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.


 






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“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.


 



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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.


 






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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
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. 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.


 






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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.



 






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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.


 






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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.


 






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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.



 






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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”.


 






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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.


 



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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.


 






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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	 




 






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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.


 






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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.


 



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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.


 



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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”.


 



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