# EDGAR Filing Document

**Accession Number:** 0001861233
**File Stem:** 0001171843-23-001562
**Filing Date:** 2023-3
**Character Count:** 387383
**Document Hash:** 6e7f0cc8389317084c9c5d65c4b974b2
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001171843-23-001562.hdr.sgml**: 20230309

**ACCESSION NUMBER**: 0001171843-23-001562

**CONFORMED SUBMISSION TYPE**: 40-F

**PUBLIC DOCUMENT COUNT**: 98

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230309

**DATE AS OF CHANGE**: 20230309

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** AcuityAds Holdings Inc.
- **CENTRAL INDEX KEY:** 0001861233
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374]
- **IRS NUMBER:** 000000000
- **STATE OF INCORPORATION:** Z4
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 40-F
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-40469
- **FILM NUMBER:** 23720525

**BUSINESS ADDRESS:**
- **STREET 1:** 70 UNIVERSITY AVE.
- **STREET 2:** SUITE 1200
- **CITY:** TORONTO
- **STATE:** A6
- **ZIP:** M5J 2M4
- **BUSINESS PHONE:** 416-218-9888

**MAIL ADDRESS:**
- **STREET 1:** 70 UNIVERSITY AVE.
- **STREET 2:** SUITE 1200
- **CITY:** TORONTO
- **STATE:** A6
- **ZIP:** M5J 2M4

aty20221231_10k.htm

**UNITED STATES**

 **SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549** 

**FORM **40-F**<br>

**[Check one]**

☐ **REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934**

**OR**

☒ **ANNUAL REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

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| | |
|:---|:---|
| **For the fiscal year ended **December 31, 2022** | **Commission File Number **001-40469** |

---

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| |
|:---|
| **AcuityAds Holdings Inc.** |
| (Exact name of Registrant as specified in its charter) |

---

**Not Applicable**

(Translation of Registrant's name into English (if applicable))

**Ontario, Canada**

(Province or other jurisdiction of incorporation or organization)

**7372**

(Primary Standard Industrial Classification Code Number (if applicable))

**Not Applicable**

(I.R.S. Employer Identification Number (if applicable))

**70 University Ave., Suite 1200**<br> **Toronto, **Ontario**, **Canada**<br> **M5J 2M4**<br>

**(**416**) **218-9888**

(Address and telephone number of Registrant's principal executive offices)

**CT Corporation System**

**28 Liberty St.**

**New York, NY 10005**

**(212) 894-8940**

(Name, address (including zip code) and telephone number (including area code)

of agent for service in the United States)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

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| | | |
|:---|:---|:---|
| **Title of each class** | **Trading Symbol(s)** | **Name of each exchange on which registered** |
| Common Shares | ATY | The Nasdaq Stock Market LLC |

---

Securities registered or to be registered pursuant to Section 12(g) of the Act:

**Not Applicable**

(Title of Class)

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Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

**Not Applicable**

(Title of Class)

For annual reports, indicate by check mark the information filed with this Form:

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| | |
|:---|:---|
| **☒ Annual information form** | **☒ Audited annual financial statements** |

---

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report.

**56,808,921 Common Shares outstanding as of December 31, 2022**

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☒ Yes ☐ No

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 12b-2 of the Exchange Act.<br> Emerging growth company ☒<br>

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

† The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Auditor: PricewaterhouseCoopers LLP Location: Toronto, Canada ID: 271

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐

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**PRINCIPAL DOCUMENTS**

The following documents have been filed as part of this Annual Report:

1. Annual Information Form for the year ended December 31, 2022 (the "2022 AIF") (filed as Exhibit 99.1 hereto);

2. Audited Consolidated Financial Statements for the years ended December 31, 2022 and 2021, including the Report of Independent Registered Public Accounting Firm with respect thereto (the "Audited Annual Financial Statements") (filed as Exhibit 99.2 hereto); and

3. Management's Discussion and Analysis of Financial Condition and Results of Operations for the three and twelve months ended December 31, 2022 (the "2022 MD&A") (filed as Exhibit 99.3 hereto).

**DISCLOSURE CONTROLS AND PROCEDURES**

A. **Certifications**

The required disclosure is included in Exhibits 99.5, 99.6 and 99.7 to this Annual Report, and is incorporated herein by reference.

B. **Disclosure Controls and Procedures**

Management of the Registrant, under the supervision of the Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act"), for the Registrant to ensure that material information relating to the Registrant, including its consolidated subsidiaries, that is required to be made known to the Chief Executive Officer and Chief Financial Officer by others within the Registrant and disclosed by the Registrant in reports filed or submitted by it under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the rules and forms of the U.S. Securities and Exchange Commission (the "Commission") and (ii) accumulated and communicated to the Registrant's management, including its Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. Management, including the Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the Registrant's disclosure controls and procedures as of December 31, 2022 and have concluded that, because of the weakness in the Registrant's internal control over financial reporting described below, the Registrant's disclosure controls and procedures were not effective as of December 31, 2022.

C. **Management**'**s Annual Report on Internal Control over Financial Reporting**

Management of the Registrant, under the supervision of the Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining an adequate system of "internal control over financial reporting" as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. Management, including the Chief Executive Officer and the Chief Financial Officer, have assessed the effectiveness of the Registrant's internal control over financial reporting in accordance with Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on this assessment, management, including the Chief Executive Officer and the Chief Financial Officer, have determined that the Registrant's internal control over financial reporting was not effective as of December 31, 2022.

As of December 31, 2022, management of the Registrant, including the Chief Executive Officer and the Chief Financial Officer, determined a material weakness existed in the internal control over financial reporting in the design and implementation of the oversight processes related to the appropriate calculation of share-based compensation expense and the subsequent classification of exercised options between Share Capital and Contributed Surplus. The expense error overstated prior year expense, which led to a restatement of the 2021 Consolidated Statement of Comprehensive Income (Loss) and a further adjustment for the year ended December 31, 2022. The improper classification within Shareholders' Equity resulted in an overstatement of Contributed Surplus and an understatement of Share Capital. Management determined that there was a deficiency in the adequacy of the review of the process as well as having individuals with the requisite technical accounting knowledge preparing the journal entries.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Registrant's annual or interim financial statements may not be prevented or detected on a timely basis. As a result of the material weakness determination, management has begun to take steps to remediate the material weakness including the hiring of an individual with the requisite technical accounting knowledge. Management is taking further steps to correct the amortization calculation with the system vendor to the appropriate method and adopted a review methodology that reconciles system outputs back to source data as part of the period-end financial reporting process.

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D. **Attestation Report of the Independent Registered Public Accounting Firm**

This Annual Report does not include an attestation report of the Registrant's Independent Registered Public Accounting Firm, PricewaterhouseCoopers LLP (PCAOB ID 271), regarding the Registrant's internal control over financial reporting due to Registrant's status as an emerging growth company.

E. **Changes in Internal Control over Financial Reporting**

Management has concluded that, except as otherwise described above, there were no changes to the Registrant's internal control over financial reporting for the year ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting.

**IDENTIFICATION OF THE AUDIT COMMITTEE**

The Board of Directors (the "Board") of AcuityAds Holdings Inc. ("AcuityAds" or the "Company") has a separately-designated standing Audit Committee established in accordance with section 3(a)(58)(A) of the Exchange Act. The members of the Audit Committee are Igal Mayer, Roger Dent, Sheldon Pollack and Yishay Waxman.

**AUDIT COMMITTEE FINANCIAL EXPERT**

The Board has determined that it has at least one "audit committee financial expert" (as such term is defined in paragraph 8(b) of General Instruction B to Form 40-F) serving on its Audit Committee. Igal Mayer has been determined to be such audit committee financial expert and was determined to be "independent" as such term is defined under the Canadian Securities Administrators' National Instrument 52-110 (Audit Committees) and the standards of the Commission and the Nasdaq Stock Market ("Nasdaq") relating to the independence of audit committee members.

The Board's designation of Igal Mayer as an audit committee financial expert does not impose on him any duties, obligations or liability that are greater than the duties, obligations and liability imposed on him as a member of the Audit Committee and Board in the absence of such designation or identification. In addition, the designation of Igal Mayer as an audit committee financial expert does not affect the duties, obligations or liability of any other member of the Audit Committee or Board. See also "*Audit Committee*" ****in the 2022 AIF, filed as Exhibit 99.1 to this Annual Report, and incorporated herein by reference.

**DIFFERENCES IN NASDAQ AND CANADIAN CORPORATE GOVERNANCE REQUIREMENTS**

AcuityAds is a foreign private issuer and its Common Shares are listed on the Nasdaq Capital Market.

Nasdaq Rule 5615(a)(3) permits a foreign private issuer to follow its home country practice in lieu of the requirements of the Rule 5600 Series, the requirement to distribute annual and interim reports set forth in Rule 5250(d), and the Direct Registration Program requirement set forth in Rules 5210(c) and 5255; provided, however, that such a company shall comply with the Notification of Material Noncompliance requirement (Rule 5625), the Voting Rights requirement (Rule 5640), have an audit committee that satisfies Rule 5605(c)(3), and ensure that such audit committee's members meet the independence requirement in Rule 5605(c)(2)(A)(ii).

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AcuityAds does not follow Rule 5605(d)(1), which requires companies to adopt a formal written compensation committee charter and have a compensation committee review and reassess the adequacy of the charter on an annual basis. In lieu of following Rule 5605(d)(1), AcuityAds follows the rules of the Toronto Stock Exchange.

AcuityAds does not follow Rule 5605(e)(2), which requires companies to adopt a formal written charter or board resolution, as applicable, addressing the director nomination process and such related matters as may be required under the federal securities laws. In lieu of following Rule 5605(e)(2), AcuityAds follows the rules of the Toronto Stock Exchange.

AcuityAds does not follow Rule 5620(c) (shareholder quorum) but instead follows its home country practice. The Nasdaq minimum quorum requirement under Rule 5620(c) for a shareholder meeting is 33-1/3% of the outstanding shares of common stock. In addition, a registrant listed on Nasdaq is required to state its quorum requirement in its by-laws. AcuityAds' quorum requirement is set forth in its by-laws. A quorum for a meeting of AcuityAds' shareholders is at least two persons who hold, or represent by proxy, in the aggregate at least 10% of the issued and outstanding Common Shares as of the applicable record date.

**CODE OF CONDUCT**

AcuityAds has adopted a "code of ethics" (as that term is defined in Form 40-F), entitled the AcuityAds Code of Conduct that applies to all directors, officers, employees and representatives of AcuityAds and its subsidiaries (the "AcuityAds Code"). A copy of the AcuityAds Code is posted on AcuityAds' website at https://illumin.com/investors/corporate-governance/. Copies may be obtained, free of charge, by contacting AcuityAds in writing at 70 University Ave., Suite 1200, Toronto, Ontario, Canada M5J 2M4, by telephone at (416) 218-9888 or on AcuityAds' website at https://illumin.com/.

In the past fiscal year, AcuityAds has not granted any waiver, including an implicit waiver, from any provision of its Code of Ethics. AcuityAds intends to post any amendments to and waivers from the AcuityAds Code on its website as identified above.

**NOTICES PURSUANT TO REGULATION BTR**

Not applicable.

**PRINCIPAL ACCOUNTANT FEES AND SERVICES**

The required disclosure is included under the heading "*Audit Committee*—*External Auditor Service Fees*" in the 2022 AIF, filed as Exhibit 99.1 to this Annual Report, and incorporated herein by reference.

**AUDIT COMMITTEE**'**S PRE-APPROVAL POLICIES AND PROCEDURES**

The required disclosure is included under the heading "*Audit Committee*—*Pre-Approval Policies and Procedures*" in the 2022 AIF, filed as Exhibit 99.1 to this Annual Report, and incorporated herein by reference.

**OFF-BALANCE SHEET ARRANGEMENTS** 

The required disclosure is included under the heading "*Off-Balance Sheet Arrangements*" of the 2022 MD&A, filed as Exhibit 99.3 to this Annual Report, and incorporated herein by reference.

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**DISCLOSURE OF CONTRACTUAL OBLIGATIONS**

The required disclosure is included under the headings "*Liquidity & Capital Resources*—*Cash Requirements*" and "*Contractual Obligations*" of the 2022 MD&A, filed as Exhibit 99.3 to this Annual Report, and incorporated herein by reference.

**MINE SAFETY DISCLOSURE**

Not applicable.

**DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS**

Not applicable.

**WEBSITE INFORMATION**

Notwithstanding any reference to AcuityAds' website or other websites in this Annual Report or in the documents attached as exhibits hereto, the information contained in AcuityAds' website or any other website referred to in this Annual Report or in the documents attached as exhibits hereto, or referred to in AcuityAds' website, is not a part of this Annual Report and, therefore, is not filed with the SEC.

**UNDERTAKING AND CONSENT TO SERVICE OF PROCESS**

AcuityAds undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to: the securities registered pursuant to Form 40-F; the securities in relation to which the obligation to file an annual report on Form 40-F arises; or transactions in said securities.

AcuityAds has previously filed an Appointment of Agent for Service of Process and Undertaking on Form F-X with respect to the class of securities in relation to which the obligation to file the Form 40-F arises. Any change to the name or address of AcuityAds' agent for service of process shall be communicated promptly to the Commission by amendment to the Form F-X referencing the file number of AcuityAds.

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**SIGNATURES**

Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this annual report to be signed on its behalf by the undersigned, thereto duly authorized.

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| | |
|:---|:---|
| **ACUITYADS HOLDINGS INC.** | **ACUITYADS HOLDINGS INC.** |
| By: | ![muchniksig.jpg](muchniksig.jpg) |
| Name:<br> Title: | Elliot Muchnik<br> Chief Financial Officer |

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Date: March 9, 2023

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**EXHIBIT INDEX**

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| | |
|:---|:---|
| <u>Exhibit Number</u> | <u>Description</u> |
| [99.1](ex_482790.htm) | [Annual Information Form for the year ended December 31, 2022](ex_482790.htm) |
| [99.2](ex_482644.htm) | [Audited Consolidated Financial Statements for the years ended December 31, 2022 and 2021](ex_482644.htm) |
| [99.3](ex_482789.htm) | [Management's Discussion and Analysis of Financial Condition and Results of Operations for the three and twelve months ended December 31, 2022](ex_482789.htm) |
| [99.4](ex_485440.htm) | [Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm](ex_485440.htm) |
| [99.5](ex_484291.htm) | [Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](ex_484291.htm) |
| [99.6](ex_484292.htm) | [Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](ex_484292.htm) |
| [99.7](ex_484293.htm) | [Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](ex_484293.htm) |
| 101 | Interactive Data File (formatted as Inline XBRL) |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL) |

---

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## Exhibit 99.1

**Exhibit 99.1**

![acuitylogo.jpg](acuitylogo.jpg)

**ACUITYADS HOLDINGS INC.**

**ANNUAL INFORMATION FORM** 

**FOR THE YEAR ENDED DECEMBER 31, 2022**

**March 9, 2023**

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**TABLE OF CONTENTS**

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| | |
|:---|:---|
| MEANING OF CERTAIN REFERENCES | 1 |
| TRADEMARKS AND TRADE NAMES | 1 |
| FORWARD-LOOKING INFORMATION | 1 |
| MARKET AND INDUSTRY DATA | 3 |
| CORPORATE STRUCTURE | 3 |
| DESCRIPTION AND GENERAL DEVELOPMENT OF THE BUSINESS | 4 |
| RISK FACTORS | 10 |
| DIVIDENDS AND DISTRIBUTIONS | 33 |
| DESCRIPTION OF CAPITAL STRUCTURE | 33 |
| MARKET FOR SECURITIES | 34 |
| DIRECTORS AND OFFICERS | 35 |
| AUDIT COMMITTEE | 39 |
| PROMOTERS | 40 |
| LEGAL PROCEEDINGS AND REGULATORY ACTIONS | 40 |
| INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS | 40 |
| TRANSFER AGENT AND REGISTRAR | 40 |
| MATERIAL CONTRACTS | 41 |
| INTERESTS OF EXPERTS | 41 |
| ADDITIONAL INFORMATION | 41 |
| GLOSSARY | 41 |
| APPENDIX A AUDIT COMMITTEE CHARTER | 1 |

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**MEANING OF CERTAIN REFERENCES**

Unless otherwise defined herein, capitalized terms used in this AIF are defined in the "Glossary" section of this AIF. Except where otherwise indicated, all references to dollar amounts and "$" are to Canadian dollars and the "Corporation" or "AcuityAds" refers to AcuityAds Holdings Inc. and its subsidiary entities on a consolidated basis. Any statements in this AIF made by or on behalf of management of the Corporation are made in such persons' capacities as officers of the Corporation and not in their personal capacities. All information in this AIF is stated as at December 31, 2022, unless otherwise indicated.

This AIF should be read in conjunction with the Corporation's 2022 audited annual consolidated financial statements and notes thereto and the related annual management's discussion and analysis, but which, for greater certainty, are not incorporated by reference herein.

**TRADEMARKS AND TRADE NAMES**

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

**FORWARD-LOOKING INFORMATION**

This AIF contains forward-looking statements under the provisions of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the U.S. Securities Act of 1933 (as amended, the "**Securities Act**"), and Section 21E of the U.S. Securities Exchange Act of 1934 (as amended, the "**Exchange Act**"), and forward-looking information within the meaning of applicable Canadian securities legislation. Forward-looking information is characterized by words such as "plan", "expect", "budget", "target", "project", "intend", "believe", "anticipate", "estimate", "should", "predict", "potential", "continue" and other similar words, or statements that certain events or conditions "may" or "will" occur. Except for statements of historical fact relating to the Corporation, information contained herein constitutes forward-looking information, including, but not limited to, statements regarding: the effect of the COVID-19 pandemic on the Corporation's business and operations, the Corporation's strategy, plans or future financial or operating performance; the continuing competitiveness of and strategy relating to the Corporation's service offerings, such as its Programmatic Marketing Platform (as defined herein) and the illumin platform; the continuation and success of the Corporation's partnerships with other organizations; the Corporation's intentions to improve its Programmatic Marketing Platform and service offerings, strengthen relationships with existing customers, and expand its customer base and its presence in the U.S. and globally; continuing investment in research, development and marketing; the Corporation's ability to expand into additional advertising channels, including connected TV, gain market penetration and grow sales and revenue; the Corporation's intention to acquire complementary businesses and technologies; the Corporation's ability to manage its brand, increase market awareness and generate new advertiser leads; the Corporation's ability to meet the needs of digital marketers; and the Corporation's expectation that reliance on key customers will decrease over time, that the online advertising channels will continue to be a primary channel used by its customers; the Corporation's ability to hire and train sufficient numbers of effective sales personnel; the Corporation's expectation that the sales personnel will obtain new customers and increase existing customers' spend; the Corporation's ability to provide sufficient customer training and support for the Corporation's self-service based platform; regarding the future of legislation and regulation related to online advertising and online data collection and usage; regarding the continued operation of third party tools used by the AcuityAds platform; regarding the benefits of the illumin platform; and the future of ad blocking and online media fraud.

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

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Statements containing forward-looking information are based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including management's perceptions of historical trends, current conditions and expected future developments, as well as other considerations that are believed to be appropriate in the circumstances, including the following: the Canadian and global economy will remain stable over the next 12 months; the Corporation will be able to meet its future capital commitments; the Corporation will be able to obtain additional financing on reasonable terms if and when needed; the Corporation will be able to effectively protect its current and future intellectual property rights; the Corporation will be able to recruit and retain the services of its key technical, sales, marketing, operations and management personnel; the Corporation will be able to develop commercially viable solutions as a result of its research and development activities; and that the risks referenced above and herein, collectively or individually, will not have a material impact on the Corporation. While management considers these assumptions to be reasonable based on currently available information, they may prove to be incorrect. The COVID-19 pandemic has had, and may continue to have, a broad impact across industries and the economy, including impacts on our operations and our employees, suppliers, partners, merchants and their customers and it is difficult to predict how significant the adverse impact of the pandemic will continue to be on the global and domestic economy, the business, operations and financial position of the Corporation's clients and the business, operations and financial position of the Corporation.

Many risks, uncertainties and other factors could cause the actual results of AcuityAds to differ materially from the results, performance, achievements or developments expressed or implied by such forward-looking statements that are contained in this AIF. These risks, uncertainties and other factors include, but are not limited to the following: overall economic conditions, rapid technological changes, use of cookies, demand for the Corporation's products and services, the introduction of competing technologies, competitive pressures, network restrictions, fluctuations in foreign currency exchange rates, and other similar factors that may cause the actual results, performance or achievements to differ materially from those expressed or implied in these forward-looking statements.

By their nature, forward-looking statements are inherently uncertain, are subject to risk and are based on assumptions including those discussed herein. There is significant risk that predictions and other forward-looking statements will not prove to be accurate. Readers are cautioned to not place undue reliance on forward-looking statements made herein because a number of factors could cause actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed in the forward-looking statements. The forward-looking statements contained herein are expressly qualified in their entirety by the above cautionary statement. The future outcomes that relate to forward-looking statements may be influenced by many factors, including, but not limited to any future sales or issuances of securities of the Corporation and the risk factors described under the heading "Risk Factors" in this AIF. The Corporation cautions that the foregoing list of factors is not exhaustive, and that, when relying on forward-looking statements to make decisions with respect to the Corporation or the securities of the Corporation, investors and others should carefully consider these factors, as well as other uncertainties and potential events, and the inherent uncertainty of forward-looking statements.

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

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**MARKET AND INDUSTRY DATA**

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

**CORPORATE STRUCTURE**

**Incorporation**

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

Prior to July 16, 2014, the business of the Corporation was carried on by a corporation called AcuityAds Inc., which was incorporated on October 9, 2009 under the *Business Corporations Act* (Ontario). On July 16, 2014, AcuityAds Inc. completed a reverse take-over of the Corporation, following which AcuityAds Inc. became a wholly-owned subsidiary of the Corporation. The Corporation graduated from the TSX Venture Exchange to the TSX on June 26, 2019. The Corporation's common shares (the "**Common Shares**") were added to and began trading on the Nasdaq under the symbol "ATY" on June 10, 2021.

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

**Inter-corporate Relationships**

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

![orgchart.jpg](orgchart.jpg)

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**DESCRIPTION AND GENERAL DEVELOPMENT OF THE BUSINESS**

**Business of the Corporation**

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

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

AcuityAds' illumin™ enables creation of consumer journeys with custom messages tied to propensity-scored audiences, increasing efficiency and return on advertising investments. illumin is an advertising automation technology that offers planning, buying media and omnichannel intelligence from a single platform, allowing advertisers to map their consumer journey playbooks across screens and execute in real-time using programmatic technology. illumin has had excellent traction and experienced rapid growth since its launch and now accounts for a significant portion of the Corporation's total revenue.

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**Three Year History**

***Product Expansions***

On October 1, 2020, the Corporation officially launched its journey advertising platform, illumin™. illumin is an advertising automation technology that offers planning, buying media and omnichannel intelligence from a single platform, allowing advertisers to map their consumer journey playbooks across screens and execute in real-time using programmatic technology. illumin enables creation of consumer journeys with custom messages tied to propensity-scored audiences, increasing efficiency and return on advertising investments. See "New Products" below for additional detail. illumin has had excellent traction and experienced rapid growth since its launch and now accounts for a significant portion of the Corporation's total revenue. The Corporation anticipates that this product will continue to grow its existing market share by expanding the scope of prospective clients that are seeking a more intuitive and easy-to-use programmatic advertising solution.

***Financings and U.S. Stock Exchange Listing***

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

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

On June 14, 2021, AcuityAds completed a public offering of 5,665,025 Common Shares in the United States and Canada, including the exercise in full by the underwriters of their over-allotment option, at a price of US$10.15 ($12.25) per share, for gross proceeds to the Corporation of US$57,500,003 ($69,396,556). In connection with this public offering, on June 21, 2021 the Corporation's Common Shares were listed and began trading on the Nasdaq.

***Normal Course Issuer Bid***

On May 16, 2022, AcuityAds commenced a normal course issuer bid ("**NCIB**") for its Common Shares, which is open until May 15, 2023 or such earlier time as the NCIB is completed or terminated at the option of the Corporation. Under the NCIB, AcuityAds may purchase for cancellation up to 5,500,000 Common Shares of the Corporation. Daily purchases are limited to 140,680 Common Shares, other than block purchase exceptions. The maximum number of shares that may be purchased under the NCIB represents approximately 9.95% of AcuityAds' public float as at May 3, 2022. The Common Shares will be purchased on behalf of the Corporation by a registered broker through the facilities of the TSX and through other alternative Canadian trading platforms at the prevailing market price at the time of such transaction.

During the year ended December 31, 2022, AcuityAds repurchased 4,703,780 Common Shares through the facilities of the TSX and alternative Canadian trading systems at a weighted-average price of approximately $3.08 per share for a total cash consideration of approximately $14,499,976.

***COVID-19 Global Pandemic***

On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 as a global pandemic. While global economic conditions have improved in 2022, many areas of the world continue experiencing negative effects associated with the outbreak of COVID-19. Despite the COVID-19 pandemic and the Corporation's changes to its work environment, AcuityAds continues to operate its business in the normal course. **None of the Corporation**'**s operations have closed down or otherwise been materially affected by the COVID-19 pandemic.**

Based on the most recent trends and observations since the beginning of the COVID-19 pandemic, the Corporation does not expect the COVID-19 pandemic will have a material impact on its future revenues. The COVID-19 pandemic has not directly restricted the Corporation's growth plans as demand for the Corporation's products and services is growing as the Corporation's customers increase their digital advertising budgets.

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

AcuityAds continues to monitor and assess the impacts of COVID-19 on its employees and business.

**AcuityAds**' **Programmatic Marketing Platform**

The Programmatic Marketing Platform, now exclusively provided through the illumin interface, is offered to AcuityAds' customers through three primary service approaches to meet their digital advertising needs as follows:

<u>Self-Serve</u>: In the self-serve model, the advertiser runs their digital advertising campaigns directly within the Self-Serve Programmatic Marketing Platform, or programmatically using another system, after training and onboarding. A dedicated AcuityAds' account manager is assigned to each account and provides proactive support and guidance to help achieve campaign success. Advertisers typically enter into one-year agreements with a renewal option, to gain access to the self-serve platform which includes real-time campaign dashboards and reporting features. Revenue is generated per impression served. Going forward, with the growth of the illumin self-serve component of AcuityAds total revenue, the Corporation is also moving to multi-year agreements with minimum spend provisions. Customers under the self-serve model, which include both brands and advertising agencies, are provided with training, documentation and online access to the Programmatic Marketing Platform to run their digital advertising campaigns independently.

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

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

<u>illumin</u>™: AcuityAds' product, which accounts for a significant portion of the Corporation's total revenue, is a Journey Advertising Platform under the brand name, illumin™. illumin is the next generation of advertising automation technology, offering advertisers the ability to plan, buy, optimize and report on omnichannel advertising programs from a single, intuitive user-interface. Advertisers can map consumer journey playbooks across devices and communication channels, and execute in real-time using programmatic technology. illumin enables the delivery of custom creative advertising based on audience receptivity (time, place and context), which has proven to increase both efficiency and overall return on advertising investments.

For the year ended December 31, 2022, the Corporation's revenue was $121,038,735 in the aggregate, including $80,978,396 for the Full-Serve category and $40,060,339 for the self-serve category, compared to $122,026,302 in the aggregate for the year ended December 31, 2021, including $91,807,683 for the Full-Serve category and $30,218,619 for the self-serve category.

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

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

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

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

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

**Competitive Conditions**

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

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

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

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

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

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

● *illumin*. The illumin platform as a Journey Advertising Platform offers a level of control, insight, and value-add analysis across the entire funnel of the consumer journey that is not available through other demand-side platforms. This creates a significant competitive advantage for AcuityAds and is the focus of AcuityAds' growth initiatives for 2023 and thereafter.

**Growth Strategy**

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

● *Growth of illumin.* Following a beta-testing period, illumin launched in October 2020. illumin allows users to build, visualize and customize their consumer journey using a new, streamlined planning canvas. AcuityAds' illumin has had excellent traction and experienced rapid growth since its launch and now accounts for a significant portion of the Corporation's total revenue. The Corporation anticipates that this product will further grow its existing market share by expanding the scope of prospective clients that are seeking a more intuitive advertising platform. The Corporation intends to continue developing its illumin platform to expand the scope of offerings within the platform as opportunities arise and enhance consumer experience. It also intends to continue expanding the scope of prospective clients seeking a more intuitive and easy-to-use programmatic advertising solution.

● *Increasing Connected TV, display, mobile, social and video market penetration*. AcuityAds intends to continue investing in research and development and marketing to expand the capabilities of its Programmatic Marketing Platform in video, mobile, social and online advertising in order to increase its customer base, gain market penetration and grow revenue from these channels. AcuityAds will continue to offer its services on a Full-Serve and a self-serve basis. Connected TV includes over-the-top content delivered through a connected device over the internet.

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

● *Continuing domestic and international expansion*. AcuityAds currently operates in Canada, the U.S., Europe and Latin America. AcuityAds' growth is attributable to both organic growth strategies and a selective approach to acquisition-based growth. AcuityAds identifies possible acquisition targets with a view to entering new but complementary markets and expanding our product and technology offerings. The Corporation leverages its accrued sales and marketing expertise to facilitate its continued global expansion both organically and in integrating the companies the Corporation acquires. AcuityAds also intends to continue expanding its presence in the key markets it serves by expanding its sales resources and partners for its Programmatic Marketing Platform.

**Marketing Strategy**

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

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

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

**Specialized Skill and Knowledge**

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

**Intangible Properties**

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

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

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

See also "Description and General Development of the Business – Three-Year History – Product Expansions" for more information regarding the technology acquired by the Corporation.

**Cycles**

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

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

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**Economic Dependence**

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

**Employees**

As of December 31, 2022, AcuityAds had: (i) 142 full-time employees in Canada, 45 full-time employees in the United States, and 39 full-time employees in other countries; and (ii) 14 full-time contractors in Canada.

**Foreign Operations**

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

For the year ended December 31, 2022, U.S. sales accounted for approximately 68% of AcuityAds' total revenues. AcuityAds expects to expand its business into other local, U.S. and international jurisdictions in the future, and with continued growth, its sales may become dependent on its revenues from international jurisdictions. AcuityAds' existing and future international operations expose it to currency exchange risk, foreign regulatory policies and global business and industry conditions. See "Risk Factors – Financial and Accounting Risks – Foreign Sales".

**Privacy**

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

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

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

**RISK FACTORS**

An investment in securities of AcuityAds involves significant risks. Investors should carefully consider the risks described below, the other information described elsewhere in this AIF and those risks set out in AcuityAds' management's discussion and analysis for the year ended December 31, 2022 before making a decision to buy securities of AcuityAds. If any of the following or other risks materialize, AcuityAds' business, prospects, financial condition, financial performance and cash flows could be materially adversely impacted. In that case, the trading price of securities of AcuityAds could decline and investors could lose all or part of their investment in such securities. You should not interpret the disclosure of any risk factor to imply that the risk has not already materialized. There is no assurance that risk management steps taken will avoid future loss due to the occurrence of the below described or other unforeseen risks.

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**Business Risks**

*Fluctuation of Financial Results*

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

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

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

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

● changes in AcuityAds' customer base and platform offerings;

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

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

● changes to AcuityAds' channel mix;

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

● changes in the economic prospects of marketers or the economy generally, which could alter marketers' spending priorities, or could increase the time or costs required to complete advertising inventory sales;

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

● disruptions or outages on AcuityAds' platforms;

● the introduction of new technologies or offerings by AcuityAds' competitors;

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

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

● the length and unpredictability of AcuityAds' sales cycle;

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

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

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

*Seasonal fluctuations in advertising activity could have a negative impact on our revenue, cash flow and results of operations.*

AcuityAds' revenue, cash flow, results of operations and other key operating and performance metrics may vary from quarter to quarter due to the seasonal nature of the Corporation's clients' spending on advertising campaigns. For example, clients tend to devote more of their advertising budgets to the fourth calendar quarter to coincide with consumer holiday spending. Moreover, advertising inventory in the fourth quarter may be more expensive due to increased demand for it. Political advertising could also cause AcuityAds' revenue to increase during election cycles and decrease during other periods. AcuityAds' historical revenue growth has lessened the impact of seasonality; however, seasonality could have a more significant impact on AcuityAds' revenue, cash flow and results of operations from period to period if AcuityAds' growth rate declines, if seasonal spending becomes more pronounced, or if seasonality otherwise differs from the Corporation's expectations.

*Reliance on Key Customers*

Historically, a large amount of AcuityAds' sales have been to relatively few customers. For the 2022 financial year, approximately 6% of its revenues were derived from its top customer, and approximately 25% of its revenues were derived from its top 10 customers. While it is expected that this reliance will decrease over time, the Corporation may continue to depend upon a relatively small number of customers for a significant portion of its revenue for the foreseeable future. The loss of a significant customer or failure to attract new customers could harm AcuityAds' business and severely impact the future financial success of AcuityAds.

*Retaining and Attracting Customers*

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

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

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

*No Long-Term Customer Commitments*

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

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

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

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

*Failure to Properly Manage Growth*

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

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*Failure to Properly Forecast Growth*

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

*Acquisitions by the Corporation*

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

● regulatory hurdles;

● failure of anticipated benefits to materialize;

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

● retention of employees from the acquired company;

● cultural challenges associated with integrating employees from the acquired company into the Corporation's organization;

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

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

● coordination of product development and sales and marketing functions;

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

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

Lastly, there are no assurances that the Corporation will achieve any of the synergies or other expected benefits with any acquisition targets it pursues.

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*Reliance on Third Parties*

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

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

*Personnel*

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

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

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

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

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*Conflicts of Interest*

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

*Dependence on Display Advertising*

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

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

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

*Risks of Self-Service Model* 

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

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

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

*Risks of Proprietary Artificial Intelligence Algorithms*

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

*Risks Related to COVID-19 pandemic*

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

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

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

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

*Risks Related to Cyberattacks*

Cybersecurity attacks, including breaches, computer malware and computer hacking have become more prevalent in the Corporation's industry. Any cybersecurity breach caused by hacking, which involves efforts to gain unauthorized access to information or systems, or to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment, or the inadvertent transmission of computer viruses could adversely affect the business, financial condition, results of operations or reputation of the Corporation. The Corporation believes that it is taken reasonable steps to protect the security, integrity and confidentiality of the information collected, used, stored and disclosed, but there is no guarantee that in the future inadvertent (e.g., software bugs or other technical malfunctions, employee error or malfeasance, or other factors) or unauthorized data access or use will not occur despite its efforts in the past and in the future. The Corporation will experience hacking attempts of varying degrees from time to time, including denial-of-service attacks. Techniques used to obtain unauthorized access to personal information, confidential information and/or the systems on which such information are stored and/or to sabotage systems change frequently and generally are not recognized until launched against a target. As a result, the Corporation may be unable to anticipate these techniques or to implement adequate preventative measures.

Many of the Corporation's employees now have a hybrid work schedule consisting of both in-person work and working from home. Although the Corporation has implemented work-from-home protocols and provide work-issued devices to employees, the actions of the Corporation's employees while working from home may have a greater effect on the security of the Corporation's systems, the platform and the data we process, including by increasing the risk of compromise to the Corporation's systems, confidential information or data arising from employees' combined personal and private use of devices, accessing the Corporation's systems or data using wireless networks that the Corporation's does not control or the ability to transmit or store company-controlled data outside of the Corporation's secured network.

In addition, the Corporation relies on third-party data centers, systems and technologies to operate its business. The Corporation is dependent on these third-party providers to provide industry standard protection against potential damages such as cyber intrusions, natural disasters, criminal acts and technical maintenance. In the event of damage or interruption, it is unlikely that the Corporation would be appropriately compensated for the reputational harm that such an interruption would create regardless of any damages we may recover from such third parties or any insurance policy in place. This would in turn reduce the Corporation revenue, subject it to liability and may cause it to lose customers, any of which could materially adversely affect its business.

The Corporation is subject to a number of laws, rules and regulations requiring it to provide notification to consumers, investors, regulators and other affected parties in the event of a security breach of certain personal data, or requiring the adoption of minimum information security standards that are often vaguely defined and difficult to practically implement. The costs of compliance with these laws have increased and may increase in the future. The Corporation's corporate systems, third-party systems and security measures may be breached due to the actions of outside parties, employee error, malfeasance, a combination of these, or otherwise, and, as a result, an unauthorized party may obtain access to its data, its employees' data, its customers' data or any third party data it may possess. Any such security breach could require the Corporation to comply with various breach notification laws and may expose the Corporation to litigation, remediation and investigation costs, increased costs for security measures, loss of revenue, damage to the Corporation's reputation and potential liability.

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If an actual or perceived security breach occurs, the market perception of the Corporation's security measures could be harmed and it could lose sales and customers and/or suffer other negative consequences to its business. A security breach could adversely affect the operation of the Corporation's platform and cause the loss or corruption of data, which could harm the Corporation's business, financial condition and operating results. Any failure to maintain the security of the Corporation's infrastructure could result in loss of personal information and/or other confidential information, damage to its reputation and customer relationships, early termination of its contracts and other business losses, indemnification of its customers, financial penalties, litigation, regulatory investigations and other significant liabilities. In the event of a major third-party security incident, the Corporation may incur losses in excess of its insurance coverage. Further, certain incidents that Corporation can experience may not be covered by the insurance coverage in place at the time.

Moreover, if a high profile security breach occurs with respect to the Corporation or another company in the same industry, the Corporation's customers and potential customers may lose trust in the security of its business model generally, which could adversely impact its ability to retain existing customers or attract new ones.

**Financial and Accounting Risks**

*Additional Financing*

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

*Existing Debt*

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

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*Inability to Offset Increasing Costs*

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

*Negative Impact of Seasonal Fluctuations*

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

*Payment Risks* 

AcuityAds is subject to payment-related risks and if its customers do not pay, or dispute their invoices, AcuityAds' business, operating results and financial condition may be adversely affected. AcuityAds' may also be involved in disputes with agencies and their marketers over the operation of its platform, the terms of its agreements or billings for purchases made by them through its platform. These challenges may be exacerbated by the resulting economic impact caused by the COVID-19 pandemic as a number of customers experience financial difficulties and liquidity constraints. When the Corporation is unable to collect or make adjustments to its bills to customers, the Corporation incurs write-offs for bad debt, which could have a material adverse effect on its results of operations for the periods in which the write-offs occur. In the future, bad debt may exceed reserves for such contingencies and the Corporation's bad debt exposure may increase over time. Any increase in write-offs for bad debt could have a materially negative effect on AcuityAds' business, operating results and financial condition.

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

*Foreign Sales*

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

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*Estimates or Judgments Relating to Critical Accounting Policies*

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

*Internal Controls Over Financial Reporting and Disclosure Controls and Procedures*

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

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

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

*Liquidity*

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

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

*Interest Rates*

Interest rate risk is the risk of financial loss to the Corporation if interest rates increase in interest-bearing instruments. The revolving line of credit with Silicon Valley Bank bears interest at an annual rate equal to the greater of (i) prime plus 0.60% and (ii) 3.85% and the term loans bear interest at a rate equal to the greater of (i) prime plus 1.50% and (ii) 4.75%, each of which the Corporation believes is consistent with market interest rates for this type of debt. Additional information can be found in the Corporation's Consolidated Financial Statements which is available on SEDAR at www.sedar.com.

*Foreign Exchange or Currency*

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

**Industry Risks**

*Competition*

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

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

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

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

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

*Ad Blockers*

Consumers may download free or paid "ad-blocking" software on their computers or mobile devices, not only for privacy reasons, but also to counteract the adverse effect advertisements can have on the consumer experience, including increased load times, data consumption, and screen overcrowding. Ad-blocking technologies and other global privacy controls may prevent some third-party cookies, or other tracking technologies, from being stored on a consumer's computer or mobile device. If more consumers adopt these measures, the Corporation's business, results of operations, and financial condition could be adversely affected. Ad-blocking technologies could have an adverse effect on the Corporation's business, results of operations, and financial condition if they reduce the volume or effectiveness and value of advertising. Even if ad blockers do not ultimately have an adverse effect on the Corporation's business, investor concerns about ad blockers could cause the Corporation's stock price to decline.

In addition, internet-connected devices and operating systems controlled by third parties increasingly contain features that allow device users to disable functionality that allows for the delivery of advertising on their devices. Device and browser manufacturers may include or expand these features as part of their standard device specifications. For example, when Apple announced that UDID, a standard device identifier used in some applications, was being superseded and would no longer be supported, application developers were required to update their apps to utilize alternative device identifiers such as universally unique identifier, or, more recently, identifier-for-advertising, which simplify the process for Apple users to opt out of behavioral targeting. If users elect to utilize the opt-out mechanisms in greater numbers, the Corporation's ability to deliver effective advertising campaigns on behalf of its advertisers would suffer, which could cause the Corporation's business, financial condition, or results of operations to suffer.

*Use of Third-Party Cookies and Other Tracking Technologies*

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

Digital advertising and in-app advertising are largely dependent on established technology companies and their operation of the most commonly used Internet browsers (Chrome, Firefox, Internet Explorer and Safari), devices and their operating systems (Android and iOS). These companies continue to make changes to the operations or policies of their browsers, devices and operating systems in a manner that fundamentally changes our ability to operate our platform or collect data. For example, Apple introduced new rules around the tracking of data with its rollout of its iOS 14 operating system and browser providers recently enacted changes restricting the use of third-party cookies in their browsers, which may cause instability in the digital advertising market.

Users of these browsers, devices or operating systems may also adjust their behaviors and use of technology in ways that change our ability to collect data. Digital advertising and in-app advertising are also dependent, in part, on internet protocols and the practices of internet service providers, including IP address allocation. Changes that these providers make to their practices, or adoption of new internet protocols, may materially limit or alter the availability of data. A limitation or alteration of the availability of data in any of these or other instances may have a material impact on the advertising technology industry, which could decrease advertising budgets and subsequently reduce our revenue and adversely affect our business, operating results and financial condition.

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

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

Certain international jurisdictions have adopted and implemented legislation that negatively impacts the use of cookies and other tracking technologies for online advertising, and additional jurisdictions may do so in the future. Currently, although Canadian anti-spam legislation ("**CASL**") requires consent to install a computer program, CASL provides that a person is considered to expressly consent to the installation of a cookie, provided that the person's conduct is such that it is reasonable to believe that they consent to the cookie's installation (e.g. the person has not elected to disable cookies in their browser). Limitations on the use or effectiveness of cookies or other tracking technologies may impact the performance of the Programmatic Marketing Platform. AcuityAds may be required to, or otherwise may determine that it is advisable to, develop or obtain additional tools and technologies to compensate for any loss of data. AcuityAds may not be able to develop or implement such additional tools. Moreover, even if AcuityAds is able to do so, such additional tools may be subject to further regulation, time consuming to develop or costly to obtain, and less effective than AcuityAds' current tracking technology.

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

*Potential* "*Do Not Track*" *Standards*

As the use of cookies has received ongoing media attention in recent years, some government regulators and privacy advocates have suggested creating a "Do Not Track" standard that would allow internet users to express a preference, independent of cookie settings in their browser, not to have website browsing recorded. Currently under California law, operators of commercial websites that collect personal information from California consumers must disclose in a privacy policy how the website or online service responds to Do Not Track signals from web browsers. All major internet browsers have implemented some version of a "Do Not Track" setting. However, there is no definition of "tracking," no consensus regarding what message is conveyed by a "Do Not Track" setting and no industry standards regarding how to respond to a "Do Not Track" preference. The "Do-Not-Track Online Act of 2013" was introduced in the U.S. Senate in February 2013. If a "Do Not Track" browser setting is adopted by many internet users, and the standard either imposed by legislation or agreed upon by standard setting groups, prohibits AcuityAds from using non-personal information as it currently does, then that could hinder growth of advertising and content production on the web generally, cause AcuityAds to change its business practices and adversely affect its business.

*Legislation and Regulation*

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

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In Europe, the General Data Protection Regulation ("**GDPR**") provides for obligations that apply internationally to entities that control or process the personal data of citizens of the European Union. Several of these obligations, if applicable, could require changes to the processes used by AcuityAds. Non-compliance with the GDPR can trigger steep fines of up to €20 million or 4% of total worldwide annual turnover, whichever is higher. Existing and proposed laws and regulations, in particular in the European Union and the United States, concerning user privacy, use of personal information and on-line tracking technologies could affect the efficacy and profitability of internet-based and digital marketing. For example, the California *Consumer Privacy Act*, as amended by the California Privacy Rights Act (the "**CCPA**"), imposes stringent data privacy and security requirements and obligations with respect to the personal information of California residents, including, among other things, new disclosures to California consumers such as the use of automated tracking technologies to collect personal information, and providing such consumers new data protection and privacy rights, including the ability to opt out of certain sales of personal information and sharing of personal information for cross-context behavioral or targeted advertising purposes. The CCPA provides for civil penalties for violations, as well as a private right of action for certain data breaches that result in the loss of personal data that may increase the likelihood of, and risks associated with, data breach litigation. Other states have enacted or are expected to enact similar laws that set forth comprehensive privacy and security obligations regarding the collection, processing and disclosure of personal information. The costs of compliance with these laws may increase in the future as a result of the implementation of new laws or regulations, such as the GDPR, CCPA or other applicable data protection and privacy laws, or changes in interpretations of current ones. Any failure on the Corporation's part to comply with these legal requirements, or their application in an unanticipated manner, could harm its business and result in penalties or significant legal liability.

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

*Transfer and Receipt of Personal Data from the European Economic Area (*"*EEA*"*)*

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

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*Ability to Protect AcuityAds*' *Proprietary Offering*

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

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

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

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

*Infringement of Intellectual Property Rights*

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

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

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

*Use of Open Source Software Components*

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

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

*Unanticipated Problems Associated with the Programmatic Marketing Platform*

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

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

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

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

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

*Failure to Access Advertising Inventory*

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

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

*Social Data*

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

*Mobile Advertising*

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

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*Video Advertising*

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

*Fraud*

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

*Publisher Protection*

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

*Potential for Liability* 

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

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

*Obsolescence*

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

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*Catastrophic Events*

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

*Economic, Political and Market Conditions*

AcuityAds' business depends on the overall demand for advertising and on the economic health of its current and prospective advertisers. Economic downturns, including a recession, or instability in political or market conditions may cause current or new advertisers to reduce their advertising budgets. These conditions are impacted by events outside of the Corporation's control, such as the COVID-19 pandemic, the Russian invasion of Ukraine, and growing political tension between the U.S. and China, which may have a long-term impact on the global economy. Adverse economic conditions and general uncertainty about continued economic recovery are likely to affect the Corporation's business prospects. This uncertainty may cause general business conditions in the United States and elsewhere to deteriorate or become volatile, which could cause advertisers to delay, decrease or cancel purchases of the Corporation's offerings, and expose the Corporation to increased credit risk on advertiser orders, which, in turn, could negatively impact its business, financial condition and results of operations. In addition, continued geopolitical turmoil in many parts of the world have and may continue to put pressure on global economic conditions, which could lead to reduced spending on advertising.

*Negative Industry Publicity*

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

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*Corporate Culture*

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

**Risks Related to the Common Shares and Corporate and Securities Laws**

*Market for Common Shares*

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

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

*Dividend Policy*

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

*Public Company Implications* 

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

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*Foreign Private Issuer*

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

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

In addition, as a foreign private issuer, AcuityAds has the option to follow certain Canadian corporate governance practices, except to the extent that such laws would be contrary to U.S. securities laws, and provided that AcuityAds discloses the requirements it is not following and describes the Canadian practices it follows instead. AcuityAds plans to rely on this exemption. As a result, AcuityAds' shareholders may not have the same protections afforded to shareholders of U.S. domestic companies that are subject to all U.S. corporate governance requirements.

*Canadian Corporate and Security Laws*

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

*Issuance of Additional Securities in the Future*

AcuityAds' articles of incorporation permit us to issue an unlimited number of Common Shares. AcuityAds anticipates that it will, from time to time, issue additional Common Shares in the future, including in connection with potential acquisitions. Subject to the requirements of the TSX and the Nasdaq, AcuityAds will not be required to obtain the approval of shareholders for the issuance of additional Common Shares. Any further issuances of Common Shares will result in immediate dilution to existing shareholders and may have an adverse effect on the value of their shareholdings.

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

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*Directors and Officers Reside in Canada*

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

*Analyst Coverage*

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

*Tax Consequences*

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

**DIVIDENDS AND DISTRIBUTIONS**

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

**DESCRIPTION OF CAPITAL STRUCTURE**

AcuityAds is authorized to issue an unlimited number of Common Shares. As of the date hereof, there are a total of 56,808,921 Common Shares issued and outstanding. In addition, as at such date the Corporation has 727,803 stock options issued and outstanding under its existing stock option plan and under the Corporation's omnibus long-term incentive plan, 672,898 deferred share units issued and outstanding under its existing deferred share unit plan and 4,244,824 restricted share units issued and outstanding under the Corporation's omnibus long-term incentive plan adopted by the shareholders on June 16, 2020. All stock options and all deferred share units are exercisable to acquire Common Shares.

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

*Advance Notice Provisions* 

AcuityAds has adopted an advance notice by-law that includes provisions with respect to the election of its directors (the "**Advance Notice By-Law**"). The purpose of the Advance Notice By-Law is to (i) ensure that all shareholders receive adequate notice of director nominations and sufficient time and information with respect to all nominees to make appropriate deliberations and register an informed vote; and (ii) facilitate an orderly and efficient process for annual or, where the need arises, special meetings of shareholders of the Corporation.

The Advance Notice By-Law fixes a deadline by which holders of record of Shares of the Corporation must submit director nominations to the Corporation prior to any annual or special meeting of shareholders and sets forth the information that a shareholder must include in a written notice to the Corporation for any director nominee to be eligible for election at such annual or special meeting of shareholders. As a result of these requirements, the Advance Notice By-Law provides all shareholders with the opportunity to participate effectively in the election of directors by allowing them to consider all director nominees and to be made aware of potential proxy contests in advance of an annual or special meeting of shareholders. Only persons who are nominated by shareholders in accordance with the Advance Notice By-Law will be eligible for election as directors at any annual meeting of shareholders, or at any special meeting of shareholders if one of the purposes for which the special meeting was called was the election of directors. Under the Advance Notice By-Law, a shareholder wishing to nominate a director would be required to provide the Corporation with notice, in the prescribed form, within the prescribed time periods. These time periods require that the Corporation receives notice of a director's nomination: (i) in the case of an annual meeting of shareholders (including annual and special meetings), not less than 30 days prior to the date of the annual meeting of shareholders; provided, that if the first public announcement of the date (the "**Notice Date**") of the annual meeting of shareholders is less than 50 days before the meeting date, not later than the close of business on the 10th day following the Notice Date; and (ii) in the case of a special meeting (which is not also an annual meeting) of shareholders called for any purpose which includes electing directors, not later than the close of business on the 15th day following the Notice Date. The board of directors of the Corporation may, in its sole discretion, waive any requirement of the Advance Notice By-Law.

**MARKET FOR SECURITIES**

**Trading Price and Volume**

The Common Shares trade on the TSX under the symbol "AT" and on the Nasdaq under the symbol "ATY". The following table sets forth, for the periods indicated, the reported high and low prices and the aggregate volume of trading of the Common Shares on the TSX (January 1, 2022 to December 31, 2022) and the Nasdaq (January 1, 2022 to December 31, 2022) for the financial year ended December 31, 2022.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **TSX (CAD$)** | **TSX (CAD$)** | **TSX (CAD$)** | **Nasdaq (US$)** | **Nasdaq (US$)** | **Nasdaq (US$)** |
| **Month** | **High**  | **Low** | **Volume** | **High**  | **Low** | **Volume** |
| January 2022 | 4.92 | 3.12 | 12304885 | 3.92 | 2.43 | 4313970 |
| February 2022 | 3.9 | 3.06 | 7333098 | 3.08 | 2.37 | 2124680 |
| March 2022 | 4.07 | 2.67 | 14193299 | 3.26 | 2.08 | 3408460 |
| April 2022 | 4.58 | 3.73 | 7475968 | 3.66 | 2.90 | 1946130 |
| May 2022 | 4.03 | 2.19 | 8081070 | 3.11 | 1.65 | 2806750 |
| June 2022 | 3.56 | 2.75 | 3541925 | 2.84 | 2.14 | 1048410 |
| July 2022 | 3.47 | 2.83 | 2310392 | 2.69 | 2.18 | 466640 |
| August 2022 | 3.88 | 2.80 | 4610173 | 3.08 | 2.15 | 1122550 |
| September 2022 | 3.08 | 2.36 | 1871047 | 2.36 | 1.72 | 628380 |
| October 2022 | 2.53 | 2.08 | 1508786 | 1.85 | 1.51 | 627250 |
| November 2022 | 2.54 | 1.86 | 3033530 | 1.85 | 1.38 | 1847180 |
| December 2022 | 2.72 | 1.93 | 3472940 | 2.00 | 1.42 | 1260070 |

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**<u>Notes:</u>**

<sup>(1)</sup> Source: Capital IQ.

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**Prior Sales**

During the financial year ended December 31, 2022, the Corporation issued the following securities not listed or quoted on a marketplace:

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| | | |
|:---|:---|:---|
| **Date of Issuance** | **Security** | **Number of Securities Issued** |
| March 14, 2022 | RSUs | 1402159<br> N/A<sup>(1)</sup> |
| March 29, 2022 | RSUs | 88397<br> N/A<sup>(1)</sup> |
| May 16, 2022 | RSUs | 189739<br> N/A<sup>(1)</sup> |
| August 12, 2022 | RSUs | 226420<br> N/A<sup>(1)</sup> |
| November 14, 2022 | RSUs | 1316877<br> N/A<sup>(1)</sup> |

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Notes:

(1) The value of each restricted share unit is equal to the price of the Common Shares at the time the restricted share unit is awarded and increases/decreases as the price of the Common Shares increases/decreases.

**DIRECTORS AND OFFICERS**

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

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| | | | | |
|:---|:---|:---|:---|:---|
| **Name and Residence** | **Position with the Corporation and Period(s) Served as a Director** | **Principal Occupation** | **Number of Common Shares Beneficially Owned or Controlled** | **Percentage of Common Shares Beneficially Held**<sup>(3)</sup> |
| Tal Hayek<br> Ontario, Canada | Co-Founder, Chief Executive Officer and Director since October 9, 2009 | Chief Executive Officer of the Corporation | 2895251 | 5.10% |
| Elliot Muchnik<br> Ontario, Canada | Chief Financial Officer since<br> November 30, 2021 | Chief Financial Officer of the Corporation | 258330 | 0.45% |
| Rachel Kapcan<br> Ontario, Canada | Co-Founder and Chief Product Officer | Chief Product Officer of the Corporation | 2346640 | 4.13% |
| Oren Hisherik,<br> Ontario, Canada | Chief Information and Technology Officer since<br> February 18, 2019 | Chief Information and Technology Officer of the Corporation | 440954 | 0.78% |
| Sheldon Pollack<sup>(1) (2)</sup> <br> Ontario, Canada | Chairman and Director since<br> January 9, 2013 | Co-founder of OnX Enterprise Solutions Inc. and early-stage investor | 2040127 | 3.59% |
| Neil Phasey | Chief Operating Officer since<br> October 1, 2021 | Chief Operating Officer of the Corporation | 94697 | 0.17% |
| Roger Dent <sup>(1) (2)</sup> <br> Ontario, Canada | Director since July 16, 2014 | Chief Executive Officer of Quinsam Capital Corporation | 156066 | 0.27% |
| Igal Mayer <sup>(1)(2)</sup> <br> Ontario, Canada | Director since July 16, 2014 | Chief Executive Officer of RatesDOTca Group Ltd. | 242903 | 0.43% |
| Yishay Waxman<sup>(1)(2)</sup> <br> Ontario, Canada | Director since July 16, 2014 | Co-founder and President, Platterz Inc. | 96085 | 0.17% |
| Paul Khawaja<br> Ontario, Canada | Director since June 15, 2022 | President of OnX Canada | 0 | 0% |
| Michele Tobin<br> California, U.S.A. | Director since June 15, 2022 | Independent consultant, advisor, and angel investor | 0 | 0% |

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

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

(3) Based on a fully diluted basis.

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As at the date hereof, the directors and executive officers of the Corporation, as a group, beneficially owned, directly or indirectly, or exercised control over, a total of 8,571,053 Common Shares, representing approximately 15.09% of the issued and outstanding Common Shares of the Corporation.

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

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

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

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

***Elliot Muchnik, CPA, CA and ICD.D*** – ***Chief Financial Officer***. Mr. Muchnik has served as AcuityAds' Chief Financial Officer since November 2021. Mr. Muchnik joined AcuityAds from Richardson Wealth Limited, one of Canada's largest, regulated independent wealth management firms, where he served as Chief Financial Officer and Corporate Secretary from 2007. Previously, he was a Senior Vice President and Managing Director at BMO Nesbitt Burns. Mr. Muchnik holds a Bachelor of Business Administration from York University.

***Neil Phasey*** – ***Chief Operating Officer***. Mr. Phasey ****has served as AcuityAds' Chief Operating Officer since October 2021. Mr. Phasey ****has over 30 years of leadership experience as a business executive, consultant, and thought leader across multiple industries, with a specific focus in information technology. Mr. Phasey ****has co-founded multiple organizations, including most recently, WishWell, a technology platform designed to support the emotional needs of others, and TRP Collaborative, a professional training and coaching company whose mission is to empower individuals and groups to take charge of their life experience by consciously managing perception, no matter what the circumstances.

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

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

***Paul Khawaja*** – ***Director***. Mr. Khawaja is President of OnX Canada, and is driving the organization's growth, strategy, and development for enterprise infrastructure solutions, managed services, and digital services. Prior to his current role, Mr. Khawaja served as Executive Vice President and Chief Operating Officer of Cloud and Managed Services for OnX. Before joining OnX, Mr. Khawaja served as Vice President of Bell Canada, and President of xwave. Mr. Khawaja held senior leadership positions in sales, operations, and business development at MITI Information Technology. Mr. Khawaja is also the Chairperson of the Board for Victim Services Toronto, Mr. Khawaja also sits on the Waterfront Toronto Human Resources, Governance and Stakeholder Relations Committee.

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

***Michele Tobin*** – ***Director***. Ms. Tobin is a veteran sales and business development executive with 20 years of leadership experience and a successful track record of launching and scaling new businesses within consumer technology brands. Ms. Tobin has built and scaled ad monetization businesses at some of the most innovative and fast growing B2C brands in the Social and Gaming verticals including Bumble, DraftKings and Rovio Entertainment (the developer and publisher of Angry Birds), leading global sales, ad operations, ad sales marketing and programmatic monetization teams. Currently, Ms. Tobin works as a consultant and advisor and is an active angel investor in early-stage start-ups, with a particular focus on supporting under-represented founders.

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

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**Corporate Cease Trade Orders, Bankruptcies, Penalties or Sanctions**

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

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

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

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

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

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

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

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

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

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

**Conflicts of Interest**

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

------

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

**AUDIT COMMITTEE**

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

**Audit Committee Charter**

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

*Composition of the Audit Committee*

During the year ended December 31, 2022, the Audit Committee was comprised of five directors, all of whom were independent directors within the meaning of National Instrument 52-110 Audit Committees ("**NI 52- 110**"). The current members of the Audit Committee are: Messrs. Mayer (Chair), Dent, Sheldon Pollack, Waxman and Ferengul. In addition to being independent directors as described above, each member of the Audit Committee is considered "financially literate" pursuant to NI 52-110.

**Relevant Education and Experience**

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

**Audit Committee Oversight**

At no time since January 1, 2022, has any recommendation of the audit committee to nominate or compensate an external auditor not been adopted by the Board.

**Pre-Approval Policies and Procedures**

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

------

**External Auditor Service Fees**

The aggregate fees billed by the Corporation's external auditor during the years ended December 31, 2022 and December 31, 2021 are set out in the table below.

---

| | | |
|:---|:---|:---|
| **Year Ended** | **Audit Fees<sup>(1)</sup>** | **Audit Related Fees<sup>(</sup><sup>2)</sup>** |
| December 31, 2022 | $457650 | $112350 Nil |
| December 31, 2021 | $313190 | $114000 Nil |

---

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(1) "Audit Fees" refers to the aggregate fees billed by the Corporation's external auditor for audit services.

(2) "Audit-Related Fees" refers to the aggregate fees billed for assurance and related services by the Corporation's external auditor that are reasonably related to the performance of the audit or review of the Corporation's financial statements and not reported under Audit Fees. These amounts were incurred in relation to a quarterly review performed by the Corporation's external auditor.

(3) "Tax Fees" refers to the aggregate fees billed for professional services rendered by the Corporation's external auditor for tax compliance, tax advice and tax planning.

(4) "All Other Fees" refers to the aggregate fees billed for certain other services provided by the Corporation's external auditor, other than the services reported under the other three columns.

**PROMOTERS**

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

**LEGAL PROCEEDINGS AND REGULATORY ACTIONS**

The Corporation is not and was not, during the year ended December 31, 2022, a party to any material legal proceedings, nor is any of its property, nor was any of its property, during the year ended December 31, 2022, the subject of any material legal proceedings. As at the date hereof, no such material legal proceedings are known to be contemplated.

During the financial year ended December 31, 2022, there were no: (a) penalties or sanctions imposed against the Corporation by a court relating to securities legislation or by a securities regulatory authority; (b) penalties or sanctions imposed by a court or regulatory body against the Corporation that would likely be considered important to a reasonable investor in making an investment decision; or (c) settlement agreements the Corporation entered into before a court relating to securities legislation or with a securities regulatory authority.

**INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS**

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

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

**TRANSFER AGENT AND REGISTRAR**

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

------

**MATERIAL CONTRACTS**

The Corporation did not enter into any material contracts outside the ordinary course of business during the year ended December 31, 2022, nor has it entered into any material contracts outside the ordinary course of business prior to the year ended December 31, 2022 which are still in effect as at the date of this AIF.

**INTERESTS OF EXPERTS**

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

**ADDITIONAL INFORMATION**

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

Additional information, including directors' and officers' remuneration and indebtedness, principal holders of the Corporation's securities and securities authorized for issuance under equity compensation plans for the year ended December 31, 2022 will be contained in the Corporation's management information circular filed in connection with its 2023 annual meeting of shareholders.

Additional financial information is provided in the Corporation's annual financial statements and management's discussion and analysis for the year ended December 31, 2022, each of which is available on SEDAR at www.sedar.com.

**GLOSSARY**

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

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

**"AIF**" means this annual information form;

**"Audit Committee**" means the audit committee of the Board;

**"Board**" means the board of directors of the Corporation;

**"Canadian GAAP**" means Canadian generally accepted accounting principles;

**"Common Share**" mean a common share in the capital of the Corporation;

**"Full-Serve**" or "**Managed Services**" means AcuityAds' fully-managed online digital campaign execution services;

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

**"Nasdaq**" means The Nasdaq Capital Market.

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

**"TSX**" means the Toronto Stock Exchange; and

**"U.S.**" means the United States of America.

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**APPENDIX A**<br> **AUDIT COMMITTEE CHARTER**

**General**

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

● the accuracy and completeness of the Corporation's Financial Statements;

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

● the selection and activities of the Corporation's external Auditor;

● the development of the Corporation's Risk Management Strategy;

● the Corporation's compliance with legal and regulatory requirements regarding financial reporting; and

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

**Composition and Operation**

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

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

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

**Mandate**

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

**Financial Reporting and Disclosure**

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

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

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

------

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

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

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

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

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

**Oversight of Internal Controls**

The Audit Committee will:

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

● oversee the system of internal control, by:

● consulting with the external Auditor regarding the adequacy of the Corporation's internal controls;

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

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

● taking other actions as considered necessary.

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

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

------

**External Audit Appointment and Removal**

The Audit Committee will:

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

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

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

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

**External Audit Liaison**

The external Auditor will report directly to the Audit Committee.

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

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

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

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

**External Audit Review**

The Audit Committee will:

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

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

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

------

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

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

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

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

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

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

**Risk Management**

The Audit Committee will:

● review with Management the Corporation's tolerance for financial risks;

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

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

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

**Regulatory Compliance**

The Audit Committee will:

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

● review with Management the timeliness and accuracy of the Corporation's filings with regulatory authorities.

------

**Related Party Transactions**

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

**Board of Directors Relationship and Reporting**

The Audit Committee will:

● review and assess the adequacy of the Audit Committee mandate annually and submit such amendments as the Audit Committee proposes to the Board of Directors;

● oversee appropriate disclosure of the Audit Committee mandate, and other information required to be disclosed by applicable securities laws, in the Corporation's AIF and all other applicable disclosure documents, including any Management Information Circular distributed in connection with the solicitation of proxies from the Shareholders of the Corporation; and

● report regularly to the Board of Directors on Audit Committee activities, issues and related recommendations.

**Chair**

The Board of Directors will in each year appoint a Chairman of the Audit Committee (the "AC Chair"). In the AC Chair's absence, or if the position is vacant, the Audit Committee may select another member as AC Chair. The AC Chair will have the right to exercise all powers of the Audit Committee between meetings but will attempt to involve all other Members as appropriate prior to the exercise of any powers and will, in any event, advise all other Members of any decisions made or powers exercised.

**Meetings**

The Audit Committee shall meet at the request of the AC Chair, but in any event it will meet at least four times a year. Notices calling Meetings shall be sent to all Audit Committee Members, to the CEO and to the AC Chair. The external Auditor or any member of the Audit Committee may call a meeting of the Audit Committee.

**Quorum**

A majority of Members of the Audit Committee, present in person, by teleconference, or by videoconference will constitute a quorum.

**Removal and Vacancy**

A Member may resign from the Audit Committee, and may be removed and replaced at any time by the Board of Directors, and will automatically cease to be a member as soon as the Member ceases to be a Board Member. The Board of Directors will fill vacancies in the Audit Committee by appointment from among the Directors in accordance with this mandate. Subject to quorum requirements, if a vacancy exists on the Audit Committee, the remaining Members will exercise all its powers.

**Experts and Advisors**

In order to carry out its duties, the Audit Committee may retain or appoint, at the Corporation's expense, such independent counsel and other experts and advisors, as it deems necessary. The Audit Committee shall provide notice to the relevant parties of its actions in this regard.

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**Access**

The Audit Committee may have access to and direct contact with any Employee, contractor, supplier, customer or other person that is engaged in any business relationship with the Corporation to confirm information or to investigate any matter within the mandate of the Audit Committee.

**Secretary and Minutes**

The AC Chair shall appoint a secretary for each meeting to keep Minutes of such Meeting. The Minutes of the Audit Committee will be in writing and duly entered into the books of the Corporation. The Minutes of the Audit Committee will be available to all Board Members.

## Exhibit 99.2

ex_482644.htm

**Exhibit 99.2**

**AcuityAds Holdings Inc.**

Consolidated Financial Statements

**December 31, 2022 and 2021**

(Expressed in Canadian dollars)

------

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of AcuityAds Holdings Inc.

**Opinion on the Financial Statements** 

We have audited the accompanying consolidated statements of financial position of AcuityAds Holdings Inc. and its subsidiaries (together, the Company) as of December 31, 2022 and 2021, and the related consolidated statements of comprehensive income (loss), changes in shareholders' equity and cash flows for the years then ended, including the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and its financial performance and its cash flows for the years then ended in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

*Restatement of Previously Issued Financial Statements*

As discussed in Note 8(g) to the consolidated financial statements, the Company has restated its 2021 consolidated financial statements to correct a misstatement.

**Basis for Opinion**

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/PricewaterhouseCoopers LLP

Chartered Professional Accountants, Licensed Public Accountants

Toronto, Canada<br> March 9, 2023<br>

We have served as the Company's auditor since 2015.

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**AcuityAds Holdings Inc.**

Consolidated Statements of Financial Position

(Expressed in Canadian dollars)

------

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2022** | **December 31,**<br> **2021** |
| **Assets** |  |  |
| **Current assets** |  |  |
| Cash and cash equivalents | $85940728 | $102208807 |
| Accounts receivable | 33791853 | 30972608 |
| Income tax receivable | 847950 |  |
| Prepaid expenses and other | 3153012 | 3278624 |
|  | 123733543 | 136460039 |
| **Non-current assets** |  |  |
| Deferred tax asset (note 17) | 449482 | 81803 |
| Other assets | 248285 |  |
| Property and equipment (note 3) | 7117446 | 5369619 |
| Intangible assets (note 4) | 5228805 | 3044278 |
| Goodwill (note 5) | 4869841 | 4869841 |
|  | 141647402 | 149825580 |
| **Liabilities** |  |  |
| **Current liabilities** |  |  |
| Accounts payable and accrued liabilities | 26546031 | 24853497 |
| Income tax payable | 42567 | 910165 |
| Borrowings (note 16) | 4031324 | 2946150 |
| Lease obligations (note 6) | 2881804 | 2058161 |
|  | 33501726 | 30767973 |
| **Non-current liabilities** |  |  |
| Borrowings (note 16) | 191022 | 3852891 |
| Deferred tax liability (note 17) | 1060115 |  |
| Lease obligations (note 6) | 3768191 | 2148708 |
|  | 38521054 | 36769572 |
| **Shareholders**' **equity** (note 8) | 103126348 | 113056008 |
|  | 141647402 | 149825580 |

---

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**AcuityAds Holdings Inc.**

Consolidated Statements of Comprehensive Income (Loss)

(Expressed in Canadian dollars)

**For the years ended December 31, 2022 and 2021**

------

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021**<br> (As restated Note 8 (g)) |
| **Revenue** |  |  |
| Managed services | $80978396 | $91807683 |
| Self-service | 40060339 | 30218619 |
|  | 121038735 | 122026302 |
| Media costs | 60250973 | 58461333 |
| **Gross profit** | 60787762 | 63564969 |
| **Operating expenses** |  |  |
| Sales and marketing (note 18) | 24042497 | 22274113 |
| Technology (notes 12 and 18) | 16804963 | 12680460 |
| General and administrative (note 18) | 14753447 | 8838230 |
| Share-based compensation (note 8) | 5850615 | 4132017 |
| Depreciation and amortization | 4853009 | 5057117 |
|  | 66304531 | 52981937 |
| **Income (loss) from operations** | (5516769) | 10583032 |
| **Finance costs** (note 9) | 544344 | 1053282 |
| **Foreign exchange gain**  | (6269843) | (3374098) |
|  | (5725499) | (2320816) |
| **Net income before income taxes** | 208730 | 12903848 |
| **Income taxes** (note 17) | 962167 | 1150917 |
| **Net income (loss) for the year** | (753437) | 11752931 |
| **Basic and diluted net income (loss) per share** (note 10) | (0.01) | 0.20 |
| **Other Comprehensive Income (Loss)** |  |  |
| Items that may be subsequently reclassified to net income: |  |  |
| &nbsp;&nbsp;&nbsp; Exchange gain (loss) on translating foreign operations | (900899) | 31169 |
| **Comprehensive income (loss) for the year** | (1654336) | 11784100 |

---

------

**AcuityAds Holdings Inc.**

Consolidated Statements of Changes in Shareholders' Equity

(Expressed in Canadian dollars unless otherwise stated)

**For the years ended December 31, 2022 and 2021**

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---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  |  |  | **2022** |
|  | **Common shares** | **Common shares** |  |  |  |  |  |
|  | **Number** | **Amount**<br> **$** | **Contributed**<br> **surplus**<br> **$** | **Warrants**<br> **$** | **Other**<br> **reserves**<br> **$** | **Deficit**<br> **$** | **Total**<br> **$** |
|  |  | *(As restated Note 8 (g))* | *(As restated Note 8 (g))* |  |  |  |  |
| Balance – December 31, 2021 | 60733803 | 126736698 | 6461456 |  | 446218 | (20588364) | 113056008 |
| Shares issued – options exercised | 247866 | 626441 | (252404) |  |  |  | 374037 |
| Repurchase of shares for cancellation (note 8 (f)) | (4703780) | (9792573) | (4707403) |  |  |  | (14499976) |
| Share-based compensation (note 8(c)) | *-* |  | 5850615 |  |  |  | 5850615 |
| Shares issued – DSUs/RSUs exercised (notes 8(d) and 8(e)) | 531032 | 2362374 | (2362374) |  |  |  |  |
| Other comprehensive loss | *-* |  |  |  | (900899) |  | (900899) |
| Net loss for the year | *-* |  |  |  |  | (753437) | (753437) |
| Balance – December 31, 2022 | 56808921 | 119932940 | 4989890 |  | (454681) | (21341801) | 103126348 |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  |  |  | **2021** |
|  | **Common shares** | **Common shares** |  |  |  |  |  |
|  | **Number** | **Amount**<br> **$** | **Contributed**<br> **surplus**<br> **$** | **Warrants**<br> **$** | **Other**<br> **reserves**<br> **$** | **Deficit**<br> **$** | **Total**<br> **$** |
|  |  | *(As restated Note 8 (g))* | *(As restated Note 8 (g))* |  |  |  |  |
| Balance – December 31, 2020 | 53422024 | 58895718 | 5049837 | 31279 | 415049 | (32341295) | 32050588 |
| Shares issued – options exercised | 757183 | 1859803 | (787714) |  |  |  | 1072089 |
| Equity financing (note 8(b)) | 5665025 | 63955491 |  |  |  |  | 63955491 |
| Share-based compensation (note 8(c)) | *-* |  | 4132017 |  |  |  | 4132017 |
| Shares issued – warrants exercised | 39821 | 61723 | 31279 | (31279) |  |  | 61723 |
| Shares issued – DSUs/RSUs exercised (notes 8(d) and 8(e)) | 849750 | 1963963 | (1963963) |  |  |  |  |
| Other comprehensive income | *-* |  |  |  | 31169 |  | 31169 |
| Net income for the year | *-* |  |  |  |  | 11752931 | 11752931 |
| Balance – December 31, 2021 | 60733803 | 126736698 | 6461456 | - | 446218 | (20588364) | 113056008 |

---

------

**AcuityAds Holdings Inc.**

Consolidated Statements of Cash Flows

(Expressed in Canadian dollars)

**For the years ended December 31, 2022 and 2021**

------

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021**<br> (As restated Note 8 (g)) |
| **Cash provided by (used in)** |  |  |
| **Operating activities** |  |  |
| Net income (loss) for the year | $(753437) | $11752931 |
| Adjustments to reconcile net income (loss) to net cash flows |  |  |
| &nbsp;&nbsp;&nbsp; Depreciation and amortization | 4853009 | 5057117 |
| &nbsp;&nbsp;&nbsp; Finance costs (note 9) | 544344 | 1053282 |
| &nbsp;&nbsp;&nbsp; Share-based compensation (note 8(c)) | 5850615 | 4132017 |
| &nbsp;&nbsp;&nbsp; Foreign exchange gain | (6269843) | (3374098) |
| &nbsp;&nbsp;&nbsp; Income tax expense (note 17) | 962167 | 1150917 |
| Change in non-cash operating working capital |  |  |
| &nbsp;&nbsp;&nbsp; Accounts receivable | (2819245) | 886698 |
| &nbsp;&nbsp;&nbsp; Prepaid expenses and other | 125610 | (1345158) |
| &nbsp;&nbsp;&nbsp; Other assets | (248285) |  |
| &nbsp;&nbsp;&nbsp; Accounts payable and accrued liabilities | 1930673 | 1620836 |
| Income taxes paid | (1985279) | (322555) |
| Interest paid, net | (409378) | (918443) |
|  | 1780951 | 19693544 |
| **Investing activities** |  |  |
| Additions to property and equipment (note 3) | (91382) | (393859) |
| Additions to intangible assets (note 4) | (3737030) | (1259165) |
|  | (3828412) | (1653024) |
| **Financing activities** |  |  |
| Repayment of term loans principal (note 16) | (2261350) | (2495887) |
| Proceeds from international loans (note 16) | 1435351 | 1297598 |
| Repayment of international loans (note 16) | (1885662) | (2395741) |
| Repayment of leases | (2516967) | (3360075) |
| Net proceeds from equity financing (note 8) |  | 63955491 |
| Repurchase of shares for cancellation (note 8 (f)) | (14499976) |  |
| Proceeds from the exercise of warrants |  | 61723 |
| Proceeds from the exercise of stock options | 374037 | 1072089 |
|  | (19354567) | 58135198 |
| **Increase (decrease) in cash and cash equivalents** | (21402028) | 76175718 |
| **Impact of foreign exchange on cash and cash equivalents**  | 5133949 | 3394789 |
| **Cash and cash equivalents** – **beginning of year** | 102208807 | 22638300 |
| **Cash and cash equivalents** – **end of year** | 85940728 | 102208807 |
| **Supplemental disclosure of non-cash transactions** |  |  |
| Additions to property and equipment under leases | 4956952 | 674927 |

---

------

**AcuityAds Holdings Inc.**

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars)

**December 31, 2022 and 2021**

------

---

| | |
|:---|:---|
| ***1*** | **Corporate information** |

---

AcuityAds Holdings Inc. ("AcuityAds" or the "Company"), and its wholly owned subsidiaries AcuityAds Inc., AcuityAds US Inc., *140* Proof Inc., and ADman Interactive S.L.U. ("ADman"), a company that holds certain technology assets, is a leading provider of targeted digital media solutions, enabling advertisers to connect intelligently with their audiences across online display, video, social and mobile campaigns. AcuityAds is a publicly traded company, incorporated in Canada, with its head office located at *70* University Ave, Suite *1200,* Toronto, Ontario *M5J 2M4.* The Company's common shares are listed on the Toronto Stock Exchange in Canada under the trading symbol "AT", and on the Nasdaq Capital Market in the United States, under the trading symbol "ATY".

---

| | |
|:---|:---|
| ***2*** | **Summary of significant accounting policies** |

---

**Statement of compliance**

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board. The date the Board of Directors authorized the consolidated financial statements for issue was *March 9, 2023.*

**Basis of presentation**

These consolidated financial statements are prepared in Canadian dollars ("CAD"), which is the Company's functional and reporting currency and have been prepared mainly under the historical cost basis. Other measurement bases used are described in the applicable notes.

**Use of estimates and judgements**

The preparation of the consolidated financial statements and application of IFRS often involve management's judgement and the use of estimates and assumptions deemed to be reasonable at the time they are made. The Company reviews estimates and underlying assumptions on an ongoing basis. Revisions are recognized in the period in which estimates are revised and *may* impact future periods as well.

Other results *may* be derived with different judgements or using different assumptions or estimates and events *may* occur that could require a material adjustment.

The following are critical accounting policies subject to such judgements and the key sources of estimation uncertainty that the Company believes could have the most significant impact on the consolidated financial statements.

● Key sources of estimation uncertainty

i) Accounts receivable – the Company monitors the financial stability of its customers and the environment in which they operate to make estimates regarding the likelihood that the individual trade receivable balances will be paid. Credit risks for outstanding customer receivables are regularly assessed and allowances are recorded for estimated losses.

ii) Share-based payments – the estimated fair value of stock options is determined using the Black-Scholes option pricing model. Inputs to the model are subject to various estimates related to volatility, interest rates, dividend yields and expected life of the stock options issued. Fair value inputs are subject to market factors, as well as internal estimates. In addition to the fair value calculation, the Company estimates the expected forfeiture rate with respect to equity-settled share-based payments based on historical experience.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *1*

------

**AcuityAds Holdings Inc.**

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars)

 ***December 31, 2022* and *2021***

------

iii) Goodwill – Impairment – the goodwill impairment test requires a calculation to determine the recoverable amount of goodwill. Management has determined the recoverable amount by determining the higher of fair value less costs of disposal of goodwill and value in use.

● Critical judgements in applying accounting policies

i) Revenue and cost recognition – for revenue from sales of *third*-party services, management's judgement is applied regarding the determination of whether the Company is a principal or agent to the transactions. In making this judgement, management places significant weight on the fact that the Company has the primary responsibility for providing access to the Company's programmatic marketing platform, which is critical to the fulfillment of the customer deliverables.

ii) Impairment tests for non-financial assets other than goodwill – judgement is applied in determining whether events or changes in circumstances during the period are indicators that a review for impairment should be conducted.

**Basis of consolidation**

The financial results of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

Intercompany balances and transactions and any unrealized income and expenses arising from such transactions are eliminated upon consolidation.

**Revenue**

Revenue is recognized based on the *five*-step model outlined in IFRS *15* – Revenue Recognition from Contracts with Customers. The Company generates revenue from the delivery of targeted digital media solutions, enabling advertisers to connect intelligently with their audiences across online display, video, social and mobile campaigns using its programmatic marketing platform. The Company offers its services on a fully-managed and a self-serve basis, which is recognized over time using the output method when the performance obligation is fulfilled. The performance obligation is satisfied over time as the volume of impressions (number of ads displayed, consumer clicks on ads, or consumer actions) are delivered up to the contractual maximum for fully-managed revenue and the delivery of media inventory for self-serve revenue.

Revenue arrangements are evidenced by a fully executed insertion order ("IO"). Generally, IOs specify the number and type of advertising impressions to be delivered over a specified time at an agreed upon price and performance objectives for an ad campaign. Performance objectives are generally a measure of targeting as defined by the parties in advance, such as number of ads displayed, consumer clicks on ads or consumer actions (which *may* include qualified leads, registrations, downloads, inquiries, or purchases). These payment models are commonly referred to as CPM (cost per thousand impressions), CPC (cost per click) and CPA (cost per action).

The Company determines collectability by performing ongoing credit evaluations and monitoring its customers' accounts receivable balances. For new customers and their agents, which *may* be advertising agencies or other *third* parties, the Company performs a credit check with an independent credit agency and checks credit references to determine creditworthiness. The Company only recognizes revenue when collection is reasonably assured. If collection is *not* considered reasonably assured, revenue is recognized only once all amounts are collected. Revenue is recorded net of trade discounts and volume rebates. If it is probable that discounts will be granted and amounts can be measured reliably, then the discount is recognized as a reduction of revenue as the related sales are recognized.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *2*

------

**AcuityAds Holdings Inc.**

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars)

 ***December 31, 2022* and *2021***

------

In instances where the Company contracts with *third* party advertising agencies on behalf of their advertiser clients, a determination is made to recognize revenue on a gross or net basis based on an assessment of whether the Company is acting as the principal or an agent in the transaction. The Company is acting as the principal in these arrangements and therefore revenue earned, and costs incurred are recognized on a gross basis as the Company has control and is responsible for fulfilling the advertisement delivery, establishing the selling prices and the delivery of the advertisements for fully managed revenue, providing training and updates for the self-serve proprietary platform and performing all billing and collection activities.

Amounts billed in excess of revenue recognized to date on an arrangement-by-arrangement basis are classified as deferred revenue, whereas revenue recognized in excess of amounts billed is classified as accrued receivables and included as part of accounts receivable.

**Foreign currency transactions**

● Transactions and balances in foreign currencies

The Company's functional and reporting currency is CAD. Transactions in foreign currencies are translated to the Company's functional currency at exchange rates at the dates of transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to the functional currency at the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary assets and liabilities and related depreciation are translated at historical exchange rates. Revenue and expenses other than depreciation are translated at the average rates of exchange for the period.

● Subsidiaries with a functional currency other than CAD

The assets and liabilities of foreign subsidiaries are translated into CAD at the rate of exchange prevailing at the reporting date, and their income statements are translated at the average rates of exchange for the period.

Exchange rate adjustments arising on translation are recognized in other comprehensive income. On disposal of a foreign subsidiary, the component of other comprehensive income relating to that particular foreign operation is recognized in net income.

**Financial instruments**

● Non-derivative financial assets

The Company initially recognizes loans and receivables and deposits on the date they originate. All other financial assets are recognized initially on the trade date at which the Company becomes a party to the contractual provisions of the instrument.

The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *3*

------

**AcuityAds Holdings Inc.**

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars)

 ***December 31, 2022* and *2021***

------

Financial instruments are, for measurement purposes, grouped into categories. The classification depends on the purpose and is determined on initial recognition. The Company's non-derivative financial assets comprise loans and receivables.

Cash and cash equivalents comprise cash balances and cash deposits with original maturities of *three* months or less.

Loans and receivables, which include cash, accounts receivable and investment tax credits receivable, are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortized cost using the effective interest method, less any impairment losses. Accounts receivable comprise trade receivables, net of allowance for doubtful accounts. The Company has adopted the use of an expected credit loss model rather than an incurred loss analysis when evaluating the allowance for doubtful accounts receivable (note *15*).

Income tax credit receivables comprise refundable Canadian income tax credits ("ITCs") for qualifying research and development activities in Canada.

The Company's non-derivative financial liabilities consist of accounts payable and accrued liabilities, revolving line of credit, term loans and amounts due to related parties.

Such financial liabilities are recognized initially at fair value less any directly attributable transaction costs. Subsequent to initial recognition and measurement, these financial liabilities are measured at amortized cost using the effective interest method.

**Property and equipment**

● Recognition and measurement

Property and equipment are measured at cost less accumulated depreciation and accumulated impairment losses.

Cost includes expenditures that are directly attributable to the acquisition of the asset.

Gains and losses on disposal of an item of property and equipment are determined by comparing the proceeds from disposal with the carrying amount of property and equipment and are recognized in net income. The costs of the day-to-day servicing of property and equipment are recognized in net income as incurred.

● Depreciation

Depreciation is calculated on the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value. Depreciation is recognized on a straight-line basis over the estimated useful lives of the property and equipment, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset.

The estimated useful lives for the current and comparative years are as follows:

---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Furniture and fixtures | 5 years |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Data centre equipment | 4 years |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Office computer equipment | 3 years |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Right of use assets | Range from 3-8 years |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *4*

------

**AcuityAds Holdings Inc.**

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars)

 ***December 31, 2022* and *2021***

------

Depreciation methods, useful lives and residual values are reviewed at each year-end and adjusted if appropriate.

● Research and development

Expenditures on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, are recognized in net income as incurred.

Expenditures on development activities involve a plan or design for the production of new or substantially improved products and processes. Development expenditures are capitalized only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Company intends to and has sufficient resources to complete development and to use or sell the asset.

**Impairment**

● Financial assets (including accounts receivable)

A financial asset is considered impaired if objective evidence indicates that *one* or more events have had a negative effect on the estimated future cash flows of that asset that can be estimated reliably. Significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively based on the nature of the asset.

The Company assesses on a forward-looking basis the expected credit loss associated with its financial assets. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade and other receivables, the Company applies the simplified approach permitted by IFRS *9,* which requires expected lifetime losses to be recognized at the time of initial recognition of the receivables. Receivable balances are written off when all collection efforts are exhausted and there is *no* indication of recovery.

● Non-financial assets

The carrying amounts of the Company's non-financial assets (except goodwill) are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated.

Goodwill is *not* amortized but is reviewed for impairment at least annually and whenever events or circumstances indicate the carrying amount *may* be impaired. Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to the cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose. The Company's cash-generating units generally represent either individual business units, or groups of business units that are all below the level of the Company's operating segments. The ADman CGU (as defined below) has been incorporated together with the Company CGU into a single CGU, due to operational integration.

The recoverable amount of an asset or group of assets (cash-generating unit) ("CGU") is the greater of its value in use and its fair value less costs to sell. In assessing the fair value less costs to sell, the Company uses the sum of its quoted equity market capitalization and the fair value of its debt. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that is largely independent of the cash inflows of other assets or CGUs.

*5*

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**AcuityAds Holdings Inc.**

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars)

 ***December 31, 2022* and *2021***

------

An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognized in net income. Impairment losses recognized in respect of CGUs are allocated to reduce the carrying amounts of the other assets in the unit (group of units) on a pro rata basis.

Impairment losses recognized in prior periods, other than those recognized for impairment of goodwill, are assessed at each reporting date for any indications that the loss has decreased or *no* longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does *not* exceed the carrying amount that would have been determined, net of depreciation or amortization, if *no* impairment loss had been recognized.

**Leases**

At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:

● The contract involves the use of an identified asset – this *may* be specified explicitly or implicitly and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is *not* identified

● The Company has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use

● The Company has the right to direct the use of the asset. The Company has this right when it has the decision-making rights that are most relevant to changing how and for what purpose the asset is used. In rare cases where the decision about how and for what purpose the asset is used is predetermined, the Company has the right to direct the use of the asset if either:

---

| | |
|:---|:---|
| o | The Company has the right to operate the asset; or |

---

---

| | |
|:---|:---|
| o | The Company designed the asset in a way that predetermines how and for what purpose it will be used. |

---

At inception or on reassessment of a contract that contains a lease component, the Company allocates the consideration in the contract to each lease component on the basis of its relative stand-alone price.

The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment.

*6*

------

**AcuityAds Holdings Inc.**

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars)

 ***December 31, 2022* and *2021***

------

The lease liability is initially measured at the present value of the lease payments that are *not* paid at the commencement date, discounted using the interest rate implicit in the lease.

Lease payments included in the measurement of the lease liability comprise the following:

● Fixed payments, including in-substance fixed payments

● The exercise price under a purchase option that the Company is reasonably certain to exercise, lease payments in an optional renewal period if the Company is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Company is reasonably certain *not* to terminate early

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in the rate or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The Company presents right-of-use assets in "Property and equipment" and lease liabilities in "Lease obligation" in the consolidated balance sheets.

**Nature of leased assets** 

The Company leases various office space and equipment. Contracts are typically made for fixed periods of one to eight years but *may* have extension options as described below. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. Leased assets *may not* be used as security for borrowing purposes.

**Extension and termination options**

Some office leases include an option to renew the lease for an additional period after the non-cancellable contract period. Where practicable, the Company seeks to include extension options in new leases to provide operational flexibility. Extension options are exercisable only by the Company and *not* by the lessors. The Company assesses at lease commencement whether it is reasonably certain to exercise the extension options. The Company reassesses its portfolio of leases to determine whether it is reasonably certain to exercise the options if there is a significant event or significant change in circumstances within its control. The Company considers all facts and circumstances when making this decision. The Company examines whether there is an economic incentive or penalty that would affect the decision to exercise the option, for example, whether the lease option is below market value or whether the Company has made significant investments in leasehold improvements. Where it is *not* reasonably certain that the lease will be extended or terminated, the Company will *not* recognize these options.

**Share-based payments**

Share-based payment arrangements in which the Company receives goods or services as consideration for its own equity instruments are accounted for as equity-settled share-based payment transactions.

The grant date fair value of share-based payment awards such as performance share units ("PSUs"), restricted share units ("RSUs") and stock options granted to employees is recognized as a compensation cost, with a corresponding increase in contributed surplus, over the vesting period of the award. The amount recognized is adjusted to reflect the number of awards for which the related service and non-market vesting conditions are expected to be met, such that the amount ultimately recognized is based on the number of awards that vest. Upon exercising the options, the fair value of the options exercised that was initially recorded to contributed surplus is reclassified to common shares and reflected in the consolidated statements of changes in shareholders' equity.

*7*

------

**AcuityAds Holdings Inc.**

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars)

 ***December 31, 2022* and *2021***

------

As part of the Company's long-term incentives, the Company from time-to-time issues deferred share units ("DSUs") under its long-term incentive plans. DSU awards are settled with the issuance of common shares. The compensation expense for DSUs is based on the fair value at the time the award is granted. The expense is recognized as a component of share-based compensation expense with a corresponding increase to contributed surplus within shareholders' equity. Upon redemption, the fair value of the award is reclassified from contributed surplus to share capital.

**Provisions**

A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. The timing or amount of the outflow *may* still be uncertain. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as a finance cost.

**Finance costs**

Finance costs comprise interest expense on the revolving line of credit, leases, and term loans. Borrowing costs that are *not* directly attributable to the acquisition, construction or production of a qualifying asset are recognized in net income using the effective interest method.

**Income taxes**

Income tax expense for the year comprises current and deferred income taxes. Current taxes and deferred taxes are recognized in the consolidated statements of comprehensive income, except to the extent that they relate to items recognized in other comprehensive income ("OCI") or directly in equity. In these cases, the taxes are also recognized in OCI or directly in equity, respectively.

The Company uses the asset and liability method of accounting for deferred income taxes. Under this method, the Company recognizes deferred income tax assets and liabilities for future income tax consequences attributable to temporary differences between the financial statement carrying amounts of assets and liabilities and their respective income tax bases, and on unused tax losses and tax credit carry-forwards. The Company measures deferred income taxes using tax rates and laws that have been enacted or substantively enacted at the reporting date and are expected to apply when the related deferred income tax asset is realized, or the deferred income tax liability is settled. The Company recognizes deferred income tax assets only to the extent that it is probable that future taxable income will be available against which the deductible temporary differences as well as unused tax losses and tax credit carry-forwards can be utilized. Deferred income tax assets are reviewed at each reporting date and are reduced to the extent that it is *no* longer probable that the related tax benefit will be realized. The Company recognizes the effect of a change in income tax rates in the year of enactment or substantive enactment.

Deferred income taxes are *not* recognized if they arise from the initial recognition of goodwill, nor are they recognized on temporary differences arising from the initial recognition of an asset or liability in a transaction that is *not* a business combination and that affects neither accounting nor taxable income (loss). Deferred income taxes are also *not* recognized on temporary differences relating to investments in subsidiaries to the extent that it is probable that the temporary differences will *not* reverse in the foreseeable future.

*8*

------

**AcuityAds Holdings Inc.**

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars)

 ***December 31, 2022* and *2021***

------

The Company records current income tax expense or recovery based on income earned or loss incurred for the year in each tax jurisdiction where it operates, and for any adjustment to taxes payable in respect of previous years, using tax laws that are enacted or substantively enacted at the consolidated statements of financial position dates.

In the ordinary course of business, there are many transactions for which the ultimate tax outcome is uncertain. The final tax outcome of these matters *may* be different from the estimates originally made by management in determining the Company's income tax provisions. Management periodically evaluates the positions taken in the Company's tax returns with respect to situations in which applicable tax rules are subject to interpretation. The Company establishes provisions related to tax uncertainties where appropriate based on its best estimate of the amount that will ultimately be paid to or received from tax authorities.

**Government assistance**

Government grants and subsidies are recognized at fair value when there is reasonable assurance that they will be received, and the Company will comply with the conditions associated with the grants. To the extent that government grants are earned under the conditions of the grant prior to receipt of funds, the Company records a government grants receivable. Government grants related to operating expenses are reflected as a reduction of such expenses in the year when they are incurred (note *12*).

**Net income per share**

Basic income per share is calculated by dividing the net income for the period by the weighted average number of common shares outstanding during the period. Diluted income per share is calculated by dividing the net income for the period by the sum of the weighted average number of common shares outstanding and the dilutive common share equivalents outstanding during the period. Common share equivalents consist of the shares issuable upon exercise of stock options and shares issuable upon exercise of common share unit options calculated using the treasury stock method. Common share equivalents are *not* included in the calculation of the weighted average number of shares outstanding for diluted net income per share when the effect would be anti-dilutive.

**Media costs**

Media costs are considered the Company's cost of goods sold. The costs include the publishing and real time bidding costs to secure advertising space.

**Intangible assets**

The useful life of an intangible asset is either finite or indefinite. Intangible assets are initially measured at fair value. Following the initial recognition, intangible assets are carried at the initial fair value less accumulated amortization and impairment losses, if any. Acquired intangible assets are recognized as intangible assets with finite lives. Amortization of customer relationships and technology is based on the estimated useful lives of these assets and is recognized on a straight-line basis over *three* years. Intangible assets with finite lives are amortized over their useful economic lives and assessed for impairment whenever there is an indication that the intangible asset *may* be impaired.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *9*

------

**AcuityAds Holdings Inc.**

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars)

 ***December 31, 2022* and *2021***

------

**New accounting standards**

The following amendments to standards and interpretations became effective for the annual periods beginning on or after *January 1, 2022.* The application of these amendments and interpretations had *no* significant impact on the Company's consolidated financial position or results of operations.

Reference to the Conceptual Framework (Amendments to IFRS *3,* Business Combinations). The amendments to IFRS *3* update an outdated reference in IFRS *3* without significantly changing its requirements and add an explicit statement that an acquirer does *not* recognize contingent assets acquired in a business combination.

Fees in the *"10* Per Cent Test" for Derecognition of Financial Liabilities (Amendments to IFRS *9,* Financial Instruments). The amendments to IFRS *9* clarify which fees an entity includes when it applies the *"10* per cent test" in assessing whether to derecognize a financial liability. An entity includes only fees paid or received between the entity (the borrower) and the lender, including fees paid or received by either the entity or the lender on the other's behalf.

Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS *37,* Provisions, Contingent Liabilities and Contingent Assets). The amendments to IAS *37* provide guidance regarding the costs a company should include as the cost of fulfilling a contract when assessing whether a contract is onerous. The amendments specify that the cost of fulfilling a contract comprises the costs that relate directly to the contract and can either be incremental costs of fulfilling that contract or an allocation of other costs that relate directly to fulfilling contracts.

**Future accounting standards**

Classification of Liabilities as Current or Non-current (Amendments to IAS *1,* Presentation of Financial Statements). The amendments to IAS *1* provide a more general approach to the classification of liabilities based on the contractual arrangements in place at the reporting date. The amendments clarify that the classification of liabilities as current or non-current should be based on rights that are in existence at the end of the reporting period and align the wording in all affected paragraphs to refer to the right to defer settlement by at least *twelve* months and make explicit that only rights in place at the end of the reporting period should affect the classification of a liability. The amendments are effective for annual reporting periods beginning on or after *January 1, 2023* and are to be applied retroactively.

Disclosure of Accounting Policies (Amendments to IAS *1*). The amendments to IAS *1* require an entity to disclose its material accounting policies instead of its significant accounting policies. The amendments clarify that accounting policy information is material if users of an entity's financial statements would need it to understand other material information in the financial statements. The amendments are effective for annual reporting periods beginning on or after *January 1, 2023* and are to be applied prospectively.

Definition of Accounting Estimates (Amendments to IAS *8,* Accounting Policies, Changes in Accounting Estimates and Errors). The amendments to IAS *8* provide guidance to assist entities in distinguishing between accounting policies and accounting estimates. The amendments replace the definition of a change in accounting estimates with the definition of accounting estimates. Under the new definition, accounting estimates are monetary amounts in financial statements that are subject to measurement uncertainty. The amendments also clarify that a change in accounting estimate that results from new information or new developments is *not* the correction of an error. In addition, the effects of a change in an input or a measurement technique used to develop an accounting estimate are changes in accounting estimates if they do *not* result from the correction of prior period errors. The amendments are effective for annual periods beginning on or after *January 1, 2023* and are to be applied prospectively.

*10*

------

**AcuityAds Holdings Inc.**

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars)

 ***December 31, 2022* and *2021***

------

Deferred Tax on Assets and Liabilities Arising from Lease and Decommissioning Obligation Transactions (Amendments to IAS *12,* Income Taxes). The amendments to IAS *12* provide clarifications in accounting for deferred tax on certain transactions such as leases and decommissioning obligations. The amendments clarify that the initial recognition exemption does *not* apply to transactions such as leases and decommissioning obligations. As a result, entities *may* need to recognize both a deferred tax asset and a deferred tax liability for temporary differences arising on initial recognition of leases and decommissioning obligations.

These amendments are effective for annual periods beginning on or after *January 1, 2023* and are to be applied to transactions that occur on or after the beginning of the earliest comparative period presented. The Company is still assessing the impact of adopting these amendments on its future financial statements.

---

| | |
|:---|:---|
| ***3*** | **Property and equipment** |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Furniture<br> and fixtures** | **Data center<br> equipment** | **Office<br> computer<br> equipment** | **Right of<br> use assets** | **Total** |
| *Cost* | | | | | |
| As at January 1, 2022 | $1316926 | $52003 | $1266013 | $14505025 | $17139967 |
| Additions | 12769 |  | 78613 | 4956952 | 5048334 |
| **As at December 31, 2022** | **1329695** | **52003** | **1344626** | **19461977** | **22188301** |
| *Accumulated depreciation* | | | | | |
| As at January 1, 2022 | 674721 | 50423 | 799726 | 10245478 | 11770348 |
| Amortization | 231918 | 1580 | 272227 | 2794782 | 3300507 |
| **As at December 31, 2022** | **906639** | **52003** | **1071953** | **13040260** | **15070855** |
| *Net carrying amount* | | | | | |
| As at January 1, 2022 | 642205 | 1580 | 466287 | 4259547 | 5369619 |
| **As at December 31, 2022** | **423056** | **-** | **272673** | **6421717** | **7117446** |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Furniture<br> and fixtures** | **Data center<br> equipment** | **Office<br> computer<br> equipment** | **Right of<br> use assets** | **Total** |
| *Cost* | | | | | |
| As at January 1, 2021 | $1292927 | $52003 | $896153 | $13830098 | $16071181 |
| Additions | 23999 |  | 369860 | 674927 | 1068786 |
| **As at December 31, 2021** | 1316926 | 52003 | 1266013 | 14505025 | 17139967 |
| *Accumulated depreciation* | | | | | |
| As at January 1, 2021 | 442096 | 43179 | 528748 | 7112048 | 8126071 |
| Amortization | 232625 | 7244 | 270978 | 3133430 | 3644277 |
| **As at December 31, 2021** | 674721 | 50423 | 799726 | 10245478 | 11770348 |
| *Net carrying amount* | | | | | |
| As at January 1, 2021 | 850831 | 8824 | 367405 | 6718050 | 7945110 |
| **As at December 31, 2021** | **642205** | **1580** | **466287** | **4259547** | **5369619** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *11*

------

**AcuityAds Holdings Inc.**

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars)

 ***December 31, 2022* and *2021***

------

---

| | |
|:---|:---|
| ***4*** | **Intangible assets** |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **Customer<br> relationships** | **Technology** | **Total** |
| *Cost* | | | |
| As at January 1, 2022 | $5285064 | $12792409 | $18077473 |
| Additions |  | 3737030 | 3737030 |
| **As at December 31, 2022** | **5285064** | **16529439** | **21814503** |
| *Accumulated depreciation* | | | |
| As at January 1, 2022 | 5285064 | 9748131 | 15033195 |
| Amortization |  | 1552503 | 1552503 |
| **As at December 31, 2022** | **5285064** | **11300634** | **16585698** |
| *Net carrying amount* | | | |
| As at January 1, 2022 |  | 3044278 | 3044278 |
| **As at December 31, 2022** | **-** | **5228805** | **5228805** |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **Customer<br> relationships** | **Technology** | **Total** |
| *Cost* | | | |
| As at January 1, 2021 | $5285064 | $11533244 | $16818308 |
| Additions |  | 1259165 | 1259165 |
| **As at December 31, 2021** | **5285064** | **12792409** | **18077473** |
| *Accumulated depreciation* | | | |
| As at January 1, 2021 | 5232604 | 8387751 | 13620355 |
| Amortization | 52460 | 1360380 | 1412840 |
| **As at December 31, 2021** | **5285064** | **9748131** | **15033195** |
| *Net carrying amount* | | | |
| As at January 1, 2021 | 52460 | 3145493 | 3197953 |
| **As at December 31, 2021** | **-** | **3044278** | **3044278** |

---

The Technology intangible asset is internally derived from capitalizing development costs related to revenue generating technology. During the year ended *December 31, 2022,* the Company capitalized $3,737,030 (*2021* – $1,259,165).

---

| | |
|:---|:---|
| ***5*** | **Goodwill**  |

---

Goodwill is tested at least annually for impairment. Goodwill is tested for impairment using the fair value less cost to dispose model at the operating segment level. The Company is managed as one operating segment based on how financial information is produced internally for the purposes of making operating decisions, and it is the lowest level at which goodwill is monitored for internal management purposes. In assessing the goodwill for impairment, the Company compares the aggregate recoverable amount consisting of the sum of its quoted equity market capitalization and the fair value of its debt to the carrying value of its net assets excluding long-term debt. An impairment charge is recognized to the extent that the carrying value exceeds the recoverable amount. No impairment losses have been recorded against the value of goodwill since its acquisition. No impairment charges have arisen as a result of the reviews performed as at *December 31, 2022* and *2021.* Reasonably possible changes in key assumptions would *not* cause the recoverable amount of goodwill to fall below the carrying value.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *12*

------

**AcuityAds Holdings Inc.**

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars)

 ***December 31, 2022* and *2021***

------

---

| | |
|:---|:---|
| ***6*** | **Lease obligations** |

---

---

| | | |
|:---|:---|:---|
|  | **December 31,** <br> **2022** | **December 31,** <br> **2021** |
| Obligations under leases | $6649995 | $4206869 |
| Less: Current portion | 2881804 | 2058161 |
|  | 3768191 | 2148708 |

---

The Company has minimum lease payment commitments under leases for the following amounts:

---

| | |
|:---|:---|
| 2023 | $3462763.0 |
| 2024 | 2318051.0 |
| 2025 | 498844.0 |
| 2026 | 275129.0 |
| 2027 | 270636.0 |
| 2028 | 265312.0 |
| 2029 | 22085.0 |
|  | 7112820.0 |
| Less: Interest | 462825.0 |
| Present value of minimum lease payments | 6649995.0 |

---

---

| | |
|:---|:---|
| ***7*** | **Related party transactions and balances** |

---

Directors and officers are eligible to participate in the Company's long-term incentive plans. No stock options have been granted to directors and officers of the Company since *March 31, 2020 (*note *8*(c)).

During the year ended *December 31, 2022,* the Company issued 144,693 DSUs (*2021* – 16,557) to directors in lieu of director fees. The directors' DSUs vest fully after one year.

During the year ended *December 31, 2022,* the Company issued 1,176,789 (*2021* – 432,286) RSUs to officers of the Company in lieu of cash bonuses. The officers' RSUs vest fully over a period of six to 36 months.

● **Transactions with executive personnel** 

The key management personnel of the Company are the officers and the directors. The remuneration of executive personal during the years ended *December 31, 2022* and *2021* was as follows:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Executive compensation and benefits | $1793894 | $1418101 |
| Share-based compensation | 1046371 | 588925 |
|  | 2840265 | 2007026 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *13*

------

**AcuityAds Holdings Inc.**

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars)

 ***December 31, 2022* and *2021***

------

---

| | |
|:---|:---|
| ***8*** | **Share capital and share-based payments** |

---

a) Share capital

As at *December 31, 2022,* the Company had an unlimited number of common shares authorized for issuance (*2021* – unlimited) and 56,808,921 common shares outstanding (*2021* – 60,733,803) (without par value).

b) Equity financings

On *June 14, 2021,* the Company closed a public offering comprised of 5,665,025 common shares issued from treasury and offered by the Company at a price of US$10.15 ($12.25) per share for gross proceeds to the Company of US$57,500,003 ($69,396,556). The offering was completed by a syndicate of underwriters. In consideration for their services, the underwriters received aggregate compensation equal to 5.5% of the gross proceeds of the offering. The Company incurred additional share issuance costs of $1,640,742 in connection with the offering which was recorded as a reduction of equity.

c) Stock Option Plan and Omnibus Incentive Plan

The Company has a stock option plan (the "Stock Option Plan"), a deferred share unit plan (the "Deferred Share Unit Plan") and an omnibus long-term incentive plan (the "Omnibus Incentive Plan"). Since the adoption of the Omnibus Incentive Plan by shareholders on *June 16, 2020,* the Company has stopped issuing new stock options under its Stock Option Plan and new DSUs under its Deferred Share Unit Plan. Previously issued stock options and DSUs remain outstanding and are governed by the plans under which they were initially issued.

Under the Stock Option Plan, the Board of Directors granted stock options to employees, officers, directors and consultants of the Company. The expiry date of options granted under the Stock Option Plan typically did *not* exceed five years from the grant date. The vesting schedule was at the discretion of the Board of Directors and was generally annually over a three-year period. The exercise price of options was equal to the market price per share on the day preceding the grant date.

The Omnibus Incentive Plan allows for a variety of equity-based awards to be granted to officers, directors, employees, and consultants (in the case of stock options, PSUs and RSUs) and non-employee directors (in the case of DSUs). Stock options, PSUs, RSUs and DSUs are collectively referred to herein as "Awards". Each Award represents the right to receive common shares, or in the case of PSUs, RSUs and DSUs, common shares or cash, in accordance with the terms of the Omnibus Incentive Plan.

The maximum number of common shares reserved for issuance, in the aggregate, under the Omnibus Incentive Plan, the Stock Option Plan, the Deferred Share Unit Plan of the Company and any other security-based compensation arrangement, collectively, is 15% of the aggregate number of common shares issued and outstanding from time to time.

As at *December 31, 2022,* the Company was entitled to issue a maximum of 8,521,338 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *14*

------

**AcuityAds Holdings Inc.**

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars)

 ***December 31, 2022* and *2021***

------

The following table summarizes the continuity of options issued under the Stock Option Plan:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  | **December 31,**<br> **2022** |  | **December 31,**<br> **2021** |
|  | **Number**<br> **of options** | **Weighted**<br> **average**<br> **exercise**<br> **price** | **Number**<br> **of options** | **Weighted**<br> **average**<br> **exercise**<br> **price** |
| Outstanding – beginning of year | 1094001 | $1.90 | 1865519 | $1.69 |
| Granted |  |  | 3333 | 1.06 |
| Forfeited or cancelled | (141666) | 4.06 | (29334) | 1.06 |
| Exercised | (247866) | 1.51 | (745517) | 1.41 |
| Outstanding – end of year | 704469 | 1.60 | 1094001 | 1.90 |
| Options exercisable – end of year | 661135 | 1.60 | 877001 | 1.99 |

---

The following table summarizes the continuity of options issued under the Omnibus Incentive Plan:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  | **December 31,**<br> **2022** |  | **December 31,**<br> **2021** |
|  | **Number**<br> **of options** | **Weighted**<br> **average**<br> **exercise**<br> **price** | **Number**<br> **of options** | **Weighted**<br> **average**<br> **exercise**<br> **price** |
| Outstanding – beginning of year | 23334 | $2.09 | 35000 | $2.09 |
| Exercised |  |  | (11666) | 2.09 |
| Outstanding – end of year | 23334 | 2.09 | 23334 | 2.09 |
| Options exercisable – end of year | 11668 | 2.09 |  |  |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *15*

------

**AcuityAds Holdings Inc.**

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars)

 ***December 31, 2022* and *2021***

------

A combined summary of the Company's stock options outstanding under the above plans is as follows:

---

| | | | |
|:---|:---|:---|:---|
|  |  | **December 31, 2022** | **December 31, 2022** |
| **Range of**<br> **exercise**<br> **prices**<br> **$** | **Number of**<br> **options** | **Weighted**<br> **average**<br> **remaining**<br> **contractual**<br> **life (years)** | **Weighted**<br> **average**<br> **number of**<br> **options**<br> **exercisable** |
| 0.96 | 3333 | 0.67 | 3333 |
| 1.06 | 15134 | 0.75 | 15134 |
| 1.13 | 55000 | 2.42 | 55000 |
| 1.14 | 10000 | 0.92 | 10000 |
| 1.15 | 20000 | 1.92 | 20000 |
| 1.27 | 3334 | 1.67 | 3334 |
| 1.55 | 36333 | 1.42 | 36333 |
| 1.59 | 143334 | 2.17 | 100000 |
| 1.71 | 378001 | 1.25 | 378001 |
| 1.94 | 40000 | 0.92 | 40000 |
| 2.09 | 23334 | 2.67 | 11668 |
|  | **727803** |  | **672803** |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
| **Range of**<br> **exercise**<br> **prices**<br> **$** | **Number of**<br> **options** | **Weighted**<br> **average**<br> **remaining**<br> **contractual**<br> **life (years)** | **Weighted**<br> **average**<br> **number of**<br> **options**<br> **exercisable** |
| 0.96 | 3333 | 1.67 | 3333 |
| 1.06 | 74634 | 1.75 | 74634 |
| 1.13 | 68333 | 3.42 | 55000 |
| 1.14 | 10000 | 1.92 | 10000 |
| 1.15 | 20000 | 2.92 | 13333 |
| 1.27 | 8334 | 2.67 | 5000 |
| 1.55 | 58033 | 2.42 | 18700 |
| 1.59 | 185000 | 3.17 | 51668 |
| 1.71 | 506334 | 2.25 | 485333 |
| 1.94 | 40000 | 0.92 | 40000 |
| 2.09 | 23334 | 3.67 |  |
| 4.12 | 7500 | 0.42 | 7500 |
| 4.47 | 22500 | 0.67 | 22500 |
| 4.60 | 90000 | 0.25 | 90000 |
|  | **1117335** |  | **877001** |

---

During the year ended *December 31, 2022,* the Company recorded share-based compensation expense under the Black-Scholes option pricing model, related to stock options, DSUs and RSUs granted to employees, officers, directors and consultants of the Company of $5,850,615 (*2021* – $4,132,017).

During the year ended *December 31, 2022,* the Company granted nil (*2021* – 3,333) stock options to employees, officers, directors, and consultants of the Company. Of those stock options, nil (*2021* – nil) stock options were granted to officers or employees of the Company. Nil (*2021* – 3,333) stock options were granted to consultants as compensation for services rendered.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *16*

------

**AcuityAds Holdings Inc.**

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars)

 ***December 31, 2022* and *2021***

------

During the year ended *December 31, 2022,* 247,866 stock options under the Stock Option Plan were exercised at a weighted average exercise price of $1.51 per option, for gross proceeds of $374,037 (*2021* – 745,517 were exercised at a weighted average price of $1.41 for gross proceeds of $1,054,673) and nil (*2021* – 11,666) stock options under the Omnibus Incentive Plan were exercised.

Share-based compensation expense was determined based on the fair value of the options at the date of measurement using the Black-Scholes option pricing model with the weighted average assumptions for stock options granted during the year ended *December 31, 2021* as follows:

---

| | |
|:---|:---|
|  | **2021** |
| Weighted average grant date fair value of options granted | $1.45 |
| Weighted average assumptions used |  |
| Expected option life | 5 years |
| Risk-free interest rate | 1.45% |
| Expected volatility | 87% |

---

The expected volatility was estimated based on the historical volatility of the Company's common shares that covers the expected life of the options granted. The expected option life was estimated based on historical data and represents the numbers of years the stock options are expected to be outstanding. The risk-free rate was estimated based on the Government of Canada marketable bonds with a term that covers the expected life of the options granted.

d) Deferred share units

During the year ended *December 31, 2022,* the Company issued a total of 166,432 (*2021* – 63,876) DSUs, of which 144,693 were issued to directors with one year vesting periods and 21,739 were issued to consultants of the Company, vesting every year in the measure of one third. During the year ended *December 31, 2022,* 183,505 DSUs were exercised (*2021* – 578,053).

e) Restricted share units

During the year ended *December 31, 2022,* the Company issued 3,057,160 (*2021* – 952,967) RSUs to employees, officers, and consultants of the Company. During the year ended *December 31, 2022,* 347,527 (*2021* – 271,697) RSUs were exercised.

f) Repurchase of shares for cancellation under NCIB

On *May 16, 2022,* the Company commenced a normal course issuer bid ("NCIB") to purchase for cancellation up to 5,500,000 of its outstanding common shares.

During the year ended *December 31, 2022,* the Company repurchased 4,703,780 common shares at an average price of $3.08 per share totaling $14,499,975.

g) Restatement of previously issued financial statements

During the preparation of the *2022* annual financial statements, the Company determined that the Share-based compensation expense related to RSUs and DSUs was *not* being recorded properly starting prior to *January 1, 2021.* The effect of this error is an overstatement of the Share-based compensation expense and an overstatement of the Contributed surplus balance. The item impacted the Company's reported net income, but did *not* impact its cash flows.

In addition, the Company determined that Contributed surplus was *not* being transferred to Share capital when stock options were exercised starting prior to *January 1, 2021.* The effect of this error is an overstatement of the Contributed surplus balance and an understatement of the Common share balance. The item did *not* impact the Company's reported net income or cash flows.

The Company concluded that the above errors were material to the previously issued consolidated financial statements and as such, the Company has restated its comparative consolidated financial statements, as applicable. The following table presents the impact of the restatements on the Company's comparative Consolidated Statements of Comprehensive Income (Loss) for the year ended *December 31, 2021:*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *17*

------

**AcuityAds Holdings Inc.**

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars)

 ***December 31, 2022* and *2021***

------

---

| | | |
|:---|:---|:---|
|  | **As Reported** | **As Restated** |
| Share-based compensation expense | $5329438 | $4132017 |
| Operating expenses | 54179358 | 52981937 |
| Income from operations | 9385611 | 10583032 |
| Net income before income taxes | 11706427 | 12903848 |
| Net income for the year | 10555510 | 11752931 |
| Basic and diluted net income per share | 0.18 | 0.20 |
| Comprehensive income for the year | 10586679 | 11784100 |

---

The following table presents the impact of the restatements on the Company's comparative Consolidated Statement of Changes in Shareholders' Equity as at *December 31, 2021:*

---

| | | |
|:---|:---|:---|
|  | **As Reported** | **As Restated** |
| Common shares | $124036377 | $126736698 |
| Contributed surplus | 10620976 | 6461456 |
| Deficit | 22047563 | 20588364 |

---

The cumulative impact of the restatement to Shareholders' equity as of *January 1, 2021* was an increase of $1,912,607 to Common Shares, a decrease to Contributed Surplus of $2,174,385, and a decrease to Deficit of $261,778.

---

| | |
|:---|:---|
| ***9*** | **Finance costs** |

---

---

| | | |
|:---|:---|:---|
|  | **Year ended** <br> **December 31,** <br> **2022** | **Year ended** <br> **December 31,**<br> **2021** |
| Interest on leases and other interest | $143058 | $616286 |
| Interest and fees on term loans (note 15 (a)) | 401286 | 436996 |
|  | 544344 | 1053282 |

---

---

| | |
|:---|:---|
| ***10*** | **Net income (loss) per share** |

---

The computations for basic and diluted net income (loss) per share for the year ended *December 31, 2022* and *2021* are as follows:

---

| | | |
|:---|:---|:---|
|  | **Year ended** <br> **December 31,** <br> **2022** | **Year ended** <br> **December 31,** <br> **2021**<br> (As restated Note 8(g)) |
| Net income (loss) for the year | $(753437) | $11752931 |
| Weighted average number of shares outstanding – basic | 59065118 | 57624420 |
| Net income (loss) per share – basic | $(0.01) | $0.20 |
| Dilutive effect of stock options |  | 739172 |
| Dilutive effect of DSUs |  | 305415 |
| Dilutive effect of RSUs |  | 326986 |
| Diluted weighted average number of shares outstanding | 59065118 | 58995993 |
| Net income (loss) per share – diluted | $(0.01) | $0.20 |
| Items excluded from the calculation of diluted net income (loss) per share due to their anti-dilutive effect |  |  |
| Stock options, DSUs, and RSUs | 5645525 | 2297512 |

---

Net income (loss) per share is calculated by dividing the net income (loss) by the weighted average number of shares outstanding during the relevant period. Diluted weighted average number of shares reflects the dilutive effect of equity instruments, such as any "in the money" stock options, RSUs, or DSUs. In the years with reported net losses, all stock options, RSUs, and DSUs are deemed anti-dilutive such that basic net loss per share and diluted net loss per share are equal, and thus "in the money" stock options, RSUs, and DSUs have *not* been included in the computation of net loss per share because to do so would be anti-dilutive.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *18*

------

**AcuityAds Holdings Inc.**

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars)

 ***December 31, 2022* and *2021***

------

---

| | |
|:---|:---|
| ***11*** | **Segment information** |

---

The Company's CEO has been identified as the chief operating decision maker (CODM). The CODM reviews financial information, makes decisions and assesses the performance of the company as a single operating segment. The Company's assets and operations are substantially located in Canada however, the Company also has employees and customers in the United States and Europe and generates revenue in each region. Revenue by region for the year ended *December 31, 2022,* and *2021* is as follows:

---

| | | |
|:---|:---|:---|
|  | **Year ended**<br> **December 31,**<br> **2022** | **Year ended** <br> **December 31,** <br> **2021** |
| United States | $81876626 | $88970329 |
| Canada | 17242502 | 17183464 |
| Europe and other | 21919607 | 15872509 |
|  | 121038735 | 122026302 |

---

During the years ended *December 31, 2022* and *2021,* the Company did *not* have any customers that represented greater than *10%* of total revenue.

---

| | |
|:---|:---|
| ***12*** | **Government assistance** |

---

During the year ended *December 31, 2020,* the Company secured a $3,000,000 commitment funding from the National Research Council's Industrial Research Assistance Program ("IRAP"). In *January 2021,* the Company secured an additional $535,200 commitment to bring the total commitment to $3,535,200. During the year ended *December 31, 2021,* the Company received $2,149,092 of this commitment from IRAP, and the amount was used to reduce technology costs on the consolidated statement of comprehensive income. As of *December 31, 2021,* the Company recognized the full amount of $3,535,200 from the IRAP commitment. During the year ended *December 31, 2022,* the Company did not receive any funds from IRAP.

---

| | |
|:---|:---|
| ***13*** | **Financial instruments** |

---

**Classification of financial instruments**

The following table provides the allocation of financial instruments and their associated financial instrument classifications:

---

| | | |
|:---|:---|:---|
|  | **Loans and receivables/**<br> **financial liabilities**<br> **(Amortized cost)** | **Loans and receivables/**<br> **financial liabilities**<br> **(Amortized cost)** |
| **Measurement basis** | **December 31,** <br> **2022** | **December 31,<br> 2021** |
| Financial assets |  |  |
| Cash and cash equivalents | $85940728 | $102208807 |
| Accounts receivable | 33791853 | 30972608 |
|  | 119732581 | 133181415 |

---

*19*

------

**AcuityAds Holdings Inc.**

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars)

 ***December 31, 2022* and *2021***

------

---

| | | |
|:---|:---|:---|
| Financial liabilities |  |  |
| Accounts payable and accrued liabilities | $26546031.0 | $24853497.0 |
| Term loans | 3790572.0 | 5916956.0 |
| International loans | 431774.0 | 882085.0 |
| Lease obligations | 6649995.0 | 4206869.0 |
|  | 37418372.0 | 35859407.0 |

---

**Fair value measurements**

The Company provides disclosure of the *three*-level hierarchy that reflects the significance of the inputs used in making the fair value measurement. The carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, current portion of finance lease obligations, and current portion of term loans approximate their fair values given their short-term nature. The carrying value of the non-current liabilities approximates their fair value, given that the difference between the discount rates used to recognize the liabilities in the consolidated statements of financial position and the market rates of interest is *not* considered significant. The *three* levels of fair value hierarchy based on the reliability of inputs are as follows:

● Level *1* – inputs are quoted prices in active markets for identical assets and liabilities.

● Level *2* – inputs are based on observable market data, either directly or indirectly other than quoted prices; and

● Level *3* – inputs are *not* based on observable market data.

There were no transfers of financial assets during the year ended *December 31, 2022,* and *2021* between any of the levels.

---

| | |
|:---|:---|
| ***14*** | **Capital risk management** |

---

The Company's objectives in managing capital are to ensure sufficient liquidity to pursue its strategy of organic growth combined with strategic acquisitions and to provide returns to its shareholders. The Company defines capital that it manages as the aggregate of its shareholders' equity, which comprises issued capital, contributed surplus and deficit. The Company manages its capital structure and makes adjustments to it in working capital requirements. In order to maintain or adjust its capital structure, the Company, upon approval from the Board of Directors, *may* issue shares, repurchase shares, pay dividends or undertake other activities as deemed appropriate under the specific circumstances. The Company is *not* subject to externally imposed capital requirements, except for certain monthly financial covenants associated with the revolving line of credit as described in note *15.*

---

| | |
|:---|:---|
| ***15*** | **Financial risk management** |

---

The Company's Board of Directors has overall responsibility for the establishment and oversight of the Company's risk management framework and reviews the Company's risk management policies on an annual basis. Management identifies and evaluates financial risks and is charged with the responsibility of establishing controls and procedures to ensure that financial risks are mitigated in accordance with the approved policies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *20*

------

**AcuityAds Holdings Inc.**

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars)

 ***December 31, 2022* and *2021***

------

**Credit risk**

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises from the Company's accounts receivable and cash. As of *December 31, 2022,* three customers each represented more than 5% of the gross accounts receivable balance of $34,320,380. As of *December 31, 2021,* two customers each represented more than 5% of the gross accounts receivable balance of $31,310,642.

The Company reviews the components of these accounts on a regular basis to evaluate and monitor this risk. The Company's customers are generally financially established organizations, which limits the credit risk relating to the customers. In addition, credit reviews by the Company take into account the counterparty's financial position, past experience and other factors.

As at *December 31, 2022,* the allowance for expected credit loss was $528,527 (*2021* – $338,034). In establishing the appropriate allowance for expected credit loss, management makes assumptions with respect to the future collectability of the receivables. Assumptions are based on an individual assessment of a customer's credit quality as well as subjective factors and trends. As at *December 31, 2022,* 80.0% of the Company's customers are current, 10.6% are from *31* to *60* days, 3.6% are from *61* to *90* days, and 5.8% are greater than *90* days.

The Company, from time to time, invests its excess cash in accounts with Schedule I banks and Silicon Valley Bank ("SVB"), a large U.S. based bank, with the objective of maintaining the safety of the principal and providing adequate liquidity to meet current payment obligations and future planned capital expenditures and with the secondary objective of maximizing the overall yield of the portfolio. The Company's cash as of *December 31, 2022,* is *not* subject to external restrictions. Investments must be rated at least investment grade by recognized rating agencies.

**Liquidity risk**

Liquidity risk is the risk that the Company will *not* be able to meet its financial obligations as they come due. The Company's approach to managing liquidity is to ensure, to the extent possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation. The Company manages its liquidity risk by continually monitoring forecasted and actual revenue and expenditures and cash flows from operations. Management is also actively involved in the review and approval of planned expenditures. The Company's principal cash requirements are for principal and interest payments on its debt, capital expenditures and working capital needs. The Company uses its operating cash flows, loans and borrowings and cash balances to maintain liquidity. In the event that future cash flows from operations are lower than expected, the Company *may* need to seek additional financing, either by issuing additional equity or by undertaking additional borrowings. There is *no* certainty that additional financing will be available or that it will be available on attractive terms.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *21*

------

**AcuityAds Holdings Inc.**

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars)

 ***December 31, 2022* and *2021***

------

The following are the contractual maturities for the financial liabilities:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
|  | **Carrying**<br> **amount** | **Total**<br> **contractual**<br> **cash flows** | **Less**<br> **than**<br> **1 year** | **1 to 3**<br> **Years** | ***> 3 years*** |
| Accounts payable and accrued liabilities | $26546031 | $26546031 | $26546031 | $- | $- |
| International loans | 431774 | 431774 | 240752 | 191022 |  |
| Term loans | 3790572 | 3963031 | 3963031 |  |  |
| Lease obligation | 6649995 | 7112820 | 2881804 | 3092024 | 1138992 |
|  | 37418372 | 38053656 | 33631618 | 3283046 | 1138992 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **Carrying**<br> **amount** | **Total**<br> **contractual**<br> **cash flows** | **Less**<br> **than**<br> **1 year** | **1 to 3**<br> **Years** | ***> 3 years*** |
| Accounts payable and accrued liabilities | $24853497 | $24853497 | $24853497 | $- | $- |
| International loans | 882085 | 882085 | 467312 | 414773 |  |
| Term loans | 5916956 | 6222416 | 2478838 | 3743578 |  |
| Lease obligation | 4206869 | 4724847 | 2058161 | 2666686 |  |
|  | 35859407 | 36682845 | 29857808 | 6825037 |  |

---

**Interest rate risk**

Interest rate risk is the risk of financial loss to the Company if interest rates increase on interest-bearing instruments. The revolving line of credit bears interest at 4.6%. The term loans bear interest at a fixed rate of 8.10%, which the Company believes is consistent with market interest rates for this type of debt.

**Foreign exchange or currency risk**

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

If a shift in foreign currency exchange rates of 10% were to occur, the foreign exchange gain or loss on the Company's net monetary assets could change by approximately $9,336,426 due to the fluctuation and this would be recorded in the consolidated statements of comprehensive income.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *22*

------

**AcuityAds Holdings Inc.**

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars)

 ***December 31, 2022* and *2021***

------

Balances held in U.S. dollars are as follows in CAD:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2022** | **December 31,**<br> **2021** |
| Cash | $82257335 | $99118059 |
| Accounts receivable | 24157194 | 22017575 |
| Accounts payable | 13050270 | 15530451 |
| Term loan | 3790572 | 5916956 |

---

---

| | |
|:---|:---|
| ***16*** | **Borrowings** |

---

a) **Term Loan**

During the years ended *December 31, 2022* and *2021,* the Company had a secured term loan with SVB that expires *April 1, 2024* with total availability of US$7,750,000 bearing interest at the greater of prime plus 0.60% and 3.85%. On *December 31, 2022,* the prime rate was 7.50%.

The following table outlines the activity of the term loan during the years ended *December 31, 2022,* and *2021:*

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Amortized cost – January 1 | $5916956 | $8278004 |
| Accrued interest | 401286 | 436996 |
| Payment of interest | (266320) | (302157) |
| Principal amount repaid | (2261350) | (2495887) |
| Balance – December 31 | 3790572 | 5916956 |

---

The credit facilities are subject to certain general and financial covenants, including the delivery of annual audited consolidated financial statements to the holders. The credit facilities are secured by all material assets of the Company. The Company was in breach of *one* covenant as at *December 31, 2022.* Accordingly, the entire loan balance of $3,790,572 has been classified as current liabilities as at *December 31, 2022.* However, the Company received a waiver from SVB after *December 31, 2022* indicating that it does *not* intend to take any action and demand repayment of the loan balance under the agreement.

b) **International loans**

**International term loans**

International term loans outstanding amounted to $416,736 (Euro 288,239) as at *December 31, 2022 (2021:* $867,931: Euro 602,673). The interest rates of 1.75% to 2.53% and maturity date from *May 18, 2023* to *May 21, 2025* for these unsecured term loans held during the year ended *December 31, 2022,* and *2021.*

**Line of credit**

The line of credit payables amounted to $15,038 (Euro 10,401) as at *December 31, 2022 (2021:* $14,154: Euro 10,628) and is secured against certain accounts receivable as at *December 31, 2022* and *2021.* The interest rates of 1.75% to Euribor + 1.95% and maturity date from *April 16, 2023* to *August 6, 2023* for these line of credit payables held during the year ended *December 31, 2022,* and *2021.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *23*

------

**AcuityAds Holdings Inc.**

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars)

 ***December 31, 2022* and *2021***

------

The following table outlines the current portion and non-current portion of the borrowings:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2022** | **December 31,**<br> **2021** |
| Current portion of term loan | $3790572 | $2478838 |
| Current portion of international loans | 240752 | 467312 |
| Total current borrowings | 4031324 | 2946150 |
| Non-current portion of term loan |  | 3438118 |
| Non-current portion of international loans | 191022 | 414773 |
| Total borrowings | 4222346 | 6799041 |

---

---

| | |
|:---|:---|
| ***17*** | **Income taxes** |

---

**Income tax expense**

A reconciliation between tax expense (recovery) and accounting income (loss) multiplied by the Company's domestic tax rate for the years ended *December 31, 2022* and *2021* is as follows:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021**<br> (As restated Note 8(g)) |
| Income before income taxes | $208730 | $12903848 |
| Income tax expense at the Company's statutory tax rate of 26.5% (2021 – 26.5%) | 55314 | 3419520 |
| Increase (decrease) in income taxes resulting from |  |  |
| Permanent differences | 1443060 | 1634557 |
| Prior year true-up | 910 | 108305 |
| Changes in unrecognized temporary differences | (197857) | (105922) |
| Effect of foreign subsidiaries | (82026) | (70146) |
| Prior year loss applied in current year previously not recognized | (274134) | (2807987) |
| Other | 39070 | (887345) |
| Rate adjustment | (22170) | (140065) |
| Income tax expense  | 962167 | 1150917 |
| Current tax expense | 269730 | 1232720 |
| Deferred tax expense (recovery) | 692437 | (81803) |
| Income tax expense | 962167 | 1150917 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *24*

------

**AcuityAds Holdings Inc.**

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars)

 ***December 31, 2022* and *2021***

------

**Deferred taxes**

Deferred taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax values. The Company records deferred income tax recovery on losses in comprehensive income, when management views that it is probable that the deferred tax assets will be realized, based on historical profitability and forecasted future profitability.

Deferred tax assets (liabilities) as at *December 31, 2022* comprised the following.

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Non-capital loss carryforwards | $385905 | $651934 |
| Property and equipment | (1226457) | (816614) |
| Financing fees | 72432 | 128018 |
| SR&ED ITC credit |  | (227634) |
| Lease liabilities | 157487 | 346099 |
| Deferred tax asset (liabilities) | (610633) | 81803 |

---

As at *December 31, 2022,* the Company had non-capital losses of approximately $1,456,244 that are available to reduce future taxable income and for which a benefit has currently been recognized in the consolidated financial statements. The non-capital losses will expire as follows: *2038* – $79,214; *2039* - $645,353; *2040* – $731,677. The Company does not have any SR&ED Investment tax credits carry-forward for the year ended *December 31, 2022 (2021* – $858,944).

Deferred tax assets have *not* been recognized for the Company's operations in the US in respect of the following items:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Non-capital loss carryforwards | $23461788 | $24230225 |
| Taxable temporary differences | (686458) | (369894) |
|  | 22775330 | 23860331 |

---

As at *December 31, 2022,* the Company had non-capital losses of approximately $102,013,679, which are available to reduce future taxable income and for which *no* benefit has currently been recognized in the consolidated financial statements. Certain of those losses are restricted under the Internal Revenue Code, Section *382,* and amounted to $91,095,775. If unused, the non-capital losses incurred from before *2018* will expire from *2028* through *2037.*

Under the CARES Act (The Coronavirus Aid, Relief, and Economic Security Act), losses incurred after the *2017* tax year can be carried forward indefinitely. This indefinite carry-forward period includes any NOLs from *2018, 2019* and *2020* that remain after they are carried back to tax years in the *five*-year carry-back period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *25*

------

**AcuityAds Holdings Inc.**

Notes to Consolidated Financial Statements

(Expressed in Canadian dollars)

 ***December 31, 2022* and *2021***

------

---

| | |
|:---|:---|
| ***18*** | **Expenses by nature** |

---

---

| | | |
|:---|:---|:---|
|  | **Year ended**<br> **December 31,**<br> **2022** | **Year ended**<br> **December 31,**<br> **2021** |
| Employee wages, salaries, and benefits | $32924571 | $27257073 |
| Professional fees | 2592940 | 1927512 |
| Contractor consulting fees | 3854951 | 2768516 |
| Hosting and data costs | 6359167 | 5280774 |
| Insurance | 2723618 | 1820269 |
| Travel, entertainment, and conferences | 2527479 | 1563729 |
| Advertising and promotion | 1469458 | 1161780 |
| Public company fees | 779453 | 467606 |
| Other | 2369270 | 1545544 |
|  | 55600907 | 43792803 |

---

For the year ended *December 31, 2022* and *2021,* the Company recorded IRAP subsidies of nil (*2021* - $2,149,092), which have all been offset against employee wages, salaries and benefits.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 26

## Exhibit 99.3

**Exhibit 99.3**

![exh993_logo.jpg](exh993_logo.jpg)

**AcuityAds Holdings Inc.**

**MANAGEMENT**'**S DISCUSSION AND ANALYSIS**

**FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2022**

Dated March 9, 2023

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, 2022

------

**Management**'**s Discussion and Analysis**

This Management's Discussion and Analysis ("MD&A") explains the variations in the consolidated operating results, 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, 2022. In this MD&A, "this quarter", "the quarter", or "fourth quarter" refer to the three months ended December 31, 2022, and "year to date" refers to the twelve months ended December 31, 2022 unless the context indicates otherwise. All results commentary is compared to the equivalent period in 2021 or as at December 31, 2021, as applicable, unless otherwise indicated. This analysis should be read in conjunction with AcuityAds' audited consolidated financial statements for the twelve months ended December 31, 2022, 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. All intercompany balances and transactions have been eliminated on consolidation.

The information in this report is dated as at March 9, 2023.

**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", and "Adjusted EBITDA".

The term "Net Revenue" or Gross Profit 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" or Gross 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 gains, income taxes, foreign exchange gains and losses, depreciation and amortization, share-based compensation, acquisition and related integration costs, severance expenses, and executive transition expenses. 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.

"Net Revenue", "Net Revenue Margin", and "Adjusted EBITDA" 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", and "Adjusted EBITDA" do not have a standardized meaning prescribed by IFRS and are not necessarily comparable to similar measures presented by other companies.

------

**AcuityAds Holdings Inc.**

Management's Discussion and Analysis for the three and twelve months ended December 31, 2022

------

**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 AcuityAds*' *programmatic marketing platform (the* "***Programmatic Marketing 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. 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 Company*'*s ability to retain existing customers and attract new customers, including under the illumin platform; the Company*'*s ability to expand into additional advertising channels and expand its customer base in Canada, the U.S. and globally; 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.* 

*Any financial outlook or 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.*

------

**AcuityAds Holdings Inc.**

Management's Discussion and Analysis for the three and twelve months ended December 31, 2022

------

*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 contained 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 the* "*Risk Factors*" *section of this MD&A and under the* "*Risk Factors*" *section of the most recent Annual Information Form and included or discussed in the Company*'*s other periodic filings, such as previous MD&A, which are available under the Company*'*s profile 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' Programmatic Marketing Platform allows advertisers to manage their purchasing of online display advertising in real-time using programmatic ad buying, a method of buying online display advertising in which ad spots (called impressions) are released in an auction that occurs in milliseconds. AcuityAds purchases impressions for advertisers through agreements with publishers, ad networks and ad exchanges. Its technology platform benefits advertisers by enabling them to target specific audiences based on demographic and psychographic parameters as well as manage their bid amounts to purchase the advertising inventory that is most relevant for their campaigns. Real-time reporting enables advertisers to monitor specific performance metrics and react and pivot quickly to optimize campaigns to help ensure they achieve consumer targeting goals and key performance indicators.

AcuityAds' illumin<sup>TM</sup> enables creation of consumer journeys with custom messages tied to propensity-scored audience, increasing efficiency and return on advertising investments. illumin is an advertising automation technology that offers planning, media buying and omnichannel intelligence from a single platform, allowing advertisers to map their consumer journey playbooks across screens and execute in real-time using programmatic technology. illumin has had excellent traction and experienced rapid growth since its launch and now accounts for a significant portion of the Corporation's total revenue. For the three and twelve months ended December 31, 2022, revenue derived from illumin was $22,451,183 and $53,762,723 respectively compared to $10,172,803 and $26,020,954, respectively, of revenue in the comparable 2021 periods. This represents continued growth in the illumin platform as we reach the target customer base and realize on our significant growth potential.

------

**AcuityAds Holdings Inc.**

Management's Discussion and Analysis for the three and twelve months ended December 31, 2022

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**RESULTS OF OPERATIONS**

**Significant developments during the three and twelve months ended December 31, 2022, and to the date of this report include the following:**

On May 16, 2022, AcuityAds commenced a normal course issuer bid ("NCIB") for its common shares, which is open until May 15, 2023 or such earlier time as the NCIB is completed or terminated at the option of the Company. Under the NCIB, AcuityAds may purchase for cancellation up to 5,500,000 common shares of the Company. Daily purchases are limited to 140,680 common shares, other than block purchase exceptions. The maximum number of common shares that may be purchased under the NCIB represents approximately 9.95% of AcuityAds' public float as at May 3, 2022.

The common shares are purchased on behalf of the Corporation by a registered broker through the facilities of the Toronto Stock Exchange ("TSX") and through other alternative Canadian trading platforms at the prevailing market price at the time of such transaction. The actual number of common shares that may be purchased, and the timing of any such purchases, is determined by the Company, subject to the applicable terms and limitations of the NCIB. All common shares acquired by the Company under the NCIB will be cancelled.

The NCIB will terminate one year after its commencement, or earlier if the maximum number of common shares under the NCIB have been purchased. Although the Company has a present intention to acquire its common shares pursuant to the NCIB, the Company will not be obligated to make any purchases and purchases may be suspended by the Company at any time. The Company reserves the right to terminate the NCIB earlier if it feels it is appropriate to do so.

As of December 31, 2022, the Company purchased and cancelled 4,703,780 common shares at an average price of $3.08 per share totaling $14,499,976 through the NCIB.

**Factors Affecting the Company**'**s Performance**

We believe that the growth and success of the Company in the future depends on factors including, but not limited to, those described below.

*Economic factors*

Economic conditions may affect the Company's results of operations and predictability of future income. Demand and supply are both driven by movements in the end consumer market, which may be affected by factors such as high inflation, recessionary fear and geopolitical instability. These conditions may reduce the spending committed by our existing and potential customers on marketing campaigns, and a less observable impact of our product (such as conversion rate) as received by the end consumers. Therefore, we foresee a less predictable period in the foreseeable future, where the Company's revenue and other results may fluctuate, as we lack the visibility as to how customers may react to the economic factors discussed above.

*Seasonality*

Seasonality and cyclicality of the retail sales business may affect the Company's revenue and operating results. Typically, retail advertisers concentrate spending in the fourth quarter during holiday seasons. However, some advertisers, such as those in the entertainment industry, may concentrate advertising spending outside of the fourth quarter, to coincide with the launch and display of contents or programs. As a result of these factors, one quarter's operating results do not necessarily indicate future quarters' operating results.

------

**AcuityAds Holdings Inc.**

Management's Discussion and Analysis for the three and twelve months ended December 31, 2022

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*Foreign Currency*

A large portion of the Company's revenue is earned in U.S. dollars from customers based in the U.S. Our results of operations are converted into our functional currency, Canadian dollars, using the average foreign exchange rates for each period presented. Given the material magnitude of our revenue earned in U.S. dollars, our operating results may be adversely impacted by an increase in the value of the Canadian dollar in relation to the U.S. dollar.

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**AcuityAds Holdings Inc.**

Management's Discussion and Analysis for the three and twelve months ended December 31, 2022

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**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 2022, Fiscal 2021, and Fiscal 2020 has been derived from the Company's audited annual Consolidated Financial Statements and related notes.

---

| | | | |
|:---|:---|:---|:---|
|  | **Fiscal 2022** | **Fiscal 2021**<br> (As restated)<sup>1</sup> | **Fiscal 2020**<br> (As restated) |
| Revenue | $121038735 | $122026302 | $104894048 |
| By line of service: |  |  |  |
| Managed services | 80978396 | 91807683 | 80500355 |
| Self-service | 40060339 | 30218619 | 24393693 |
| Media Cost | 60250973 | 58461333 | 50808810 |
| Gross Profit | 60787762 | 63564969 | 54085238 |
| *Gross Margin* | 50% | 52% | 52% |
| Sales and marketing expenses | 24042497 | 22274113 | 18127414 |
| Research and development | 16804963 | 12680460 | 13156538 |
| General and administrative | 14753447 | 8838230 | 5918740 |
| Share-based compensation | 5850615 | 4132017 | 736529 |
| Depreciation and amortization | 4853009 | 5057117 | 8894174 |
| Income (loss) from operations | (5516769) | 10583032 | 7251843 |
| Finance costs | 544344 | 1053282 | 1663039 |
| Foreign exchange (gain) loss | (6269843) | (3374098) | 138335 |
|  | (5725499) | (2320816) | 1801374 |
| Income taxes | 962167 | 1150917 | 1497701 |
| Net income (loss) for the year | (753437) | 11752931 | 3952768 |
| Net income (loss) per share (basic and diluted) | (0.01) | 0.20 | 0.08 |
| Adjusted EBITDA | 5756557 | 20271899 | 15798119 |
| Total assets | 141647402 | 149825580 | 72433499 |
| Total non-current liabilities | 5019328 | 6001599 | 10725906 |
| Working capital | 90231817 | 105692066 | 26763590 |

---

(1) See "Restatement of previously issued financial statements" disclosure in this MD&A.

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**AcuityAds Holdings Inc.**

Management's Discussion and Analysis for the three and twelve months ended December 31, 2022

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***Results for the three and twelve months ended December 31, 2022 and 2021***

The following table provides selected financial information from the consolidated statements of income (loss) for the three and twelve months ended December 31, 2022 and 2021:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Three months ended | Three months ended | Twelve months ended | Twelve months ended |
|  | December 31, | December 31,<br> 2021 | December 31, | December 31,<br> 2021 |
|  | 2022 | (As restated)<sup>3</sup> | 2022 | (As restated)3 |
| Revenue | $40010206 | $36801668 | $121038735 | $122026302 |
| By line of service: |  |  |  |  |
| Managed services | 26640756 | 26610018 | 80978396 | 91807683 |
| Self-service | 13369450 | 10191650 | 40060339 | 30218619 |
| By geography: |  |  |  |  |
| U.S. | 26953061 | 26400940 | 81876626 | 88970329 |
| Canada | 4287267 | 5844700 | 17242502 | 17183464 |
| Other | 8769878 | 4556028 | 21919607 | 15872509 |
| Gross Profit (Net Revenue) <sup>1</sup> | 19360693 | 19139096 | 60787762 | 63564969 |
| Adjusted EBITDA<sup>1</sup> | 2447426 | 5872288 | 5756557 | 20271899 |
| Income (loss) from operations | (215287) | 3046120 | (5516769) | 10583032 |
| Net income (loss) | (818228) | 2645206 | (753437) | 11752931 |
| Net income (loss) per share (basic and diluted) <sup>2</sup> | (0.01) | 0.04 | (0.01) | 0.20 |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) As defined in "Non-IFRS Financial Measures".

&nbsp;&nbsp;&nbsp;&nbsp;(2) Exercisable options to purchase 672,803 (2021 – 877,001) common shares were outstanding as at December 31, 2022. The weighted average number of options and warrants were excluded from the calculation of diluted loss per share for the periods ended December 31, 2022 and 2021 because their inclusion would have been anti-dilutive.

&nbsp;&nbsp;&nbsp;&nbsp;(3) See "Restatement of previously issued financial statements" disclosure in this MD&A.

*Three months ended December 31, 2022 and 2021*

Revenue for the quarter was $40,010,206, an increase of $3,208,538, or 9%. from the same prior year period. The Company's managed service revenue for the quarter was $26,640,756, essentially flat from the same prior year period. The Company's self-service revenue for the quarter was $13,369,450, an increase of $3,177,800, or 31%, from the same prior year period. The increase in total revenue for the quarter was primarily a result of higher spend by existing clients that have, because of a short learning curve, gained traction on our illumin platform resulting in organic growth.

Revenue generated in the United States for the quarter was $26,953,061, an increase of $552,121, or 2%, from the same prior year period. Revenue generated in Canada for the quarter was $4,287,267, a decrease of $1,557,433, or 27% from the same prior year period. Revenue from other geographies for the quarter was $8,769,878, an increase of 92%.

Adjusted EBITDA for the quarter was $2,447,426, a decrease of $3,424,862, or 58%, from the same prior year period and was primarily attributable to higher operating expenses. Net loss for the quarter was $818,228, a decrease of $3,463,434, or 131%, primarily as a result of an increase in operating expenses as discussed under the operating expense section.

*Twelve months ended December 31, 2022 and 2021*

Revenue for the twelve months ended December 31, 2022 was $121,038,735, a decrease of $987,567, or 1%, from the same prior year period. The Company's managed services revenue for the year was $80,978,396, a decrease of $10,829,287, or 12%, from the same prior year period. The Company's self-service revenue for the year was $40,060,339, an increase of $9,841,720, or 33% from the same prior year period. The decrease in total revenue for the twelve months ended December 31, 2022 was primarily a result of lower spend by clients driven by economic headwinds, such as historically high inflation, the anticipation of lower inventory and lower demand due to persisting supply chain challenges and recessionary fears and pressures.

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**AcuityAds Holdings Inc.**

Management's Discussion and Analysis for the three and twelve months ended December 31, 2022

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Revenue generated in the United States for the twelve months ended December 31, 2022 was $81,876,626, a decrease of $7,093,703, or 8%, from the same prior year period. Revenue generated in Canada for the twelve months ended December 31, 2022 was $17,242,502, essentially flat from the same prior year period. Revenue from other geographies for the year was $21,919,607, an increase of $6,047,098, or 38%, from the same prior year period.

Adjusted EBITDA for the twelve months ended December 31, 2022 was $5,756,557, a decrease of $14,515,342, or 72%, from the same prior year period and was primarily attributable to higher operating expenses. Net loss for the twelve months ended December 31, 2022 was $753,437, a decrease of $12,506,368 from net income of $11,752,931 from the same prior year period. The decrease in net income was primarily a result of an increase in operating expenses due to growth initiatives and a lower Gross Profit.

<u>Net Revenue</u>

The following table sets out a reconciliation of Net Revenue (Gross Profit) to Revenue for each of the periods indicated:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Three months ended | Three months ended | Twelve months ended | Twelve months ended |
|  | December 31, | December 31, | December 31, | December 31, |
|  | 2022 | 2021 | 2022 | 2021 |
| Revenue | $40010206 | $36801668 | $121038735 | $122026302 |
| Media costs | 20649513 | 17662572 | 60250973 | 58461333 |
| Net Revenue | 19360693 | 19139096 | 60787762 | 63564969 |
| Net Revenue Margin | 48.4% | 52.0% | 50.2% | 52.1% |

---

*Three months ended December 31, 2022 and 2021*

Media costs are comprised of advertising impressions that the Company purchased from real-time advertising exchanges or through other third parties. Media costs were $20,649,513 for the quarter compared to $17,662,572 for the same prior year period, for an increase of $2,986,941, or 17%. This increase in media costs was attributable to the increased revenue during the period attributable to the increased self-service revenue during the period, which has lower margins than managed. Net Revenue Margin was 48.4% for the quarter compared to 52.0% for the same prior year period.

*Twelve months ended December 31, 2022 and 2021*

For the twelve months ended December 31, 2022, media costs were $60,250,973 compared to $58,461,333 for the same prior year period. The increase in media costs of $1,789,640, or 3%, was attributable to the increased self-service revenue during the period, which has a lower margin than managed. Net Revenue Margin was 50.2% for the year, compared to 52.1% for the same prior year period.

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**AcuityAds Holdings Inc.**

Management's Discussion and Analysis for the three and twelve months ended December 31, 2022

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**Reconciliation of Net income (loss) to Adjusted EBITDA for the three and twelve months ended December 31, 2022 and 2021**

The following table presents a reconciliation of Net income (loss) to Adjusted EBITDA for the periods indicated:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | Three months ended | Three months ended | Twelve months ended | Twelve months ended |
|  |  | December 31, |  | December 31, |
|  | December 31,<br> 2022 | 2021<br> (As restated)<sup>1</sup> | December 31,<br> 2022 | 2021<br> (As restated)<sup>1</sup> |
| Net income (loss) for the period | $(818228) | $2645206 | $(753437) | $11752931 |
| Adjustments: |  |  |  |  |
| Finance costs | 114787 | 256208 | 544344 | 1053282 |
| Foreign exchange (gain) loss | 958229 | (774611) | (6269843) | (3374098) |
| Depreciation and amortization | 1325841 | 1240123 | 4853009 | 5057117 |
| Income tax expense (recovery) | (470075) | 919317 | 962167 | 1150917 |
| Share-based compensation | 1244565 | 1197945 | 5850615 | 4132017 |
| Severance expenses | 92307 | 27500 | 490570 | 139133 |
| Other expenses |  | 360600 | 79132 | 360600 |
| Total adjustments | 3265654 | 3227082 | 6509994 | 8518968 |
| **Adjusted EBITDA** | $**2447426** | $**5872288** | $**5756557** | $**20271899** |

---

(1) See "Restatement of previously issued financial statements" disclosure in this MD&A.

*Three months ended December 31, 2022 and 2021*

Adjusted EBITDA for the three months ended December 31, 2022 was $2,447,426 compared to $5,872,288 for the same prior year period. The year-over-year decrease of $3,424,862 was primarily attributable to higher operating expenses as discussed under the operating expenses section.

*Twelve months ended December 31, 2022 and 2021*

Adjusted EBITDA for the twelve months ended December 31, 2022 was $5,756,557 compared to $20,271,899 for the same prior year period. The year-over-year decrease of $14,515,342 was primarily attributable to higher operating expenses and lower revenues.

***Operating Expenses, Finance Costs, and Foreign Exchange***

The following table summarizes various expenses for the three and twelve months ended December 31, 2022 and 2021:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | Three months ended | Three months ended | Twelve months ended | Twelve months ended |
|  |  | December 31, |  | December 31, |
|  | December 31,<br> 2022 | 2021<br> (As restated)<sup>1</sup> | December 31,<br> 2022 | 2021<br> (As restated)<sup>1</sup> |
| Sales and marketing | $7296589 | $7291942 | $24042497 | $22274113 |
| Technology | 5040004 | 2963946 | 16804963 | 12680460 |
| General and administrative | 4668981 | 3399020 | 14753447 | 8838230 |
| Share-based compensation | 1244565 | 1197945 | 5850615 | 4132017 |
| Depreciation and amortization | 1325841 | 1240123 | 4853009 | 5057117 |
| Finance costs | 114787 | 256208 | 544344 | 1053282 |
| Foreign exchange (gain) loss | 958229 | (774611) | (6269843) | (3374098) |

---

(1) See "Restatement of previously issued financial statements" disclosure in this MD&A.

The Company's rapid growth has led to fluctuating overall operating results due to higher expenditures in sales and marketing and research and development from quarter to quarter and increases in employee headcount.

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**AcuityAds Holdings Inc.**

Management's Discussion and Analysis for the three and twelve months ended December 31, 2022

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<u>Sales and marketing expenses</u>

Sales and marketing expenses consist of all costs associated with selling and marketing the Company's services. The costs include all salary and benefit 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 quarter were $7,296,589 and were relatively flat compared to the same period of the prior year. Sales and marketing expenses represented 18% of revenue for the quarter compared with 20% for the same period of the prior year.

Sales and marketing expenses for the twelve months ended December 31, 2022 were $24,042,497, an increase of $1,768,384, or 8%, compared to the same prior year period. The year-over-year increase was primarily related to the increase in the sales team and an increase in sales-related expense due to the lifting of COVID-19 travel restrictions, capacity limits, and vaccine requirements. Sales and marketing expenses represented 20% of revenue for the twelve months ended December 31, 2022, compared with 18% for the same prior year period.

<u>Technology</u>

Technology expenses consist of all costs associated with increasing the Programmatic Marketing Platform's effectiveness and efficiency. The majority of such costs are comprised of salary and benefit costs and costs associated with housing the required computer equipment. Technology expenses for the quarter were $5,040,004, an increase of $2,076,058, or 70%, compared to the same period of the prior year. Excluding government grants and capitalized salaries, technology expenses for the quarter increased by $2,349,882 compared to the same period from the prior year and represented 15% of revenue compared to 10% for the same period of the prior year.

During the quarter, the Company recognized nil in government grants related to technology from the Industrial Research Assistance Program ("IRAP") compared to $535,200 during the same prior year period. During the quarter, the Company capitalized $1,109,024 of salary costs that related to revenue generating technology compared to $300,000 for the same prior year period.

Technology expenses for the twelve months ended December 31, 2022 were $16,804,963, an increase of $4,124,503, or 33%, compared to the same period of the prior year. Excluding government grants and capitalized salaries, during the twelve months ended December 31, 2022, technology expenses increased by $4,453,276 compared to the same period from the prior year and represented 17% of revenue compared to 13% for the same period of the prior year.

During the twelve months ended December 31, 2022, the Company recognized nil in government grants related to technology from IRAP compared to $2,149,092 during the same prior year period. During the twelve months ended December 31, 2022, the Company capitalized $3,737,030 of salary costs that related to revenue generating technology compared to $1,259,165 for the same prior year period.

<u>General and administrative</u>

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 fourth quarter were $4,668,981, an increase of $1,269,961, or 37%, compared to the same period of the prior year. The year-over-year increase was primarily related to increased legal and audit fees, as well as an increase to the overall size of the executive team. General and administrative expenses for the quarter represented 12% of revenue compared to 9% for the same period of the prior year.

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**AcuityAds Holdings Inc.**

Management's Discussion and Analysis for the three and twelve months ended December 31, 2022

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General and administrative expenses for the twelve months ended December 31, 2022 were $14,753,447, an increase of $5,915,217, or 67%, compared to the same period of the prior year. The year-over-year increase was primarily related to increased legal, advisory, audit, and insurance costs that arose from listing on the Nasdaq, as well as an increase to the overall size of the executive team. General and administrative expenses for the twelve months ended December 31, 2022 represented 12% of revenue compared to 7% for the same period of the prior year.

<u>Share-based compensation</u>

Share-based compensation expense for the quarter was $1,244,565, an increase of $46,620, or 4%, compared to the same period of the prior year. This increase in share-based compensation expense was related to an increase in grants issued to attract and also retain senior leadership positions.

Share-based compensation expense for the twelve months ended December 31, 2022 was $5,850,615, an increase of $1,718,598, or 42%, compared to the same period of the prior year. This increase in share-based compensation expense was related to an increase in grants issued to attract and also retain senior leadership positions.

<u>Depreciation and amortization</u>

Depreciation and amortization expense for the quarter was $1,325,841, an increase of $85,718, or 7%, compared to the same period of the prior year. The year-over-year increase was attributable to the increase in fixed asset balance during 2022.

Depreciation and amortization expense for the twelve months ended December 31, 2022 was $4,853,009, a decrease of $204,108, or 4%, compared to the same period of the prior year. The year-over-year decrease was attributable to the lower fixed asset balance as a result of fully amortizing certain fixed assets during 2022.

<u>Finance costs</u>

Finance costs for the quarter were $114,787, a decrease of $141,421, or 55%, 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.

Finance costs for the twelve months ended December 31, 2022 were $544,344, a decrease of $508,938, or 48%, compared to the same prior year period. 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.

<u>Foreign exchange (gain) loss</u>

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 $958,229 for the quarter compared to a gain of $774,611 for the same prior year period. The foreign exchange loss was a result of a decrease in the U.S. dollar in the quarter.

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**AcuityAds Holdings Inc.**

Management's Discussion and Analysis for the three and twelve months ended December 31, 2022

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For the twelve months ended December 31, 2022, the Company recorded a net foreign exchange gain of $6,269,843 compared to $3,374,098 for the same prior year period. The foreign exchange gain was a result of the large increase in the U.S. dollar in the period in conjunction with the large U.S. dollar cash balance held.

Historically, the Company has not hedged foreign currency transactions, but may elect to do so in the future if it is determined to be advantageous.

***Summary of Quarterly Results***

The following table sets out selected financial information for the Company on a consolidated basis for the last eight most recently completed quarters. The quarterly information has been prepared in accordance with IFRS.

![exh993_12.jpg](exh993_12.jpg)

(1) See "Restatement of previously issued financial statements" disclosure in this MD&A.

**LIQUIDITY AND CAPITAL RESOURCES** 

Selected financial information from the statements of financial position as at December 31, 2022 and December 31, 2021 are as follows:

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| | | |
|:---|:---|:---|
|  | December 31,<br> 2022 | December 31,<br> 2021 |
| Cash and cash equivalents | $85940728 | $102208807 |
| Working capital<sup>(1)</sup> | 90231817 | 105692066 |
| Total assets | 141647402 | 149825580 |
| Current liabilities | 33501726 | 30767973 |
| Other non-current liabilities | 5019328 | 6001599 |
| Shareholders' equity | 103126348 | 113056008 |

---

<sup>(1)</sup> Working capital is defined as current assets less current liabilities.

As at December 31, 2022, the Company had cash and cash equivalents of $85,940,728 compared to $102,208,807 as at December 31, 2021 for a decrease of $16,268,079, or 16%. This decrease was largely due to the NCIB program and investments in our platform and other property and equipment, partially offset by the impact of foreign exchange on cash and cash equivalents.

Cash flows generated from operations were $1,780,951 during the twelve months ended December 31, 2022, compared to $19,693,544 during the same prior year period.

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**AcuityAds Holdings Inc.**

Management's Discussion and Analysis for the three and twelve months ended December 31, 2022

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Cash flows used in investing activities were $3,828,412 during the twelve months ended December 31, 2022, compared to $1,653,024 during the same prior year period. The increase was primarily due to an increase in intangible assets compared to the same prior year period.

Cash flows used in financing activities were $19,354,567 during the twelve months ended December 31, 2022, compared to a cash generation of $58,135,198 during the same prior year period. This decrease was primarily due to an equity raise that was completed during the prior year period and the repurchase of shares under NCIB in the twelve months ended December 31, 2022.

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. The Company's approach to managing liquidity is to ensure, to the extent possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation. The Company manages its liquidity risk by continually monitoring forecasted and actual revenue and expenditures and cash flows from operations. 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. The Company currently has sufficient operating capital to meet its day-to-day operating expenses. The Company has credit facilities that are subject to certain general and financial covenants, including the delivery of annual audited consolidated financial statements to the holders. The credit facilities are secured by all material assets of the Company. The Company was in breach of one covenant as at December 31, 2022 and accordingly, the entire loan balance of $3,790,572 has been classified as a current liability as at December 31, 2022. However, the Company received a waiver from its lender, Silicon Valley Bank ("SVB") after December 31, 2022 indicating that SVB does not intend to take any action and demand repayment of the loan balance under the agreement.

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 commercially 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 of the Company from December 31, 2021 to December 31, 2022 are as follows:

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| | |
|:---|:---|
|  | Number of Common Shares |
| Balance as at December 31, 2021 | 60733803 |
| Shares issued – Options exercised | 247866 |
| Shares issued – DSUs exercised | 183505 |
| Shares issued – RSUs exercised | 347527 |
| Repurchase of shares for cancellation under NCIB | (4703780) |
| **Balance as at December 31, 2022** | **56808921** |

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**Preference Shares**

While the Company is authorized to issue an unlimited number of preference shares, the Company has no preference shares issued and outstanding.

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**AcuityAds Holdings Inc.**

Management's Discussion and Analysis for the three and twelve months ended December 31, 2022

------

**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 DSU Plan and any other security-based compensation arrangement of the Company, collectively, is 15% of the aggregate number of common shares issued and outstanding from time to time. As at December 31, 2022, the Company was entitled to issue a maximum of 8,521,338 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:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  | **Number**<br> **of options** | **Weighted**<br> **average**<br> **exercise**<br> **price**<br> **$** | **Number**<br> **of options** | **Weighted**<br> **average**<br> **exercise**<br> **price**<br> **$** |
| Options outstanding – Beginning of year | 1094001 | 1.90 | 1865519 | 1.69 |
| Granted |  |  | 3333 | 1.06 |
| Forfeited or cancelled | (141666) | 4.06 | (29334) | 1.06 |
| Exercised | (247866) | 1.51 | (745517) | 1.41 |
| Options outstanding – End of period | 704469 | 1.60 | 1094001 | 1.90 |
| Options exercisable – End of period | 661135 | 1.60 | 877001 | 1.99 |

---

The following table summarizes the continuity of stock options issued by the Company under the Omnibus Incentive Plan:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  | **Number**<br> **of options** | **Weighted**<br> **average**<br> **exercise**<br> **price**<br> **$** | **Number**<br> **of options** | **Weighted**<br> **average**<br> **exercise**<br> **price**<br> **$** |
| Options outstanding – Beginning of year | 23334 | 2.09 | 35000 | 2.09 |
| Granted |  |  |  |  |
| Forfeited or cancelled |  |  |  |  |
| Exercised |  |  | (11666) | 2.09 |
| Options outstanding – End of period | 23334 | 2.09 | 23334 | 2.09 |
| Options exercisable – End of period | 11668 | 2.09 |  |  |

---

------

**AcuityAds Holdings Inc.**

Management's Discussion and Analysis for the three and twelve months ended December 31, 2022

------

**Deferred Share Units** 

During the three and twelve months ended December 31, 2022, the Company issued 56,296 and 166,432 DSUs, respectively to employees, officers, directors, and consultants of the Company as compared to 14,205 and 63,876 during the prior year periods, respectively.

During the three and twelve months ended December 31, 2022, 5,867 and 183,505 DSUs, respectively, were exercised as compared to 31,997 and 578,053 during the prior year periods, respectively.

**Restricted Share Units** 

During the three and twelve months ended December 31, 2022, the Company issued 1,260,581 and 3,057,160 RSUs, respectively to employees, officers, directors, and consultants of the Company as compared to 649,161 and 952,967 during the prior year periods, respectively.

During the three and twelve months ended December 31, 2022, 44,768 and 347,527 RSUs, respectively, were exercised as compared to 49,184 and 271,697 during the prior year periods, respectively. As at December 31, 2022, the Company had 4,244,825 RSUs outstanding.

**Restatement of previously issued financial statements** 

During the preparation of the 2022 annual financial statements, the Company determined that the Share-based compensation expense related to RSUs and DSUs was not being recorded properly starting prior to January 1, 2021. The effect of this error is an overstatement of the Share-based compensation expense and an overstatement of the Contributed surplus balance. The item impacted the Company's reported net income, but did not impact its cash flows.

In addition, the Company determined that Contributed surplus was not being transferred to Share capital when stock options were exercised starting prior to January 1, 2021. The effect of this error is an overstatement of the Contributed surplus balance and an understatement of the Common share balance. The item did not impact the Company's reported net income or cash flows.

The Company concluded that the above errors were material to the previously issued consolidated financial statements and as such, the Company has restated its comparative consolidated financial statements, as applicable. The following table presents the impact of the restatements on the Company's comparative Consolidated Statements of Comprehensive Income (Loss) as at December 31, 2021:

---

| | | |
|:---|:---|:---|
|  | **As Reported** | **As Restated** |
| Share-based compensation expense | $5329438 | $4132017 |
| Operating expenses | 54179358 | 52981937 |
| Income (loss) from operations | 9385611 | 10583032 |
| Net income (loss) before income taxes | 11706427 | 12903848 |
| Net income (loss) for the year | 10555510 | 11752931 |
| Basic and diluted net (loss) per share | 0.18 | 0.20 |
| Comprehensive income (loss) for the year | 10586679 | 11784100 |

---

------

The following table presents the impact of the restatements on the Company's comparative Consolidated Statement of Changes in Shareholders' Equity as at December 31, 2021:

---

| | | |
|:---|:---|:---|
|  | **As Reported** | **As Restated** |
| Common shares | $124036377 | $126736698 |
| Contributed surplus | 10620976 | 6461456 |
| Deficit | 22047563 | 20588364 |

---

The cumulative impact of the restatement to Shareholders' equity as of January 1, 2021 was an increase of $1,912,607 to Common Shares, a decrease to Contributed Surplus of $2,174,385, and a decrease to Deficit of $261,778.

**CONTRACTUAL OBLIGATIONS**

The following are the contractual maturities for the financial liabilities:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
|  | **Carrying**<br> **amount**<br> **$** | **Total**<br> **contractual**<br> **cash flows**<br> **$** | **Less**<br> **than**<br> **1 year**<br> **$** | **1 to 3**<br> **Years**<br> **$** | **> 3 years**<br> **$** |
| Accounts payable and accrued liabilities | 26546031 | 26546031 | 26546031 |  |  |
| International loans | 431774 | 431774 | 240752 | 191022 |  |
| Term loans | 3790572 | 3963031 | 3963031 |  |  |
| Lease obligations | 6649995 | 7112820 | 2881804 | 3092024 | 1138992 |
|  | 37418372 | 38053656 | 33631618 | 3283046 | 1138992 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **Carrying**<br> **amount**<br> **$** | **Total**<br> **contractual**<br> **cash flows**<br> **$** | **Less**<br> **than**<br> **1 year**<br> **$** | **1 to 3**<br> **Years**<br> **$** | **> 3 years**<br> **$** |
| Accounts payable and accrued liabilities | 24853497 | 24853497 | 24853497 |  |  |
| International loans | 882085 | 882085 | 467312 | 414773 |  |
| Term loans | 5916956 | 6222416 | 2478838 | 3743578 |  |
| Lease obligations | 4206869 | 4724847 | 2058161 | 2666686 |  |
|  | 35859407 | 36682845 | 29857808 | 6825037 |  |

---

**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.

------

**AcuityAds Holdings Inc.**

Management's Discussion and Analysis for the three and twelve months ended December 31, 2022

------

**TRANSACTIONS WITH RELATED PARTIES**

During the three and twelve months ended December 31, 2022, 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 Consolidated Financial Statements which are available on SEDAR at www.sedar.com.

**CHANGES IN ACCOUNTING POLICIES**

**Recently adopted accounting pronouncements**

For the period ended December 31, 2022, the Company has adopted new accounting policies as disclosed in Note 2 of the Company's Consolidated Financial Statements. The application of those amendments and interpretations had no significant impact on the Company's Consolidated Financial position or results of operations.

**DISCLOSURE CONTROLS AND INTERNAL CONTROL OVER FINANCIAL REPORTING** 

Management, under the supervision of the Company's Chief Executive Officer and Chief Financial Officer (collectively the "Certifying Officers"), is responsible for establishing and maintaining disclosure controls and procedures ("DC&P"), as that term is defined in National Instrument 52-109 Certification of Disclosure in Issuer's Annual and Interim Filings and Rule 13a-15(e) of the Exchange Act. DC&P have been designed to ensure that information required to be disclosed by the Company is accumulated and communicated to the Company's management as appropriate to allow timely decisions regarding required disclosure. Management, including the Certifying Officers evaluated the effectiveness of the Company's DC&P and have concluded that, because of the material weakness in the Company's ICFR described below, the Company's DC&P were not effective as of December 31, 2022.

Management, under the supervision of the Certifying Officers, is responsible for establishing and maintaining an adequate system of "internal control over financial reporting" ("ICFR"), as that term is defined in National Instrument 52-109 Certification of Disclosure in Issuer's Annual and Interim Filings and Rule 13a-15(f) of the Exchange Act. Management, including the Certifying Officers, have assessed the effectiveness of the Company's ICFR in accordance Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management, including the Certifying Officers, have determined that the Company's ICFR was not effective as of December 31, 2022.

As of December 31, 2022, management, including the Certifying Officers, determined a material weakness existed in the Company's ICFR in the design and implementation of the oversight processes related to the appropriate calculation of share-based compensation expense and the subsequent classification of exercised options between Share Capital and Contributed Surplus. The expense error overstated prior year expense, which led to a restatement of the 2021 Consolidated Statement of Comprehensive Income (Loss) and a further adjustment for the year ended December 31, 2022. The improper classification within Shareholders' Equity resulted in an overstatement of Contributed Surplus and an understatement of Share Capital. Management determined that there was a deficiency in the adequacy of the review of the process as well as having individuals with the requisite technical accounting knowledge preparing the journal entries.

------

**AcuityAds Holdings Inc.**

Management's Discussion and Analysis for the three and twelve months ended December 31, 2022

------

A material weakness is a deficiency, or combination of deficiencies, in ICFR such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements may not be prevented or detected on a timely basis. As a result of the material weakness determination, management has begun to take steps to remediate the material weakness including the hiring of an individual with the requisite technical accounting knowledge. Management is taking further steps to correct the amortization calculation with the system vendor to the appropriate method and adopted a review methodology that reconciles system outputs back to source data as part of the period-end financial reporting process.

Management has concluded that, except as otherwise described above, there were no changes to the Company's ICFR for the year ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, the Company's ICFR.

**OUTSTANDING SHARE DATA**

As at March 9, 2023, 56,808,921 common shares and no preference shares were issued and outstanding. In addition, as at March 9, 2023, there were 727,803 stock options outstanding, each of which represents the right to acquire one common share, with exercise prices ranging from $0.96 to $2.09 per share. As at March 9, 2023, there were 662,898 DSUs outstanding and 4,148,730 RSUs outstanding, each of which represents the right to acquire one common 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 Annual Information Form for the year ended December 31, 2022, 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 common shares are listed on the TSX under the symbol "AT" and the Nasdaq under the symbol "ATY".

## Exhibit 99.4

**Exhibit 99.4**

![pwc.jpg](pwc.jpg)

**Consent of Independent Registered Public Accounting Firm**

We hereby consent to the inclusion in this Annual Report on Form 40-F for the year ended December 31, 2022 of AcuityAds Holdings Inc. of our report dated March 9, 2023 relating to the consolidated financial statements, which appears in Exhibit 99.2 to this Annual Report on Form 40-F.

We also consent to the reference to us under the heading "Interests of Experts" in the Annual Information Form, which appears in Exhibit 99.1 to this Annual Report on Form 40-F.

We also consent to the incorporation by reference in the Registration Statements on Form F-10 (No. 333-256909) and Form S-8 (No. 333-258901) of AcuityAds Holdings Inc. of our report dated March 9, 2023 referred to above.

/s/ PricewaterhouseCoopers LLP

**Chartered Professional Accountants, Licensed Public Accountants**<br> Toronto, Canada<br> March 9, 2023

PricewaterhouseCoopers LLP

PwC Tower, 18 York Street, Suite 2600, Toronto, Ontario, Canada M5J 0B2

T: +1 416 863 1133, F: +1 416 365 8215, www.pwc.com/ca

"PwC" refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.

## Exhibit 99.5

**Exhibit 99.5**

**CERTIFICATION PURSUANT TO RULE 13a-14 OR 15d-14 OF**<br> **THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO**

**SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, Tal Hayek, certify that:

1. I have reviewed this annual report on Form 40-F of AcuityAds Holdings Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

4. The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) Evaluated the effectiveness of the issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d) Disclosed in this report any change in the issuer's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer's internal control over financial reporting; and

5. The issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer's auditors and the audit committee of the issuer's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer's internal control over financial reporting.

---

| | |
|:---|:---|
| March 9, 2023 | ![talhayeksignature.jpg](talhayeksignature.jpg) |
|  | Tal Hayek |
|  | Chief Executive Officer |

---

## Exhibit 99.6

**Exhibit 99.6**

**CERTIFICATION PURSUANT TO RULE 13a-14 OR 15d-14 OF**<br> **THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO**

**SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, Elliot Muchnik, certify that:

1. I have reviewed this annual report on Form 40-F of AcuityAds Holdings Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

4. The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) Evaluated the effectiveness of the issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d) Disclosed in this report any change in the issuer's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer's internal control over financial reporting; and

5. The issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer's auditors and the audit committee of the issuer's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer's internal control over financial reporting.

---

| | |
|:---|:---|
| March 9, 2023 | ![elliotmuchniksignature.jpg](elliotmuchniksignature.jpg) |
|  | Elliot Muchnik |
|  | Chief Financial Officer |

---

## Exhibit 99.7

**Exhibit 99.7**

**Certification of Chief Executive Officer Pursuant To 18 U.S.C. Section 1350,**<br> **As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act**

In connection with the Annual Report of AcuityAds Holdings Inc. (the "Company") on Form 40-F for the fiscal year ended December 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Tal Hayek, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

1. The Report of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: March 9, 2023

---

| | |
|:---|:---|
| ![talhayeksignature.jpg](talhayeksignature.jpg) | ![talhayeksignature.jpg](talhayeksignature.jpg) |
| Name: | Tal Hayek |
| Title: | Chief Executive Officer |

---

**Certification of Chief Financial Officer Pursuant To 18 U.S.C. Section 1350,**<br> **As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act**

In connection with the Annual Report of AcuityAds Holdings Inc. (the "Company") on Form 40-F for the fiscal year ended December 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Elliot Muchnik, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

1. The Report of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: March 9, 2023

---

| | |
|:---|:---|
| ![elliotmuchniksignature.jpg](elliotmuchniksignature.jpg) | ![elliotmuchniksignature.jpg](elliotmuchniksignature.jpg) |
| Name: | Elliot Muchnik |
| Title: | Chief Financial Officer |

---