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
illuminTM, 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 illuminTM, 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