marketing, and account management teams. Sales and marketing expenses for the three months ended March 31, 2021 were $4,554,024, a decrease of $274,901 compared to the same period of the prior year. The year-over-year decrease was primarily related to management’s execution of cost optimization initiatives. Sales and marketing expenses represented 17% of revenue for the three months ended March 31, 2021, compared to 20% for the same period of the prior year.

Technology

Technology expenses consist of all costs associated with increasing the Programmatic Marketing Platform’s effectiveness and efficiency. The majority of such costs comprise of salary and benefit costs and costs associated with housing the required computer equipment. Technology expenses for the three months ended March 31, 2021 were $3,793,370, a decrease of $259,652 compared to the same period of the prior year. Excluding government grants, during the three months ended March 31, 2021, technology expenses increased by $331,278 compared to the same period from the prior year. Excluding government grants, for the three months ended March 31, 2021, technology expenses represented 17% of revenue compared to 18% for the same period of the prior year.

During the three months ended March 31, 2021, the Company received $815,930 in government grants related to technology from IRAP.

General and administrative

General and administrative expenses include salaries and benefits of the administrative staff, occupancy costs, public company fees, insurance, professional fees, and supplies. General and administrative expenses for the three months ended March 31, 2021 were $1,531,793, a decrease of $68,445 compared to the same period of the prior year. For the three months ended March 31, 2021, General and administrative expenses represented 6% of revenue compared to 7% for the same period of the prior year.

8 

Share-based compensation

Share-based compensation expenses for the three months ended March 31, 2021 were $864,392, an increase of $721,268 from $143,124 for the three months ended March 31, 2020. The increase in share-based compensation expense was related to an increase in share compensation granted in the period ending March 31, 2021.

Depreciation and amortization

Depreciation and amortization for the three months ended March 31, 2021 were $1,383,026, a decrease of $783,318 compared to the same period of the prior year. The year-over-year decrease was attributable to the lower intangible asset balance as a result of fully amortizing the asset in December 2020.

Finance costs

Finance costs for the three months ended March 31, 2021 were $274,880, a decrease of $327,512 compared to the same period of the prior year. The decrease in finance costs was primarily due to the debt repayment during the period, resulting in a lower outstanding debt balance as compared to the same period of the prior year as well as the term loan interest rate decreasing from 12% to 4.75% as a result of the April 2020 debt refinancing with Silicon Valley Bank.

Foreign exchange (gain) (loss)

Foreign exchange gain (loss) consists of the realized and unrealized exchange differences due to fluctuations between the Canadian dollar, the U.S. dollar and the Euro. The Company recorded a net foreign exchange loss of $568,483 for the three months ended March 31, 2021 compared to a gain of $1,514,296 for the three months ended March 31, 2020.

To date, the Company does not hedge foreign currency transactions but may elect to do so in the future if it is determined to be advantageous.

OUTLOOK

While the impact of the COVID-19 pandemic has created short-term uncertainty with respect to the Company’s revenues, Adjusted EBITDA and net income, the Company still expects to continue to grow these measures in the second quarter and the Company anticipates its total year-over-year revenue growth to increase approximately 50% in the second quarter of 2021.

See “Forward-Looking Information”.

9 

Summary of Quarterly Results

The following unaudited table sets out selected financial information for the Company on a consolidated basis for the last eight most recently completed quarters. The unaudited quarterly information, other than Adjusted EBITDA, has been prepared in accordance with IFRS.

	Quarter Ended
	Mar. 31, 2021		Dec. 31, 2020		Sept. 30, 2020		Jun. 30, 2020			Mar. 31, 2020		Dec. 31, 2019		Sept. 30, 2019			Jun. 30, 2019
Revenue:	$	27,454,592	$	35,057,316	$	26,064,322	$	19,556,810		$	24,215,600	$	38,536,725	$	26,864,507		$	25,811,114
Adjusted EBITDA		4,541,454		7,819,968		4,034,402	$	2,141,178		$	1,802,569	$	6,012,050	$	1,613,770		$	1,072,326
Adjusted Net income (loss)	$	4,179,782	$	7,063,270	$	3,741,924	$	1,378,528		$	999,946	$	5,219,673	$	738,996		$	(662,372	)
Net income (loss)	$	1,363,881	$	4,165,399	$	921,220	$	(1,600,405	)	$	204,774	$	1,995,245	$	(1,360,006	)	$	(3,461,394	)
Net income (loss) per share:	$	0.03	$	0.07	$	0.02	$	(0.03	)	$	0.00	$	0.04	$	(0.03	)	$	(0.07	)
Weighted average number of shares outstanding (000’S)		54,398,478		52,855,998		50,312,701		49,523,122			48,997,938		47,814,816		47,744,143			46,931,380

LIQUIDITY AND CAPITAL RESOURCES

Selected financial information from the statements of financial position as at March 31, 2021 and December 31, 2020 are as follows:

	March 31, 2021		December 31, 2020
Cash	$	27,010,140	$	22,638,300
Working capital(1)		30,420,344		26,763,590
Total assets		71,164,931		72,433,499
Current liabilities		26,074,396		29,657,005
Other non-current liabilities		9,552,787		10,725,906
Shareholders’ equity		35,537,748		32,050,588

(1) Working capital is defined as current assets less current liabilities.

As at March 31, 2021, the Company had cash and cash equivalents and restricted cash of $27,010,140 compared to $22,638,300 as at December 31, 2020.

Cash flows generated from operations were $5,655,243 during the three months ended March 31, 2021 as compared to $3,955,094 during the three months ended March 31, 2020. The increase in cash flows generated in operations was primarily a result of increased working capital and reduced costs.

Cash flows used in investing activities were $40,313 during the three months ended March 31, 2021, compared to $3,228,026 during the three months ended March 31, 2020. The decrease was primarily due to a reduction in right-of-use assets and capitalized technology costs compared to the prior period.

Cash flows used from financing activities were $1,243,090 during the three months ended March 31, 2021, compared to $329,829 during the three months ended March 31, 2020. The increase was primarily due to the increase in repayment of international loans and the term loan, and no capital lease additions.

10 

Liquidity risk is the risk the Company will not be able to meet its financial obligations as they come due. The Company’s approach to managing liquidity is to ensure, to the extent possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. The Company manages its liquidity risk by continually monitoring forecasted and actual revenue and expenditures and cash flows from operations. While the Company currently has sufficient operating capital to meet its day-to-day operating expenses, it is possible that the Company could experience a working capital deficiency in the future, which would have a materially adverse effect on the Company’s liquidity.

Management is also actively involved in the review and approval of planned expenditures. The Company’s principal cash requirements are for principal and interest payments on its debt, capital expenditures and working capital needs. The Company uses its operating cash flows, loans and borrowings and cash balances to maintain liquidity. In the event future cash flows from operations are lower than expected, the Company may need to seek additional financing, either by issuing additional equity or by undertaking additional debt. There is no certainty that additional financing, whether debt or equity, will be available or that it will be available on attractive terms. Additional information can be found in the Company’s Consolidated Financial Statements which are available on SEDAR at www.sedar.com

Common Shares

Changes in the number of issued common shares from December 31, 2020 to March 31, 2021 are as follows:

	Number of Common Shares
Balance December 31, 2020		53,422,024
Shares issued –Warrants exercised		39,821,
Shares issued –Options exercised		611,666
Shares issued – DSU’s exercised		374,496
Shares issued – RSU’s exercised		189,834
Balance March 31, 2021		54,637,841

Preference Shares

While the Company is authorized to issue and unlimited number of preference shares, the Company has no preference shares issued and outstanding.

11 

Stock Options

The Company presently issues stock options, deferred share units (“DSUs”), performance share units (“PSUs”) and restricted share units (RSUs”) pursuant to its omnibus long-term incentive plan (the “Omnibus Incentive Plan”). Prior to June 16, 2020, the Company issued stock options pursuant to its predecessor stock option plan (the “Stock Option Plan”) and DSUs pursuant to its predecessor deferred share unit plan (the “DSU Plan”). Although the Company no longer issues new stock options or DSUs pursuant to the predecessor Stock Option Plan and DSU Plan, respectively, previously issued stock options and DSUs remain outstanding and are governed by the existing plans under which they were initially issued.

The maximum number of common shares reserved for issuance, in the aggregate, under the Omnibus Incentive Plan, the stock option plan, the deferred share unit plan of the Company and any other security-based compensation arrangement, collectively, is 15% of the aggregate number of common shares issued and outstanding from time to time. As at March 31, 2021, the Company was entitled to issue a maximum of 8,195,676 equity-based awards collectively under the Omnibus Incentive Plan, the existing Stock Option Plan, the existing DSU Plan and any other security-based compensation arrangement..

The following table summarizes the continuity of stock options issued by the Company under the Stock Option Plan:

	March 31, 2021					March 31, 2020
	Number of options			Weighted average exercise price $		Number of options			Weighted average exercise price $
Options outstanding – Beginning of year		1,865,519			1.69		3,409,886			1.45
Granted		3,333			1.06		235,000			1.59
Forfeited or cancelled		-			-		(703,385	)		1.03
Exercised		(611,666	)		1.40		-
Options outstanding – End of period		1,257,186			1.83		2,941,501			1.57
Options exercisable – End of period		780,688			2.14		1,857,836			1.73

12 

The following table summarizes the continuity of stock options issued by the Company under the Omnibus Incentive Plan:

	March 31, 2021				March 31, 2020
	Number of options		Weighted average exercise price $		Number of options		Weighted average exercise price $
Options outstanding – Beginning of year		35,000		2.09		-		-
Granted		-				-		-
Forfeited or cancelled		-				-		-
Exercised		-				-		-
Options outstanding – End of period		35,000		2.09		-		-
Options exercisable – End of period		-		-		-		-

Deferred Share Units

During the three months ended March 31, 2021, the Company issued nil (2020 – 132,415) DSUs to employees, officers, directors and consultants of the Company. During the three months ended March 31, 2021, 374,496 (2020 – 593,236) DSUs were exercised. As of March 31, 2021, the Company had 830,123 DSUs outstanding.

Restricted Share Units

During the three months ended March 31, 2021, the Company issued 171,693 (2020 – nil) RSUs to employees, officers, directors and consultants of the Company. During the three months ended March 31, 2021, 189,834 (2020 – nil) RSUs were exercised. As of March 31, 2021, the Company had 1,199,804 RSUs outstanding.

Warrants

For the three months ended March 31, 2021, the Company issued nil warrants and during the same period, 39,821 warrants were exercised. As a result, as of March 31, 2021, the Company had 800 warrants outstanding.

13 

CONTRACTUAL OBLIGATIONS

The following are the contractual maturities for the financial liabilities:

	March 31, 2021
		Carrying amount $		Total contractual cash flows $		Less than 1 year $		1 to 3 Years $		>3 years $
Accounts payable and accrued liabilities			20,833,225		20,833,225		20,833,225		-		-
International Loans			1,310,698		1,310,698		528,280		782,418		-
Term loans			7,539,209		7,942,577		2,436,213		5,506,364		-
Lease Obligations			5,944,051		6,607,458		2,385,168		4,222,290		-
			35,627,183		36,693,958		26,182,886		10,511,072		-

	December 31, 2020
	Carrying amount $		Total contractual cash flows $		Less than 1 year $		1 to 3 Years $		>3 years $
Accounts payable and accrued liabilities		23,232,661		23,232,661		23,232,661				-
International Loans		1,980,229		1,980,229		1,092,297		887,932		-
Term loans		8,278,004		8,710,774		2,481,550		6,229,224		-
Lease Obligations		6,892,017		7,315,497		3,366,199		3,949,298		-
		40,382,911		41,239,161		30,172,707		11,066,454		-

OFF-BALANCE SHEET ARRANGEMENTS

The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future material adverse effect on its financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

TRANSACTIONS WITH RELATED PARTIES

During the three months ended March 31, 2021 there were no transactions with related parties.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of the Consolidated Financial Statements and application of IFRS often involve management’s judgment and the use of estimates and assumptions deemed to be reasonable at the time they are made. Significant assumptions and estimates used in preparing the financial statements include those related to credit quality of accounts receivable, income tax credits receivable, share-based payments, impairment tests for non-financial assets, as well as revenue and cost recognition. AcuityAds bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets, liabilities, equity, revenue and expenses that are not readily apparent from other sources. The Company reviews estimates and underlying assumptions on an ongoing basis. Revisions are recognized in the period in which estimates are revised and may impact future periods as well. Other results may be derived with different judgments or using different assumptions or estimates and events may occur that could require a material adjustment. Significant accounting policies and estimates under IFRS are found in Note 2 of the Company’s Condensed Interim Consolidated Financial Statements which are available on SEDAR at www.sedar.com.

14 

CHANGES IN ACCOUNTING POLICIES

Recently adopted accounting pronouncements

For the three months ending March 31, 2021, the Company has not adopted any new accounting policies.

DISCLOSURE CONTROLS AND INTERNAL CONTROLS OVER FINANCIAL REPORTING

Management of AcuityAds is responsible for establishing and maintaining disclosure controls and procedures for the Company as defined under National Instrument 52-109 - Certification of Disclosure in Issuers’ Annual and Interim Filings (“NI 52-109”) issued by the Canadian Securities Administrators. Management has designed such disclosure controls and procedures, or caused them to be designed under its supervision, to provide reasonable assurance that material information relating to the Company, including its consolidated subsidiaries, is made known to the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”) by others within those entities on a timely basis, particularly during the period in which the annual filings are being prepared, so that appropriate decisions can be made regarding public disclosure.

As required by NI 52-109, an evaluation of the adequacy of the design (quarterly) and effective operation (annually) of the Company’s disclosure controls and procedures was conducted under the supervision of management, including the CEO and CFO, as at December 31, 2020. Based on that evaluation, the CEO and the CFO have concluded that the design and operation of the system of disclosure controls and procedures were effective as at December 31, 2020.

There have been no changes to AcuityAds’ internal controls over financial reporting during the three-months ended March 31, 2021 that have materially affected, or are reasonably likely to materially affect, AcuityAds’ internal control over financial reporting.

OUTSTANDING SHARE DATA

As of May 10, 2021, 54,637,841 common shares and no preference shares were issued and outstanding. In addition, as of May 10, 2021, there were 1,292,186 stock options outstanding, each of which represents the right to acquire one Common Share, with exercise prices ranging from $0.96 to $4.60 per share. As at May 10, 2021, there were 830,123 DSUs outstanding under the Company’s DSU Plan, each of which represents the right to acquire one common share when the participant is no longer rendering service to the Company. As at May 10, 2021, there were 1,199,804 RSUs outstanding under the Company’s Omnibus Incentive Plan, each of which represents the right to acquire one common share when the participant is no longer rendering service to the Company. As at May 10, 2021, there were 800 warrants outstanding, each of which represents the right to acquire one Common Share, with exercise prices of $1.55 per share.

15 

RISK FACTORS

AcuityAds is exposed to a variety of business risks, financial and accounting risks and industry risks in the normal course of operations. A detailed description of risk factors associated with the Company’s business is given in the “Risk Factors” section of the 2020 AIF dated March 1, 2021 which is available under the Company’s profile on SEDAR at www.sedar.com.

ADDITIONAL INFORMATION

Additional information relating to the Company, including the Company’s AIF, is posted on SEDAR at www.sedar.com. The Company’s shares are listed on the TSX under the symbol “AT”.

16 

EX-4.6

Exhibit 4.6

AcuityAds Holdings Inc.

Notice of Annual Meeting of Shareholders

And

Management Information Circular

May 13, 2021

Table of Contents

MANAGEMENT INFORMATION CIRCULAR	1
Meeting Procedures	2
Voting Procedures	3
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS	7
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON	7
PARTICULARS OF ANNUAL MATTERS TO BE ACTED UPON	7
Financial Statements	7
Appointment of Auditor	7
Election of Directors	8
COMPENSATION DISCUSSION AND ANALYSIS	17
PERFORMANCE GRAPH	19
COMPENSATION GOVERNANCE	20
SUMMARY COMPENSATION TABLE	21
INCENTIVE PLAN AWARDS FOR NAMED EXECUTIVE OFFICERS	22
Outstanding Share-Based Awards and Option-Based Awards	22
Value Vested or Earned During the Year	23
PENSION PLAN BENEFITS	23
DEFERRED COMPENSATION PLANS	23
TERMINATION AND CHANGE OF CONTROL BENEFITS	23
DIRECTOR COMPENSATION	25
Compensation Philosophy and Objectives	25
Director Compensation Table	25
Incentive Plan Awards for Directors	26
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS	28
Description of the Omnibus Incentive Plan	28
Description of the Option Plan	30
Description of the DSU Plan	32
STATEMENT OF CORPORATE GOVERNANCE PRACTICES	34
Board of Directors	34
Directorships	35
Board Mandate	35
Position Descriptions	36

i

Table of Contents

(continued)

	Page
Orientation and Continuing Education	36
Ethical Business Conduct	36
Nomination of Directors	37
Compensation	37
Assessments	37
Director Term Limits and Other Mechanisms of Board Renewal	37
Policies Regarding Representation of Designated Groups on the Board	38
Consideration of the Representation of Designated Groups in the Director Identification and Selection Process	38
Consideration of the Representation of Designated Groups in Executive Officer Appointments	39
Issuer’s Targets Regarding the Representation of Designated Groups on the Board and in Executive Officer Positions	39
Number of Members of Designated Groups on the Board and in Executive Officer Positions	39
Audit Committee	40
Compensation and Corporate Governance Committee	40
Other Committees	40
Other Governance Policies	41
OTHER INFORMATION	42
Indebtedness of Directors and Executive Officers	42
Interest of Informed Persons in Material Transactions	43
SHAREHOLDER PROPOSALS	44
ADDITIONAL INFORMATION	44
DIRECTORS’ APPROVAL	44
SCHEDULE A - BOARD MANDATE	A-1

ii

MANAGEMENT INFORMATION CIRCULAR

This management information circular (the “Circular”) is furnished in connection with the solicitation by management of AcuityAds Holdings Inc. (“AcuityAds” or the “Corporation”) of proxies to be used at the annual meeting (the “Meeting”) of the holders (“Shareholders”) of common shares in the capital of the Corporation (“Common Shares”) referred to in the accompanying Notice of Annual Meeting of Shareholders (the “Notice”) to be held on June 16, 2021, at the time and through the virtual meeting portal as set forth in the Notice.

In light of ongoing public health concerns and restrictions with respect to the COVID-19 pandemic and in order to protect the health and safety of our shareholders, employees and the broader community, the Corporation will be hosting the Meeting virtually via live audio webcast. Shareholders will be able to listen, participate and vote at the Meeting in real time through a web-based platform instead of attending the Meeting in person. For further information on attending, participating and voting at the Meeting, please see “Meeting Procedures” and “Voting Procedures” below beginning on pages 4 and 5, respectively.

This Circular describes the items to be voted on at the Meeting as well as the voting process, and provides information about trustee and executive compensation, governance practices and other relevant matters. The information in this Circular is presented as at May 13, 2021, unless indicated otherwise. The board of directors of the Corporation (the “Board”) has by written resolution fixed May 7, 2021 as the record date for the Meeting (the “Record Date”). All dollar amounts referenced herein, unless otherwise indicated, are expressed in Canadian dollars.

In this document, “you” and “your” refer to the shareholders of Corporation. “AcuityAds” or the “Corporation” means AcuityAds Holdings Inc. and its subsidiary entities on a consolidated basis and, in the case of references to matters undertaken by a predecessor in interest to the Corporation or its subsidiary entities, includes each such predecessor in interest, unless the context otherwise requires.

No person has been authorized to give any information or to make any representation in connection with any other matters to be considered at the Meeting other than those contained in this Circular and, if given or made, any such information or representation must not be relied upon as having been authorized.

NOTICE TO SHAREHOLDERS NOT RESIDENT IN CANADA

The Corporation is established under the laws of Canada. The solicitation of proxies involves securities of a Canadian issuer and is being effected in accordance with applicable corporate and securities laws in Canada. The proxy rules under the United States Securities Exchange Act of 1934, as amended, are not applicable to the Corporation or this solicitation. Accordingly, this solicitation is not being effected in accordance with such U.S. laws. Shareholders should be aware that the requirements applicable to the Corporation under Canadian laws may differ from requirements under corporate and securities laws applicable to corporations in other jurisdictions.

The enforcement by investors of civil liabilities under U.S. federal securities laws or the securities laws of other jurisdictions outside of Canada may be affected adversely by the fact that the Corporation is formed under the laws of Canada and that certain directors and officers are not residents of the United States. You may not be able to sue the Corporation or its directors or officers in a Canadian court for violations of U.S. or other foreign securities laws. It may be difficult to compel the Corporation to subject itself to a judgment of a court outside of Canada.

NO SECURITIES REGULATORY AUTHORITY HAS PASSED UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS AN OFFENCE.

1

Meeting Procedures

When is the Record Date?

The Board of Directors has fixed the close of business on May 7, 2021 as the record date for the Meeting. Only Shareholders of record at the close of business on the Record Date will be entitled to notice of the Meeting or any adjournment or postponement thereof, and to vote at the Meeting. No Shareholder who becomes a Shareholder of record after that time will be entitled to vote at the Meeting, or any adjournment or postponement thereof.

Who may attend the Meeting?

Anyone who holds Common Shares as of the Record Date or has been appointed proxyholder by such a shareholder, is entitled to attend the Meeting.

Who may vote at the Meeting and what are we voting on?

There are two types of shareholders who can vote at the Meeting: “registered shareholders” and “non-registered shareholders”. Registered shareholders hold their Common Shares in their own name, and this name appears on the share register maintained by the Corporation’s transfer agent. Non-registered shareholders hold their Common Shares through an intermediary such as a bank, investment dealer, trust company or other financial institution. Common Shares held by non-registered shareholders are registered in the name of the applicable intermediary on the share register maintained by the Corporation’s transfer agent.

If you are a registered shareholder and hold Common Shares as of the close of business on the Record Date, or have been appointed proxyholder by such a shareholder, you have the right to cast one vote per Common Share on the business matters set out in the accompanying Notice and any other matters which properly come before the Meeting.

If you are a non-registered shareholder, in order to vote your beneficially owned Common Shares you must carefully follow the instructions provided by the financial intermediary that manages your account. Without specific instructions, intermediaries are prohibited from voting for their clients. Therefore, non-registered shareholders should ensure that instructions respecting the voting of their Common Shares are communicated to the appropriate person at the appropriate time. A non-registered shareholder cannot use a voting instruction form or form of proxy to vote Common Shares directly at the Meeting. Non-registered shareholders must carefully follow the instructions provided by their financial intermediary if they wish to vote their Common Shares at the Meeting. Voting instruction forms must be returned sufficiently in advance of the Meeting to have those Common Shares voted. Please consult with your financial intermediary for further information.

How do I attend the Virtual Only Meeting?

Registered shareholders and duly appointed proxyholders will be able to attend the Meeting, ask questions and vote, all in real time, online using the web link and password provided in the accompanying Notice. Registered shareholders and duly appointed third party proxyholders can vote at the appropriate times during the Meeting. Guests, including non-registered beneficial shareholders who have not duly appointed a third party proxyholder, can log in and listen to the Meeting as set out below, but are not able to vote. It is important that you are connected to the internet at all times during the Meeting in order to vote when balloting commences. It is your responsibility to ensure connectivity for the duration of the Meeting. You should allow ample time to check into the Meeting online and complete the related procedure.

2

· Log in using the following link: https://virtual-meetings.tsxtrust.com/1131. We recommend that you log in at least one hour before the Meeting starts.

· If you have voting rights, click “I have a control number” and then enter your Control Number and Password “acuityads2021” (case sensitive).

OR

· If you do not have voting rights, click “I am a Guest” and then complete the online form.

Registered shareholders: The Control Number located on the form of proxy or in the email notification you received is your Control Number.

Duly appointed proxyholders: TSX Trust Company (“TSX Trust”) will provide the proxyholder with a Control Number by e-mail after the proxy Voting Deadline (as defined below) has passed and the proxyholder has been duly appointed AND registered as described in “How do I appoint someone else to attend the Meeting and vote my Common Shares for me?” below.

United States Beneficial Owners: To attend and vote at the virtual Meeting, you must first obtain a valid legal proxy from your intermediary and then register in advance to attend the Meeting. Follow the instructions from your intermediary included with these proxy materials, or contact your intermediary to request a legal proxy form. After first obtaining a valid legal proxy from your intermediary, to then register to attend the Meeting, you must submit a copy of your legal proxy to TSX Trust. Requests for registration should be directed to: TSX Trust Company, 301 – 100 Adelaide Street West Toronto, Ontario M5H 4H1 OR Email at: tsxtrustproxyvoting@tmx.com.

Requests for registration must be labeled as “Legal Proxy” and be received no later than the Voting Deadline (as defined below). You will receive a confirmation of your registration by email after TSX Trust receives your registration materials. You may attend the Meeting and vote your shares at during the Meeting using the log in procedure described above. Please note that you are required to register your appointment at https://tsxtrust.com/resource/en/75.

How many shareholders are needed to reach a quorum?

A quorum is reached with at least two persons present who hold, or represent by proxy, in the aggregate at least 10% of the issued and outstanding Common Shares as at the Record Date, being the shares entitled to be voted at the Meeting.

How many shares are outstanding?

The authorized capital of AcuityAds consists of an unlimited number of Common Shares and an unlimited number of preference shares. As at the Record Date, AcuityAds has 54,637,850 Common Shares issued and outstanding and no preference shares issued and outstanding. Each Common Share entitles the holder thereof to one vote on all matters to be acted upon at the Meeting. In accordance with the provisions of the Canada Business Corporations Act (the “CBCA”), the Corporation will arrange for the preparation of a list of holders of Common Shares as of the Record Date.

Voting Procedures

Am I a registered or non-registered shareholder?

You are a registered shareholder if you have a share certificate in your name. You are a non-registered shareholder if your Common Shares are registered in the name of an intermediary (such as a bank, trust company, trustee, investment dealer, clearing agency or other institution). If you hold your Common Shares through a brokerage account, it is highly likely you are a non-registered shareholder.

3

How can I vote if I am a registered shareholder?

· By casting your vote online in advance at www.voteproxyonline.com, alternatively you may return your completed proxy by mail or deliver it in accordance with the instructions on your proxy;

· By attending the Meeting virtually and voting at the prompted times during the Meeting; or

· By appointing someone else as proxy to attend the Meeting virtually and vote your Common Shares for you, by following the instructions provided on your proxy.

When voting other than at the Meeting, please ensure you leave sufficient time for your proxy to be received by TSX Trust before 9:30 a.m. (Eastern Daylight Time) on Monday, June 14, 2021 (or a day other than a Saturday, Sunday or holiday which is at least 48 hours before any adjournment or postponement of the Meeting).

How may I vote if I am a non-registered shareholder?

The majority of investment brokers and dealers now delegate responsibility for obtaining instructions from clients to Broadridge Financial Solutions, Inc. (“Broadridge”). Broadridge typically asks non-registered shareholders to vote via the internet at www.proxyvote.com, by telephone using the number listed on the voting instruction form, or by returning the proxy forms to Broadridge. Broadridge then tabulates the results of all instructions received and provides appropriate instructions respecting the voting of shares to be represented at the Meeting.

If you are a non-registered shareholder and you receive your materials through an investment dealer or other intermediary, complete and return the forms entitling you to vote by following the instructions in those forms. The materials are being sent to both registered and non-registered owners of Common Shares (including non-objecting beneficial owners). If you are a non-registered owner, and the Corporation or its agent has sent these materials directly to you, your name and address and information about your holdings of Common Shares have been obtained in accordance with applicable securities regulatory requirements from the intermediary holding on your behalf. By choosing to send these materials to you directly, the Corporation (and not the intermediary holding on your behalf) has assumed responsibility for (i) delivering these materials to you, and (ii) executing your proper voting instructions.

If you are a non-registered shareholder and wish to vote at the Meeting, you MUST insert your own name in the space provided on the voting information form sent to you by your intermediary, follow all of the applicable instructions provided by your intermediary AND register yourself as your proxyholder, as described under “How do I appoint someone else to attend the Meeting and vote my Common Shares for me?” below. By doing so, you are instruction you intermediary to appoint you as its proxyholder. It is important that you carefully follow the instructions and comply with the signature and return requirements provided by your intermediary.

Non-registered shareholders should pay particular attention to any deadline specified on the voting information form as this deadline may be different (and earlier) than the proxy Voting Deadline for registered shareholders described below. TSX Trust must receive non-registered shareholders’ voting instructions from Broadridge in advance of 9:30 a.m. (Eastern Daylight Time) on Monday, June 14, 2021 (or a day other than a Saturday, Sunday or holiday which is at least 48 hours before any adjournment or postponement of the Meeting).

4

Do not otherwise complete the request for voting instructions sent to you as you will be voting at the Meeting. Note that non-registered shareholders cannot use a voting information form provided by Broadridge to vote their Common Shares directly at the Meeting.

How do I appoint someone else to attend the Meeting and vote my Common Shares for me?

Mr. Tal Hayek, the Chief Executive Officer and a Director of the Corporation and Mr. Jonathan Pollack, the Chief Financial Officer of the Corporation have been named in the proxy to represent shareholders at the Meeting. Note that Mr. Jonathan Pollack is not related to Mr. Sheldon Pollack, Chairman of the Board.

Registered and non-registered shareholders who wish to appoint a person (a “third party proxyholder”) other than the management nominees identified in the form of proxy or voting instruction form as proxyholder (including themselves) to attend and participate at the Meeting as their proxyholder and vote their Common Shares MUST submit their form of proxy or voting instruction form, as applicable, appointing that person as proxyholder AND register that proxyholder, as described below. Registering your proxyholder is an additional step to be completed IN ADDITION TO submitting your form of proxy or voting instruction form. Failure to register the proxyholder will result in the proxyholder not receiving a Control Number that is required to vote at the Meeting and only being able to attend as a guest.

· Step 1 – Submit your form of proxy or voting instruction form: To appoint a third party proxyholder, insert that person’s name in the blank space provided in the form of proxy or voting instruction form (if permitted) and follow the instructions for submitting such form of proxy or voting instruction form.

· Step 2 – Register your proxyholder: To register a third party proxyholder, such third party proxyholder must contact TSX Trust at TMXEInvestorServices@tmx.com to request a control number to be represented or voted at the meeting by no later than 9:30 a.m. (Eastern Daylight Time) on June 14, 2021 (the “Voting Deadline”). It is the shareholder’s responsibility to advise their third party proxyholder to contact TSX Trust to request a Control number. Without a Control Number, proxyholders will not be able to vote at the Meeting but will be able to participate as a guest.

Is there a deadline for my proxy to be received?

Yes. Your proxy must be received by TSX Trust Company, 301 – 100 Adelaide Street West Toronto, Ontario M5H 4H1 no later than 9:30 a.m. (Eastern Daylight Time) on Monday, June 14, 2021. You may also vote by fax, by phone or over the internet by following the instructions on the form of proxy. If the Meeting is adjourned or postponed, your proxy must be received 48 hours, excluding weekends and holidays, before the adjourned or postponed meeting date.

Late proxies may be accepted or rejected by the Chair of the Meeting in his discretion, and the Chair is under no obligation to accept or reject any particular late proxy. The Chair of the Meeting may waive or extend the proxy cut- off without notice.

How will my Common Shares be voted if I return a proxy?

Common Shares represented by a proxy will be voted or withheld from voting, as the case may be, on any ballot that may be called for at the Meeting. A shareholder or intermediary may direct the manner in which the Common Shares represented by the proxy are to be voted by marking the form of proxy accordingly. Where a choice is specified, the Common Shares represented by the proxy will be voted or withheld from voting in accordance with the choice specified. Where no choice is specified in the proxy with respect to a matter identified therein, the Common Shares represented will be voted in favour of all the resolutions described herein and on any ballot that may be called for on that matter.

5

What happens if there are amendments or variations or other matters brought before the Meeting?

The form of proxy confers discretionary authority upon the proxyholder in respect of amendments or variations to the matters identified in the accompanying Notice, and in respect of any other matters that may properly come before the Meeting.

Your voting instructions provided by proxy give discretionary authority to the person you appoint as proxyholder to vote as he or she sees fit on any amendment or variation to any of the matters identified in the Notice and any other matters that may properly be brought before the Meeting, to the extent permitted by law. As of the date hereof, neither the directors nor executive officers of the Corporation are aware of any variation, amendment or other matter to be presented for a vote at the Meeting.

What if I change my mind?

If you are a registered shareholder and have voted by proxy, you may revoke your proxy by delivering to TSX Trust a duly executed proxy with a later date by paper, or by delivering a form of revocation of proxy. Any new voting instructions, however, will only take effect if received by TSX Trust Company, 301 – 100 Adelaide Street West Toronto, Ontario M5H 4H1 by 9:30 a.m. (Eastern Daylight Time) on Monday, June 14, 2021, or if the Meeting is postponed or adjourned, no later than 48 hours, excluding weekends and holidays, before the date and time of the postponed or adjourned meeting.

If you are a registered shareholder and have voted by proxy, you may also revoke your proxy by an instrument in writing executed by a shareholder or by a shareholder’s attorney authorized in writing (or, if the shareholder is a corporation, by a duly authorized officer or attorney) and deposited at the registered office of the Corporation at Suite 1200, 70 University Avenue, Toronto, Ontario M5J 2M4 any time up to and including the last business day preceding the day of the Meeting.

If you are a registered shareholder, you may also revoke your proxy and vote at the Meeting, or any adjournment or postponement thereof, by delivering a form of revocation of proxy to the Chairman of the Meeting at the Meeting before the vote, in respect of which the proxy is to be used, is taken. You may also revoke your proxy in any other manner permitted by law.

If you are a non-registered shareholder, you may revoke your proxy or voting instructions in accordance with the procedure set forth in your voting information form or by contacting the individual who serves your account.

Who is soliciting my proxy?

Your proxy is being solicited on behalf of management of AcuityAds for use at the Meeting to be held at the time and place and for the purposes set forth in the accompanying Notice and the Corporation will pay for the cost of solicitation.

Mailing/Delivery of Meeting Materials

AcuityAds’ management will solicit proxies either by mail to your latest address shown on the register of shareholders or by electronic mail to the e-mail address you provided. Additionally, employees or agents may solicit proxies personally, by email, by telephone or other ways at a nominal cost to the Corporation.

6

What if I have more questions?

If you have any questions about the information contained in this Circular or need assistance in completing your proxy form, please contact AcuityAds by phone at 416-218-9888 or by mail at the address shown on the Corporation’s SEDAR profile at www.sedar.com.

VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS

The authorized capital of AcuityAds consists of an unlimited number of Common Shares and an unlimited number of preference shares. As at the Record Date, AcuityAds has 54,637,850 Common Shares issued and outstanding and no preference shares issued and outstanding. Each Common Share entitles the holder thereof to one vote on all matters to be acted upon at the Meeting.

To the knowledge of the directors and executive officers of the Corporation, as of the date hereof, no person or company beneficially owns, directly or indirectly, or exercises control or direction over, voting securities of the Corporation carrying 10% or more of the voting rights attached to any class of voting securities of the Corporation, except as set forth in the table below.

Name of Shareholder	Number of Common Shares Held		Percentage of Common Shares Outstanding
Fidelity Investment Canada ULC(1)		5,625,538		10.296	%

Notes:

(1) Includes Common Shares held by affiliates. The Corporation does not directly have this information and has relied on public filings provided by Fidelity Investment Canada ULC for the purposes of this disclosure.

INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON

No (a) director or executive officer of the Corporation who has held such position at any time during the financial year ended December 31, 2020; (b) proposed nominee for election as a director of the Corporation; or (c) associate or affiliate of any of the persons in (a) or (b) has any material interest, direct or indirect, by way of beneficial ownership of securities the Corporation or otherwise, in any matter to be acted upon at the Meeting, other than the election of directors or the appointment of auditors.

PARTICULARS OF ANNUAL MATTERS TO BE ACTED UPON

Financial Statements

The Corporation’s audited annual financial statements for the financial year ended December 31, 2020 and the report of the auditor thereon will be placed before shareholders at the Meeting, but no vote thereon is required. These documents are available upon request and free of charge from the Corporation and they can also be found under the Corporation’s profile on SEDAR at www.sedar.com.

Appointment of Auditor

The auditor of the Corporation is PricewaterhouseCoopers LLP, Chartered Professional Accountants (“PwC”), PwC Tower, 18 York Street, Suite 2600, Toronto, Ontario M5J 0B2. PwC was first appointed as auditor of the Corporation on August 18, 2015.

7

The Board recommends that PwC be re-appointed to serve as the Corporation’s auditor until the next annual meeting of shareholders, and that shareholders authorize the Board to fix their remuneration. To be effective, the resolution appointing PwC as the auditor of the Corporation and to authorize the Board to fix their remuneration must be approved by a majority of the votes (at least 50% plus one) cast by the shareholders who vote at the Meeting or by proxy at the Meeting on such resolution. Unless authority is withheld, the persons named in the accompanying proxy intend to vote FOR the appointment of PwC as the auditor of the Corporation until the next annual meeting of shareholders and to authorize the Board to fix their remuneration.

Election of Directors

The Corporation’s articles of incorporation provide that the Board consist of a minimum of three and a maximum of ten directors with the actual number to be determined from time to time by the Board. The Board currently consists of seven directors and the term of office of each of the present directors expires at the close of the Meeting. The Board has determined that, at the present time, there will be seven directors. All of the individuals who have been nominated as directors are currently members of the Board and were elected at the Corporation’s 2020 annual shareholder meeting, except for Elisabeth Donohue, who is being proposed for election for the first time. At the Meeting, the seven incumbent directors, set out in the table below, will be proposed for election as directors of the Corporation (the “Nominees”). All Nominees have established their eligibility and willingness to serve as directors. Each director elected will hold office until the close of the next annual meeting of shareholders or until such person’s successor is elected or appointed.

Unless authority is withheld, the persons named in the accompanying proxy intend to vote FOR the election of the Nominees. The Corporation’s management does not contemplate that any of the Nominees will be unable to serve as a director, but if that should occur for any reason prior to the Meeting, it is intended that discretionary authority will be exercised by the persons named in the accompanying proxy to vote the proxy for the election of any other person or persons in place of any Nominee or Nominees unable to serve.

In accordance with the requirements of the Toronto Stock Exchange (“TSX”), the Board has adopted a majority voting policy (the “Majority Voting Policy”), which requires that in an uncontested election of directors, if any nominee receives a greater number of votes “withheld” than votes “for”, the nominee will tender a resignation to the chair of the Board promptly following the Meeting. The Compensation and Corporate Governance Committee (the “CCG Committee”) will consider such offer and make a recommendation to the Board whether to accept it or not. The Board will promptly accept the resignation unless it determines, in consultation with the CCG Committee, that there are exceptional circumstances that should delay the acceptance of the resignation or justify rejecting it. The Board will make its decision within 90 days following the meeting of shareholders and promptly announce it in a press release, and should the Board decline to accept the resignation, the press release will include the reasons for its decision. A director who tenders a resignation pursuant to the Majority Voting Policy will not participate in any meeting of the Board or the CCG Committee at which the resignation is considered. A copy of the Corporation’s Majority Voting Policy is available on the Corporation’s website at www.acuityads.com.

The Corporation’s director Nominees hold an aggregate of 4,555,649 Common Shares representing approximately 8.34% of the Common Shares issued and outstanding as at the date of this Circular. The following tables set forth the name, province or state of residence, position held with the Corporation, the date each Nominee was elected to the Board, principal occupation, a brief biography, committee memberships, the number of Common Shares, Options, DSUs and RSUs that are beneficially owned, directly or indirectly, or which control or direction is exercised, by each Nominee, and whether the Nominee meets the share ownership requirements (in accordance with the Share Ownership Policy, as defined below) as at December 31, 2020.

8

TAL HAYEK	Non-Independent
Residence: Ontario, Canada	Biography:
Position with the Corporation: Co-Founder, Chief Executive Officer and Director	Mr. Hayek has served as AcuityAds’ Chief Executive Officer since October 2009. In 2004, he founded an ad-tech company, which provided a marketing platform focused on lead generation and customer acquisition. This company was subsequently sold in 2006 to a public company. Mr. Hayek continued with the company for two years and was a key contributor in helping the company’s revenue grow to $110 million in 2008.
Director since: October 9, 2009	Committees: None
Principal Occupation: President and Chief Executive Officer of the Corporation	Public Board Memberships During Last Five Years:
	AcuityAds	(2009 – Present)

NUMBER OF SECURITIES BENEFICIALLY OWNED, CONTROLLED OR DIRECTED (as at December 31, 2020).
Common Shares	Percentage of Common Shares			Options		DSUs		RSUs		Total Number of Common Shares, Options, DSUs and RSUs		Total Value of Common Shares, DSUs and RSUs based on a closing market price of $14.29 as at December 31, 2020.
2,655,801		4.97	%		125,000		0		193,304		2,974,105	$	40,713,710

SHARE OWNERSHIP POLICY GUIDELINES 

Date by which the Share Ownership Policy guidelines are to be met: May 10, 2024 Have Share Ownership Policy guidelines been met: Yes

9

SHELDON POLLACK	Independent
Residence:	Biography:
Ontario, Canada	Sheldon Pollack is the President of Ov2 Capital Inc., a private investment holding company. Mr. Pollack is a serial entrepreneur – starting his first venture at the age of 16 and co-founded OnX Enterprise Solutions at the age of 21. OnX grew to become one of North America’s largest IT services company with revenues of approximately $1 Billion. In 2017, OnX was acquired by Cincinnati Bell. Mr. Pollack went on to become co-founder and Chairman of OverActive Media Corp., a global e-sports organization and the owner of The Toronto Defiant, Toronto Ultra and The MAD Lions. OverActive Media Corp. was recently ranked by Forbes Magazine as one of the world’s most valuable esports organizations. Mr. Pollack remains an active private and public market investor in earlier stage technology companies. He currently serves as Chairman and Director of AcuityAds, Chairman of OverActive Media Corp. and is a member of the board of Ov2 Investments 1 and Exelerate Capital. Mr. Pollack serves on the board of Sunnybrook Hospital Foundation and in 2012, he founded AbilityGives.org, a charity dedicated to providing highly specialized equipment to children and young adults with special needs.
Position with the Corporation:
Chairman and Director
Director since:
January 9, 2013
Principal Occupation:
Chairman, OverActive Media Corp., President, Ov2 Capital Inc., Co-Founder of OnX and Early Stage Investor
	Committees:
	Mr. Pollack is a member of the Audit Committee and a member of the Compensation and Corporate Governance Committee.
	Public Board Memberships During Last Five Years:
	Exelerate Capital Corp. OV2 Investment 1 Inc. AcuityAds	(2018 – Present) (2016 – Present) (2013 – Present)

NUMBER OF SECURITIES BENEFICIALLY OWNED, CONTROLLED OR DIRECTED (as at December 31, 2020).
Common Shares	Percentage of Common Shares			Options		DSUs		RSUs		Total Number of Common Shares, Options, DSUs and RSUs		Total Value of Common Shares, DSUs and RSUs based on a closing market price of $14.29 as at December 31, 2020.
1,759,482		3.29	%		130,000		103,543		0		1,993,025	$	26,622,627

SHARE OWNERSHIP POLICY GUIDELINES

Date by which the Share Ownership Policy guidelines are to be met: May 10, 2024 Have Share Ownership Policy guidelines been met: Yes

10 

ROGER DENT	Independent
Residence:	Biography:
Ontario, Canada	Mr. Dent has served as the Chief Executive Officer and a director of Quinsam Capital Corporation since December 2013 and is a director of Omni-Lite Industries Canada, Inc., VitalHub Corp., Deveron UAS Corp., and California Nanotechnologies Corp. from 2003 to 2011, he held various positions, including portfolio manager, with Matrix Fund Management Inc., where he managed the Matrix Strategic Small Cap Fund and the Matrix Small Companies Fund.  He was formerly Vice-Chairman of one of Canada’s largest independent investment dealers and was Managing Director and Deputy Manager of Research at CIBC World Markets. He holds a Master of Business Administration from Harvard Business School and a Bachelor of Commerce from Queen’s University.
Position with the Corporation:
Director
Director since:
July 16, 2014
Principal Occupation:	Committees:
Chief Executive Officer of Quinsam Capital Corporation	Mr. Dent is a member of the Audit Committee and the Chair of the Compensation and Corporate Governance Committee.
	Public Board Memberships During Last Five Years:
	Omni-Lite Industries Canada, Inc. VitalHub Corp. Deveron UAS Corp. California Nanotechnologies Corp. AcuityAds Quinsam Capital Corporation	(2016 – Present) (2015 – Present) (2015 – Present) (2014 – Present) (2014 – Present) (2013 – Present)

NUMBER OF SECURITIES BENEFICIALLY OWNED, CONTROLLED OR DIRECTED (as at December 31, 2020).
Common Shares	Percentage of Common Shares			Options		DSUs		RSUs		Total Number of Common Shares, Options, DSUs and RSUs		Total Value of Common Shares, DSUs and RSUs based on a closing market price of $14.29 as at December 31, 2020.
70,000		0.130	%		70,000		103,543		0		243,549	$	2,479,929

SHARE OWNERSHIP POLICY GUIDELINES

Date by which the Share Ownership Policy guidelines are to be met: May 10, 2024 Have Share Ownership Policy guidelines been met: Yes

11 

IGAL MAYER	Independent
Residence:	Biography:
Ontario, Canada	Mr. Mayer has over 30 years of experience in the financial services industry. He is the Chief Executive Officer of Kanetix Ltd. since September 2018 and previously was the Co-Chairman and Chief Executive Officer of RDA Insurance Inc. since January 2014. Prior to that, Mr. Mayer held various positions at Aviva plc and Aviva Canada Inc. for over 23 years, including Executive Director, Chief Executive Officer of Aviva Europe, Chief Executive Officer of Aviva North America, Chief Executive Officer of Aviva UKGI and Chief Executive Officer of Aviva Canada.  Mr. Mayer previously served as the Chief Financial Officer at Canadian General Insurance Group, where he led the successful sale of the company.  Mr. Mayer is a Certified Public Accountant and Chartered Accountant with the Canadian Institute of Chartered Accountants and holds a Bachelor of Arts in Economics and Commerce from the University of Toronto.
Position with the Corporation:
Director
Director since:
July 16, 2014
Principal Occupation:	Committees:
Chief Executive Officer of Kanetix Ltd.	Mr. Mayer is the Chair of the Audit Committee and a member of the Compensation and Corporate Governance Committee.
	Public Board Memberships During Last Five Years:
	AcuityAds	(2014 – Present)

NUMBER OF SECURITIES BENEFICIALLY OWNED, CONTROLLED OR DIRECTED (as at December 31, 2020).
Common Shares	Percentage of Common Shares			Options		DSUs		RSUs		Total Number of Common Shares, Options, DSUs and RSUs		Total Value of Common Shares, DSUs and RSUs based on a closing market price of $14.29 as at December 31, 2020.
51,666		0.10	%		70,000		103,543		0		225,210	$	2,217,951

SHARE OWNERSHIP POLICY GUIDELINES

Date by which the Share Ownership Policy guidelines are to be met: May 10, 2024 Have Share Ownership Policy guidelines been met: Yes

12 

YISHAY WAXMAN	Independent
Residence:	Biography:
Ontario, Canada	Mr. Waxman is an entrepreneur, investor and start-up advisor and has been co-founder and president of Platterz Inc. and president of YW Consulting, a marketing and advertising consulting company, since June 2005.  He has worked in the mobile industry for over 18 years, selling platforms and solutions to more than 350 operators worldwide.  Most recently, he was the co-founder of Jumptap, Inc., which was acquired in November 2013 by Millennial Media.  He holds a Master of Business Administration from Heriot-Watt University (Israel) and a Honours Bachelor of Arts from McMaster University.
Position with the Corporation:
Director
Director since:
July 16, 2014
Principal Occupation:	Committees:
Co-founder and President of Platterz Inc.	Mr. Waxman is a member of the Audit Committee and a member of the Compensation and Corporate Governance Committee.
	Public Board Memberships During Last Five Years:
	AcuityAds	(2014 – Present)

NUMBER OF SECURITIES BENEFICIALLY OWNED, CONTROLLED OR DIRECTED (as at December 31, 2020).
Common Shares	Percentage of Common Shares			Options		DSUs		RSUs		Total Number of Common Shares, Options, DSUs and RSUs		Total Value of Common Shares, DSUs and RSUs based on a closing market price of $14.29 as at December 31, 2020.
18,700		0.04	%		30,000		92,758		0		141,458	$	1,592,735

SHARE OWNERSHIP POLICY GUIDELINES

Date by which the Share Ownership Policy guidelines are to be met: May 10, 2024 Have Share Ownership Policy guidelines been met: Yes

13 

COREY FERENGUL	Independent
Residence:	Biography:
Illinois, U.S.A.	Mr. Ferengul is an experienced technology executive and investor. Most recently (from September 2017 to October 2018) he served as Executive Chairman and CEO of Magnetic, a leader in AI powered digital advertising, which was sold to Deloitte Digital. He is also a Board Member and active investor for Hyde Park Angels, a leading Midwest angel investment group. Additionally, he serves on Boards of Directors for Provi, dScout and Packback as well as advisory boards for several other companies. Mr. Ferengul was CEO of Undertone, a New York based ad-tech company from 2013 until its sale in 2015. Previously he spent six years as an executive of Rovi Corporation (now Tivo) as Executive VP of Product responsible for corporate and product strategy, engineering, & global marketing.  Earlier in his career he held many roles in large and small organizations such as Platinum Technology (acquired by CA) and Meta Group (acquired by Gartner Group).
Position with the Corporation:
Director
Director since:
May 28, 2019
Principal Occupation:	Committees:
Investor with Hyde Park Angels	Mr. Ferengul is a member of the Audit Committee and a member of the Compensation and Corporate Governance Committee.
	Public Board Memberships During Last Five Years:
	AcuityAds	(2019 – Present)

NUMBER OF SECURITIES BENEFICIALLY OWNED, CONTROLLED OR DIRECTED (as at December 31, 2020).
Common Shares	Percentage of Common Shares		Options		DSUs		RSUs		Total Number of Common Shares, Options, DSUs and RSUs		Total Value of Common Shares, DSUs and RSUs based on a closing market price of $14.29 as at December 31, 2020.
Nil		Nil		67,000		0		0		67,000	Nil

SHARE OWNERSHIP POLICY GUIDELINES  

Date by which the Share Ownership Policy guidelines are to be met: May 10, 2024 Have Share Ownership Policy guidelines been met: No

14 

ELISABETH DONOHUE	Independent
Residence:	Biography:
New York, U.S.A.	Ms. Donohue is an experienced public board director and chief executive officer with extensive expertise in global consumer marketing. Most recently, Ms. Donohue served as CEO of Publicis Spine, a data and technology start-up of Publicis Groupe, and Chief Integration Officer of Publicis Groupe. From 2016 to 2017, she was the Global Brand President at Starcom Worldwide, also a division of Publicis Groupe, and prior to that, she served as CEO of Starcom USA, a division of Starcom Worldwide, from 2009 to 2016. She has significant expertise in marketing and communications, data and analytics and strategic planning. She presently serves on the board of directors of NRG Energy, Inc. as well as two not-for-profit boards, She Runs It and Milton Academy. Ms. Donohue holds a Bachelor of Arts in Organizational Behavior and Management and Business Economics from Brown University.
Position with the Corporation:
Proposed New Director
Director since:
N/A
Principal Occupation:	Committees:
Independent Board Member	None.
	Public Board Memberships During Last Five Years:
	NRG Energy, Inc. Synacor Inc.	(2020 – Present) (2017 – 2021)

NUMBER OF SECURITIES BENEFICIALLY OWNED, CONTROLLED OR DIRECTED (as at December 31, 2020).
Common Shares	Percentage of Common Shares		Options		DSUs		RSUs		Total Number of Common Shares, Options, DSUs and RSUs	Total Value of Common Shares, DSUs and RSUs based on a closing market price of $14.29 as at December 31, 2020.
Nil		Nil		Nil		Nil		Nil	Nil	Nil

SHARE OWNERSHIP POLICY GUIDELINES  

Date by which the Share Ownership Policy guidelines are to be met: May 10, 2024 Have Share Ownership Policy guidelines been met: No

15 

Corporate Cease Trade Orders, Bankruptcies, Penalties or Sanctions

To the knowledge of the Corporation, no proposed director of the Corporation is, as at the date hereof, or has been, within the ten years before the date hereof, a director, chief executive officer or chief financial officer of any company (including AcuityAds) that:

(a) was subject to a cease trade or similar order, or an order that denied the relevant company access to any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days and that was issued while the proposed director was acting in the capacity as director, chief executive officer or chief financial officer; or

(b) was subject to a cease trade or similar order, or an order that denied the relevant company access to any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days and that was issued after the proposed director ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer.

To the knowledge of the Corporation, no proposed director of the Corporation:

(c) is, as at the date hereof, or has been within the ten years before the date hereof, a director or executive officer of any company (including AcuityAds) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or

(d) has, within the ten years before the date hereof, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the proposed director.

To the knowledge of the Corporation, other than as set forth below, no proposed director of the Corporation has been subject to:

(e) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or

(f) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable shareholder in deciding whether to vote for a proposed director.

Pursuant to the terms of a settlement agreement dated December 17, 2001 between Mr. Roger Dent and the Ontario Securities Commission, Mr. Dent received a reprimand and agreed to pay a penalty of $50,000 plus $10,000 in costs to the Ontario Securities Commission in connection with certain trades in which he was involved while in a conflict of interest position as a result of being an officer and director of Yorkton Securities Inc.

16

COMPENSATION DISCUSSION AND ANALYSIS

The “named executive officers” (as such term is defined in Form 51-102F6 – Statement of Executive Compensation) of the Corporation during its financial year ended December 31, 2020 were:

• Tal Hayek, Co-Founder and Chief Executive Officer;

• Jonathan Pollack, Chief Financial Officer;

• Rachel Kapcan, Co-Founder and Vice-President of Client Operations;

• Joe Ontman, Co-Founder and Chief Business Development Officer; and

• Oren Hisherik, Chief Information and Technology Officer (collectively, the “NEOs”).

The objectives of AcuityAds’ executive compensation policy are to attract and retain individuals of high caliber to serve as officers of AcuityAds, to motivate their performance in order to achieve AcuityAds’ strategic objectives, to establish a compensation framework which is industry competitive and to align the interests of executive officers with the long-term interests of shareholders. AcuityAds endeavours to recognize and reward individual performance, as well as to place executive compensation within the range of compensation levels in the industry in which it operates, taking into account the size and scope of its operations.

The Corporation’s compensation program for the NEOs and its other executive officers is comprised of both fixed compensation (i.e., annual base salaries) and performance-based variable incentive compensation. The allocation of total compensation is intended to reflect both the performance of the Corporation as well as the Board’s discretionary assessment of an executive officer’s past contributions and ability to contribute to future and long-term business results, following receipt of a recommendation regarding the same from the CCG Committee.

The objective in setting the base salary for each executive officer (including each NEO) is to recognize market rates of pay for comparable positions in the industry and to acknowledge the competencies and skills of each of the individuals. The base salary paid to each executive officer (including each NEO) of the Corporation is reviewed annually by the CCG Committee and approved by the Board as part of its annual review.

In respect of fiscal 2020, the annual review by the CCG Committee led to an increase of base salaries for each of the NEOs as of January 1, 2020 as a result of the increased size of the business and in accordance with market rates for comparable positions. However, due to the impact of COVID-19, salaries for all executive officers were reduced by 20% effective April 1, 2020 until May 15, 2020. Executive officers did not receive back-pay for any amounts during the period in which salaries were reduced as a result of the COVID-19 pandemic.

In addition to fixed annual base salaries, each NEO is also eligible for an annual bonus consisting of: (i) a formulaic bonus set to a specified amount of each his or her annual base salary payable if the Corporation achieves 100% or more of its budgeted Adjusted EBITDA; and (ii) a discretionary bonus separate from the formulaic bonus described above in (i) awarded at the Board’s discretion based on various qualitative and quantitative factors (collectively, the “NEO Bonuses”). Such factors include, but are not limited to: the Corporation’s overall performance as compared to its budget (i.e. year-over-year revenue growth); the Corporation’s performance relative to the market in which it operates; transactions and financings completed by the Corporation during the year and the NEO’s individual contributions towards those transactions; and the Corporation’s cash-flow position. Each NEO is eligible to receive a maximum aggregate bonus of two times his or her base salary.

17

In 2020, since the Corporation exceeded its budgeted Annual EBITDA target, the formulaic component of the bonus for each of Mr. Hayek, Ms. Kapcan Mr. Ontman and Mr. Jonathan Pollack resulted in a bonus equal to 100% of that person’s annual base salary. In the case of Mr. Hisherik, he achieved his formulaic bonus of 30% of his annual base salary as a result of the Corporation meeting each of the following: (i) 40% of Mr. Hisherik’s bonus was payable upon the Corporation achieving 100% of its budgeted Adjusted EBITDA; (ii) 40% of Mr. Hisherik’s bonus was payable upon the Corporation achieving 100% of its budgeted revenue; and (iii) 20% of Mr. Hisherik’s bonus was payable upon the Corporation achieving objectives set by the management for each fiscal quarter.

In addition to the formulaic bonuses earned, each NEO also received a discretionary bonus based on their individual achievements and due to the strength of the Corporation’s financial performance during the challenging economic environment resulting from the ongoing COVID-19 pandemic.

In prior years, bonuses were generally paid through the grant of equity compensation, typically in the form of deferred share units (“DSUs”) or restricted share units (“RSUs”). For the year-ended December 31, 2020, the Corporation awarded bonuses in the form of RSUs, issuing an aggregate of 847,475 RSUs to NEOs. Mr. Hisherik received a portion of his bonus in the form of cash in the amount of $61,603. The Corporation recognizes the need to provide a compensation package that will attract and retain qualified and experienced executives, as well as align the compensation level of each executive to that executive’s level of responsibility, and, accordingly expects that NEOs will remain eligible for bonuses in fiscal 2021, including equity-based awards issued pursuant to the Corporation’s Omnibus Incentive Plan (as defined below).

In addition to each NEOs’ eligibility to receive a bonus, AcuityAds’ other executive officers are also entitled to receive a bonus pursuant to the terms of their respective employment agreements, which the Corporation may choose to pay in cash, DSUs, performance share units (“PSUs”) and/or RSUs.

In considering whether to award discretionary bonuses to executive officers, the Board considers the risks associated with the additional compensation, such as the state of the financial markets, the ability of the Corporation to raise money in such markets, and the need for the Corporation to preserve its capital from time to time in such markets, compared to the needs of the Corporation to retain and reward experience and qualified individuals to advance the Corporation’s objectives. In addition to the foregoing risk assessment conducted by the Board, the CCG Committee considers the implications of the risks associated with the Corporation’s compensation policies and practices at its quarterly committee meetings. The CCG Committee has not identified any risks arising from the Corporation’s compensation policies and practices that are reasonably likely to have a material adverse effect on the Corporation.

Aside from the NEO Bonuses, which are determined based on the specific performance criteria of the Corporation, AcuityAds’ executive officers’ compensation is determined by the Board through discussion and informal assessments of the performance of each individual. The Board does not set specific performance objectives in assessing the performance of its senior management; rather, the Board uses its experience and judgment in determining an overall compensation package for such individuals. The Board’s assessment of corporate performance is based on a number of qualitative and quantitative factors including execution of on-going projects and transactions, operational performance, meeting targeted budgets and progress on key growth initiatives. The executive officers do not automatically receive any particular award based on the Board’s determination of overall performance, but rather the determination establishes the background for the Board’s subsequent review of the officer’s individual performance.

18

The Corporation’s Trading Policy (as defined below) prohibits directors and NEOs from purchasing financial instruments, including, for greater certainty, prepaid variable forward contracts, equity swaps, collars, or units of exchange funds that are designed to hedge or offset a decrease in market value of equity securities granted as compensation or held, directly or indirectly. To the knowledge of the Corporation, as of the date hereof, no director or NEO has participated in the purchase of such financial instruments.

During 2020, the Corporation engaged a compensation consultant to perform an independent review of executive compensation matters and to assist the CCG Committee in determining the appropriateness of the Corporation’s current compensation structure. For further information, see “Compensation Governance”.

PERFORMANCE GRAPH

The following graph compared the Corporation’s cumulative total shareholder return to the S&P/TSX SmallCap Index, assuming reinvestment of any dividends and considering a $100 investment on January 1, 2016, being the first day of the five most recently completed financial years.

 

The S&P/TSX SmallCap Index was created to address the needs of investment managers requiring a portfolio index of the small cap market segment of the Canadian equity market, of which AcuityAds would be considered a part of. Securities must be between $100 million and $1.5 billion in market capitalization and must have a minimum volume weighted average price of $1.00 over the last three trading days of the month-end prior to an annual review. During the period covered by the performance graph, the Corporation has exceeded the performance of the benchmark significantly by 1375%. Given the Corporation’s market capitalization size and size of operations upon inception of the Corporation, volatility has been exceptionally higher than that of the benchmark. Accordingly, the Corporation’s successful performance over a five-year period has resulted in a significant return premium relative to the benchmark. The Corporation’s management compensation is tied to the performance of certain company-specific metrics including but not limited to Adjusted EBITDA performance. Each NEOs bonus payout was determined primarily by the Corporation’s annual financial performance resulting in awards that have a meaningful direct link to the Corporation’s financial results for the fiscal year.

“Adjusted EBITDA” is a non-IFRS measure and refers to net income (loss) after adjusting for finance costs, impairment loss, fair value gain, income taxes, foreign exchange gain (loss), depreciation and amortization, share-based compensation, acquisition and related integration costs, severance expenses and adjustments to the carrying value of investment tax credits receivable. The Corporation believes that Adjusted EBITDA is useful supplemental information as it provides an indication of the results generated by the Corporation’s main business activities before taking into consideration how those activities are financed and taxed and also prior to taking into consideration depreciation of property and equipment and certain other items listed above. It is a key measure used by the Corporation’s Management and Board to understand and evaluate the Corporation’s operating performance, to prepare annual budgets and to help develop operating plans.

19

COMPENSATION GOVERNANCE

The Board has charged the CCG Committee with reviewing, overseeing and evaluating, among other things, the compensation policies of the Corporation. In particular, the CCG Committee is responsible for appointing and compensating officers, approving succession plans for officers and overseeing any compensation or benefit plans of the Corporation.

The CCG Committee is comprised of five directors, Messrs. Dent (Chair), Pollack, Mayer, Waxman and Ferengul, all of whom are independent within the meaning of section 1.4 of National Instrument 52-110 – Audit Committees (“NI 52-110”). All members of the CCG Committee have experience in reviewing and evaluating compensation matters as a result of their previous roles. For the relevant education and experience of each of the members of the CCG Committee, please see the biographical summary of each of Messrs. Dent, Pollack, Mayer, Waxman and Ferengul under the heading “Directors and Officers”. The CCG Committee is responsible for reviewing, at appropriate intervals, the compensation and benefit levels for members of the Board. The CCG Committee is also responsible for reviewing the compensation and remuneration policies for employees and officers of the Corporation. For further information on the CCG Committee, see “Statement of Corporate Governance Practices – Compensation and Corporate Governance Committee”.

On October 22, 2020, the Corporation retained Meridian Compensation Partners, LLC (“Meridian”) to perform an independent review of executive compensation matters and to assist the CCG Committee in determining the appropriateness of the Corporation’s current compensation structure for senior executives and directors.

	Year Ended December 31, 2020		Year-Ended December 31, 2019
Executive Compensation-Related Fees	$	10,819		Nil
All Other Fees		Nil		Nil
Total	$	10,819		Nil

By the recommendation of the CCG Committee, the Corporation has also implemented a policy (the “Share Ownership Policy”) in which each director is required to own Common Shares (or share equivalents, such as DSUs, RSUs, or PSUs) with a market value equal to three times the annual compensation of such director. The minimum share ownership requirement must be attained within three (3) years of the date an individual is first appointed or elected as a director and must be maintained after attainment throughout an individual’s tenure as a director. Notwithstanding the foregoing, any individual who was a director of the Corporation at the time the Share Ownership Policy was first adopted by the Board on May 10, 2021, has three (3) years from that date to attain the minimum share ownership requirement.

20

SUMMARY COMPENSATION TABLE

The following table provides information regarding compensation earned by the NEOs for the financial years ended December 31, 2020, December 31, 2019 and December 31, 2018. 

					Non-Equity Incentive Plan Compensation ($)
Name and Principal Position	Year	Salary ($)	Share-Based Awards ($)(1)	Option-Based Awards ($)(2)	Annual Incentive Plans	Long-Term Incentive Plans	Pension Value ($)	All other Compensation ($)	Total Compensation ($)
Tal Hayek(3) Chief Executive Officer Ontario, Canada	2020 2019 2018	214,500 180,000 180,000	779,005(7) Nil Nil	Nil Nil 153,750	Nil Nil Nil	N/A N/A N/A	N/A N/A N/A	N/A N/A N/A	993,505 180,000 333,750
Jonathan Pollack(4) Chief Financial Officer Ontario, Canada	2020 2019 2018(4)	214,500 180,000 123,500	578,000(7) Nil Nil	Nil Nil 358,750	Nil Nil Nil	N/A N/A N/A	N/A N/A N/A	N/A N/A N/A	792,500 180,000 482,250
Oren Hisherik(5)(6) Chief Information and Technology Officer Ontario, Canada	2020 2019	219,375 178,798	572,291 18,750	Nil 61,698	61,603 33,088	N/A N/A	N/A N/A	N/A N/A	853,269 292,334
Rachel Kapcan Vice President of Client Operations Ontario, Canada	2020 2019 2018	214,500 180,000 180,000	755,911(7) Nil Nil	Nil Nil 153,750	Nil Nil 4,500	N/A N/A N/A	N/A N/A N/A	N/A N/A N/A	970,411 180,000 338,250
Joe Ontman (3)  Chief Revenue Officer Ontario, Canada	2020 2019 2018	214,500 180,000 180,000	761,554(7) Nil Nil	Nil Nil 153,750	Nil Nil Nil	N/A N/A N/A	N/A N/A N/A	N/A N/A N/A	976,054 180,000 333,750

Notes:

(1) On March 4, 2021, each of the NEO’s received 17,045 RSUs in connection with their 2020 bonus, calculated based on the closing price of the Common Shares on the TSX on March 3, 2021 of $22.00.

(2) The grant date fair value of option-based awards was calculated based on the Black-Scholes option pricing model. The Black-Scholes option pricing model was selected as it is a widely used financial method to determine the fair value of Options. No option-based awards were granted to the NEOs during the year-ended December 31, 2020.

(3) No compensation was paid to Messrs. Hayek and Ontman in their capacities as directors of the Corporation for the financial years ended December 31, 2020, December 31, 2019 and December 31, 2018.

(4) Jonathan Pollack received 500,000 Options when he joined the Corporation on May 9, 2018, calculated using the Black-Scholes method, based on the grant date fair value of the Options.

(5) Mr. Hisherik received 50,000 Options when he joined the Corporation on February 18, 2019, calculated using the Black-Scholes method, based on the grant date fair value of the Options.

(6) Mr. Hisherik joined the Corporation on February 18, 2019.

(7) On August 14, 2020, AcuityAds issued additional RSUs to Tal Hayek, Jonathan Pollack, Joe Ontman, and Rachel Kapcan in lieu of cash bonuses. Mr. Hayek was issued 193,304 RSUs, Mr. Pollack was issued 97,129 RSUs, Mr. Ontman was issued 184,954 RSUs, and Ms. Kapcan was issued 182,254 RSUs.

21

INCENTIVE PLAN AWARDS FOR NAMED EXECUTIVE OFFICERS

Outstanding Share-Based Awards and Option-Based Awards

The following table provides information regarding all incentive plan awards for each NEO outstanding as of December 31, 2020.

	Option-Based Awards					Share-Based Awards
Name	Number of Securities Underlying Unexercised Options (#)	Option Exercise Price ($)	Option Grant Date	Option Expiration Date	Value of Unexercised In-the- Money Options ($)(1)	Number of Shares or Units of Shares that have not Vested (#)	Market or Payout Value of Share-Based Awards that have not Vested ($)	Market or Payout Value of Vested Share- Based Awards not Paid Out or Distributed ($)(2)
Tal Hayek	125,000	1.71	March 14, 2019	March 14, 2024	1,572,500	210,349	3,005,887	Nil
Jonathan Pollack	125,000 166,667	1.71 0.64	March 14, 2019 May 10, 2018	March 14, 2024 May 10, 2023	1,572,500 2,275,005	17,045	243,573	Nil
Oren Hisherik	50,000	1.71	March 14, 2019	March 14, 2024	209,671	114,225	1,632,275	77,666
Rachel Kapcan	125,000	1.71	March 14, 2019	March 14, 2024	1,572,500	199,299	2,847,983	Nil
Joe Ontman	125,000	1.71	March 14, 2019	March 14, 2024	1,572,500	201,999	2,886,566	Nil

Notes:

(1) Calculated based on the difference in value between the exercise price of the Options and the closing price of the Common Shares on the TSX on December 31, 2020 of $14.29. Any unexercised Options may never be exercised and actual gain, if any, on exercise will depend on the value of the Common Shares on the date of exercise.

(2) These amounts represent the cash value of all outstanding DSUs and RSUs granted to the NEOs if they were settled on December 31, 2020 based on the closing price of the Common Shares on the TSX of $14.29 on December 31, 2020.

22

Value Vested or Earned During the Year

The following table provides information regarding the value on pay-out or vesting of incentive plan awards for each NEO for the financial year ended December 31, 2020.

Name	Option Awards – Value Vested During the Year ($)(1)		Share Awards – Value Vested During the Year ($)(2)		Non-Equity Incentive Plan Compensation – Value Earned During the Year ($)
Tal Hayek	N/A		N/A		N/A
Jonathan Pollack		91,667		N/A		N/A
Oren Hisherik		Nil		33,860		61,603
Rachel Kapcan		N/A		N/A		N/A
Joe Ontman		N/A		N/A		N/A

Notes:  

(1) Based on the number of Options that vested during the year and calculated based on the difference between the market price of the Common Shares on the TSX and the exercise price of the Options on the vesting date. Any unexercised Options may never be exercised and actual gain, if any, on exercise will depend on the value of the Common Shares on the date of exercise.

(2) These amounts represent the cash value of all outstanding DSUs and RSUs granted to the NEOs if they were exercised on December 31, 2020 based on the closing price of the Common Shares on the TSX of $14.29 on December 31, 2020.

PENSION PLAN BENEFITS

The Corporation does not have a pension plan and does not provide any pension plan benefits.

DEFERRED COMPENSATION PLANS

The Corporation does not have a deferred compensation plan.

TERMINATION AND CHANGE OF CONTROL BENEFITS

AcuityAds is party to employment agreements with each of the NEOs (collectively, the “Employment Agreements”), with the exception of Jonathan Pollack with whom AcuityAds is party to an independent contractor agreement (the “Independent Contractor Agreement”). Each such Employment Agreement and Independent Contract Agreement contain certain termination and change of control provisions.

Where Mr. Hayek, Ms. Kapcan and Mr. Ontman’s employment has been terminated by AcuityAds without cause, each is entitled to receive a severance payment, in lieu of notice, of the greater of (i) a lump sum amount equal to 12 months of his or her then current annual salary plus the bonus for the calendar year plus any entitlement in respect of vacation pay, and (ii) such amount he or she would otherwise be entitled pursuant to applicable law. Benefits will cease 12 months after the effective date of termination or such later date pursuant to applicable law. If the benefits provider does not permit the continuation of benefits for these periods, the benefits shall cease on the date the provider ceases to provide such benefits to Mr. Hayek, Ms. Kapcan or Mr. Ontman. All Options granted to Mr. Hayek, Ms. Kapcan and Mr. Ontman and issued pursuant to the Option Plan terminate, unexercised, 90 days from the effective date of termination.

For the purposes of Mr. Hayek, Ms. Kapcan and Mr. Ontman’s Employment Agreements, a “change of control” means the occurrence of a transaction or series of transactions as a result of which AcuityAds becomes controlled by a person other than the founding shareholders of AcuityAds (i.e. Tal Hayek, Rachel Kapcan, Joe Ontman and Nathan Mekuz). AcuityAds is deemed to be controlled by a person if such person, together with any of its affiliates, beneficially owns shares of AcuityAds carrying more than 50% of its voting rights ordinarily exercisable at meetings of shareholders of AcuityAds, with such rights being sufficient to elect a majority of the directors of AcuityAds.

23 

If there is a change of control of AcuityAds, Mr. Hayek, Ms. Kapcan or Mr. Ontman may, within 30 days of learning of such change of control, give notice to AcuityAds to terminate their employment, which shall be treated as a termination by AcuityAds without cause.

If Mr. Hisherik’s employment has been terminated by AcuityAds without cause (and not for the reason of change of control), he is entitled to receive a severance payment, in lieu of notice, of a lump sum amount equal to four months base salary, any accrued wages up to the date of termination, and continuation of certain benefits and as required by applicable employment laws). In the event of a termination within 12 months of a change of control, Mr. Hisherik is entitled to a severance payment equal to 12 months’ base salary.

The severance payment shall be full satisfaction of any and all entitlement that Mr. Hisherik may have with respect to: (i) notice of termination or payment in lieu of such notice; (ii) severance pay; or (iii) any other payments Mr. Hisherik may otherwise be entitled pursuant to applicable law, provided that the severance payment shall not be a smaller amount than that to which Mr. Hisherik would otherwise be entitled under applicable law, in which case Mr. Hisherik shall receive the greater of the two amounts.

If Jonathan Pollack’s employment has been terminated by AcuityAds without cause, he is entitled to a termination fee in the amount of $45,000.

The following table sets out the estimated incremental payments, payables and benefits, assuming that a termination without cause or termination within 30 days of a change of control took place on December 31, 2020.

Name	Aggregate base salary ($)		Aggregate bonus ($)	Options/DSUs ($)(1)		Other benefits ($)		Total ($)(2)
Tal Hayek		220,000	Nil		Nil		N/A		220,000
Jonathan Pollack(3)		N/A	N/A		N/A		45,000		45,000
Oren Hisherik(4)		56,250 / 225,000	Nil		Nil		N/A		56,250 / 225,000
Rachel Kapcan		220,000	Nil		Nil		N/A		220,000
Joe Ontman		220,000	Nil		Nil		N/A		220,000

Notes:

(1) Based on the closing price of the Common Shares on the TSX on December 31, 2020 of $14.29.

(2) Totals do not include any entitlements in respect of vacation benefits.

(3) Jonathan Pollack is entitled to a termination fee in the amount of $45,000.

(4) In the event of a termination without cause (for the reason other than change of control), Mr. Hisherik is entitled to $56,250. In the event of a termination within 12 months of a change of control, Mr. Hisherik is entitled to $225,000.

24 

DIRECTOR COMPENSATION

Compensation Philosophy and Objectives

The directors of the Corporation are compensated through directors’ fees, which are paid in Options. In 2020, each director received 30,000 Options and the chairs of each committee received an additional 5,000 Options. In addition, the chair of the board received an additional 10,000 Options.

Directors of the Corporation are entitled to reimbursement for all actual reasonable and appropriate expenditures (including business travel expenses, if applicable) incurred by them in carrying out their respective duties and responsibilities as directors of the Corporation. The CCG Committee reviews the compensation of the directors on an annual basis, considering such factors as time commitment, responsibility and compensation provided by comparative companies. Based on its annual review, the CCG Committee will make recommendations to the Board when it deems changes in compensation are needed.

Director Compensation Table

The following table provides information regarding compensation earned by each director (who is not also a NEO) for the financial year ended December 31, 2020.

Name(1)	Fees Earned ($)	Share- Based Awards ($)		Option- Based Awards ($)		Non-Equity Incentive Plan Compensation ($)	Pension Value ($)		All Other Compensation ($)	Total ($)
Sheldon Pollack	Nil		Nil		33,863	N/A		N/A	N/A		33,863
Igal Mayer	Nil		Nil		29,630	N/A		N/A	N/A		29,630
Roger Dent	Nil		Nil		29,630	N/A		N/A	N/A		29,630
Yishay Waxman	Nil		Nil		25,397	N/A		N/A	N/A		25,397
Corey Ferengul	Nil		Nil		25,397	N/A		N/A	N/A		25,397

Notes:

(1) No compensation was paid to Messrs. Hayek and Ontman in their capacities as directors of the Corporation. For a summary of the compensation paid to Messrs. Hayek and Ontman in their capacities as executive officers of the Corporation, see “Summary Compensation Table” above.

(2) The grant date fair value of option-based awards was calculated based on the Black-Scholes option pricing model. The Black-Scholes option pricing model was selected as it is a widely used financial method to determine the fair value of Options.

25 

Incentive Plan Awards for Directors

Outstanding Share-Based Awards and Option-Based Awards

The following table provides information regarding all incentive plan awards for each director (who is not also a NEO) outstanding as of December 31, 2020.

Option-Based Awards

Share-Based Awards

Name(1)

Number of Securities Underlying Unexercised Options (#)

Option Exercise Price ($)

Option Grant Date

Option Expiration Date

Value of Unexercised In-the-Money Options ($)(2)

Number of Shares or Units of Shares that have not Vested (#)

Market or Payout Value of Share-Based Awards that have not Vested ($)

Market or Payout Value of Vested Share-Based Awards not Paid Out or Distributed ($)

Sheldon Pollack

50,000

$

4.60

March 14, 2017

March 14, 2022

484,500

N/A

N/A

N/A

40,000

$

1.71

March 14, 2019

March 14, 2024

503,200

N/A

N/A

N/A

40,000

$

1.59

March 4, 2020

March 4, 2025

508,000

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

Nil

Nil

1,058,074

Igal Mayer

35,000

$

1.71

March 14, 2019

March 14, 2024

440,300

N/A

N/A

N/A

35,000

$

1.59

March 4, 2020

March 4, 2025

444,500

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

Nil

Nil

1,058,074

Roger Dent

35,000

$

1.71

March 14, 2019

March 14, 2024

440,300

N/A

N/A

N/A

35,000

$

1.59

March 4, 2020

March 4, 2025

444,500

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

Nil

Nil

834,150

Yishay Waxman

30,000

$

1.59

March 4, 2020

March 4, 2025

381,000

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

Nil

Nil

Nil

Corey Ferengul

50,000

$

1.06

Sept. 12, 2018

Sept. 12, 2023

15,500

N/A

N/A

N/A

30,000

$

1.55

May 29, 2019

May 29, 2024

-

N/A

N/A

N/A

30,000

1.59

March 4, 2020

March 4, 2025

381,000

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

Nil

Nil

Nil

Notes:    

(1) For a summary of share-based and option-based awards granted to Messrs. Hayek and Ontman, see “Incentive Plan Awards for Named Executive Officers” above.

(2) Calculated based on the difference in value between the exercise price of the Options and the closing price of the Common Shares on the TSX on December 31, 2020 of $14.29. Any unexercised Options may never be exercised and actual gain, if any, on exercise will depend on the value of the Common shares on the date of exercise.

26 

Value Vested or Earned During the Year

The following table provides information regarding the value on pay-out or vesting of incentive plan awards for each director (who is not also a NEO) for the financial year ended December 31, 2020.

Name(1)	Option awards – Value vested during the year(2)(3) ($)		Share awards – Value vested during the year ($)	Non-equity incentive plan compensation – Value earned during the year ($)
Sheldon Pollack(3)		Nil	Nil	N/A
Igal Mayer(3)		Nil	Nil	N/A
Roger Dent(3)		Nil	Nil	N/A
Yishay Waxman(3)		Nil	Nil	N/A
Corey Ferengul(4)		33,999	Nil	N/A

Notes:

(1) For a summary of share-based on option-based awards granted to Messrs. Hayek and Ontman, see “Incentive Plan Awards for Named Executive Officers” above.

(2) Based on the number of Options that vested during the year and calculated based on the difference between the market price of the Common Shares on the TSX and the exercise price of the Options on the vesting date. Any unexercised Options may never be exercised and actual gain, if any, on exercise will depend on the value of the Common Shares on the date of exercise.

(3) Certain Options granted to Messrs. Pollack, Mayer, Dent and Waxman vested on March 13, 2020 and had a nil value as they were out-of-the-money on such date (based on an exercise price of $1.71 and the Corporation’s closing share price on the TSX of $1.05 on the date of vesting).

(4) Certain Options granted to Mr. Ferengul vested on May 29, 2020 and September 11, 2020. The Options vested on May 29, 2020 and had a nil value as they were out-of-the-money on such date (based on an exercise price of $1.55 and the Corporation’s closing share price on the TSX of $1.05 on the date of vesting). 16,666 Options vested on September 11, 2020 had value of $33,999 on such date based on an exercise price of $1.06 and the Corporation’s closing share price on the TSX of $3.10 on the date of vesting.

27 

SECURITIES AUTHORIZED FOR ISSUANCE UNDER
EQUITY COMPENSATION PLANS

The following table provides details of securities authorized for issuance as of December 31, 2020 pursuant to the Corporation’s omnibus long-term incentive plan (the “Omnibus Incentive Plan”), the existing amended and restated stock option plan (the “Option Plan”), and the legacy third amended and restated deferred share unit plan (the “DSU Plan”) of the Corporation, which were the only compensation plans under which equity securities of the Corporation were authorized for issuance as of December 31, 2020.

Plan Category	Number of securities to be issued upon exercise of outstanding options and rights (a)	Weighted-average price of outstanding options and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))(1)(2)(3)(c)
Equity compensation plans approved by securityholders	1,900,519 Options 1,168,619 DSUs 1,223,945 RSUs		$1.69 N/A	8,013,304 equity-based awards available for issuance under the Omnibus Incentive Plan
Equity compensation plans not approved by securityholders	Nil		N/A	N/A
Total	4,293,083		$1.69	8,013,304

Notes:

(1) Options are comprised of Options awarded under the Omnibus Incentive Plan and the Option Plan. The Corporation ceased granting awards under the Option Plan following the approval of the Omnibus Incentive Plan by the board on April 13, 2020 and subsequent approval by shareholders on June 16, 2020. However, Options that were issued prior to April 13, 2020 under the Option Plan remain outstanding and are governed by the terms of the Option Plan.

(2) DSUs are comprised of DSUs awarded under the Omnibus Incentive Plan and the DSU Plan. The Corporation ceased granted award under the DSU Plan following the approval of the Omnibus Incentive Plan by the board on April 13, 2020 and subsequent approval by shareholders on June 16, 2020. However, DSUs that were issued prior to April 13, 2020 under the DSU Plan remain outstanding and are governed by the terms of the DSU Plan.

(3) The maximum number of Common Shares reserved for issuance, in the aggregate, under the Omnibus Incentive Plan, the Option Plan, the DSU Plan and any other security-based compensation arrangement, collectively, is 15% of the aggregate number of Common Shares issued and outstanding from time to time. As of the date of this Circular, there are 54,637,8450 Common Shares issued and outstanding.

Description of the Omnibus Incentive Plan

The Omnibus Incentive Plan was approved by the Board effective April 13, 2020 and was first approved by shareholders at the Corporation’s Annual General and Special Meeting held on June 16, 2020. Capitalized terms used but not defined in this section of the Circular shall have the meanings ascribed thereto in the Omnibus Incentive Plan, which can be found on the Corporation’s SEDAR profile at www.sedar.com.

The Omnibus Incentive Plan is designed to promote the alignment of interests among employees, directors, officers and shareholders of the Corporation. The Omnibus Incentive Plan allows for a variety of equity-based awards that provide different types of incentives to be granted to certain officers, directors, employees and consultants (in the case of Options, PSUs and RSUs) and non-employee directors (in the case of DSUs). Options, PSUs, RSUs and DSUs are collectively referred to herein as “Awards”. Each Award represents the right to receive Common Shares, or in the case of PSUs, RSUs and DSUs, Common Shares or cash, in accordance with the terms of the Omnibus Incentive Plan.

28 

The Plan Administrator (as defined in the Omnibus Incentive Plan) is determined by the Board, and is presently the CCG Committee, which is made up of independent directors. The Omnibus Incentive Plan may in the future be administered by the Board itself or delegated to a committee of the Board. The Plan Administrator may grant Awards to eligible participants, as applicable. Participation in the Omnibus Incentive Plan is voluntary and, if an eligible participant agrees to participate, the grant of Awards will be evidenced by a grant agreement with each such participant. The interest of any participant in any Award is not assignable or transferable, whether voluntary, involuntary, by operation of law or otherwise, other than by will or the laws of descent and distribution.

The Omnibus Incentive Plan provides that appropriate adjustments, if any, will be made by the Plan Administrator in connection with a reclassification, reorganization or other change of the Corporation’s Common Shares, share split or consolidation, distribution, merger or amalgamation, in the Common Shares issuable or amounts payable to preclude a dilution or enlargement of the benefits under the Omnibus Incentive Plan.

The maximum number of Common Shares reserved for issuance, in the aggregate, under the Omnibus Incentive Plan, the Option Plan, the DSU Plan and any other security-based compensation arrangement, collectively, is 15% of the aggregate number of Common Shares issued and outstanding from time to time. As of the date of this Circular, there are 54,637,850 Common Shares issued and outstanding, and a total of 1,292,186 Options and 2,219,761 DSUs issued and outstanding, including 35,000 Options and 1,389,638 DSUs awarded under the Omnibus Incentive Plan, and 1,257,186 Options and 830,123 DSUs issued under the predecessor Option Plan and DSU Plan, respectively. Accordingly, the Corporation may grant additional Awards under the Omnibus Incentive Plan as the maximum has not yet been reached. As at the date of this Circular, the issued and outstanding Options and DSUs, in aggregate, represent approximately 6.4% of the issued and outstanding Common Shares.

The Omnibus Incentive Plan is considered an “evergreen” plan, since the shares covered by awards which have been exercised shall be available for subsequent grants under the Omnibus Incentive Plan and the number of awards available to grant increases as the number of issued and outstanding shares increases. As an evergreen plan, the Omnibus Incentive Plan will be subject to shareholder approval every three years pursuant of the rules of the TSX. Awards may be granted under to the Omnibus Incentive Plan to those eligible to receive Awards thereunder until June 16, 2023, three years from the date of the shareholder meeting at which Omnibus Incentive Plan was approved by shareholders, at which time renewal approval of the Omnibus Incentive Plan must be sought.

Unless requisite shareholder approval has been obtained (or unless permitted otherwise by the rules of the TSX): (i) the maximum number of Awards which may be granted to any one individual under all of the Corporation’s share compensation arrangements within any one-year period must not exceed 5% of the Common Shares issued and outstanding at the time of the Award; (ii) the maximum number of Awards which may be granted to any one consultant under all of the Corporation’s share compensation arrangements within any one-year period must not exceed 2% of the Common Shares issued and outstanding at the time of the Award; (iii) the maximum number of Common Shares issuable to insiders of the Corporation under all of the Corporation’s share compensation arrangements at any time must not exceed 10% of the outstanding Common Shares on a non-diluted basis; and (iv) the maximum number of Common Shares issued to insiders of the Corporation under all of the Corporation’s share compensation arrangements within any one-year period must not exceed 10% of the outstanding Common Shares on a non-diluted basis.

29 

Unless the Plan Administrator decides otherwise, the participant’s grant agreement will provide that any Options granted will vest over a 3 year period as follows: 1/3 at the first anniversary of the date of such grant and 1/3 each subsequent anniversary for the remaining two years following the first anniversary of the date of such grant. Otherwise, Options granted under the Omnibus Incentive Plan vest in accordance with the terms of the applicable grant agreement. An Option shall be exercisable during a period established by the Plan Administrator which shall commence on the date of the grant and shall terminate no later than ten years after the date of the granting of the Option or such shorter period as the Plan Administrator may determine. The minimum exercise price of an Option will be determined based on the closing price of the Common Shares on the TSX on the last trading day before the date such Option is granted.

Certain events, including termination for cause, resignation, retirement, termination other than for cause, and death or long-term disability may impact the rights of holders of Options. Such events and related impact are set forth in the Omnibus Incentive Plan, and are subject to the terms of a participant’s employment agreement, grant agreement, and the change of control provisions described below.

The terms and conditions of grants of RSUs, PSUs and DSUs (including the quantity, type of award, grant date, vesting conditions, vesting periods, settlement, settlement date and other terms and conditions with respect to these Awards) as well as the impact of certain prescribed events on the respective holder, are set out in the participant’s grant agreement.

In the event of a change of control of the Corporation, the Plan Administrator will have the discretion to, among other things, accelerate the vesting of outstanding awards, settle outstanding awards in cash or exchange outstanding awards for similar awards of a successor company. In addition, the Plan Administrator may, in its sole discretion, suspend or terminate the Omnibus Incentive Plan at any time, or from time to time, amend, revise or discontinue the terms and conditions of the Omnibus Incentive Plan or of any securities granted under the Omnibus Incentive Plan and any grant agreement relating thereto, subject to any required regulatory and TSX approval, provided that such suspension, termination, amendment, or revision will not adversely alter or impair any Award previously granted except as permitted by the terms of the Omnibus Incentive Plan or as required by applicable laws.

The Plan Administrator may amend the Omnibus Incentive Plan or any Awards granted under the Omnibus Incentive Plan at any time without the consent of a participant provided that such amendment shall: (i) not adversely alter or impair any Award previously granted except as permitted by the terms of the Omnibus Incentive Plan; (ii) be in compliance with applicable law and subject to any regulatory approvals including, where required, the approval of the TSX; and (iii) be subject to shareholder approval, where required by law, the requirements of the TSX or the Omnibus Incentive Plan, provided however that shareholder approval shall not be required for certain prescribed, non-prejudicial amendments, as set forth in the Omnibus Incentive Plan.

Description of the Option Plan

Since the adoption of the Omnibus Incentive Plan, no further awards have been or will be granted under the Option Plan. However, Options that were issued prior to April 13, 2020 under the Option Plan remain outstanding and are governed by the terms of the Option Plan.

As at the date of this Circular, 1,292,186 Options are issued and outstanding, and have not been cancelled, exercised or expired, under the Option Plan.

The Options that remain outstanding under the Option Plan are non-assignable and were granted for a term of five years from the date of grant. Notwithstanding, if the date on which an Option expires occurs during any period imposed by the Corporation, pursuant to its insider trading policies or otherwise, during which an optionee may be restricted from trading in securities of the Corporation (a “Blackout Period”) or within two business days after the last day of a Blackout Period, the date of the expiry of such Option will become the tenth business day following the end of the Blackout Period.

30 

In the event of a change of control of the Corporation (or an impending change of control), the Board will have the discretion to deal with outstanding Options in the manner it deems fair and reasonable in the circumstances, which may include accelerated vesting or expiry of the Options. Under the Option Plan, a change of control is deemed to occur if one of the following events has taken place:

• the sale, transfer or other disposition of all or substantially all of the Corporation’s assets in complete liquidation or dissolution of the Corporation;

• a consolidation, merger, amalgamation, arrangement or other reorganization or acquisition involving the Corporation or any of its affiliates and another corporation or other entity, as a result of which the holders of Common Shares immediately prior to the completion of the transaction hold less than 50% of the outstanding voting securities of the successor corporation immediately after completion of the transaction;

• any person or combination of persons at arm’s length to the Corporation and its affiliates acquires or becomes the beneficial owner of, directly or indirectly, more than 50% of the voting securities of the Corporation, whether through the acquisition of previously issued and outstanding voting securities, or of voting securities that have not been previously issued, or any combination thereof, or any other transaction having a similar effect;

• a resolution is adopted to wind-up, dissolve or liquidate the Corporation; or

• as a result of or in connection with:

o (A) a contested election of directors of the Corporation; or

o (B) a consolidation, merger, amalgamation, arrangement or other reorganization or acquisition involving the Corporation or any of its affiliates and another corporation or other entity (a “Transaction”), fewer than 50% of the Corporation’s directors following the Transaction are persons who were directors of the Corporation immediately prior to such Transaction.

Options issued under the Option Plan vest at the discretion of the Board, subject to the rules or policies of the TSX and certain specified limitations. Notwithstanding, unless otherwise permitted by the TSX, Options awarded to consultants performing investor relations activities must vest in stages over 12-months with no more than one-quarter vesting in any three-month period.

The Board may at any time amend the Option Plan or any Options granted thereunder, subject to the receipt of all applicable regulatory approvals, provided that no such amendment may, without the consent of affected optionees, materially decrease the rights or benefits accruing to such optionees or materially increase the obligations of such optionees. For greater certainty, the Option Plan provides that the Board may amend or terminate the Option Plan or any Options granted thereunder without obtaining shareholder approval of such amendments or termination, other than the following amendments which shall be subject to the approval of shareholders (together with all applicable regulatory approvals): (i) amendments to the definition of categories of persons eligible to participate in the Option Plan; (ii) amendments to the maximum number or percentage of Common Shares (or other securities) issuable under the Option Plan; (iii) the limitations under the Option Plan on the number of Options that may be granted to any one person or any category of persons; (iv) the method for determining the exercise price of Options; (v) the maximum term of Options; (vi) the expiry and termination provisions applicable to Options; (vii) any reduction in the exercise price if the Option holder is an insider of the Corporation at the time of the proposed amendment; and (viii) any other provision that is required to be approved by shareholders under applicable law (including, without limitation, the rules, regulations and policies of the TSX).

31

Description of the DSU Plan

Since the adoption of the Omnibus Incentive Plan, no further awards have been or will be granted under the DSU Plan. However, DSUs that were issued prior to April 13, 2020 under the DSU Plan remain outstanding and are governed by the terms of the DSU Plan.

The DSU Plan is designed to promote the alignment of interests among employees, directors, officers and shareholders of the Corporation. The CCG Committee of the Board is responsible for administering the DSU Plan, subject to the overriding authority of the Board to make all determinations and take all other actions in connection with or in relation to the DSU Plan as it may deem necessary or advisable. A DSU issued under the DSU Plan is a bookkeeping entry representing a future right to receive one Common Share in accordance with the terms of the DSU Plan. Previous grants of DSUs are taken into account when considering new grants. Capitalized terms used but not defined in this section of the Circular shall have the meanings ascribed thereto in the DSU Plan.

As at the date of this Circular, 2,219,761 DSUs are issued and outstanding, and have not been cancelled, exercised or expired, under the DSU Plan.

Subject to applicable income tax and other withholdings as required by law, the value of the vested DSUs redeemed by or in respect of a Participant will be paid to the Participant, at the election of the Participant, in the form of Common Shares. Any vesting conditions (which may include time restrictions, performance conditions or a combination of both) for DSUs was determined by the CCG Committee in advance of any grants. The Board may also, in its sole and absolute discretion, accelerate and/or waive any vesting or other conditions for all or any DSUs for any Participant at any time and from time to time.

The value of each DSU awarded by the Corporation is equal to the Market Price (as defined in the DSU Plan) of the Common Shares at the time the DSU is awarded. The value of the DSU increases or decreases as the price of the Common Shares increases or decreases, thus promoting alignment of the interest of a Participant with the shareholders. DSUs generally vest upon redemption, subject to the discretion of the Board, and are credited to a Participant’s DSU Account.

The value of the DSUs credited to a Participant’s DSU account is redeemable upon the Participant delivering a written notice of redemption to the Corporation. In the event of termination, the redemption date specified in the notice must be dated within 90 days of such event of termination. Common Shares deliverable upon redemption of DSUs must be delivered within five Trading Days following the applicable redemption date. No fractional Common Shares will be issued pursuant to the DSU Plan and a fractional DSU will not be entitled to a Common Share or any cash payment on a redemption.

Upon the occurrence of a Change of Control, all of a Participant’s unvested DSUs will automatically become vested DSUs on the date such change of control occurs and all of such Participant’s vested DSUs will be redeemed in accordance with the terms of the DSU Plan in a manner that allows the Participant to participate in such Change of Control only if it is completed prior to the date of an event of termination (if any), as determined by the Board in its sole discretion.

DSUs are non-assignable. During the lifetime of the Participant, a vested DSU is redeemable only by the Participant or, upon the death of a Participant, the Participant’s beneficiary or estate.

If the number of outstanding Common Shares is increased or decreased as a result of a stock split, consolidation or recapitalization and not as a result of the issuance of Common Shares for additional consideration or by way of stock dividend, the Board may make appropriate adjustments to the number of DSUs credited to a Participant. Any determinations by the Board as to the required adjustments shall be made in its sole and absolute discretion and all such adjustments shall be conclusive and binding for all purposes under the DSU Plan.

32

Whenever cash dividends or distributions are paid on the Common Shares, additional DSUs will be credited to the Participant’s DSU Account with respect to Vested DSUs. The number of such additional DSUs will be calculated by multiplying the per Common Share dividend rate by the number of Vested DSUs held at that time in the Participant’s DSU account.

If the applicable redemption date for DSUs held by any Participant occurs during or within ten business days of the expiration of a blackout period applicable to such Participant, then the redemption date for such DSUs shall be extended to the close of business on the tenth business day following the expiration of the blackout period.

The Board reserves the right, in its sole discretion, to suspend or terminate the DSU Plan, or any portion thereof, at any time without obtaining the consent of any Participant by giving notice thereof to each Participant, provided that such suspension or termination may not materially adversely affect the rights already accrued under the DSU Plan by a Participant without the consent of the Participant.

Subject to those provisions of applicable law and regulatory requirements (including the rules, regulations and policies of the TSX), if any, that require shareholder approval, the Board reserves the right to amend the DSU Plan or the terms and conditions of DSUs issued or rights acquired under the DSU Plan without obtaining the approval of shareholders, except for the following types of amendments or modifications: (i) amendments to increase the number of Common Shares reserved for issuance, including an increase in the fixed maximum number of Common Shares, or a change from a fixed maximum number of Common Shares to a fixed maximum percentage of Common Shares; (ii) amendments for the purpose of extending eligibility to participate in the DSU Plan to persons who are not “Eligible Persons” as defined in the DSU Plan; (iii) amendments for the purpose of permitting DSUs issued or other rights or interests acquired under the DSU Plan to be transferred or assigned other than in accordance with the DSU Plan; (iv) amendments to increase the insider participation limits; and (v) amendments to the amending provision of the DSU Plan.

In accordance with the requirements of section 613 of the TSX Company Manual, the following table sets out the burn rate of the awards granted under the Corporation’s security-based compensation arrangements as at the end of the financial years ended December 31, 2020, December 31, 2019 and December 31, 2018. The burn rate is calculated by dividing the number of awards granted during the relevant financial year by the weighted average number of securities outstanding for the applicable fiscal year.

	Year Ended December 31, 2020			Year Ended December 31, 2019			Year Ended December 31, 2018
Number of Options granted under the Omnibus Incentive Plan		45,000			N/A			N/A
Number of Options granted under the Option Plan		350,000			1,153,500			985,000
Number of DSUs/RSUs granted under the Omnibus Incentive Plan		1,321,074			N/A			N/A
Number of DSUs granted under the DSU Plan		204,008			381,304			701,808
Weighted average of outstanding securities for that fiscal year(1)		49,720,186			45,286,998			39,134,484
Annual Burn Rate (Options)(2)		1	%		3	%		3	%
Annual Burn Rate (DSUs/RSUs)(2)		3	%		1	%		2	%

33

Notes:

(1) The weighted average number of securities outstanding during the period is the number of securities outstanding at the beginning of the period, adjusted by the number of securities bought back or issued during the period multiplied by a time-weighting factor. The time weighting factor is the number of days that the securities are outstanding as a proportion of the total number of days in the period; a reasonable approximation of the weighted average is adequate in many circumstances. The weighted average number of securities outstanding is calculated in accordance with the CPA Canada Handbook, as such may be amended or superseded from time to time.

(2) The burn rate is calculated by dividing the number of Options or DSUs/RSUs (as applicable) granted during the applicable fiscal year by the weighted average number of securities outstanding for the applicable fiscal year.

STATEMENT OF CORPORATE GOVERNANCE PRACTICES

The Corporation recognizes the importance of corporate governance to the effective management of the Corporation and to the protection of the employees and shareholders. The Corporation’s approach to significant issues of corporate governance is designed with a view to ensuring that the business and affairs of the Corporation are effectively managed so as to enhance shareholder value.

National Instrument 58-101 – Disclosure of Corporate Governance Practices (“NI 58-101”) requires issuers to disclose certain corporate governance practices they have adopted. As required by NI 58-101 and other applicable regulatory instruments, the following disclosure describes the Corporation’s corporate governance policies and initiatives.

Board of Directors

Meetings of the Board

The Board fulfills its mandate at regularly scheduled meetings or as required. The directors are kept informed of the Corporation’s operations at these meetings as well as through information provided by management at other times during the year. The frequency of the meetings and the nature of the meeting agendas are dependent upon the nature of the business and affairs which the Corporation faces from time to time.

At each meeting of the Board, the independent directors of the Corporation are encouraged to, in their discretion, meet in the absence of management and non-independent directors to hold an open and candid discussion.

Directors are expected to attend all meetings of the Board and the committees upon which they serve and to come to such meetings fully prepared (including having conducted a full review of all documentation sent prior to the meeting).

Prior to each Board meeting, the Chairman of the Board, Sheldon Pollack, shall discuss the agenda items for the meeting with the Chief Executive Officer, and circulate an agenda and materials for the meeting to the Board.

Independence

Pursuant to NI 52-110, an independent director is one who is free from any direct or indirect relationship which could, in the view of the Board, be reasonably expected to interfere with a director’s independent judgement.

The Board has considered the relationship of each of the directors to the Corporation and has determined that all of the director Nominees are independent within the meaning of NI 52-110, other than Mr. Hayek, Chief Executive Officer of the Corporation.

34

The Corporation has also taken steps to ensure that adequate structures and processes are in place to permit the Board to function independently of management and, if deemed appropriate, additional independent committees may be appointed from time to time.

Directorships

No directors of the Corporation serve together as directors on the boards of other public companies. The following table sets out each director’s current directorship(s) with any other reporting issuer (or the equivalent of a reporting issuer):

Director Reporting Issuer

Roger Dent:

Quinsam Capital Corporation
California Nanotechnologies Corp.
Omni-Lite Industries Canada, Inc.
VitalHub Corp.
Deveron UAS Corp.

Sheldon Pollack:

OV2 Investment 1 Inc.

Exelerate Capital Corp

Elisabeth Donohue:

NRG Energy, Inc.

Board Mandate

The Board is responsible for representing the shareholders of the Corporation, enhancing and maximizing shareholder value and conducting the business and affairs of the Corporation ethically and in accordance with the highest standards of corporate governance. The Board has adopted the written mandate set forth in Schedule A, which describes the duties and responsibilities of the Board in the following areas:

• delegations and approvals of authority;

• strategic planning and risk management;

• corporate ethics and integrity;

• appointment and supervision of management and, as appropriate, succession planning;

• monitoring of financial reporting and management;

• corporate disclosure and communications;

• corporate policies; and

• review of its mandate.

35

Position Descriptions

Our Board has adopted a written position description for the chair of the Board. The written position description sets out the chair of the Board’s key responsibilities, including, among others, duties related to:

• establishing procedures to govern the Board’s work and ensuring the Board’s full discharge of its duties;

• chairing Board meetings and meetings of shareholders;

• identifying guidelines for the selection of, and evaluation of conduct of, the directors;

• liaising between the Board and management; and

• carrying out duties as requested by the Board as a whole.

Our Board has adopted a written position description for each of our committee chairs which sets out each of the committee chair’s key responsibilities, including, among others, duties relating to setting committee meeting agendas, chairing committee meetings and working with the respective committee and management to ensure, to the greatest extent possible, the effective functioning of the committee.

Our Board has adopted a written position description for our Chief Executive Officer which sets out the key responsibilities of our Chief Executive Officer, including, among other duties in relation to providing overall leadership, strategic planning and business and organizational management.

Orientation and Continuing Education

Through the CCG Committee, new directors will be provided with an orientation and education program regarding the business and operations of the Corporation, and will have opportunities to set up meetings and discussions with senior management and other Board members. New directors will also be provided with written information about the duties and obligations of Board members and will receive documents from recent meetings. The Corporation will tailor the orientation of each new Board member to that Board member’s individual needs and areas of interest.

Board members are encouraged to communicate with management and auditors, to keep themselves current with industry trends and developments and changes in legislation with management’s assistance and to attend related industry seminars.

Ethical Business Conduct

In fulfilling its mandate and approving various decisions put forth by management, the Board ensures that the measures taken by management comply with Canadian securities regulations and other applicable legislation. Members of the Board are aware of their fiduciary duties in their capacity as directors, which are set out in the CBCA. In exercising their powers and discharging their duties, members of the Board are required to act honestly and in good faith with a view to the best interests of the Corporation, and to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

The Board has adopted a written code of ethics entitled the “Code of Business Conduct and Conflict of Interest Policy” (the “Business Code”), which applies to all employees, contractors, consultants and agents of the Corporation. The purpose of the Business Code is to, among other things, ensure that the Corporation, and all of its employees, contractors, consultants and agents, adhere to the highest ethical standards in all of its business activities. A copy of the Business Code is available on request from the Corporation.

36

The Audit Committee is responsible for compliance issues relating to the Business Code, and the Corporation’s Whistle Blowing Policy (described below) contains the procedures by which an individual can report actual or potential violations of the Business Code to the Corporate Secretary or the Audit Committee. The Business Code provides that any violations of the Business Code by any employee may be grounds for disciplinary action including termination. Pursuant to the Business Code, employees, contractors, consultants and agents of the Corporation are required to disclose to the Corporation any possible conflicts of interest and obtain approval to pursue such interest. The fiduciary duties placed on individual directors pursuant to corporate legislation and the common law, and the conflict of interest provisions under corporate legislation which restrict an individual director’s participation in decisions of the Board in which the director has an interest, ensure that the Board operates independently of management and in the best interests of the Corporation.

Nomination of Directors

Directors serve one-year terms and are elected at each annual meeting of shareholders. The Board is responsible for identifying nominees who it believes have the competencies and skills to facilitate effective decision making. The Chair and Chief Executive Officer are consulted and have input in the nomination process. There is no retirement policy for directors.

Compensation

Through the CCG Committee, the Board reviews the compensation of directors to ensure that the compensation of directors realistically reflects the responsibilities and risks involved in being an effective director. The Board also reviews the compensation of the Chief Executive Officer and Chief Financial Officer to ensure that it is competitive within the industry and that the form of compensation aligns the interests of such officers with those of the Corporation. When making determinations of the Chief Executive Officer’s compensation level, the CCG Committee will evaluate the Chief Executive Officer’s performance against the Corporation’s corporate goals and objectives.

The Corporation has engaged Meridian Compensation Partners, LLC as an independent compensation consultant to the Corporation and the Corporation has implemented the Share Ownership Policy in which each director is required to own shares (or share equivalents, such as DSUs) with a market value equal to three times the annual compensation of such director. Please see “Compensation Governance” for additional information.

Assessments

The Board, its committees and its individual directors are assessed at least annually as to their effectiveness and contribution. The Board reviews recommendations from the CCG Committee, assesses the skills and abilities of each existing director and considers and identifies additional skills and abilities that may be required in order to improve the efficiency and competency of the Board.

Director Term Limits and Other Mechanisms of Board Renewal

The Board believes that the need to have experienced directors who are familiar with the business of the Corporation must be balanced with the need for renewal, fresh perspectives and a healthy skepticism when assessing management and its recommendations.

37

The Board has not adopted director term limits or other mechanisms of board renewal because:

• after considering the director profile at the Corporation, the Board determined that a term limit was not appropriate in the context of the Corporation;

• the Corporation has found that having long standing directors on its Board does not negatively impact board effectiveness, and instead contributes to boardroom dynamics such that the Corporation has for many years had a consistently high performing Board;

• the implementation of director term limits is problematic, as it is an inappropriate and unproven method of encouraging board effectiveness;

• the imposition of director term limits on a board implicitly discounts the value of experience and continuity amongst board members and runs the risk of excluding experienced and potentially valuable board members as a result of an arbitrary determination;

• the impositions of rigid, prescribed term limits on the tenure of directors implies that boards cannot properly govern themselves, by usurping core functions of the board and replacing them with fixed criteria that may not adequately represent the interests of shareholders;

• it is important to retain directors who hold significant investments in the Corporation;

• it is important to ensure that directors with significant and unique business experience in the Corporation’s industry be retained; and

• that directors with the level of understanding of the Corporation’s business, history and culture acquired through long service on the Board provide additional value.

Policies Regarding Representation of Designated Groups on the Board

The Corporation has not adopted a written policy relating to the identification and nomination of women, Aboriginal peoples, persons with disabilities and members of visible minorities (collectively, “Designated Groups”) as directors to the Corporation’s Board.

The Corporation has not adopted such a policy, written or otherwise, because the Board generally considers diversity of race, ethnicity, gender, age, national origin, Aboriginal status, disability, sexual orientation, visible minority status, cultural background, professional experience and other factors in evaluating candidates for board membership. While the Corporation does not have a specific policy, we consider diversity of race, ethnicity, gender, age, national origin, Aboriginal status, disability, sexual orientation, visible minority status, cultural background, professional experience and other factors in evaluating candidates for board membership.

Consideration of the Representation of Designated Groups in the Director Identification and Selection Process

In considering the level of representation of Designated Groups on the Board, the CCG Committee takes into account the following factors:

• the competencies and skills the Board, as a whole, should possess;

• the competencies, skills and personal and other diverse qualities the existing directors possess;

38

• the competencies, skills and personal and other diverse qualities required for new directors in order to add value to the Corporation in light of opportunities and risks facing the Corporation; and

• the size of the Board, with a view to facilitating effective decision-making.

Selection of candidates to the board from Designated Groups will be, in part, dependent upon the pool of such candidates with the necessary skills, knowledge and experience. The ultimate decision will be based on merit and contribution the chosen candidate will bring to the Board.

Consideration of the Representation of Designated Groups in Executive Officer Appointments

In considering the level of representation of members of Designated Groups in executive officer positions, the Corporation takes into account the following factors:

• the competencies and skills the executive team, as a whole, should possess;

• the competencies, skills and personal and other diverse qualities the existing executive officers possess; and

• the competencies, skills and personal and other diverse qualities required for new executive officers in order to add value to the Corporation in light of opportunities and risks facing the Corporation.

Issuer’s Targets Regarding the Representation of Designated Groups on the Board and in Executive Officer Positions

Board of Directors

The Corporation has not adopted a target for Designated Groups on the Board because the Corporation does not believe that any director nominee should be chosen nor excluded solely or largely because of diversity of race, ethnicity, gender, age, national origin, Aboriginal status, disability, sexual orientation, visible minority status or cultural background. In selecting a director nominee, the CCG Committee focuses on skills, expertise and background that would complement the existing board.

Directors will be recruited based on their ability and contributions.

Executive Officers

The Corporation has not adopted a target for Designated Groups in executive officer positions because the Corporation does not believe that any candidate for an executive officer position should be chosen nor excluded solely or largely because of diversity of race, ethnicity, gender, age, national origin, Aboriginal status, disability, sexual orientation, visible minority status or cultural background. In selecting candidates, the Corporation considers the skills, expertise and background that would complement the existing management team.

Executive officers will be recruited based on their ability and contributions.

Number of Members of Designated Groups on the Board and in Executive Officer Positions

The following table outlines the number and proportion, expressed as a percentage, of members of each Designated Group who hold positions on the Corporation’s Board and as executive officers, including all of the Corporation’s major subsidiaries (as that term is defined in National Instrument 55-104 – Insider Reporting Requirements and Reporting Exemptions and the Canada Business Corporations Regulations, 2001) as at December 31, 2020. The information in the following table is based on a survey of the Corporation’s Board and executive officers conducted by the Corporation on an anonymous and voluntary basis.

39

	Directors					Executive Officers
	Number		Proportion			Number		Proportion
Women		0		0	%		1		20	%
Aboriginal peoples		0		0	%		0		0	%
Persons with disabilities		0		0	%		0		0	%
Members of visible minorities		0		0	%		0		0	%

On March 26, 2021, the Corporation announced that it had been included on the 2021 Report on Business Women Lead Here list, an annual editorial benchmark to identify best-in-class executive gender diversity in corporate Canada. As at December 31, 2020, women comprise 20% of NEO and executive positions and 50% of executive vice-president or vice-president positions of the Corporation. In aggregate, women comprise 31% of all corporate leadership positions, all of whom are instrumental in the growth of the Corporation. For additional information, please refer to the news release dated March 26, 2021, which is available on the Corporation’s SEDAR profile at www.sedar.com.

Audit Committee

Detailed information about the Corporation’s Audit Committee, including the mandate of the Audit Committee and a copy of its charter, can be found in the Corporation’s Annual Information Form for the year ended December 31, 2020 on SEDAR at www.sedar.com under the heading “Audit Committee”.

Compensation and Corporate Governance Committee

The CCG Committee is charged with reviewing, overseeing and evaluating the nominating policies and the compensation policies of the Corporation. In particular, the CCG Committee is responsible for: (i) reviewing and making recommendations to the Board concerning any change in the size of the Board or its composition, including the candidate selection process and orientation of new members of the Board; (ii) establishing procedures to allow the directors of the Corporation to function independently of management; (iii) appointing and compensating officers and approving succession plans for officers; and (iv) overseeing any compensation or benefit plans of the Corporation.

The CCG Committee is also responsible for the governance practices of the Corporation. To discharge this duty, the CCG Committee, among other things: (i) reviews and recommends to the Board annually a statement of corporate governance practices; (ii) evaluates the competencies and skills that the Board considers integral to the Corporation and the Board, as a whole; (iii) reviews annually the CCG Committee’s mandate and terms of reference; (iv) establishes, reviews and updates the Business Code; and (v) ensures that management properly monitors the Corporation’s compliance with the Business Code.

Other Committees

During the year-ended December 31, 2020, the Corporation established (i) a health and wellness committee (the “Health and Wellness Committee”) and (ii) a diversity committee (the “Diversity Committee”). The Health and Wellness Committee is tasked with assessing, planning, and implementing activities and programs that promote mental and physical wellbeing within the Corporation. The Diversity Committee is mandated with assessing the Corporation’s approach to equity, diversity and inclusion in the workplace. The Corporation established the Health and Wellness Committee and Diversity Committee to create a targeted and focused approach to health, wellness and diversity initiatives within the firm, with the goal of furthering such initiatives in the coming years.

40

Other Governance Policies

Communication and Disclosure Policy

The Board has adopted a disclosure policy (the “Disclosure Policy”) to ensure, among other things: (i) that the Corporation complies with the requirement to disclose material information under applicable laws and TSX rules; (i) that the Corporation prevents the selective disclosure of material changes; (iii) that the disclosure of material information respecting the business and affairs of the Corporation be timely, factual and accurate; (iv) that all communications are broadly disseminated in accordance with all applicable legal and regulatory requirements; and (v) that persons to whom the policy applies understand their obligations to preserve the confidentiality of undisclosed material information. The Disclosure Policy applies to all employees, Board members, officers, consultants, advisors, and insiders of the Corporation, as well as any other person authorized to act as a spokesperson of the Corporation. The Disclosure Policy provides that any violations of the Disclosure Policy by any employee may be grounds for disciplinary action including termination.

Securities Trading and Confidentiality of Information Policy

The Board has adopted an insider trading policy (the “Trading Policy”) to maintain the confidentiality of material non-public information and ensure strict compliance by all insiders with all requirements relating to the reporting of insider trading and with respect to trading when in possession of material non-disclosed information. The Trading Policy applies to all of the Board members and the officers of the Corporation and its subsidiaries or affiliates (“Restricted Persons”) and provides that Restricted Persons who come into possession of material non-public information concerning the Corporation must not intentionally or inadvertently communicate that information to any person unless the person has a need to know the information for legitimate, business-related reasons.

The Trading Policy also applies to employees of the Corporation as it prohibits the communication of confidential information, except where such communication is necessary in the course of business. Employees who are unsure whether a particular disclosure qualifies as in the necessary course of business should discuss such disclosure with the Chief Executive Officer or Chief Financial Officer of the Corporation. Any violations of the Trading Policy may also violate certain securities laws.

Whistle Blowing Policy

The Board has adopted a whistle blowing policy (the “Whistle Blowing Policy”) which establishes procedures for: (i) the receipt and treatment of complaints received by the Corporation regarding financial statement disclosures, accounting, internal accounting controls, or auditing matters; and (ii) the submission by employees of the Corporation, on a confidential or anonymous basis, of concerns regarding questionable financial statement disclosures, accounting, internal accounting, or auditing matters.

Following the receipt of any complaints submitted under the Whistle Blowing Policy, the Corporate Secretary or the Audit Committee will investigate each matter so reported and take corrective and disciplinary actions as necessary. The Audit Committee may enlist employees, or outside legal, accounting, or other advisors, as appropriate, to conduct any investigation of complaints regarding financial statement disclosures, accounting, international accounting controls, or auditing matters.

41

OTHER INFORMATION

Indebtedness of Directors and Executive Officers

Other than as set out below, no individual who is, or at any time during the most recently completed fiscal year of the Corporation was, a director or executive officer of the Corporation, nor any proposed nominee for election as a director of the Corporation, nor any associate of any of the foregoing is, or at any time since the beginning of the most recently completed fiscal year of the Corporation has been, indebted to the Corporation or any of its subsidiaries or was indebted to another entity, which such indebtedness is, or at any time since the beginning of the most recently completed fiscal year of the Corporation was, the subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding provided by the Corporation or any of its subsidiaries.

The following table outlines the aggregate indebtedness of all executive officers, directors, employees and former executive officers, directors and employees of the Corporation or any of its subsidiaries outstanding as at May 13, 2021 entered into in connection with (a) a purchase of securities and (b) all other indebtedness:

AGGREGATE INDEBTEDNESS ($)
Purpose	To the Corporation or its Subsidiaries		To Another Entity
(a)	(b)		(c)
Share Purchases	$	0	$	0
Other	$	0	$	0

During the year ended December 31, 2019, the Corporation issued to each of Tal Hayek (Co-Founder, Chief Executive Officer and a Director of the Corporation), Rachel Kapcan (Co-Founder and Vice-President of Client Operations) and Joe Ontman (Co-Founder and Chief Business Development Officer) an unsecured, non-interest bearing loan of $60,000. Each non-interest bearing loan was repaid in full on September 30, 2020. Additional details respecting such indebtedness are set out in the following table:

INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS UNDER (1) SECURITIES PURCHASE AND (2) OTHER PROGRAMS
Name and Principal Position	Involvement of Corporation or Subsidiary	Largest Amount Outstanding During year ended December 31, 2020 ($)		Amount Outstanding as at the date of this Circular ($)	Financially Assisted Securities Purchases During year ended December  31, 2020 (#)	Security for Indebtedness	Amount Forgiven During year ended December 31, 2020 ($)
(a)	(b)	(c)		(d)	(e)	(f)	(g)
Securities Purchase Programs
N/A	N/A		N/A	N/A	N/A	N/A		N/A
Other Programs
Tal Hayek	Nil		60,000	Nil	Nil	Nil		Nil
Rachel Kapcan	Nil		60,000	Nil	Nil	Nil		Nil
Nathan Mekuz	Nil		Nil	Nil	Nil	Nil		Nil
Joe Ontman	Nil		60,000	Nil	Nil	Nil		Nil

42

Interest of Informed Persons in Material Transactions

Other than as disclosed below, the Corporation’s management is not aware of any material interest, direct or indirect, of any informed person of the Corporation, any proposed director of the Corporation, or any associate or affiliate of any informed person or proposed director, in any transaction since the commencement of the Corporation’s most recently completed financial year or in any proposed transaction which has materially affected or would materially affect AcuityAds or any of its subsidiaries.

On June 15, 2018, the Corporation closed a $7,263,000 subordinated term loan (the “2018 Term Loan”) from a group of private lenders (the “2018 Term Loan Lenders”). The 2018 Term Loan was made pursuant to a credit agreement dated as of June 15, 2018, as amended March 21, 2019, between a subsidiary of the Corporation, Cancor Debt Agency (as collateral agent) and the 2018 Term Loan Lenders (including the following executives and directors of the Corporation: Sheldon Pollack, (Director and Chairman of the Board), Tal Hayek (Co-Founder, Chief Executive Officer and a Director of the Corporation), Rachel Kapcan (Co-Founder and Vice-President of Client Operations), Nathan Mekuz (Co-Founder and Vice-President of Artificial Intelligence), Joe Ontman (Co-Founder and Chief Business Development Officer), Igal Mayer (Director), Jonathan Pollack (Chief Financial Officer) and Roger Dent (Director)). The Corporation used the funds from the 2018 Term Loan to complete the acquisition of ADman Media (approximately $2,700,000), repay approximately $800,000 of existing higher-cost term loans and for general corporate purposes including funding continued growth. The 2018 Term Loan (as amended) had a term of three years and accrued interest at a rate of 12.0% per annum. The 2018 Term Loan Lenders were issued an aggregate of 2,420,990 warrants (the “June 2018 Warrants”) as bonus warrants in connection with the 2018 Term Loan. Each June 2018 Warrant entitles the lender to acquire one Common Share for a period of two years at an exercise price of $1.01, which represents the closing price of the Common Shares on June 14, 2018. The Corporation also agreed to pay a nominal fee to two eligible finders assisting in the 2018 Term Loan.

On April 14, 2020, the Corporation entered into a US $21,850,000 credit facility with Silicon Valley Bank, with approximately $5.3 million of such proceeds being used to repay the 2018 Term Loan. In connection with the repayment of the 2018 Term Loan, the executives and directors of the Corporation listed in the above paragraph collectively received repayments of the debt they held in the aggregate amount of $1,372,244.

On December 4, 2020, the Corporation and certain of its shareholders completed a short form prospectus bought deal offering comprised of 1,968,000 common shares issued from treasury and offered by the Corporation for gross proceeds to the Corporation of approximately $12 million and 1,804,000 common shares offered by certain of AcuityAds’ shareholders, namely 2794606 Ontario Ltd. and OV2 Capital Inc., for gross proceeds to those selling shareholders of approximately $11 million. 2794606 Ontario Ltd. is an entity owned by Tal Hayek (Co-Founder, Chief Executive Officer and a director of the Corporation), Rachel Kapcan (Co-Founder and VP of Client Operations), and Joe Ontman (Co-Founder and Chief Business Development Officer) and OV2 Capital Inc. is an entity controlled or directed by Sheldon Pollack (Director and Chairman of the Board). For additional information, please refer to the news release dated December 4, 2020, which is available on the Corporation’s SEDAR profile at www.sedar.com.

43

SHAREHOLDER PROPOSALS

A shareholder intending to submit a proposal at the Corporation’s next annual meeting of shareholders must comply with the applicable provisions of the CBCA. The Corporation will include a shareholder proposal in the management information circular prepared for such annual meeting of shareholders provided such proposal is received by the Corporation at its head office on or before March 12, 2022 and provided such proposal is required by the CBCA to be included in the Corporation’s management information circular.

ADDITIONAL INFORMATION

Additional information, including financial information, which is provided in the Corporation’s audited consolidated comparative annual financial statements and management’s discussion and analysis for the financial year ended December 31, 2020, can be found on SEDAR at www.sedar.com. Shareholders may also contact us by telephone at 416-218-9888 or by mail at the address shown on the Corporations’ SEDAR profile at www.sedar.com to request copies of these documents free of charge.

DIRECTORS’ APPROVAL

The contents of this management information circular and the sending thereof to each director, to each shareholder of the Corporation whose proxy has been solicited and the auditors of the Corporation have been approved by the Board.

BY ORDER OF THE BOARD OF DIRECTORS

“Tal Hayek” (signed)

Chief Executive Officer and Director

May 13, 2021

Toronto, Ontario

44

SCHEDULE A -

BOARD MANDATE

See attached.

A-1

MANDATE OF THE BOARD OF DIRECTORS

1.0 Introduction

The board of directors (the “Board”) of AcuityAds Holdings Inc. (“Company”) is elected by the shareholders of Company and is responsible for the stewardship of Company. The purpose of this mandate is to describe the principal duties and responsibilities of the Board, as well as some of the policies and procedures that apply to the Board in discharging its duties and responsibilities.

2.0 Chairperson of the Board

The chairperson of the Board (“Chairperson”) will be appointed by the Board, after considering the recommendation of the Compensation and Corporate Governance Committee, for such term as the Board may determine.

3.0 Independence

The Board will be comprised of a majority of independent directors. Where the Chairperson is not independent, the independent directors will select one of their number to be appointed lead director of the Board for such term as the independent directors may determine. If Company has a non-executive, independent Chairperson, then the role of the lead director will be filled by the non-executive Chairperson. The lead director or non-executive Chairperson will chair regular meetings of the independent directors and assume other responsibilities that the independent directors as a whole have designated.

4.0 Role and Responsibilities of the Board

The role of the Board is to represent the shareholders of Company, enhance and maximize shareholder value and conduct the business and affairs of Company ethically and in accordance with the highest standards of corporate governance. The responsibilities of the Board include:

• strategic planning;

• understanding and monitoring the political, cultural, legal and business environments in which Company operates;

• ensuring that procedures are in place for the management of risks identified with management;

• review and approve annual operating plans and budgets;

• corporate ethics and integrity;

• the appointment and supervision of management and, as appropriate, succession planning;

• delegations and general approval guidelines for management;

• monitoring financial reporting and management;

• monitoring internal control and management information systems;

• corporate disclosure and communications;

• adopting measures for receiving feedback from stakeholders; and

A-2

• adopting key corporate policies designed to ensure that Company, its directors, officers and employees comply with all applicable laws, rules and regulations and conduct their business ethically and with honesty and integrity.

Meetings of the Board will be held at least quarterly, with additional meetings to be held depending on the state of Company’s affairs and in light of opportunities or risks which Company faces. In addition, separate, regularly scheduled meetings of the independent directors of the Board will be held at which members of management are not present.

5.0 Delegations and Approval Authorities

The Board will delegate to the Chief Executive Officer and senior management authority over the day-to- day management of the business and affairs of Company. This delegation of authority may be subject to specified financial limits and any transactions or arrangements in excess of general authority guidelines will be reviewed by and subject to the prior approval of the Board. The Board may delegate certain matters it is responsible for to Board committees, presently consisting of the Audit Committee and the Compensation and Corporate Governance Committee.

6.0 Strategic Planning Process and Risk Management

The Board is responsible for strategic planning regarding the establishment of objectives and goals for Company’s business and the review, approval and modification as appropriate of the strategies proposed by senior management to achieve such objectives and goals. The Board will review and approve an annual plan which takes into account, among other things, the opportunities and risks of Company’s business and affairs.

The Board, in conjunction with management, shall be responsible to identify the principal risks of Company’s business and oversee management’s implementation of appropriate systems to effectively monitor, manage and mitigate the impact of such risks.

7.0 Ethics and Integrity

The Board will set the ethical tone for Company and its management and foster ethical and responsible decision making by management. The Board will take all reasonable steps to satisfy itself of the integrity of the Chief Executive Officer and management and satisfy itself that the Chief Executive Officer and management create a culture of integrity throughout the organization.

8.0 Succession Planning, Appointment and Supervision of Management

The Board will approve the succession plan for the Company, including the selection, appointment, supervision and evaluation of the Chief Executive Officer and the other senior officers of the Company, and will also approve the compensation of the Chief Executive Officer and the other senior officers of Company upon recommendation of the Compensation and Corporate Governance Committee.

9.0 Monitoring of Financial Reporting and Management

The Board will approve all regulatory filings, including the annual audited financial statements, interim financial statements, the notes and management discussion and analysis accompanying such financial statements, quarterly and annual reports, management proxy circulars, annual information forms, prospectuses, and all equity financings, borrowings and all annual operating plans and budgets.

A-3

The Board will adopt procedures that seek to ensure: the integrity of internal controls and management information systems; compliance with all applicable laws, rules and regulations; and prevention of violations of applicable laws, rules and regulations relating to financial reporting and disclosure, violation of Company’s code of business conduct and ethics and fraud.

10.0 Corporate Disclosure and Communications

The Board will seek to ensure that corporate disclosure of the Company complies with all applicable laws, rules and regulations and the rules and regulations of the stock exchanges upon which Company’s securities are listed. In addition, the Board will adopt procedures that seek to ensure the Board receives feedback from security holders on material issues.

11.0 Corporate Policies

The Board will adopt and review policies and procedures designed to ensure that Company, its directors, officers and employees comply with all applicable laws, rules and regulations and conduct Company’s business ethically and with honesty and integrity. Principal policies consist of:

• Code of Business Conduct and Conflict of Interest Policy;

• Securities Trading and Confidentiality of Information Policy;

• Whistleblower Protection Policy;

• Majority Voting Policy;

• Disclosure Controls and Procedures; and

• Internal Controls Over Financial Reporting.

12.0 Review of Mandate

The Compensation and Corporate Governance Committee will periodically review and assess the adequacy of this mandate and recommend any proposed changes to the Board for consideration.

The Board may, from time to time, permit departures from the terms hereof, either prospectively or retrospectively, and no provision contained herein is intended to give rise to civil liability to securityholders of the Company or other liability whatsoever.

Dated: May 10, 2021

Approved by: Board of Directors

A-4

EX-5.1

Exhibit 5.1

Consent of Independent Auditor’s Report

We hereby consent to the incorporation by reference in the Registration Statement on Form F-10 of AcuityAds Holdings Inc. of our report dated March 1, 2021 relating to the consolidated financial statements, which is filed as Exhibit 4.2 to this Registration Statement.

We also consent to reference to us under the heading “Interests of Experts,” which appears in the Annual Information Form  incorporated by reference in this registration statement on Form F-10. We also consent to the reference to us as experts under the heading “Auditors, Registrar and Transfer Agent” in such Registration Statement.

/s/ PricewaterhouseCoopers LLP

Chartered Professional Accountants, Licensed Public Accountants
Toronto, Canada
June 8, 2021

PricewaterhouseCoopers LLP

PwC Tower, 18 York Street, Suite 2600, Toronto, Ontario, Canada M5J 0B2

T: +1 416 863 1133, F: +1 416 365 8215, www.pwc.com/ca

“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.

EX-24.1

Exhibit 24.1

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each individual whose signature appears below hereby constitutes and appoints Tal Hayek and Jonathan Pollack his or her true and lawful agent, proxy and attorney-in-fact, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign and execute (i) a Registration Statement on Form F-10 (the “Registration Statement”) with respect to the registration under the Securities Act of 1933, as amended (the “Securities Act”), of common shares of AcuityAds Holdings Inc. (the “Registrant”) and (ii) any and all amendments, including post-effective amendments, supplements to the Registration Statement, and registration statements filed pursuant to Rule 429 under the Securities Act, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

This Power of Attorney may be executed in multiple counterparts (including facsimile and other electronically transmitted counterparts), each of which will be deemed an original with respect to the person executing it.

Signature	Title	Date
	Chief Executive Officer and Director (Principal Executive Officer)
Tal Hayek		June 8, 2021
	Chief Financial Officer (Principal Financial and Accounting Officer)
Jonathan Pollack		June 8, 2021
/s/ Sheldon Pollack	Director and Chairman of the Board of Directors	June 8, 2021
Sheldon Pollack
/s/ Igal Mayer	Director	June 8, 2021
Igal Mayer
/s/ Joe Ontman	Director	June 8, 2021
Joe Ontman
/s/ Roger Dent	Director	June 8, 2021
Roger Dent
/s/ Yishay Waxman	Director	June 8, 2021
Yishay Waxman
/s/ Corey Ferengul	Director	June 8, 2021
Corey Ferengul