Document:

Exhibit 4.2

 

AcuityAds Holdings Inc.

 

Consolidated Financial Statements

 

December 31,
2020 and 2019

(expressed in Canadian dollars)

  

 

 

     

     

    

 

Independent auditor’s report

 

To the Shareholders of AcuityAds Holdings
Inc.

  

Our opinion

 

In our opinion, the accompanying consolidated
financial statements present fairly, in all material respects, the financial position of AcuityAds Holdings Inc. and its subsidiaries
(together, the Company) as at December 31, 2020 and 2019, and its financial performance and its cash flows for the years then ended
in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS).

 

What we have audited

 

The Company’s consolidated financial
statements comprise:

 

		·	the
                                            consolidated statements of financial position as at December 31, 2020 and 2019;

 

		·	the
                                            consolidated statements of income (loss) for the years then ended;

 

		·	the
                                            consolidated statements of comprehensive income (loss) for the years then ended;

 

		·	the
                                            consolidated statements of changes in shareholders’ equity for the years then ended;

 

		·	the
                                            consolidated statements of cash flows for the years then ended; and

 

		·	the
                                            notes to the consolidated financial statements, which include significant accounting policies
                                            and other explanatory information.

 

Basis for opinion

 

We conducted our audit in accordance
with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the consolidated financial statements section of our report.

 

We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our opinion.

 

Independence

 

We are independent of the Company in
accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada. We have fulfilled
our other ethical responsibilities in accordance with these requirements.

  

PricewaterhouseCoopers LLP

PwC Tower, 18 York Street, Suite 2600,
Toronto, Ontario, Canada M5J oB2

T: +1 416 863 1133, F: +1 416 365 8215

 

“PwC” refers to PricewaterhouseCoopers
LLP, an Ontario limited liability partnership.

 

     

     

    

 

Key audit matters

 

Key audit matters are those matters
that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended
December 31, 2020. These matters were addressed in the context of our audit of the consolidated financial statements as a whole,
and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

   

Key audit matter

 

Impairment assessment of goodwill

 

Refer to note 2 – Summary of significant accounting policies
and note 7 – Goodwill to the consolidated financial statements.

 

The Company had goodwill of $4,869,841 as at December 31, 2020.
Management performs an impairment assessment at each reporting date to determine whether there is any indication of impairment. An impairment
loss is recognized if the carrying amount of the cash generating unit (CGU) to which the goodwill relates exceeds its estimated recoverable
amount. The recoverable amount was based on the fair value less cost of disposal of goodwill and value-in-use method using a discounted
cash flow model. Significant assumptions used in the discounted cash flow model included revenue growth rates, operating margins, tax
rates, terminal value, and discount rates. No impairment was recognized as a result of the 2020 impairment review.

 

We considered this a key audit matter due to (i) the significance
of the goodwill balance and (ii) the significant judgment made by management in determining the recoverable amount of the CGU, including
the use of significant assumptions. This has resulted in a high degree of subjectivity and audit effort in performing audit procedures
to test the significant assumptions.

 

 

How our audit addressed the key audit matter

 

Our approach to addressing the matter involved the following procedures,
among others:

 

		·	Evaluated how management determined the recoverable amount of the goodwill,
which included the following:

 

		-	Tested the appropriateness of the method used and the mathematical accuracy
of the discounted cash flow model.

 

		-	Tested the revenue growth rates applied by management in the discounted cash
flow model by comparing them to the budget, management’s strategic plans approved by the Board, and available third party published
economic data.

 

		-	Performed a sensitivity analysis on key assumptions (revenue growth rates,
operating margins, tax rates, terminal value, and discount rates).

 

		-	Assessed the reasonableness of discount rates and the terminal value by comparing
to externally derived data.

 

		-	Tested the underlying data used in the discounted cash flow model.

 

		·	Evaluated the sufficiency of the disclosures in the consolidated financial
statements.

  

 

 

 

     

     

    

 

Other information

 

Management is responsible for the other
information. The other information comprises the Management’s Discussion and Analysis.

 

Our opinion on the consolidated financial
statements does not cover the other information and we do not express any form of assurance conclusion thereon.

 

In connection with our audit of the
consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether
the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated.

 

If, based on the work we have performed,
we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to
report in this regard.

 

Responsibilities of management and
those charged with governance for the consolidated financial statements

 

Management is responsible for the preparation
and fair presentation of the consolidated financial statements in accordance with IFRS, and for such internal control as management determines
is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to
fraud or error.

 

In preparing the consolidated financial
statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company
or to cease operations, or has no realistic alternative but to do so.

 

Those charged with governance are responsible
for overseeing the Company’s financial reporting process.

 

Auditor’s responsibilities
for the audit of the consolidated financial statements

 

Our objectives are to obtain reasonable
assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or
error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

 

     

     

    

 

As part of an audit in accordance with
Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the
audit. We also:

 

		·	Identify
                                            and assess the risks of material misstatement of the consolidated financial statements, whether
                                            due to fraud or error, design and perform audit procedures responsive to those risks, and
                                            obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
                                            The risk of not detecting a material misstatement resulting from fraud is higher than for
                                            one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
                                            misrepresentations, or the override of internal control.

 

		·	Obtain
                                            an understanding of internal control relevant to the audit in order to design audit procedures
                                            that are appropriate in the circumstances, but not for the purpose of expressing an opinion
                                            on the effectiveness of the Company’s internal control.

 

		·	Evaluate
                                            the appropriateness of accounting policies used and the reasonableness of accounting estimates
                                            and related disclosures made by management.

 

		·	Conclude
                                            on the appropriateness of management’s use of the going concern basis of accounting
                                            and, based on the audit evidence obtained, whether a material uncertainty exists related
                                            to events or conditions that may cast significant doubt on the Company’s ability to
                                            continue as a going concern. If we conclude that a material uncertainty exists, we are required
                                            to draw attention in our auditor’s report to the related disclosures in the consolidated
                                            financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions
                                            are based on the audit evidence obtained up to the date of our auditor’s report. However,
                                            future events or conditions may cause the Company to cease to continue as a going concern.

 

		·	Evaluate
                                            the overall presentation, structure and content of the consolidated financial statements,
                                            including the disclosures, and whether the consolidated financial statements represent the
                                            underlying transactions and events in a manner that achieves fair presentation.

 

		·	Obtain
                                            sufficient appropriate audit evidence regarding the financial information of the entities
                                            or business activities within the Company to express an opinion on the consolidated financial
                                            statements. We are responsible for the direction, supervision and performance of the group
                                            audit. We remain solely responsible for our audit opinion.

 

We communicate with those charged with
governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.

 

We also provide those charged with governance
with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships
and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

 

     

     

    

 

From the matters communicated with those
charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements
of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not
be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.

 

The engagement partner on the audit
resulting in this independent auditor’s report is Anita McOuat.

 

	/s/ PricewaterhouseCoopers
    LLP	 
	 	 
	Chartered Professional Accountants,
    Licensed Public Accountants	 
	 	 
	Toronto, Ontario	 
	March 1, 2021	 

 

     

     

    

 

AcuityAds Holdings Inc.

Consolidated Statements of Financial Position

As at December 31, 2020 and
2019

 

(expressed in Canadian dollars)

	 	 	2020	 	 	2019	 
	 	 	$	 	 	$	 
	Assets	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Current assets	 	 	 	 	 	 
	Cash and cash equivalents	 	 	22,638,300	 	 	 	7,407,122	 
	Accounts receivable	 	 	31,859,306	 	 	 	38,234,752	 
	Prepaid expenses and other	 	 	1,901,067	 	 	 	2,477,651	 
	Investment tax credits receivable (note 4)	 	 	21,922	 	 	 	286,883	 
	 	 	 	56,420,595	 	 	 	48,406,408	 
	Non-current assets	 	 	 	 	 	 	 	 
	Restricted cash	 	 	-	 	 	 	100,000	 
	Deferred tax asset (note 22)	 	 	-	 	 	 	1,262,014	 
	Property and equipment (notes 3 and 5)	 	 	7,945,110	 	 	 	6,978,834	 
	Intangible assets (note 6)	 	 	3,197,953	 	 	 	7,741,882	 
	Goodwill (note 7)	 	 	4,869,841	 	 	 	4,869,841	 
	 	 	 	72,433,499	 	 	 	69,358,979	 
	 	 	 	 	 	 	 	 	 
	Liabilities
 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Current liabilities	 	 	 	 	 	 	 	 
	Accounts payable and accrued liabilities	 	 	23,232,661	 	 	 	26,330,763	 
	Term loans (note 20)	 	 	2,481,550	 	 	 	1,210,500	 
	Revolving line of credit (note 19)	 	 	-	 	 	 	15,384,498	 
	International loans (note 21)	 	 	1,092,297	 	 	 	1,006,653	 
	Lease obligations (notes 8)	 	 	2,850,497	 	 	 	2,748,200	 
	 	 	 	29,657,005	 	 	 	46,680,614	 
	Non-current liabilities	 	 	 	 	 	 	 	 
	Term loans (note 20)	 	 	5,796,454	 	 	 	2,241,831	 
	International loans (note 21)	 	 	887,932	 	 	 	1,436,666	 
	Lease obligations (notes 8)	 	 	4,041,520	 	 	 	3,400,403	 
	 	 	 	40,382,911	 	 	 	53,759,514	 
	 	 	 	 	 	 	 	 	 
	Shareholders’ Equity (notes
    10)	 	 	32,050,588	 	 	 	15,599,465	 
	 	 	 	72,433,499	 	 	 	69,358,979	 

 

     

     

    

 

AcuityAds Holdings Inc.

Consolidated Statements of Income (Loss)

For the years ended December 31,
2020 and 2019

 

(expressed in Canadian dollars)

	 	 	2020
 
	 	 	2019
 
	 
	 	 	$	 	 	$	 
	Revenue	 	 	 	 	 	 	 	 
	Managed services	 	 	80,500,355	 	 	 	87,996,085	 
	Self-service	 	 	24,393,693	 	 	 	31,138,144	 
	 	 	 	104,894,048	 	 	 	119,134,229	 
	Media costs	 	 	50,808,810	 	 	 	61,711,918	 
	Gross profit	 	 	54,085,238	 	 	 	57,422,311	 
	Operating expenses	 	 	 	 	 	 	 	 
	Sales and marketing	 	 	18,127,414	 	 	 	27,019,494	 
	Technology (notes 4 and 6)	 	 	13,156,538	 	 	 	13,801,435	 
	General and administrative	 	 	5,918,740	 	 	 	7,873,489	 
	Share-based compensation (note 10)	 	 	998,307	 	 	 	1,410,467	 
	Acquisition costs	 	 	-	 	 	 	1,289,920	 
	Gain on contingent consideration	 	 	-	 	 	 	(3,066,799	)
	Impairment loss of goodwill (note 7)	 	 	-	 	 	 	3,231,048	 
	Depreciation and amortization	 	 	8,894,174	 	 	 	8,123,877	 
	 	 	 	47,095,173	 	 	 	59,682,931	 
	Income (loss) from operations	 	 	6,990,065	 	 	 	(2,260,620	)
	Finance costs (note 11)	 	 	1,663,039	 	 	 	2,493,711	 
	Foreign exchange loss	 	 	138,335	 	 	 	699,968	 
	 	 	 	1,801,374	 	 	 	3,193,679	 
	Net income (loss) before income taxes	 	 	5,188,691	 	 	 	(5,454,299	)
	Income taxes (note 22)	 	 	1,497,701	 	 	 	153,107	 
	Net income (loss) for the year	 	 	3,690,990	 	 	 	(5,607,406	)
	Net income (loss) per share (note 12)	 	 	 	 	 	 	 	 
	Basic and diluted	 	 	0.07	 	 	 	(0.12	)

 

AcuityAds Holdings Inc.

Consolidated Statements of Comprehensive Income (Loss)

For the years ended December 31,
2020 and 2019

 

(expressed in Canadian dollars)

	 	 	2020
 
	 	 	2019
	 
	 	 	$	 	 	$	 
	Net income (loss) for the period	 	 	3,690,990	 	 	 	(5,607,406	)
	Exchange differences on translating foreign operations	 	 	(415,049	)	 	 	(415,915	)
	Comprehensive income (loss) for the period	 	 	3,275,941	 	 	 	(6,023,321	)

 

     

     

    

 

AcuityAds Holdings Inc.

Consolidated Statements of Changes in Shareholders’ Equity

For the years ended December 31,
2020 and 2019

 

(expressed in Canadian dollars)

	 	 	2020	 
	 	 	Common shares	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	Amount	 	 	Contributed
    surplus	 	 	Warrants	 	 	Other reserves	 	 	Deficit	 	 	Total	 
	 	 	Number	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 
	Balance
    - December 31, 2019	 	47,824,212	 	 	42,185,794	 	 	 	6,954,447	 	 	 	2,337,372	 	 	 	415,915	 	 	 	(36,294,063	)	 	 	15,599,465	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Shares
    issued – options exercised	 	1,133,482	 	 	1,465,658	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	1,465,658	 
	Equity
    financing (note 10(b))	 	1,968,000	 	 	10,617,887	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	10,617,887	 
	Warrants
    issues - term loan	 	-	 	 	-	 	 	 	(1,922,271	)	 	 	-	 	 	 	-	 	 	 	-	 	 	 	(1,922,271	)
	Share-based
    compensation (note 10(c))	 	-	 	 	-	 	 	 	998,307	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	998,307	 
	Shares
    issued - Warrants exercised	 	1,417,623	 	 	1,601,418	 	 	 	1,090,965	 	 	 	(1,090,965	)	 	 	-	 	 	 	-	 	 	 	1,601,418	 
	Shares
    issued - DSUs/RSUs exercised (notes 10(d) and 10(e))	 	1,078,707	 	 	1,112,354	 	 	 	(1,112,354	)	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 
	Warrants
    cancelled and forfeited	 	-	 	 	-	 	 	 	1,215,128	 	 	 	(1,215,128	)	 	 	-	 	 	 	-	 	 	 	-	 
	Other
    comprehensive income	 	-	 	 	-	 	 	 	-	 	 	 	-	 	 	 	(866	)	 	 	-	 	 	 	(866	)
	Net
    income for the year	 	-	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	3,690,990	 	 	 	3,690,990	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balance
    - December 31, 2020	 	53,422,024	 	 	56,983,111	 	 	 	7,224,222	 	 	 	31,279	 	 	 	415,049	 	 	 	(32,603,073	)	 	 	32,050,588	 

 

	 	 	2019	 
	 	 	Common shares	 	 	 	 	 	 	 	 	 	 	 	 	 	 		 
	 	 	 	 	 	Amount	 	 	Contributed
    surplus	 	 	Warrants	 	 	Other reserves	 	 	Deficit	 	 	Total	 
	 	 	 Number	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 
	Balance
    - December 31, 2018	 	 	40,951,002	 	 	33,552,755	 	 	 	5,252,136	 	 	2,472,346	 	 	(446,279	)	 	(30,686,658	)	 	10,144,300	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Shares
    issued – options exercised	 	 	240,167	 	 	230,872	 	 	 	-	 	 	-	 	 	-	 	 	-	 	 	230,872	 
	Equity
    financing (note 10(b))	 	 	5,936,300	 	 	7,724,145	 	 	 	-	 	 	274,257	 	 	-	 	 	-	 	 	7,998,402	 
	Share-based
    compensation (note 10(c))	 	 	-	 	 	-	 	 	 	1,410,467	 	 	-	 	 	-	 	 	-	 	 	1,410,467	 
	Shares
    issued - Warrants exercised	 	 	555,885	 	 	560,635	 	 	 	409,231	 	 	(409,231	)	 	-	 	 	-	 	 	560,635	 
	Shares
    issued - DSUs/RSUs exercised (notes 10(d) and 10(e))	 	 	140,858	 	 	117,387	 	 	 	(117,387	)	 	-	 	 	-	 	 	-	 	 	-	 
	Other
    comprehensive income	 	 	-	 	 	-	 	 	 	-	 	 	-	 	 	862,194	 	 	-	 	 	862,194	 
	Net
    loss for the year	 	 	-	 	 	-	 	 	 	-	 	 	-	 	 	-	 	 	(5,607,405	)	 	(5,607,405	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balance
    - December 31, 2019	 	 	47,824,212	 	 	42,185,794	 	 	 	6,954,447	 	 	2,337,372	 	 	415,915	 	 	(36,294,063	)	 	15,599,465	 

 

     

     

    

 

AcuityAds Holdings Inc.

Consolidated Statements of Cash Flows

For the years ended December 31,
2020 and 2019

 

(expressed in Canadian dollars)

	 	 	2020	 	 	2019	 
	 	 	$	 	 	$	 
	Cash provided by (used in)	 	 	 	 	 	 	 	 
	Operating activities	 	 	 	 	 	 	 	 
	Income (loss) for the year	 	 	3,690,990	 	 	 	(5,607,405	)
	Adjustments to reconcile net income (loss) to net cash flows	 	 	 	 	 	 	 	 
	Depreciation and amortization	 	 	8,894,174	 	 	 	8,123,877	 
	Finance costs (note 11)	 	 	1,663,039	 	 	 	2,493,711	 
	Share-based compensation (note 10(c))	 	 	998,307	 	 	 	1,410,467	 
	Gain on contingent consideration	 	 	-	 	 	 	(3,066,799	)
	Impairment loss (note 7)	 	 	-	 	 	 	3,231,048	 
	Change in non-cash operating working capital	 	 	 	 	 	 	 	 
	Accounts receivable	 	 	6,375,446	 	 	 	(4,252,158	)
	Prepaid expenses and other	 	 	676,584	 	 	 	(1,356,692	)
	Investment tax credits receivable	 	 	299,051	 	 	 	(20,794	)
	Deferred tax asset adjustment	 	 	1,278,700	 	 	 	-	 
	Accounts payable and accrued liabilities	 	 	(3,201,778	)	 	 	1,998,048	 
	Interest paid – net	 	 	(1,381,698	)	 	 	(2,312,449	)
	 	 	 	19,292,815	 	 	 	640,854	 
	Investing activities	 	 	 	 	 	 	 	 
	Additions to property and equipment (note 5)	 	 	(4,923,514	)	 	 	(6,935,818	)
	Additions to intangible assets (note 6)	 	 	(393,007	)	 	 	(1,547,877	)
	 	 	 	(5,316,521	)	 	 	(8,483,695	)
	Financing activities	 	 	 	 	 	 	 	 
	Amount drawn from revolving line of credit (note 19)	 	 	67,340,097	 	 	 	77,372,076	 
	Repayment of revolving line of credit (note 19)	 	 	(83,066,960	)	 	 	(75,321,614	)
	Proceeds from term loans (note 20)	 	 	12,266,281	 	 	 	-	 
	Repayment of term loans principal (note 20)	 	 	(9,101,681	)	 	 	(1,815,750	)
	Additions to international loans	 	 	1,719,864	 	 	 	1,377,740	 
	Repayment of international loans	 	 	(2,182,955	)	 	 	(3,560,923	)
	Additions to leases	 	 	4,013,250	 	 	 	5,380,084	 
	Earn-out – acquisition	 	 	-	 	 	 	(2,927,982	)
	Repayment of leases	 	 	(3,417,975	)	 	 	(2,058,246	)
	Net proceeds from equity financing (note 10(b))	 	 	10,617,887	 	 	 	7,998,402	 
	Proceeds from the exercise of warrants	 	 	1,601,418	 	 	 	560,635	 
	Proceeds from the exercise of stock options	 	 	1,465,658	 	 	 	230,872	 
	 	 	 	1,254,884	 	 	 	7,235,294	 
	 	 	 	 	 	 	 	 	 
	Increase (decrease) in cash and cash equivalents	 	 	15,231,178	 	 	 	(607,547	)
	 	 	 	 	 	 	 	 	 
	Cash and cash equivalents – Beginning of year	 	 	7,407,122	 	 	 	8,014,668	 
	 	 	 	 	 	 	 	 	 
	Cash and cash equivalents – End of year	 	 	22,638,300	 	 	 	7,407,121	 
	 	 	 	 	 	 	 	 	 
	Supplemental disclosure of non-cash transactions	 	 	 	 	 	 	 	 
	Additions to property and equipment under leases	 	 	4,129,910	 	 	 	6,114,815	 

 

     

     

    

 

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31,
2020 and 2019

 

(expressed in Canadian dollars)

 

		1	Corporate information

 

AcuityAds Holdings Inc. (“AcuityAds” or the “Company”),
and its wholly owned subsidiaries AcuityAds Inc., AcuityAds US Inc., 140 Proof Inc., Visible Measures Corp. (including its wholly owned
subsidiaries, “Visible Measures”), AcuityAds MM Inc., ADman Interactive S.L.U. (“ADman”) and 2422330 Ontario Inc.,
a company that holds certain technology assets, is a leading provider of targeted digital media solutions, enabling advertisers to connect
intelligently with their audiences across online display, video, social and mobile campaigns. AcuityAds is a publicly traded company,
incorporated in Canada, and its head office is located at 70 University Ave, Suite 1200, Toronto, Ontario M5J 2M4. The Company’s
common shares are listed on the Toronto Stock Exchange in Canada, under the trading symbol “AT”.

 

Effective January 1, 2020 AcuityAds MM Inc. and Visible
Measures were merged into AcuityAds US Inc. and 2422330 Ontario Inc. was amalgamated into AcuityAds Inc.

 

		2	Summary of significant accounting policies

 

Statement of compliance

 

These consolidated financial statements have been prepared
in accordance with IFRS, as issued by the International Accounting Standards Board. The date the Board of Directors authorized the consolidated
financial statements for issue is March 1, 2021.

 

Basis of presentation

 

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

 

Use of estimates and judgements

 

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

 

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

 

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

 

    1

     

    

 

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31,
2020 and 2019

 

(expressed in Canadian dollars)

 

		·	Key sources of estimation uncertainty

 

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

 

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

 

		iii)	Goodwill – Impairment – the goodwill impairment test requires a calculation to determine the recoverable amount of goodwill.
Management has determined the recoverable amount by determining the higher of fair value less costs of disposal of goodwill and value
in use. Determining fair value and value in use requires the use of estimates and assumptions about factors that impact the valuation
of goodwill. Such estimates and assumptions include the forecasted financial performance of the Company and market factors applied. Reasonable
possible changes in key estimates and assumptions have the potential to cause the recoverable amount of goodwill to change.

 

		·	Critical judgements in applying accounting policies

 

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

 

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

 

    2

     

    

 

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31,
2020 and 2019

 

(expressed in Canadian dollars)

 

COVID-19

 

On March 11, 2020, the World Health Organization declared
the outbreak of COVID-19, which continues to spread throughout Canada and around the world, as a global pandemic. COVID-19 and actions
taken to mitigate its spread have had, and are expected to continue to have, an adverse impact on both local and global economies and
financial markets, including the geographical areas in which the Company operates.

 

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

 

Basis of consolidation

 

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

 

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

 

Revenue

 

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

 

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

 

    3

     

    

 

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31,
2020 and 2019

 

(expressed in Canadian dollars)

 

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

 

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

 

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

 

Foreign currency transactions

 

		·	Transactions and balances in foreign currencies

 

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

 

    4

     

    

 

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31,
2020 and 2019

 

(expressed in Canadian dollars)

 

		·	Group companies with a functional currency other than CAD

 

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

 

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

 

Financial instruments

 

		·	Non-derivative financial assets

 

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

 

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

 

Financial assets and liabilities are offset and the net amount
is presented in the consolidated statements of financial position when, and only when, the Company has a legal right to offset the amounts
and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

 

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

 

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

 

    5

     

    

 

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31,
2020 and 2019

 

(expressed in Canadian dollars)

 

Loans and receivables, which include cash, accounts receivable
and investment tax credits (“ITC”) receivable, are recognized initially at fair value plus any directly attributable transaction
costs. Subsequent to initial recognition, loans and receivables are measured at amortized cost using the effective interest method, less
any impairment losses. Accounts receivable comprise trade receivables, net of allowance for doubtful accounts. There were no significant
adjustments to the amounts recognized in the consolidated financial statements on adoption of IFRS 9 – Financial Instruments (“IFRS
9”) in 2018. The Company has adopted the use of an expected credit loss model rather than an incurred loss analysis when evaluating
the allowance for doubtful accounts receivable (note 16).

 

ITCs receivable comprise refundable Canadian ITCs for qualifying
research and development activities in Canada.

 

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

 

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

 

Property and equipment

 

		·	Recognition and measurement

 

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

 

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

 

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

 

		·	Depreciation

 

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

 

    6

     

    

 

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31,
2020 and 2019

 

(expressed in Canadian dollars)

 

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

 

	Furniture and fixtures	5 years
	Data centre equipment	4 years
	Office computer equipment	3 years
	Equipment under finance leases	3 years

 

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

 

		·	Research and development

 

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

 

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

 

Impairment

 

		·	Financial assets (including accounts receivable)

 

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

 

The Company assesses on a forward-looking basis the expected
credit loss associated with its financial assets. The impairment methodology applied depends on whether there has been a significant increase
in credit risk. For trade and other receivables, the Company applies the simplified approach permitted by IFRS 9, which requires expected
lifetime losses to be recognized at the time of initial recognition of the receivables. There was no impact due to this change in accounting
policy.

 

		·	Non-financial assets

 

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

 

    7

     

    

 

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31,
2020 and 2019

 

(expressed in Canadian dollars)

 

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

 

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

 

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

 

Share-based payments

 

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

 

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

 

    8

     

    

 

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31,
2020 and 2019

 

(expressed in Canadian dollars)

 

Deferred share units

 

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

 

Provisions

 

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

 

Finance costs

 

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

 

Income taxes

 

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

 

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

 

    9

     

    

 

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31,
2020 and 2019

 

(expressed in Canadian dollars)

 

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

 

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

 

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

 

Investment tax credits

 

The Company is entitled to certain refundable ITCs for qualifying
research and development activities performed. The ITCs are accounted for as a reduction of the related expenditures for items expensed
in the consolidated statements of comprehensive loss, being primarily as part of employee compensation and benefits, or as a reduction
of the related asset’s cost for items capitalized in the consolidated statements of financial position when the amount is reliably
estimable and realization is reasonably assured.

 

Government assistance

 

Government grants and subsidies are recognized at fair value
when there is reasonable assurance that they will be received, and the Company will comply with the conditions associated with the grants.
To the extent that government grants are earned under the conditions of the grant prior to receipt of funds, the Company records a government
grants receivable. Government grants related to operating expenses are reflected as a reduction of such expenses in the year when they
are incurred (note 14).

 

    10

     

    

 

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31,
2020 and 2019

 

(expressed in Canadian dollars)

 

Net income (loss) per share

 

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

 

Media costs

 

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

 

Intangible assets

 

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

 

Change in accounting policies

 

The Company has applied the following standards and amendments
for the first time for their annual reporting period commencing January 1, 2020:

 

		·	Definition of Material – amendments to IAS 1 – Presentation of Financial Statements and IAS 8 – Accounting Policies,
Changes in Accounting Estimates and Errors

 

		·	Definition of a Business – amendments to IFRS 3 – Business Combinations

 

    11

     

    

 

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31,
2020 and 2019

 

(expressed in Canadian dollars)

 

		·	Interest Rate Benchmark Reform – amendments to IFRS 9 – Financial Instruments, IAS 39 – Financial Instruments:
Recognition and Measurement and IFRS 7 – Financial Instruments: Disclosures

 

		·	Revised Conceptual Framework for Financial Reporting

 

The Company also elected to adopt the following amendments
early:

 

		·	Annual Improvements to IFRS Standards 2018-2020 Cycle.

 

The amendments listed above did not have any impact on the
amounts recognised in prior periods and are not expected to significantly affect the current or future periods.

 

Certain new accounting standards and interpretations have
been published that are not mandatory for December 31, 2020 reporting periods and have not been early adopted by the Company. These
standards are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future
transactions.

 

		3	Leases

 

In 2019, the Company elected to record right-of-use assets
based on the corresponding lease liability in accordance with IFRS 16 – Leases (“IFRS 16”). Right-of-use assets and
lease obligations of $3,608,085 were recorded as at January 1, 2019, with no net impact on deficit. When measuring lease liabilities,
the Company discounted lease payments using its incremental borrowing rate as at January 1, 2019. The weighted average rate applied
is 6.75%.

 

For leases previously classified as finance leases, the entity
recognized the carrying amount of the lease asset and lease liability immediately before transition as the carrying amount of the right-of-use
asset and the lease liability at the date of initial application. The measurement principles of IFRS 16 are only applied after that date.

 

The associated right-of-use assets for property leases were
measured on a retrospective basis as if the new rules had always been applied. Other right-of use assets were measured at the amount
equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognized in the
consolidated statements of financial position as at December 31, 2020 and 2019. There were no onerous lease contracts that would
have required an adjustment to the right-of-use assets at the date of initial application.

 

    12

     

    

 

 

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31,
2020 and 2019

 

(expressed in Canadian dollars)

 

Right-of-use assets included in property and equipment (note
5) consist of the following leases:

 

	 	 	As at
 December 31,
 2020
 $
	 
	Equipment	 	 	7,094,280	 
	Buildings	 	 	-	 
	Total right-of-use assets	 	 	7,094,280	 

 

		4	Investment tax credits receivable

 

The Company became a public company in 2014 and accordingly
the federal portion of any ITCs claimed on eligible Scientific Research and Experimental Development (“SRED”) expenses following
the Company becoming public will no longer be refundable, but will be carried forward as a credit for up to 20 years to reduce future
income taxes payable.

 

As at December 31, 2020, no ITCs and no international
tax credits have been recorded relating to 2020 SRED expenditures. As at December 31, 2019, no ITCs and $629,881 in international
tax credits have been recorded relating to 2019 SRED expenditures.

 

		5	Property and equipment

 

	 	 	Furniture 

and 

fixtures
 $	 	 	Data 

centre 

equipment
 $	 	 	Office

 computer 

equipment
 $	 	 	Right-of-

use assets
 $	 	 	Total
 $	 
	Net book value – December 31, 2019	 	 	373,330	 	 	 	21,351	 	 	 	482,641	 	 	 	6,101,512	 	 	 	6,978,834	 
	Additions	 	 	693,599	 	 	 	-	 	 	 	100,005	 	 	 	4,129,910	 	 	 	4,923,514	 
	Depreciation	 	 	(216,098	)	 	 	(12,527	)	 	 	(215,241	)	 	 	(3,513,372	)	 	 	(3,957,238	)
	Net book value – December 31, 2020	 	 	850,831	 	 	 	8,824	 	 	 	367,405	 	 	 	6,718,050	 	 	 	7,945,110	 

 

    13

     

    

 

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31,
2020 and 2019

 

(expressed in Canadian dollars)

 

	 	 	Furniture 

and 

fixtures
 $	 	 	Data 

centre 

equipment
 $	 	 	Office 

computer 

equipment
 $	 	 	Equipment

 under 

finance 

leases
 $	 	 	Total
 $	 
	Net book value – December 31, 2018	 	 	234,832	 	 	 	34,352	 	 	 	78,507	 	 	 	3,066,555	 	 	 	3,414,246	 
	Additions	 	 	239,577	 	 	 	-	 	 	 	581,425	 	 	 	6,114,816	 	 	 	6,935,818	 
	Depreciation	 	 	(101,079	)	 	 	(13,001	)	 	 	(177,291	)	 	 	(3,079,859	)	 	 	(3,371,230	)
	Net book value – December 31, 2019	 	 	373,330	 	 	 	21,351	 	 	 	482,641	 	 	 	6,101,512	 	 	 	6,978,834	 

 

		6	Intangible assets

 

	 	 	Customer 

relationships
 $	 	 	Tradename
 $	 	 	Technology
 $	 	 	Total
 $	 
	Net book value – December 31, 2019	 	 	1,641,517	 	 	 	336,548	 	 	 	5,763,817	 	 	 	7,741,882	 
	Additions	 	 	-	 	 	 	-	 	 	 	393,007.00	 	 	 	393,007.00	 
	Amortization	 	 	(1,589,057	)	 	 	(336,548	)	 	 	(3,011,331	)	 	 	(4,936,936	)
	Net book value – December 31, 2020	 	 	52,460	 	 	 	-	 	 	 	3,145,493	 	 	 	3,197,953	 

 

	 	 	Customer 

relationships
 $	 	 	Tradename
 $	 	 	Technology
 $	 	 	Total
 $	 
	Net book value – December 31, 2018	 	 	3,166,482	 	 	 	874,455	 	 	 	6,751,125	 	 	 	10,792,062	 
	Additions	 	 	-	 	 	 	-	 	 	 	1,702,508	 	 	 	1,702,508	 
	Amortization	 	 	(1,524,965	)	 	 	(537,907	)	 	 	(2,689,816	)	 	 	(4,752,688	)
	Net book value – December 31, 2019	 	 	1,641,517	 	 	 	336,548	 	 	 	5,763,817	 	 	 	7,741,883	 

 

During the year ended December 31, 2020, the Company
capitalized $393,008 (2019 – $1,727,852) of development costs relating to revenue generating technology.

 

		7	Goodwill

 

As at December 31, 2020 the ADman CGU has been incorporated
together with the Company CGU into a single CGU, due to operational integration during the period.

 

As at December 31, 2020, no impairment loss was recognized
for the CGU above and no write off of the recoverable amount was required.

 

    14

     

    

 

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31,
2020 and 2019

 

(expressed in Canadian dollars)

 

The recoverable amount of the CGU was determined based on
value-in-use calculations using discounted cash flow methodology. This approach requires assumptions about revenue growth rates, operating
margins, tax rates and discount rates. The maintainable discretionary after-tax cash flows from operations are based on historical results
and the Company’s projected results. In arriving at its forecasts, the Company considered past experience, economic trends and inflation
as well as industry and market trends. The assumptions used by the Company in its goodwill impairment testing are as follows: discount
rate 12.6%, budgeted gross margin 49.7% and terminal growth rate 5%.

 

Management has considered and assessed reasonably possible
changes for other key assumptions and has not identified any other instances that could cause the carrying amount of the CGU to exceed
its recoverable amount.

 

As at December 31, 2019, an impairment loss of $3,231,048
was recognized for the CGU and a write off of $2,522,970 of the recoverable amount was required.

 

		8	Lease obligations

 

	 	 	2020	 	 	2019	 
	 	 	$	 	 	$	 
	Obligations under leases	 	 	6,892,017	 	 	 	6,148,603	 
	Less: Current portion	 	 	2,850,497	 	 	 	2,748,200	 
	 	 	 	 	 	 	 	 	 
	 	 	 	4,041,520	 	 	 	3,400,403	 

 

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

 

	 	 	$	 
	2021	 	 	3,366,199	 
	2022	 	 	2,127,229	 
	2023	 	 	1,574,157	 
	2024	 	 	247,912	 
	 	 	 	7,315,497	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	Less: Interest	 	 	423,480	 
	 	 	 	 	 
	Present value of minimum lease payments	 	 	6,892,017	 

 

    15

     

    

 

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31,
2020 and 2019

 

(expressed in Canadian dollars)

 

		9	Related party transactions and balances

 

Directors and officers are eligible to participate in the
Company’s long-term incentive plans. For the year ended December 31, 2020, 987,475 equity-based awards were granted to directors
and officers of the Company (note 10(c)), of which 140,000 were stock options. For the year ended December 31, 2019, 50,000 stock
options were granted to directors and officers of the Company (note 10(c)).

 

During the year ended December 31, 2020, the Company
issued nil (2019 – 370,125) DSUs to directors and officers of the Company. Of those issued in 2019, 326,075 were granted to officers
and 44,050 were granted to directors in lieu of cash bonuses and director fees, all vesting immediately.

 

During the year ended December 31, 2020, the Company
issued 847,475 (2019 – nil) RSUs to directors and officers of the Company. Of those issued in 2020, 847,475
were granted to officers and nil were granted to directors in lieu of cash bonuses and director fees, all vesting immediately.

 

As at December 31, 2020 $nil (2019 – $1,697,250)
of the current outstanding term loans (note 20) relates to amounts loaned by related parties. In 2019, the Company issued to each of the
four founders of the Company a non-interest-bearing loan of $60,000. These loans were fully repaid during the year.

 

		·	Transactions with executive personnel

 

The key management personnel of the Company are the officers
and the directors. The remuneration of executive personnel during the years ended December 31, 2020 and 2019 was as follows:

 

	 	 	2020	 	 	2019	 
	 	 	$	 	 	$	 
	Executive compensation and benefits	 	 	1,034,500	 	 	 	900,000	 
	Share-based compensation	 	 	343,960	 	 	 	916,158	 
	 	 	 	 	 	 	 	 	 
	 	 	 	1,378,460	 	 	 	1,816,158	 

 

		10	Share capital and share based payments

 

		a)	Share
capital

 

As at December 31, 2020, the Company had an unlimited
number of common shares authorized for issuance and 53,422,024 common shares outstanding.

 

    16

     

    

 

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31,
2020 and 2019

 

(expressed in Canadian dollars)

 

		b)	Equity
financing

 

On December 4, 2020, the Company closed a bought deal
offering comprised of 1,968,000 common shares issued from treasury and offered by the Company at a price of $6.10 per share for total
gross proceeds of $12,004,800, including the full exercise by the underwriters of the over-allotment option. The offering was completed
by a syndicate of underwriters. In consideration for their services, the underwriters received aggregate cash compensation equal to 6%
of the gross proceeds of the offering. The Company incurred additional share issuance costs of $1,386,913 in connection with the offering.

 

On May 22, 2019, the Company closed a bought deal offering
comprised of 5,936,300 common shares issued from treasury and offered by the Company at a price of $1.55 per share for total gross proceeds
of $9,201,265, including the full exercise by the underwriters of the over-allotment option. The offering was completed by a syndicate
of underwriters. In consideration for their services, the underwriters received aggregate cash compensation equal to 6% of the gross proceeds
of the offering and broker warrants equal to 6% of the number of shares sold under the offering. The broker warrants are exercisable for
a period of 24 months following closing of the financing at a purchase price per share equal to the common share issuance price. The Company
issued 356,178 broker warrants at a fair value of $0.77 per broker warrant that was determined using the Black-Scholes option pricing
model using the following assumptions: risk-free interest rate of 1.48%, expected volatility of 102%, expected life of 1.75 years and
expected dividends of $nil. The broker warrants’ value of $274,257 was recognized in contributed surplus with a corresponding reduction
of share capital. The Company incurred additional share issuance costs of $650,787 in connection with the offering. The broker warrants
were issued at an exercise price of $1.55 per share.

 

		c)	Stock
option plan and Omnibus Incentive Plan

 

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

 

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

 

    17

     

    

 

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31,
2020 and 2019

 

(expressed in Canadian dollars)

 

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

 

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

 

As at December 31, 2020, the Company was entitled to
issue 8,013,304 equity-based awards under the Omnibus Incentive Plan.

 

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

 

	 	 	2020	 	 	2019	 
	 	 	Number of 

options	 	 	Weighted 

average

 exercise 

price 
 $	 	 	Number of 

options	 	 	Weighted 

average 

exercise 

price 
 $	 
	Outstanding – Beginning of year	 	 	3,409,886	 	 	 	1.45	 	 	 	3,097,220	 	 	 	1.63	 
	Granted	 	 	350,000	 	 	 	1.64	 	 	 	1,153,500	 	 	 	1.60	 
	Forfeited or cancelled	 	 	(760,885	)	 	 	1.19	 	 	 	(600,668	)	 	 	2.84	 
	Exercised	 	 	(1,133,482	)	 	 	1.29	 	 	 	(240,167	)	 	 	0.96	 
	Outstanding – End of year	 	 	1,865,519	 	 	 	1.69	 	 	 	3,409,885	 	 	 	1.45	 
	Options exercisable – End of year	 	 	1,099,687	 	 	 	2.02	 	 	 	2,258,971	 	 	 	1.46	 

 

    18

     

    

 

 

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

 

(expressed in Canadian dollars)

 

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

 

	 	 	2020	 	 	2019	 
	 	 	Number
 of options	 	 	Weighted
 average 
 exercise
 price $	 	 	Number
 of options	 	 	Weighted 
 average 
 exercise 
 price $	 
	Outstanding – Beginning of year	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 
	Granted	 	 	45,000	 	 	 	2.09	 	 	 	-	 	 	 	-	 
	Forfeited or cancelled	 	 	(10,000	)	 	 	2.09	 	 	 	-	 	 	 	-	 
	Exercised	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 
	Outstanding – End of year	 	 	35,000	 	 	 	2.09	 	 	 	-	 	 	 	-	 
	Options exercisable – End of year	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 

 

    19

     

    

 

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

 

(expressed in Canadian dollars)

 

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

 

	 	 	December 31,
 2020	 
	Range of 
 exercise 
 prices 
 $	 	Number of options	 	 	Weighted average remaining contractual life (years)	 	 	Weighted average number of options exercisable	 
	0.64	 	 	166,667	 	 	 	2.42	 	 	 	-	 
	0.96	 	 	37,333	 	 	 	2.67	 	 	 	667	 
	1.06	 	 	198,835	 	 	 	2.75	 	 	 	110,334	 
	1.13	 	 	95,000	 	 	 	4.42	 	 	 	-	 
	1.14	 	 	10,000	 	 	 	2.92	 	 	 	6,667	 
	1.15	 	 	20,000	 	 	 	3.92	 	 	 	6,667	 
	1.27	 	 	10,000	 	 	 	3.67	 	 	 	3,334	 
	1.55	 	 	83,017	 	 	 	3.42	 	 	 	4,351	 
	1.59	 	 	235,000	 	 	 	4.17	 	 	 	-	 
	1.71	 	 	794,667	 	 	 	3.25	 	 	 	752,667	 
	1.94	 	 	70,000	 	 	 	0.67	 	 	 	70,000	 
	2.09	 	 	35,000	 	 	 	4.67	 	 	 	-	 
	4.12	 	 	17,500	 	 	 	1.42	 	 	 	17,500	 
	4.47	 	 	27,500	 	 	 	1.67	 	 	 	27,500	 
	4.60	 	 	100,000	 	 	 	1.25	 	 	 	100,000	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	1,900,519	 	 	 	 	 	 	 	1,099,687	 

 

    20

     

    

 

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

 

(expressed in Canadian dollars)

 

	 	 	December 31,
 2019	 
	Range of 
 exercise 
 prices 
 $	 	Number of options	 	 	Weighted average remaining contractual life (years)	 	 	Weighted average number of options exercisable	 
	0.64	 	 	500,000	 	 	 	3.36	 	 	 	166,667	 
	0.78	 	 	90,000	 	 	 	0.67	 	 	 	90,000	 
	0.83	 	 	100,000	 	 	 	1.17	 	 	 	100,000	 
	0.94	 	 	90,000	 	 	 	0.92	 	 	 	90,000	 
	0.96	 	 	110,000	 	 	 	3.63	 	 	 	36,666	 
	0.98	 	 	653,384	 	 	 	0.42	 	 	 	653,385	 
	1.00	 	 	75,000	 	 	 	1.50	 	 	 	75,000	 
	1.06	 	 	285,500	 	 	 	3.71	 	 	 	95,167	 
	1.08	 	 	75,000	 	 	 	1.50	 	 	 	75,000	 
	1.14	 	 	10,000	 	 	 	3.88	 	 	 	3,333	 
	1.15	 	 	20,000	 	 	 	4.92	 	 	 	-	 
	1.27	 	 	10,000	 	 	 	4.67	 	 	 	-	 
	1.34	 	 	10,001	 	 	 	1.42	 	 	 	10,001	 
	1.55	 	 	118,000	 	 	 	4.42	 	 	 	-	 
	1.71	 	 	878,000	 	 	 	4.25	 	 	 	573,750	 
	1.94	 	 	100,000	 	 	 	1.83	 	 	 	100,000	 
	4.12	 	 	95,000	 	 	 	2.50	 	 	 	63,334	 
	4.47	 	 	70,000	 	 	 	2.92	 	 	 	46,668	 
	4.60	 	 	120,000	 	 	 	2.25	 	 	 	80,000	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	3,409,885	 	 	 	 	 	 	 	2,258,971	 

 

During the year ended December 31, 2020, the Company
recorded share-based compensation expense under the Black-Scholes option pricing model, related to stock options granted to employees,
officers, directors and consultants of the Company of $998,307 (2019 – $1,410,467).

 

During the year ended December 31,2020, the Company
granted 395,000 (2019 – 1,153,500) stock options with a weighted average exercise price of $1.69 (2019 – $1.60) to employees,
officers, directors and consultants of the Company. Of those options, 255,000 (2019 – 1,146,000) options were granted to officers
or employees of the Company. $nil (2019 – 7,500) options were granted to consultants as compensation for services rendered at a
weighted average price of $nil (2019 – $0.96), all expiring during 2024.

 

    21

     

    

 

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

 

(expressed in Canadian dollars)

 

During the year ended December 31, 2020, 1,133,482 options
were exercised at a weighted average exercise price of $1.29 per option, for gross proceeds of $ 1,465,658 (2019 – 240,167 options
were exercised at a weighted average exercise price of $0.96 per option, for gross proceeds of $230,560).

 

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

 

	 	 	2020 
 $	 	 	2019

$	 
	Weighted average grant date fair value of options granted	 	 	1.45	 	 	 	1.42	 
	Weighted average assumptions used	 	 	 	 	 	 	 	 
	Expected option life	 	 	5 years	 	 	 	5 years	 
	Risk-free interest rate	 	 	1.45	%	 	 	1.48	%
	Expected volatility	 	 	101	%	 	 	102	%

 

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

 

d)            Deferred
share units

 

During the year ended December 31,2020, the Company
issued 204,008 (2019 – 316,304) DSUs to employees, officers, independent directors and consultants of the Company, vesting every
year in the measure of one third. During the year ended December 31, 2020, 981,578 DSUs were exercised.

 

e)            Restricted
share units

 

During the year ended December 31, 2020, the Company
issued 1,321,074 (2019 – nil) RSUs to employees, officers, directors and consultants of the Company. During the year ended December 31,
2020, 97,129 (2019 – nil) RSUs were exercised.

 

    22

     

    

 

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

 

(expressed in Canadian dollars)

 

		11	Finance costs

 

	 	 	2020	 	 	2019	 
	 	 	$	 	 	$	 
	Finance costs	 	 	 	 	 	 	 	 
	Interest on finance leases and other interest	 	 	486,508	 	 	 	610,592	 
	Interest and fees on revolving line of credit (note 19)	 	 	532,190	 	 	 	1,057,399	 
	Interest and fees on term loans (note 20)	 	 	644,341	 	 	 	825,720	 
	 	 	 	 	 	 	 	 	 
	 	 	 	1,663,039	 	 	 	2,493,711	 

 

		12	Net income (loss) per share

 

The computations for basic and diluted net income (loss)
per share for the years ended December 31, 2020 and 2019 are as follows:

 

	 	 	2020
 $	 	 	2019

$	 
	Net income (loss) for the year	 	 	3,690,990	 	 	 	(5,607,405	)
	Weighted average number of shares outstanding – basic and diluted	 	 	49,720,186	 	 	 	45,286,998	 
	Net income (loss) per share – basic and diluted	 	 	0.07	 	 	 	(0.12	)

 

Exercisable options to purchase 1,099,687 common shares (2019
 – 2,258,971) and 40,621 warrants (2019 – 2,492,040) were outstanding as at December 31, 2020. The weighted average numbers
of options and warrants were excluded from the calculation of diluted income (loss) per share for the years ended December 31, 2020
and 2019 because their inclusion would have been anti-dilutive.

 

		13	Segment information

 

The Company’s assets and operations are substantially
located in Canada; however, the Company has employees and customers in the United States, Europe, the Middle East and Africa and generates
revenue in each region. Revenue by region for the years ended December 31, 2020 and 2019 is as follows:

 

	 	 	2020	 	 	2019	 
	 	 	 	$	 	 	 	$	 
	United States	 	 	78,832,978	 	 	 	85,630,542	 
	Canada	 	 	11,847,380	 	 	 	14,751,574	 
	Europe and other	 	 	14,213,690	 	 	 	18,752,113	 
	 	 	 	 	 	 	 	 	 
	 	 	 	104,894,048	 	 	 	119,134,229	 

 

    23

     

    

 

 

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31,
2020 and 2019

 

(expressed in Canadian dollars)

 

During the year ended December 31, 2020, the Company
had one customer that represented 9% of total revenue. In 2019, the Company had no customer that represented greater than 5% of total
revenue.

 

		14	Government
                                            assistance

 

During the year ended December 31,
2020, the Company received funding under the Government of Canada’s Canada Employment Wage Subsidy program amounting to $ 947,576,
of which $ 124,722 was used to reduce salaries related to sales and marketing costs, $ 733,102 was used to reduce salaries related to
technology costs, and $ 89,752 was used to reduce general and administrative salaries, on the consolidated statement of income.

 

During the year ended December 31,
2020, the Company secured a $3,000,000 commitment funding from the National Research Council’s Industrial Research Assistance Program
(“IRAP”) that is expected to be paid between May 2020 and October 2021, subject to the Company meeting certain
program requirements. During the year ended December 31, 2020, the Company has received $1,386,108 of this commitment from IRAP,
and these amounts were used to reduce technology costs on the consolidated statement of income (loss).

 

		15	Financial
                                            instruments

 

Classification of financial instruments

 

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

 

	 	 	Loans and receivables/	 
	 	 	financial liabilities	 
	 	 	(amortized cost)	 
		 	2020	 	 	2019	 
	Measurement basis	 	$	 	 	$	 
	Financial assets	 	 	 	 	 	 	 	 
	Cash and cash equivalents	 	 	22,638,300	 	 	 	7,407,122	 
	Restricted cash	 	 	-	 	 	 	100,000	 
	Accounts receivable	 	 	31,859,306	 	 	 	38,234,752	 
	Investment tax credit receivable	 	 	21,922	 	 	 	1,548,898	 
	 	 	 	 	 	 	 	 	 
	 	 	 	54,519,528	 	 	 	47,290,772	 

 

    24

     

    

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31,
2020 and 2019

 

(expressed in Canadian dollars)

 

	 	 	Loans and receivables/	 
	 	 	financial liabilities	 
	 	 	(amortized cost)	 
		 	 	2020	 	 	 	2019	 
	 	 	 	$	 	 	 	$	 
	Measurement basis	 	 	 	 	 	 	 	 
	Financial liabilities	 	 	 	 	 	 	 	 
	Accounts payable and accrued
    liabilities	 	 	23,232,611	 	 	 	26,330,763	 
	Revolving line of credit	 	 	-	 	 	 	15,384,498	 
	Term loans	 	 	8,278,004	 	 	 	3,452,331	 
	International loans	 	 	1,980,229	 	 	 	2,443,319	 
	Lease obligations	 	 	6,892,017	 	 	 	6,148,603	 
	 	 	 	 	 	 	 	 	 
	 	 	 	40,382,911	 	 	 	53,759,514	 

 

Fair value measurements

 

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

 

		·	Level
                                            1 – inputs are quoted prices in active markets for identical assets and liabilities;

 

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

 

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

 

There were no transfers of financial assets
during the years ended December 31, 2020 and 2019 between any of the levels.

 

    25

     

    

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31,
2020 and 2019

 

(expressed in Canadian dollars)

 

		16	Capital
                                            risk management

 

The Company’s objectives in managing
capital are to ensure sufficient liquidity to pursue its strategy of organic growth combined with strategic acquisitions and to provide
returns to its shareholders. The Company defines capital that it manages as the aggregate of its shareholders’ equity, which comprises
issued capital, contributed surplus and deficit. The Company manages its capital structure and makes adjustments to it in working capital
requirements. In order to maintain or adjust its capital structure, the Company, upon approval from the Board of Directors, may issue
shares, repurchase shares, pay dividends or undertake other activities as deemed appropriate under the specific circumstances. The Company
is not subject to externally imposed capital requirements, except for certain monthly financial covenants associated with the revolving
line of credit as described in note 19.

 

		17	Financial
                                            risk management

 

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

 

Credit risk

 

Credit risk is the risk of financial loss
to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises from the
Company’s accounts receivable and cash. As at December 31, 2020, five customers represented 32.5% of the gross accounts receivable
balance of $32,159,306. As at December 31, 2019, five customers represented 31% of the gross accounts receivable balance of $38,714,512.

 

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

 

The accounts receivable balances due from
these significant customers were current as at December 31, 2020. As at December 31,2020, the allowance for doubtful accounts
was $300,000 (2019 – $479,760). In establishing the appropriate allowance for doubtful accounts, management makes assumptions with
respect to the future collectability of the receivables. Assumptions are based on an individual assessment of a customer’s credit
quality as well as subjective factors and trends. Overdue accounts as at December 31, 2020 were $4,999,819 (2019 – $5,244,450),
which is in the normal course of business. Management believes that the allowance is adequate.

 

    26

     

    

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31,
2020 and 2019

 

(expressed in Canadian dollars)

 

The Company from time to time invests
its excess cash in accounts with Schedule I banks, with the objective of maintaining the safety of the principal and providing adequate
liquidity to meet current payment obligations and future planned capital expenditures and with the secondary objective of maximizing
the overall yield of the portfolio. The Company’s cash as at December 31, 2020 is not subject to external restrictions. Investments
must be rated at least investment grade by recognized rating agencies. Given these high credit ratings, the Company does not expect any
counterparties to these investments to fail to meet their obligations.

 

Liquidity risk

 

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

 

    27

     

    

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31,
2020 and 2019

 

(expressed in Canadian dollars)

 

The following are the contractual maturities
for the financial liabilities:

 

	 	 	December 31,	 
	 	 	2020	 
	 	 	Carrying amount 
 $	 	 	Total

                                                                                contractual

                                                                                cash flows
                                            
 $
	 	 	Less 
 than 
 1 year 
 $	 	 	1 to 3

                                                                                Years 
 $
	 	 	>
                                            3 years

                                                                                $
	 
	Accounts payable and accrued liabilities	 	 	23,232,661	 	 	 	23,232,661	 	 	 	23,232,661	 	 	 	-	 	 	 	-	 
	Revolving line of credit	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 
	International Loans	 	 	1,980,229	 	 	 	1,980,229	 	 	 	1,092,297	 	 	 	887,932	 	 	 	-	 
	Term Loans	 	 	8,278,004	 	 	 	8,710,774	 	 	 	2,481,550	 	 	 	6,229,224	 	 	 	-	 
	Lease Obligation	 	 	6,892,017	 	 	 	7,315,497	 	 	 	3,366,199	 	 	 	3,949,298	 	 	 	-	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	40,382,911	 	 	 	41,239,161	 	 	 	30,172,707	 	 	 	11,066,454	 	 	 	-	 

 

	 	 	 	December 31,	 
	 	 	 	2019	 
	 	 	 	Carrying
                                            amount 
 $	 	 	 	Total
                                            contractual cash flows 
 $	 	 	 	Less
                                            
 than 
 1 year 
 $	 	 	 	1 to 3

                                                                                Years 
 $
	 	 	 	>3 years

                                                                                $
	 
	Accounts payable and accrued liabilities	 	 	26,330,763	 	 	 	26,330,763	 	 	 	26,330,763	 	 	 	-	 	 	 	-	 
	Revolving line of credit	 	 	15,384,498	 	 	 	15,384,498	 	 	 	15,384,498	 	 	 	-	 	 	 	-	 
	International Loans	 	 	2,443,319	 	 	 	2,443,319	 	 	 	1,006,653	 	 	 	1,436,666	 	 	 	-	 
	Term loans	 	 	3,452,331	 	 	 	3,452,331	 	 	 	1,210,500	 	 	 	2,241,831	 	 	 	-	 
	Lease Obligation	 	 	6,148,603	 	 	 	6,499,839	 	 	 	2,990,552	 	 	 	3,252,263	 	 	 	257,024	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	53,759,514	 	 	 	54,110,750	 	 	 	46,922,966	 	 	 	6,930,760	 	 	 	257,024	 

 

    28

     

    

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31,
2020 and 2019

 

(expressed in Canadian dollars)

 

Interest rate risk

 

Interest rate risk is the risk of financial
loss to the Company if interest rates increase on interest-bearing instruments. The revolving line of credit bears interest at a rate
of prime plus 1%. The term loans bear interest at a fixed rate of 6.75%, which the Company believes is consistent with market interest
rates for this type of debt.

 

Foreign exchange or currency risk

 

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

 

If a shift in foreign currency exchange
rates of 10% were to occur, the foreign exchange gain or loss on the Company’s net monetary assets could change by approximately
$156,929 due to the fluctuation and this would be recorded in the consolidated statements of comprehensive loss.

 

Balances held in US dollars are as follows
in CAD:

 

	 	 	December 31,
    2020
 $	 	 	December 31,
    2019
 $	 
	Cash	 	9,255,266	 	 	5,505,276	 
	Accounts receivable	 	 	24,011,673	 	 	 	30,050,955	 
	Accounts payable	 	 	14,547,342	 	 	 	9,860,132	 
	Line of credit	 	 	-	 	 	 	15,384,498	 

 

		18	Commitments
                                            and contingencies

 

Restricted Cash

 

In July 2015, the Company entered
into a letter of credit as security for an office lease in Toronto. As at December 31, 2019, the letter of credit is backed up by
$100,000 that is held at a Canadian financial institution and is drawn down by the landlord until the end of the lease term. During the
year ended December 31, 2020, the Company’s lease term ended, and the restricted cash balance was $nil as at December 31,
2020.

 

    29

     

    

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31,
2020 and 2019

 

(expressed in Canadian dollars)

 

		19	Revolving
                                            line of credit

 

On November 13, 2015, the Company
secured a US$3.5 million (approximately CAD$4.6 million) revolving line of credit (the “Line of Credit”) from Silicon Valley
Bank (“SVB”). On September 1, 2016, the Company secured an addendum to the Line of Credit increasing the total borrowing
limit to US$6.5 million (approximately CAD$8.5 million). On March 30, 2017, the Company secured an addendum to the Line of Credit
increasing the total borrowing limit to US$10.0 million (approximately CAD$13.3 million).

 

On October 18, 2018, the Company
and SVB agreed to increase its line of credit to US$15 million (CAD$20 million) from US$10 million (CAD$13 million) and extend the maturity
date to March 2020. In addition, the applicable interest rate was reduced from prime plus 3.0% to prime plus 1.50%. At December 31,
2018, the prime rate was 5.25%.

 

On September 23, 2019, the Company
and SVB agreed to increase its line of credit to US$18 million (CAD$24 million) from US$15 million (CAD$20 million) and extend the maturity
date to April 1, 2021. In addition, the applicable interest rate was reduced from prime plus 1.5% to prime plus 1.0%.

 

On December 24, 2020, the Company
and SVB agreed to amend the applicable interest rate to the greater of prime plus 1.35% or 4.60%. At December 31, 2020, the prime
rate was 3.25%.

 

The Line of Credit is calculated based
on a maximum total amount of 80% of the Company’s accounts receivable and 80% of ITCs receivable.

 

    30

     

    

 

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31,
2020 and 2019

 

(expressed in Canadian dollars)

 

The following table outlines the activity of the Line of
Credit during the years ended December 31, 2020 and 2019:

 

	 	 	$	 
	Amortized cost – January 1, 2020	 	 	15,384,498	 
	Amount drawn from revolving line of credit	 	 	67,340,097	 
	Principal amount repaid	 	 	(83,066,960	)
	Accrued interest on revolving line of credit	 	 	532,190	 
	Payment of interest on revolving line of credit	 	 	(394,133	)
	Foreign exchange differences	 	 	204,308	 
	Amortized cost – December 31, 2020	 	 	-	 

 

	 	 	$	 
	Amortized cost – January 1, 2019	 	 	13,843,998	 
	Amount drawn from revolving line of credit	 	 	(75,321,614	)
	Principal amount repaid	 	 	77,372,076	 
	Accrued interest on revolving line of credit	 	 	1,057,399	 
	Payment of interest on revolving line of credit	 	 	(985,109	)
	Foreign exchange differences	 	 	(582,252	)
	Amortized cost – December 31, 2019	 	 	15,384,498	 

 

During the year ended December 31, 2020, transaction
costs incurred securing the Line of Credit were $nil (2019 – $73,223). All transaction costs have been capitalized and deferred.
These deferred transaction costs are being amortized over the term of the agreement under the effective interest method and are included
in finance costs.

 

The Line of Credit is secured by a full general security
agreement, an assignment of ITCs and a pledge of all shares of any direct or indirect subsidiary of the Company.

 

		20	Term loans

 

On June 15, 2018, all outstanding principal balances
related to previous term loans were repaid and the Company obtained a new $7,263,000 term loan (the “2018 Loan”) from a group
of private lenders (the “Lenders”). The 2018 Loan was made pursuant to a credit agreement dated June 15, 2018, between
the Company and various Lenders, including several individuals who are non-arms’ length to the Company (the “NAL Lenders”).
The NAL Lenders included several officers and directors of the Company who funded an aggregate of $2,263,000 of the 2018 Loan.

 

    31

     

    

 

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31,
2020 and 2019

 

(expressed in Canadian dollars)

 

The 2018 Loan was subordinate to the Company’s existing
Line of Credit with SVB and had a term of two years. The 2018 Loan accrued interest at the rate of 12.0% per annum and the Lenders were
issued an aggregate of 2,420,990 warrants (the “Warrants”) as bonus warrants in connection with the 2018 Loan. Each Warrant
entitled the Lender to acquire one common share for a period of two years at an exercise price of $1.01 per common share, which represented
the closing price of the common shares on June 14, 2018. At the time of issuance, the 2,420,990 Warrants had a fair value of $0.46
per Warrant. The fair value of the Warrants was determined using the Black-Scholes option pricing model using the following assumptions:
risk-free interest rate of 2.18%, expected volatility of 98%, expected life of 1.75 years and expected dividends of $nil.

 

Transaction costs incurred in securing the 2018 Loan were
$256,403. Included in that amount are nominal fees that the Company agreed to pay to two eligible parties assisting in the 2018 Loan.
All transaction costs were capitalized and deferred. These deferred transaction costs are being amortized over the term of the agreement
under the effective interest rate method and included in the finance costs.

 

Fifty percent of the principal portion of the 2018 Loan was
to be repaid in ten equal quarterly installments beginning January 1, 2019. The remaining 50% of the 2018 Loan was to be paid at
maturity.

 

On March 31, 2019, the Company entered into an amending
agreement to its credit agreement dated June 15, 2018, whereby the maturity date of the 2018 Loan was extended from June 15,
2020 to June 15, 2021.

 

On April 12, 2020, the Company borrowed US$5,400,00
from SVB pursuant to a secured term loan which expires April 1, 2024 (the “Secured Term Loan”), and which bears interest
at the annual rate equal to the greater of (i) prime plus 2.0% and (ii) 6.75%. All transaction costs related to the Secured
Term Loan have been capitalized and deferred, and are being amortized over the term of the agreement under the effective interest rate
method and included in finance costs.

 

On April 17, 2020, all outstanding principal balances
related to the 2018 Loan were repaid in the amount of $5,144,625 and the Company incurred an early repayment penalty of 2.5% totalling
$128,616. During the year ended December 31, 2020, $372,188 of transaction costs were incurred securing the Secured Term Loan. All
transaction costs have been capitalized and deferred. These deferred transaction costs are being amortized over the term of the agreement
under the effective interest method and included in finance costs.

 

On November 9, 2020, the Company and SVB agreed to increase
the availability under the Secured Term Loan by additional US$2,350,000 to a total of US$7,750,000.

 

On December 24, 2020, the Company and SVB agreed to
amend the applicable interest rate to the greater of prime plus 1.50% or 4.75%. At December 31, 2020, the prime rate was 3.25%.

 

    32

     

    

 

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31,
2020 and 2019

 

(expressed in Canadian dollars)

 

On May 5, 2020, the Company secured a loan of US$1,390,294
(CAD$1,816,836) pursuant to the Paycheck Protection Program as part of the United States’ Coronavirus Aid, Relief and Economic
Security Act. On October 12, 2020 the Company applied for the loan forgiveness in accordance with the terms of that program,
and the loan was fully forgiven on November 25, 2020. The total loan of US$1,390,294 (CAD$1,816,836) was used to reduce salary costs
on the statement of income (loss), $1,282,208 for sales and marketing costs, $465,481 for technology costs, and $69,147 for general and
administrative costs.

 

The following table outlines the activity of the term loans
during the years ended December 31, 2020 and 2019:

 

	 	 	$	 
	Amortized cost – January 1, 2020	 	 	3,452,331	 
	Amounts Drawn, net of transaction costs and warrants	 	 	12,266,281	 
	Accrued interest	 	 	644,342	 
	Payment of interest	 	 	(501,057	)
	Principal amount repaid	 	 	(9,101,681	)
	Adjustment for warrants granted for repaid term loan	 	 	1,922,271	 
	Exchange	 	 	(404,483	)
	Balance – December 31, 2020	 	 	8,278,004	 

 

	 	 	$	 
	Amortized cost – January 1, 2019	 	 	5,159,109	 
	Accrued interest	 	 	825,720	 
	Payment of interest	 	 	(716,748	)
	Principal amount repaid	 	 	(1,815,750	)
	Balance – December 31, 2019	 	 	3,452,331	 

 

		21	International loans

 

On June 15, 2018, as a part of the acquisition of ADman,
the Company assumed various government and bank loans and lines of credits.

 

Term loans

 

The interest rate and maturity date of each of the unsecured
term loans held and the activity during the years ended December 31, 2020 and 2019 are set out in the table below.

 

    33

     

    

 

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31,
2020 and 2019

 

(expressed in Canadian dollars)

 

Line of credit

 

The line of credit is secured against the Company’s
accounts receivable. The interest rate and term date of line of credit held and the activity during the years ended December 31,
2020 and 2019 are set out in the table below:

 

	 	 	Balance
                                            -
 January 1,
                                            2020
 $
	 	 	Amount
 drawn
 $
	 	 	Principal

    amount repaid 
 $	 	 	Balance
                                            -
 December 31

                                            2020
 $
	 	 	Interest
 rate
 %
	 	 	Maturity
    date
	Term
    Loans	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Bankinter	 	 	80,322	 	 	 	-	 	 	 	60,268	 	 	 	20,054	 	 	 	2.75	%	 	May 20,
    2021
	La
    Caixa	 	 	24,305	 	 	 	-	 	 	 	24,305	 	 	 	-	 	 	 	1.96	%	 	June 1,
    2021
	Santander	 	 	508,026	 	 	 	-	 	 	 	154,368	 	 	 	353,658	 	 	 	2.53	%	 	May 18,
    2023
	Banco
    Sabadell	 	 	106,025	 	 	 	-	 	 	 	38,377	 	 	 	67,648	 	 	 	4.60	%	 	October 20,
    2021
	Bankinter	 	 	197,310	 	 	 	-	 	 	 	77,540	 	 	 	119,770	 	 	 	2.35	%	 	August 17,
    2022
	Banco
    Sabadell	 	 	21,918	 	 	 	70,236	 	 	 	92,154	 	 	 	-	 	 	 	3.25	%	 	October 15,
    2022
	Santander_ICO	 	 	-	 	 	 	390,200	 	 	 	-	 	 	 	390,200	 	 	 	2.03	%	 	April 8,
    2025
	Bankinter_ICO
    2020	 	 	-	 	 	 	58,328	 	 	 	4,748	 	 	 	53,580	 	 	 	2.25	%	 	May 22,
    2024
	Sabadell_ICO
    2020	 	 	-	 	 	 	156,080	 	 	 	-	 	 	 	156,080	 	 	 	1.75	%	 	May 21,
    2025
	Banco
    Sabadell	 	 	69,193	 	 	 	-	 	 	 	39,847	 	 	 	29,346	 	 	 	3.25	%	 	October 15,
    2022
	CDTI	 	 	159,258	 	 	 	-	 	 	 	34,091	 	 	 	125,167	 	 	 	3.00	%	 	December 31,
    2022
	Avanza
    2013	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	3.00	%	 	December 20,
    2020
	Avanza
    2014	 	 	270,409	 	 	 	-	 	 	 	270,409	 	 	 	-	 	 	 	3.00	%	 	December 20,
    2020
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	1,436,766	 	 	 	674,844	 	 	 	796,107	 	 	 	1,315,504	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Line
    of credit	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Bankia	 	 	-	 	 	 	17,493	 	 	 	6,354	 	 	 	11,139	 	 	 	2.90	%	 	December 10,
    2021
	Banco
    Sabadell	 	 	85,045	 	 	 	143,306	 	 	 	228,351	 	 	 	-	 	 	 	1.75	%	 	May 21,
    2023
	Bankinter	 	 	92,177	 	 	 	144,293	 	 	 	116,329	 	 	 	120,141	 	 	 	Euribor
                                            + 2.25	 	 	May 19,
    2022
	Santander	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	Euribor
                                            + 1.95	 	 	April 16,
    2023
	Santander
    suppliers	 	 	-	 	 	 	21,288	 	 	 	21,288	 	 	 	-	 	 	 	2.12	 	 	May 31,
    2021
	Santander	 	 	523,966	 	 	 	667,001	 	 	 	665,077	 	 	 	525,890	 	 	 	Euribor
                                            + 1.75	 	 	April 25,
    2021
	Bankinter	 	 	129,794	 	 	 	7,554	 	 	 	129,794	 	 	 	7,554	 	 	 	2.35	%	 	July 23,
    2021
	Santander	 	 	175,571	 	 	 	44,084	 	 	 	219,655	 	 	 	-	 	 	 	Euribor
                                            + 1.75	 	 	July 23,
    2021
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	1,006,553	 	 	 	1,045,020	 	 	 	1,386,849	 	 	 	664,724	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total	 	 	2,443,319	 	 	 	1,719,864	 	 	 	2,182,955	 	 	 	1,980,228	 	 	 	 	 	 	 

 

    34

     

    

 

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31,
2020 and 2019

 

(expressed in Canadian dollars)

 

	 	 	Balance
                                            -
 January 1,

                                            2019
 $
	 	 	Amount
 drawn
 $
	 	 	Principal

    amount

    repaid 
 $	 	 	Balance
                                            -
 December 31

                                            2019
 $
	 	 	Interest
 rate
 %
	 	 	Maturity
    date
	Term
    Loans	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Bankinter	 	 	144,554	 	 	 	-	 	 	 	64,232	 	 	 	80,322	 	 	 	2.75	 	 	May 20,
    2021
	La
    Caixa	 	 	78,065	 	 	 	-	 	 	 	53,760	 	 	 	24,305	 	 	 	1.96	 	 	June 1,
    2020
	Santander	 	 	694,516	 	 	 	-	 	 	 	186,490	 	 	 	508,026	 	 	 	2.53	 	 	May 18,
    2023
	Banco
    Sabadell	 	 	187,376	 	 	 	-	 	 	 	81,351	 	 	 	106,025	 	 	 	4.6	 	 	October 20,
    2021
	Bankinter	 	 	287,344	 	 	 	-	 	 	 	90,034	 	 	 	197,310	 	 	 	2.35	 	 	August 17,
    2022
	Banco
    Sabadell	 	 	46,863	 	 	 	195,686	 	 	 	220,634	 	 	 	21,918	 	 	 	3.25	 	 	October 15,
    2022
	Banco
    Sabadell	 	 	88,362	 	 	 	-	 	 	 	19,169	 	 	 	69,193	 	 	 	3.25	 	 	October 15,
    2022
	CDTI	 	 	170,507	 	 	 	-	 	 	 	11,249	 	 	 	159,258	 	 	 	3.00	 	 	December 31,
    2020
	Avanza
    2013	 	 	163,767	 	 	 	-	 	 	 	163,767	 	 	 	-	 	 	 	3.00	 	 	December 20,
    2019
	Avanza
    2014	 	 	581,089	 	 	 	-	 	 	 	310,680	 	 	 	270,409	 	 	 	3.00	 	 	December 20,
    2020
	 	 	 	2,445,446	 	 	 	195,686	 	 	 	1,201,366	 	 	 	1,436,666	 	 	 	 	 	 	 
	Line
    of credit	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Bankia	 	 	389,740	 	 	 	54,377	 	 	 	418,405	 	 	 	-	 	 	 	2.90	 	 	December 10,
    2019
	Banco
    Sabadell	 	 	71,874	 	 	 	-	 	 	 	168,893	 	 	 	85,045	 	 	 	2.47	 	 	October 18,
    2020
	Bankinter	 	 	232,032	 	 	 	-	 	 	 	124,548	 	 	 	92,177	 	 	 	 	 	 	July 23,
    2020
	La
    Caixa	 	 	153,091	 	 	 	-	 	 	 	142,991	 	 	 	-	 	 	 	2.12	 	 	May 31,
    2019
	Santander	 	 	152,926	 	 	 	381,229	 	 	 	-	 	 	 	524,066	 	 	 	Euribor
                                            + 1,75	 	 	April 25,
    2020
	Bankinter	 	 	-	 	 	 	655,330	 	 	 	525,536	 	 	 	129,794	 	 	 	 	 	 	July 23,
    2020
	Santander	 	 	275,268	 	 	 	542,005	 	 	 	623,542	 	 	 	175,571	 	 	 	Euribor
                                            + 1,75	 	 	April 25,
    2020
	 	 	 	1,274,930	 	 	 	1,632,941	 	 	 	2,003,915	 	 	 	1,006,653	 	 	 	 	 	 	 
	Total	 	 	3,917,376	 	 	 	1,828,627	 	 	 	3,044,445	 	 	 	2,443,319	 	 	 	 	 	 	 

 

    35

     

    

 

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31,
2020 and 2019

 

(expressed in Canadian dollars)

 

		22	Income taxes

 

Income tax recovery

 

The Company has not recorded any deferred income tax recovery
on losses in comprehensive income (loss) and will not be until, in the opinion of management, it is probable that the deferred tax assets
will be realized. A reconciliation between tax recovery and accounting income multiplied by the Company’s domestic tax rate for
the years ended December 31, 2020 and 2019 is as follows:

 

	 	 	2020 
 $	 	 	2019

$	 
	Income (loss) before income taxes	 	 	5,188,691	 	 	 	(5,454,299	)
	Income tax recovery at the Company’s statutory tax rate of 26.5% (2019 – 26.5%)	 	 	1,375,003	 	 	 	(1,445,389	)
	 	 	 	 	 	 	 	 	 
	Increase (decrease) in income taxes resulting from Permanent differences	 	 	173,027	 	 	 	1,385,671	 
	Prior year true-up	 	 	(820,603	)	 	 	-	 
	Changes in unrecognized SRED pool and temporary differences	 	 	2,787,948	 	 	 	1,114,611	 
	Effect of foreign subsidiaries	 	 	(2,450	)	 	 	298,127	 
	Current year loss for which no benefit recognized	 	 	523,274	 	 	 	551,064	 
	Prior year loss applied in current year previously not recognized	 	 	(2,705,820	)	 	 	(1,778,434	)
	Other	 	 	167,322	 	 	 	27,457	 
	Income tax expense	 	 	1,497,701	 	 	 	153,107	 

 

Deferred taxes

 

		·	Unrecognized deferred tax asset

 

Deferred tax assets have not been recognized in respect of
the following items:

 

	 	 	2020
 $	 	 	2019

$	 
	Non-capital loss carryforwards	 	 	29,637,520	 	 	 	34,864,311	 
	SRED expenditure pool	 	 	1,882,949	 	 	 	7,105,467	 
	(Taxable) Deductible temporary differences	 	 	(975,000	)	 	 	1,152,977	 
	 	 	 	 	 	 	 	 	 
	 	 	 	30,545,469	 	 	 	43,122,755	 

 

    36

     

    

 

AcuityAds Holdings Inc.

Notes to Consolidated Financial Statements

December 31,
2020 and 2019

 

(expressed in Canadian dollars)

 

As at December 31, 2020, the Company had non-capital
losses of approximately $404,780 that are available to reduce future taxable income and for which no benefit has currently been recognized
in the consolidated financial statements. The non-capital losses will expire as follows: The non-capital losses will expire as follows:
2034 – $564,037; 2035 – $1,523,811; 2036 – $355,512; 2037 – $3,143,271; and 2038 – $2,061,821. The Company
had SRED Investment tax credits carry-forward of $858,944 will expire as follows: 2036 – $72,495; 2037 – $383,882; and 2038
 – $402,617.

 

Investment tax credits

 

The Company is entitled to certain federal and provincial
income tax incentives for qualified SRED expenditures based on management’s interpretation of the applicable legislation in the
Income Tax Act (Canada). These tax incentives are available to reduce future income taxes payable or are refundable in cash depending
on various factors (note 4).

 

    37Exhibit 4.3

 

 

AcuityAds Holdings Inc.

 

MANAGEMENT’S DISCUSSION
AND ANALYSIS

 

FOR THE THREE AND TWELVE
MONTHS ENDED DECEMBER 31, 2020

 

Dated March 1, 2021

 

70 University Ave

Suite 1200

Toronto, ON M5J 2M4

www.acuityads.com

 

    

     

    

 

	AcuityAds Holdings Inc.

    Management’s Discussion and Analysis for the three and twelve
    months ended December 31, 2020

 

Management’s discussion & analysis

 

This Management’s Discussion and Analysis
(“MD&A”) explains the variations in the consolidated operating results and financial position and cash flows of AcuityAds
Holdings Inc. (“AcuityAds” or the “Company”) as at and for the three and twelve months ended December 31,
2020. This analysis should be read in conjunction with AcuityAds’ audited consolidated financial statements for the three and twelve
months ended December 31, 2020 and related notes (the “Consolidated Financial Statements”). The Consolidated Financial
Statements and extracts of those Consolidated Financial Statements provided in this MD&A, were prepared in Canadian dollars and in
accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards
Board, using the accounting policies described therein. As a result of the rounding of dollar differences, certain total dollar amounts
in this MD&A may not add exactly to their constituent amounts. All amounts are presented in Canadian dollars unless otherwise indicated.
Throughout this MD&A, percentage changes are calculated using numbers rounded as they appear. Readers are cautioned that this MD&A
contains certain forward-looking information. (Please see the “Forward Looking Statements” section below for a discussion
of the use of such information in this MD&A).

 

The Consolidated Financial Statements include
the accounts of the Company and its wholly-owned subsidiaries AcuityAds Inc., AcuityAds US Inc., 140 Proof Inc., and ADman Interactive
S.L.U. All intercompany balances and transactions have been eliminated on consolidation.

 

The information in this report is dated as of
March 1, 2021.

 

Non-IFRS Financial Measures

 

This MD&A includes certain measures which
are not defined terms in accordance with IFRS such as “Net Revenue”, “Net Revenue margin”, “Adjusted EBITDA”
and “Adjusted Net Income (Loss)”.

 

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

 

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

 

    1

     

    

 

	AcuityAds Holdings Inc.

    Management’s Discussion and Analysis for the three and twelve
    months ended December 31, 2020

 

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

 

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

 

FORWARD-LOOKING STATEMENTS

 

Certain statements in this MD&A that are
not current or historical factual information may constitute “forward-looking” statements within the meaning of applicable
securities laws, regarding, among other things, the beliefs, plans, objectives, strategies, estimates, intentions or expectations of
the Company, including as they relate to its financial results its ability to execute on its investing and business strategies, the benefits
of the illumin platform, and the effect of the COVID-19 pandemic on the Company’s business and operations. When used in this MD&A,
forward looking statements can be identified by the use of words such as “may”, or by such words as “will”, “intend”,
 “believe”, “estimate”, “consider”, “expect”, “anticipate”, and “objective”
and similar expressions or variations of such words. Forward-looking statements are, by their nature, not guarantees of the Company’s
future operational or financial performance, and are subject to risks and uncertainties and other factors that could cause the Company’s
actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking
statements. No representation or warranty is intended with respect to anticipated future results, or that estimates or projections will
be sustained.

 

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

 

    2

     

    

 

	AcuityAds Holdings Inc.

    Management’s Discussion and Analysis for the three and twelve
    months ended December 31, 2020

 

Readers are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of the date of the MD&A or as of the date otherwise specifically indicated
herein. Due to risks and uncertainties, including the risks and uncertainties elsewhere in this MD&A, actual events may differ
materially from current expectations. These risks and uncertainties include, among other things, the factors discussed in “Risk
Factors” section of this MD&A and under the “Risk Factors” section of the Annual Information Form of the year
ended December 31, 2020 (“2020 AIF”) available on SEDAR at www.sedar.com. The Company disclaims any intention
or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
All forward-looking statements contained in the MD&A are expressly qualified in their entirety by this cautionary statement.

 

OVERVIEW

 

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

 

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

 

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

 

    3

     

    

 

	AcuityAds Holdings Inc.

    Management’s Discussion and Analysis for the three and twelve
    months ended December 31, 2020

 

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

 

RESULTS OF OPERATIONS

 

Significant developments during the twelve months ended December 31,
2020 and to the date of this report include the following:

 

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

 

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

 

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

 

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

 

    4

     

    

 

	AcuityAds Holdings Inc.

    Management’s Discussion and Analysis for the three and twelve
    months ended December 31, 2020

 

On April 14, 2020, the Company entered into
an amended loan and security agreement with Silicon Valley Bank. This amended loan agreement provides up to approximately US$21.85 million
of capital, an increase from US$18 million previously, for working capital and general corporate purposes, subject to customary conditions.
This amended loan agreement includes increased availability under a revolving credit facility that will mature on April 1, 2022,
and a term loan facility of US$5.4 million that matures on April 1, 2024. The proceeds from the term loans were used to repay the
Company’s then existing approximately $5 million of 12% subordinated debt, with the balance being available for general corporate
purposes. On November 9, 2020 the Company and Silicon Valley Bank agreed to increase the availability under the term loan by an
additional US$2.350 million to a total of US$7.75 million.

 

On May 5, 2020, the Company secured a loan
of $1,894,693 (US$1,390,294) pursuant to the Paycheck Protection Program as part of the United States Coronavirus Aid, Relief and Economic
Security Act. On October 12, 2020 the Company applied for the loan forgiveness in accordance with the terms of that program, and
the loan was fully forgiven on November 25, 2020 (the “PPP Loan Forgiveness”). The total loan of $1,816,836 (US$
1,390,294) was used to reduce salary costs on the Statement of Comprehensive Income (Loss), $1,282,208 for sales and marketing costs,
$465,481 for technology costs, and $69,147 for general and administrative costs.

 

During the twelve months ended December 31,
2020, the Company received funding under the Government of Canada’s Canada Emergency Wage Subsidy (“CEWS”) program
amounting to $947,576 which was used to reduce salary costs on the Comprehensive Statement of Income (Loss), $124,722 for sales and marketing
costs, $733,102 for technology costs, and $89,752 for general and administrative costs.

 

During the twelve months ended December 31,
2020, the Company secured a $3 million commitment from the National Research Council’s Industrial Research Assistance Program (IRAP)
that is expected to be paid between May 2020 and October 2021, subject to the Company meeting certain program requirements.
During the three and twelve months ended December 31, 2020, the Company has received $567,408 and $1,386,108 of this commitment,
and those amounts were used to reduce technology costs on the Consolidated Statement of Income (Loss).

 

On October 1, 2020, the Company officially
launched illuminTM, the next generation advertising automation technology, that offers advertisers the ability to plan, buy, optimize
and report on omnichannel advertising programs from a single, intuitive user-interface.

 

On November 18, 2020, the Company received
the Deloitte Enterprise Fast 15 award, a new award category as part of the Deloitte Technology Fast 50 program.

 

On December 4, 2020 the Company closed a
bought deal offering comprised of 1,968,000 common shares issued from treasury and offered by the Company for gross proceeds to the Company
of approximately $12 million (the “Treasury Offering”) and 1,804,000 common shares offered by certain of AcuityAds’
shareholders, namely 2794606 Ontario Ltd. and OV2 Capital Inc. (together, the “Selling Shareholders”), for gross proceeds
to those selling shareholders of approximately $11 million (the “Shareholder Offering” and together with the Treasury Offering,
the “Offering”).

 

    5

     

    

 

	AcuityAds Holdings Inc.

    Management’s Discussion and Analysis for the three and twelve
    months ended December 31, 2020

 

SELECTED FINANCIAL INFORMATION

 

The following table presents selected summarized
financial data for the Company for the three most recently completed financial years. The selected consolidated financial information
set out below for Fiscal 2020, Fiscal 2019 and Fiscal 2018 has been derived from the Company’s audited annual Consolidated Financial
Statements and related notes.

 

	 	 	Fiscal 2020	 	 	Fiscal 2019	 	 	Fiscal 2018	 
	Revenue	 	$	104,894,048	 	 	$	119,134,229	 	 	$	70,236,017	 
	By line of service:	 	 	 	 	 	 	 	 	 	 	 	 
	Managed services	 	 	80,500,355	 	 	 	87,996,085	 	 	 	54,407,635	 
	Self-service	 	 	24,393,693	 	 	 	31,138,144	 	 	 	15,828,382	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Media Cost	 	 	50,808,810	 	 	 	61,711,918	 	 	 	33,858,046	 
	Gross Profit	 	$	54,085,238	 	 	$	57,422,311	 	 	$	36,377,971	 
	Gross Margin	 	 	52	%	 	 	48	%	 	 	52	%
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Sales and marketing expenses	 	 	18,127,414	 	 	 	27,019,494	 	 	 	20,728,253	 
	Research and development	 	 	13,156,538	 	 	 	13,801,435	 	 	 	6,151,332	 
	General and administrative	 	 	5,918,740	 	 	 	7,873,489	 	 	 	6,860,473	 
	Share-based compensation	 	 	998,307	 	 	 	1,410,467	 	 	 	1,136,757	 
	Acquisition costs	 	 	-	 	 	 	1,289,920	 	 	 	2,264,580	 
	Gain on contingent consideration	 	 	-	 	 	 	(3,066,799	)	 	 	(805,920	)
	Impairment loss of intangible assets and goodwill	 	 	-	 	 	 	3,231,048	 	 	 	4,072,961	 
	Depreciation and amortization	 	 	8,894,174	 	 	 	8,123,877	 	 	 	6,034,389	 
	Income (loss) from operations	 	$	6,990,065	 	 	$	(2,260,619	)	 	$	(10,064,854	)
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Finance costs	 	 	1,663,039	 	 	 	2,493,711	 	 	 	2,094,955	 
	Foreign exchange loss	 	 	138,335	 	 	 	699,968	 	 	 	21,161	 
	 	 	 	1,801,374	 	 	 	(5,454,298	)	 	 	(12,180,970	)
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Income taxes	 	 	1,497,701	 	 	 	153,107	 	 	 	(902,779	)
	Net income (loss) for the year	 	 	3,690,990	 	 	 	(5,607,405	)	 	 	(11,278,191	)
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Loss per share (basic and diluted)	 	 	0.07	 	 	 	(0.12	)	 	 	(0.29	)
	Adjusted EBITDA	 	 	15,798,119	 	 	 	9,714,371	 	 	 	2,840,943	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Assets	 	 	72,433,499	 	 	 	69,358,979	 	 	 	67,599,068	 
	Total non-current liabilities	 	 	10,725,906	 	 	 	7,078,899	 	 	 	8,813,530	 
	Working Capital	 	 	26,763,590	 	 	 	1,725,793	 	 	 	(4,505,269	)

 

    6

     

    

 

	AcuityAds Holdings Inc.

    Management’s Discussion and Analysis for the three and twelve
    months ended December 31, 2020

 

Results for the three and twelve months ended
December 31, 2020 and 2019

 

The following table provides selected financial
information from the consolidated statements of comprehensive income (loss) for the three and twelve months ended December 31, 2020
and 2019:

 

	 	 	Three months ended	 	 	Twelve months ended	 
	 	 	December 31,

2020	 	 	December 31,

2019	 	 	December 31,

2020	 	 	December 31, 
 2019	 
	Revenue	 	$	35,057,316	 	 	$	38,536,725	 	 	$	104,894,048	 	 	$	119,134,229	 
	By line of service:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Managed services	 	 	27,775,862	 	 	 	27,452,636	 	 	 	80,500,355	 	 	 	87,996,085	 
	Self-service	 	 	7,281,454	 	 	 	11,084,089	 	 	 	24,393,693	 	 	 	31,138,144	 
	By geography:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	US	 	 	26,397,973	 	 	 	29,001,337	 	 	 	78,832,978	 	 	 	85,630,542	 
	Canada	 	 	4,122,582	 	 	 	4,250,618	 	 	 	11,847,380	 	 	 	14,751,574	 
	Other	 	 	4,536,761	 	 	 	5,284,770	 	 	 	14,213,690	 	 	 	18,752,113	 
	Gross Profit (Net Revenue)	 	 	18,260,068	 	 	 	19,563,077	 	 	 	54,085,238	 	 	 	57,422,311	 
	Adjusted EBITDA1	 	$	7,819,969	 	 	$	6,012,051	 	 	$	15,798,119	 	 	 	9,714,370	 
	Income (loss) from operations	 	 	6,577,954	 	 	 	2,832,410	 	 	 	6,990,065	 	 	 	(2,260,619	)
	Net income (loss)	 	 	4,165,399	 	 	 	1,995,245	 	 	 	3,690,990	 	 	 	(5,607,405	)
	Adjusted net income (loss)1	 	$	7,063,270	 	 	$	5,219,674	 	 	$	13,183,670	 	 	$	4,791,155	 
	Net income (loss) per share (basic and diluted)2	 	 	0.08	 	 	 	0.04	 	 	 	0.07	 	 	 	(0.12	)

 

		(1)	As defined in “Non-IFRS Financial Measures”.
		(2)	Exercisable options to purchase 1,099,687
                                            (2019 - 2,258,971) common shares and 40,621 (2019 - 2,492,040) warrants were outstanding
                                            as at December 31, 2020. The weighted average number of options and warrants were excluded
                                            from the calculation of diluted loss per share for the period ended December 31, 2020
                                            and 2019 because their inclusion would have been anti-dilutive.

 

Three months ended December 31, 2020
and 2019

 

Revenue for the three months ended December 31,
2020 was $35,057,316, a decrease of $3,479,409 from $38,536,725 for the three months ended December 31, 2019. Sales of the Company’s
managed services platform for the three months ended December 31, 2020 were $27,775,862, an increase of $323,326 from $27,452,636
for the three months ended December 31, 2019. Sales of the Company’s self-service platform for the three months ended December 31,
2020 were $7,281,454, a decrease of $3,802,635 from $11,084,089 for the three months ended December 31, 2019. The decrease in total
revenue for the three months ended December 31, 2020 was primarily a result of reduced client spend due to the COVID-19 pandemic,
primarily from the travel, leisure, and entertainment industries.

 

Revenue generated in the United States for the
three months ended December 31, 2020 was $26,397,973, a decrease of $2,603,364 from $29,001,337 for the three months ended December 31,
2019. Revenue generated in Canada for the three months ended December 31, 2020 was $4,122,582, a decrease of $128,036 from $4,250,618
for the three months ended December 31, 2019.

 

    7

     

    

 

	AcuityAds Holdings Inc.

    Management’s Discussion and Analysis for the three and twelve
    months ended December 31, 2020

 

Adjusted EBITDA for the three months ended December 31,
2020 was $7,819,969, an increase of $1,807,918 from $6,012,051 for the three months ended December 31, 2019. The year-over-year
increase in Adjusted EBITDA was primarily attributable to higher gross margins and management’s focus on cost containment.

 

Net income (loss) for the three months ended
December 31, 2020 was $4,165,399, an increase of $2,170,154 from $1,995,245 for the three months ended December 31, 2019. The
increase in net income was primarily due to the decrease in costs and higher margins.

 

Twelve Months Ended December 31, 2020
and 2019

 

Revenue for the twelve months ended December 31,
2020 was $104,894,048, a decrease of $14,240,181 from $119,134,229 for the twelve months ended December 31, 2019. Sales of the Company’s
managed services platform for the twelve months ended December 31, 2020 were $80,500,355, a decrease of $7,495,730 from $87,996,085
for the twelve months ended December 31, 2019. Sales of the Company’s self-service platform for the twelve months ended December 31,
2020 were $24,393,693, a decrease of $6,744,451 from $31,138,144 for the twelve months ended December 31, 2019. The decrease in
total revenue for the twelve months ended December 31, 2020 was a result of several factors, including reduced client spend due
to the COVID-19 pandemic and management’s focus to reduce low margin customer campaigns.

 

Revenue generated in the United States for the
twelve months ended December 31, 2020 was $78,832,978, a decrease of $6,797,564 from $85,630,542 for the twelve months ended December 31,
2019. Revenue generated in Canada for the twelve months ended December 31, 2020 was $11,847,380, a decrease of $2,904,194 from $14,751,574
for the twelve months ended December 31, 2019.

 

Adjusted EBITDA for the twelve months ended December 31,
2020 was $15,798,119, an increase of $6,083,748 from $9,714,371 for the twelve months ended December 31, 2019. The year-over-year
increase in Adjusted EBITDA was primarily attributable to higher gross margins, management’s focus on cost containment and various
Canadian government subsidies.

 

Net income (loss) for the twelve months ended
December 31, 2020 was $3,690,990, an increase of $9,298,395 from ($5,607,405) for the twelve months ended December 31, 2019.
The increase in net income of $9,298,395 was primarily due to a decrease in costs.

 

The Company’s revenues and operating results
may vary from quarter to quarter as a result of a variety of factors, some of which are outside of the Company’s control, including
seasonality and cyclicality, and, in fiscal 2020, to the implications of the current COVID-19 pandemic.

 

Seasonality may be affected by customer mix,
such that retail advertisers may concentrate their advertising spending with AcuityAds in the fourth quarter while entertainment advertisers
may concentrate their spending to coincide with the launch and display of content, such as television shows or movies. The Company’s
rapid growth has led to fluctuating overall operating results due to investments in AcuityAds’ sales and marketing and research
and development from quarter to quarter and increases in employee headcount. As a result of these factors, one quarter’s operating
results are not necessarily indicative of a future quarter’s operating results.

 

    8

     

    

 

	AcuityAds Holdings Inc.

    Management’s Discussion and Analysis for the three and twelve
    months ended December 31, 2020

 

Net Revenue

 

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

 

	 	 		Three months ended	 	 	 	Twelve months ended 	 
		 	December 31,

2020	 	 	 	December 31,

2019	 	 	December 31,

2020	 	 	December 31,
 2019	 
	Revenue	 	$	35,057,316	 	 	$	38,536,725	 	 	$	104,894,048	 	 	$	119,134,229	 
	Media costs	 	 	16,797,248	 	 	 	18,973,648	 	 	 	50,808,810	 	 	 	61,711,918	 
	Net Revenue	 	 	18,260,068	 	 	 	19,563,077	 	 	 	54,085,238	 	 	 	57,422,311	 
	Net Revenue margin	 	 	52	%	 	 	51	%	 	 	52	%	 	 	48	%

 

Three months ended December 31, 2020
and 2019

 

Media costs comprise advertising impressions
that the Company purchased from real-time advertising exchanges or through other third parties. For the three months ended December 31,
2020, media costs were $16,797,248 compared to $18,973,648 for the three months ended December 31, 2019. The decrease of $2,176,400
in media costs was attributable to the decreased revenue during the period. Net revenue margin was 52% for the three months ended December 31,
2020 compared to 51% for the three months ended December 31, 2019. The increase in margin was attributable to the new enhanced AI
platform.

 

Twelve Months Ended December 31, 2020
and 2019

 

For the twelve months ended December 31,
2020, media costs were $50,808,810 compared to $61,711,918 for the twelve months ended December 31, 2019. The decrease of $10,903,108
in media costs was attributable to the decreased revenue during the period. Net revenue margin was 52% for the twelve months ended December 31,
2020 compared to 48% for the twelve months ended December 31, 2019. The increase in margin was attributable to both the new enhanced
AI platform and management’s focus on reducing low margin customer campaigns.

 

    9

     

    

 

	AcuityAds Holdings Inc.

    Management’s Discussion and Analysis for the three and twelve
    months ended December 31, 2020

 

Reconciliation of net income (loss) to Adjusted EBITDA for the
three and twelve months ended December 31, 2020 and 2019

 

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

 

	 	 		Three months ended	 	 	Twelve months ended	 
	 	 	December 31,

2020	 	 	December 31,

2019	 	 	December 31,

2020	 	 	 	December 31,

2019	 
	Net income (loss) for the period	 	$	4,165,399	 	 	$	1,995,245	 	 	$	3,690,990	 	 	$	(5,607,405	)
	Adjustments:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Finance costs	 	 	358,844	 	 	 	571,692	 	 	 	1,663,039	 	 	 	2,493,711	 
	Foreign exchange gain (loss)	 	 	669,294	 	 	 	228,491	 	 	 	138,335	 	 	 	699,968	 
	Paycheck Protection Program	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	loan forgiveness	 	 	(1,816,836	)	 	 	-	 	 	 	(1,816,836	)	 	 	-	 
	Impairment loss	 	 	-	 	 	 	3,231,048	 	 	 	-	 	 	 	3,231,048	 
	Fair value gain	 	 	-	 	 	 	(3,066,799	)	 	 	-	 	 	 	(3,066,799	)
	Depreciation and amortization	 	 	2,253,557	 	 	 	2,610,214	 	 	 	8,894,174	 	 	 	8,123,877	 
	Income taxes	 	 	105,717	 	 	 	36,982	 	 	 	219,001	 	 	 	153,107	 
	Non cash income tax adjustment	 	 	1,278,700	 	 	 	-	 	 	 	1,278,700	 	 	 	-	 
	Share-based compensation	 	 	513,156	 	 	 	221,475	 	 	 	998,307	 	 	 	1,410,467	 
	Acquisition integration costs	 	 	-	 	 	 	-	 	 	 	-	 	 	 	1,289,920	 
	Severance expenses	 	 	4,231	 	 	 	117,630	 	 	 	245,365	 	 	 	654,525	 
	Non recurring expenses	 	 	287,907	 	 	 	66,073	 	 	 	487,044	 	 	 	331,952	 
	Total adjustments	 	 	3,654,570	 	 	 	4,016,806	 	 	 	12,107,129	 	 	 	15,321,776	 
	Adjusted EBITDA	 	$	7,819,969	 	 	$	6,012,051	 	 	$	15,798,119	 	 	$	9,714,371	 

 

Three months ended December 31, 2020
and 2019

 

Adjusted EBITDA for the three months ended December 31,
2020 was $7,819,969 compared to $6,012,051 for the three months ended December 31, 2019. The year-over-year increase of $1,807,918
in Adjusted EBITDA was primarily attributable to higher gross margins and management’s focus on cost containment.

 

Twelve Months Ended December 31, 2020
and 2019

 

Adjusted EBITDA for the twelve months ended December 31,
2020 was $15,798,119 compared to $9,714,371 for the twelve months ended December 31, 2019. The year-over-year increase of $6,083,748
in Adjusted EBITDA was primarily attributable to higher gross margins, management’s focus on cost containment and various Canadian
government subsidies.

 

    10

     

    

 

AcuityAds Holdings Inc. 

Management’s Discussion and Analysis for the three and twelve months ended December 31, 2020

 

Operating Expenses, Finance Costs, and Foreign
Exchange

 

The following table summarizes various expenses
for the three and twelve months ended December 31, 2020 and 2019:

 

	 	 	Three months ended	 	 	Twelve months ended	 
	 	 	December 31,
 2020	 	 	December 31,
 2019	 	 	December 31,
 2020	 	 	December 31,
 2019	 
	Sales and marketing	 	$	4,503,996	 	 	$	8,196,015	 	 	$	18,127,414	 	 	$	27,019,494	 
	Technology	 	 	3,336,948	 	 	 	3,192,994	 	 	 	13,156,538	 	 	 	13,801,435	 
	General and administrative	 	 	1,074,457	 	 	 	2,345,720	 	 	 	5,918,740	 	 	 	7,873,489	 
	Share-based compensation	 	 	513,156	 	 	 	221,475	 	 	 	998,307	 	 	 	1,410,467	 
	Acquisition integration costs	 	 	-	 	 	 	-	 	 	 	-	 	 	 	1,289,920	 
	Depreciation and amortization	 	 	2,253,557	 	 	 	2,610,214	 	 	 	8,894,174	 	 	 	8,123,877	 
	Finance costs	 	 	358,844	 	 	 	571,692	 	 	 	1,663,039	 	 	 	2,493,711	 
	Foreign exchange (gain) loss	 	 	669,294	 	 	 	228,491	 	 	 	138,335	 	 	 	699,968	 

 

Sales and marketing expenses

 

Sales and marketing expenses consist of all costs
associated with selling and marketing the Company’s services and products. The costs include all salary and benefit costs, personnel
costs, commissions and variable compensation, travel, marketing, payroll taxes and employee health and related benefit expenses, for the
sales, marketing, and account management teams. Sales and marketing expenses for the three months ended December 31, 2020 were $4,503,996,
a decrease of $3,692,019 compared to the same period of the prior year. The year-over-year decrease was primarily related to management’s
execution of cost optimization initiatives. The PPP Loan Forgiveness contributed $1,282,208 in salary-related cost savings. Sales and
marketing expenses represented 13% of revenue for the three months ended December 31, 2020, compared to 21% for the same period of
the prior year. Excluding the amounts related to the PPP Loan Forgiveness, sales and marketing expenses represented 17% of revenue for
the three months ended December 31, 2020.

 

Sales and marketing expenses for the twelve months
ended December 31, 2020 were $18,127,414, a decrease of $8,892,080 compared to the same period of the prior year. The year-over-year
decrease was primarily related to management’s execution of cost optimization initiatives and the PPP Loan Forgiveness noted above.
Sales and marketing expenses represented 17% for the three months ended December 31, 2020, compared to 23% for the same period of
the prior year. Excluding the amounts related to the PPP Loan Forgiveness, sales and marketing expenses represented 19% for the year ended
December 31, 2020.

 

Technology

 

Technology expenses consist of all costs associated
with increasing the Programmatic Marketing Platform’s effectiveness and efficiency. The majority of such costs comprise of salary
and benefit costs and costs associated with housing the required computer equipment. Technology expenses for the three months ended December 31,
2020 were $3,336,948, an increase of $143,954 compared to the same period of the prior year. Excluding capitalization, government grants,
and the PPP Loan Forgiveness, during the three months ended December 31, 2020, technology expenses increased by $779,095 compared
to the same period from the prior year. Excluding capitalization, government grants, and the PPP Loan Forgiveness, for the three months
ended December 31, 2020, technology expenses represented 12% of revenue compared to 9% for the same period of the prior year.

 

    11

     

    

 

AcuityAds Holdings Inc. 

Management’s Discussion and Analysis for the three and twelve months ended December 31, 2020

 

Technology expenses for the twelve months ended
December 31, 2020 were $13,156,538, a decrease of $644,897 compared to the same period of the prior year. Excluding capitalization,
government grants and the PPP Loan Forgiveness, during the twelve months ended December 31, 2020, technology expenses increased by
$997,025 compared to the same period of the prior year. Excluding capitalization, government grants, and the PPP Loan Forgiveness, for
the three months ended December 31, 2020, technology expenses represented 12% of revenue compared to 9% for the same period of the
prior year. Excluding capitalization, government grants, and the PPP Loan Forgiveness, for the twelve months ended December 31, 2020,
technology expenses represented 15% of revenue compared to 13% for the same period of the prior year.

 

During the three months ended December 31,
2020, the Company capitalized $5,393 of development costs relating to revenue generating technology. During the twelve months ended December 31,
2020, the Company capitalized $393,008 of development costs relating to revenue generating technology.

 

During the three months ended December 31,
2020, the Company received $567,408 in government grants related to technology from IRAP. During the twelve months ended December 31,
2020, the Company received $2,119,100 in government grants related to technology, $1,386,108 was received from IRAP and $733,102 was received
from CEWS.

 

During the three and twelve months ended December 31,
2020, the Company received $465,481 from the PPP Loan Forgiveness related to technology.

 

General and administrative

 

General and administrative expenses include salaries
and benefits of the administrative staff, occupancy costs, public company fees, insurance, professional fees, and supplies. General and
administrative expenses for the three months ended December 31, 2020 were $1,074,457, a decrease of $1,271,263 compared to the same
period of the prior year. General and administrative expenses for the twelve months ended December 31, 2020 were $5,918,740, a decrease
of $1,954,749 compared to the same period of the prior year. The PPP Loan Forgiveness reduced General and administrative expenses by $69,147.
For the three months ended December 31, 2020, General and administrative expenses represented 3% of revenue compared to 6% for the
same period of the prior year. For the twelve months ended December 31, 2020, General and administrative expenses represented 6%
of revenue compared to 7% for the same period of the prior year.

 

Share-based compensation

 

Share-based compensation expenses for the three
months ended December 31, 2020 were $513,156, an increase of $291,681 from $221,475 for the three months ended December 31,
2019. Share-based compensation expenses for the twelve months ended December 31, 2020 were $998,307, a decrease of $412,160 from
$1,410,467 for the twelve months ended December 31, 2019.

 

    12

     

    

 

AcuityAds Holdings Inc. 

Management’s Discussion and Analysis for the three and twelve months ended December 31, 2020

 

Acquisition integration costs

 

Acquisition integration expenses of $nil were
incurred during the three months ended December 31, 2020, compared to $nil incurred for the three months ended December 31,
2019. Acquisition integration expenses of $nil were incurred during the twelve months ended December 31, 2020, compared to $1,289,920
incurred for the twelve months ended December 31, 2019.

 

Depreciation and amortization

 

Depreciation and amortization for the three months
ended December 31, 2020 were $2,253,557, a decrease of $356,657 compared to the same period of the prior year. Depreciation and amortization
for the twelve months ended December 31, 2020 were $8,894,174, an increase of $770,297 compared to the same period of the prior year.
The year-over-year increase was attributable to the increase in right of use of assets.

 

Finance costs

 

Finance costs for the three months ended December 31,
2020 were $358,844, a decrease of $212,848 compared to the same period of the prior year. Finance costs for the twelve months ended December 31,
2020 were $1,663,039, a decrease of $830,672 compared to the same period of the prior year. The decrease in Finance costs was primarily
due to the debt repayment during the period, resulting in a lower outstanding debt balance as compared to the same period of the prior
year.

 

Foreign exchange gain (loss)

 

Foreign exchange gain (loss) consists of the realized
and unrealized exchange differences due to fluctuations between the Canadian dollar, the U.S. dollar and the Euro. The Company recorded
a net foreign exchange loss of $669,294 for the three months ended December 31, 2020 compared to $228,491 for the three months ended
December 31, 2019. The Company recorded a net foreign exchange loss of $138,335 for the twelve months ended December 31, 2020
compared to $699,938 for the twelve months ended December 31, 2019.

 

To date, the Company does not hedge foreign currency
transactions but may elect to do so in the future if it is determined to be advantageous.

 

Deferred tax reversal

 

During the three months ended December 31,
2020, the Company had a deferred tax reversal of $1,278,700 compared to $nil in the same period of the prior year. During the twelve months
ended December 31, 2020, the Company had a deferred tax reversal of $1,278,700 compared to $nil in the same period of the prior year.

 

OUTLOOK

 

While the impact of the COVID-19 pandemic has
created short-term uncertainty with respect to the Company’s revenues, Adjusted EBITDA and net income, the Company still expects
to continue to grow these measures in the medium to long term once the impact of the COVID-19 pandemic has subsided.

 

    13

     

    

 

AcuityAds Holdings Inc. 

Management’s Discussion and Analysis for the three and twelve months ended December 31, 2020

 

See “Forward-Looking Information”.

 

Summary of Quarterly Results

 

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

 

	 	 	Quarter
    Ended	 
	 	 	Dec
    31,
 2020	 	 	Sept
    30,
 2020	 	 	Jun
    30,
 2020	 	 	Mar
    31,
 2020	 	 	Dec
    31,
 2019	 	 	Sept
    30,
 2019	 	 	Jun. 30,

    2019	 	 	Mar. 31,

    2019	 
	Revenue	 	$	35,057,316	 	 	$	26,064,322	 	 	$	19,556,810	 	 	$	24,215,600	 	 	$	38,536,725	 	 	$	26,864,507	 	 	$	25,811,114	 	 	$	27,921,884	 
	Adjusted
    EBITDA	 	 	7,819,968	 	 	 	4,034,402	 	 	$	2,141,178	 	 	$	1,802,569	 	 	$	6,012,050	 	 	$	1,613,770	 	 	$	1,072,326	 	 	$	1,016,224	 
	Adjusted
    Net income (loss)	 	$	7,063,270	 	 	$	3,741,924	 	 	$	1,378,528	 	 	$	999,946	 	 	$	5,219,673	 	 	$	738,996	 	 	$	(662,372	)	 	$	(505,141	)
	Net
    income (loss)	 	$	4,165,399	 	 	$	921,220	 	 	$	(1,600,405	)	 	$	204,774	 	 	$	1,995,245	 	 	$	(1,360,006	)	 	$	(3,461,394	)	 	$	(2,781,250	)
	Net
    income (loss) per share:	 	$	0.07	 	 	$	0.02	 	 	$	(0.03	)	 	$	0.00	 	 	$	0.04	 	 	$	(0.03	)	 	$	(0.07	)	 	$	(0.07	)
	Weighted
    average number of shares outstanding (000’S)	 	 	52,855,998	 	 	 	50,312,701	 	 	 	49,523,122	 	 	 	48,997,938	 	 	 	47,814,816	 	 	 	47,744,143	 	 	 	46,931,380	 	 	 	41,252,050	 

 

LIQUIDITY AND CAPITAL RESOURCES

 

Selected financial information from the statements
of financial position as at December 31, 2020 and December 31, 2019 are as follows:

 

	 	 	December 31,
 2020	 	 	December 31,
 2019	 
	Cash and restricted cash	 	$	22,638,300	 	 	$	7,507,122	 
	Working capital(1)	 	 	26,763,590	 	 	 	1,725,794	 
	Total assets	 	 	72,433,499	 	 	 	69,358,979	 
	Current liabilities	 	 	29,657,005	 	 	 	46,680,614	 
	Other non-current liabilities	 	 	10,725,906	 	 	 	7,078,900	 
	Shareholders’ equity	 	 	32,050,588	 	 	 	15,599,465	 

 

(1) Working
capital is defined as current assets less current liabilities.

 

As at December 31, 2020, the Company had
cash and cash equivalents and restricted cash of $22,638,300 compared to $7,507,122 as at December 31, 2019.

 

Cash flows generated from operations were $19,292,815
during the twelve months ended December 31, 2020 as compared to $640,854 during the twelve months ended December 31, 2019. The
increase in cash flows generated in operations was primarily a result of increased working capital and reduced costs.

 

    14

     

    

 

AcuityAds Holdings Inc. 

Management’s Discussion and Analysis for the three and twelve months ended December 31, 2020

 

Cash flows used in investing activities were $5,316,521
during the twelve months ended December 31, 2020, compared to $8,483,695 during the twelve months ended December 31, 2019. The
decrease was primarily due to a reduction in capitalized technology costs and reduced capital expenditures.

 

Cash flows generated from financing activities
were $1,254,884 during the twelve months ended December 31, 2020, compared to $7,235,294 during the twelve months ended December 31,
2019. The decrease was primarily due to the increase in repayment of the line of credit and term loan in fiscal 2020 and the equity financing
completed in fiscal 2019.

 

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

 

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

 

Common Shares

 

Changes in the number of issued common shares
from December 31, 2019 to December 31, 2020 are as follows:

 

	 	 	Number of Common Shares	 
	Balance December 31, 2019	 	 	47,824,212	 
	Shares issued - Equity raise	 	 	1,968,000	 
	Shares issued -Warrants exercised	 	 	1,417,623	 
	Shares issued -Options exercised	 	 	1,133,482	 
	Shares issued - DSU’s exercised	 	 	1,078,707	 
	Balance December 31, 2020	 	 	53,422,024	 

 

    15

     

    

 

AcuityAds Holdings Inc. 

Management’s Discussion and Analysis for the three and twelve months ended December 31, 2020

 

Equity Incentive Plans

 

The Company has an omnibus long-term incentive
plan (the “Omnibus Incentive Plan”). Since the adoption of the Omnibus Incentive Plan by shareholders on June 16, 2020,
the Company has stopped issuing new stock options under its existing stock option plan, and has stopped issuing new deferred share units
(“DSUs”) under its existing deferred share unit plan; however previously issued stock options and DSUs remain outstanding
and are governed by the existing plans under which they were initially issued.

 

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

 

The maximum number of common shares reserved for
issuance, in the aggregate, under the Omnibus Incentive Plan, the stock option plan, the deferred share unit plan of the Company and any
other security-based compensation arrangement, collectively, is 15% of the aggregate number of common shares issued and outstanding from
time to time. The total availability under the new plan is currently 8,013,304 equity-based awards.

 

Preference Shares

 

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

 

Stock Options

 

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

 

	 	 	December 31,
 2020	 	 	December 31,
 2019	 
	 	 	Number
 of options	 	 	Weighted
 average
 exercise price $	 	 	Number
 of options	 	 	Weighted 
 average 
 exercise price $	 
	Options outstanding - Beginning of year	 	 	3,409,886	 	 	 	1.45	 	 	 	3,097,220	 	 	 	1.63	 
	Granted	 	 	395,000	 	 	 	1.69	 	 	 	1,153,500	 	 	 	1.60	 
	Forfeited or cancelled	 	 	(770,885	)	 	 	1.20	 	 	 	(600,667	)	 	 	2.84	 
	Exercised	 	 	(1,133,482	)	 	 	1.29	 	 	 	(240,167	)	 	 	0.96	 
	Options outstanding - End of period	 	 	1,900,519	 	 	 	1.70	 	 	 	3,409,886	 	 	 	1.44	 
	Options exercisable - End of period	 	 	1,099,687	 	 	 	2.02	 	 	 	2,258,971	 	 	 	1.46	 

 

    16

     

    

 

AcuityAds Holdings Inc. 

Management’s Discussion and Analysis for the three and twelve months ended December 31, 2020

 

Deferred Share Units

 

During the three and twelve months ended December 31,
2020, the Company issued nil and 204,008 (2019 - 93,804 and 316,304, respectively) DSUs to employees, officers, directors and consultants
of the Company. During the three and twelve months ended December 31, 2020, 316,889 and 981,578 (2019 - 74,539 and 140,858, respectively)
DSUs were exercised. As of December 31, 2020, the Company had 1,219,619 DSUs outstanding.

 

Restricted Share Units

 

During the three and twelve months ended December 31,
2020, the Company issued 231,666 and 1,321,074 (2019 - nil and nil, respectively) RSUs to employees, officers, directors and consultants
of the Company. During the three and twelve months ended December 31, 2020, 97,129 and 97,129 (2019 - nil and nil, respectively)
RSUs were exercised. As of December 31, 2020, the Company had 1,223,945 RSUs outstanding.

 

Warrants

 

For the three months ended December 31, 2020,
the Company issued nil warrants and during the same period, 277,505 warrants were exercised. For the twelve months ended December 31,
2020, the Company issued nil warrants and during the same period, 1,417,623 warrants were exercised. As a result, as of December 31,
2020, the Company had 40,621 warrants outstanding.

 

CONTRACTUAL OBLIGATIONS

 

The following are the contractual maturities for
the financial liabilities:

 

	 	 	December 31,

 2020
	 	 	Carrying
 amount
 $	 	 	Total
 contractual
 cash flows
 $	 	 	Less than
 1
    year
 $	 	 	1 to 3
 Years
 $	 	 	> 3 years
 $	 
	Accounts payable and accrued liabilities	 	 	23,232,661	 	 	 	23,232,661	 	 	 	23,232,661	 	 	 	 	 	 	 	 	 
	International Loans	 	 	1,980,229	 	 	 	1,980,229	 	 	 	1,092,297	 	 	 	887,932	 	 	 	-	 
	Term loans	 	 	8,278,004	 	 	 	8,710,774	 	 	 	2,481,550	 	 	 	6,229,224	 	 	 	-	 
	Lease Obligations	 	 	6,892,017	 	 	 	7,315,497	 	 	 	3,366,199	 	 	 	3,949,298	 	 	 	-	 
	 	 	 	40,382,911	 	 	 	41,239,161	 	 	 	30,172,707	 	 	 	11,066,454	 	 	 	-	 

 

    17

     

    

 

AcuityAds Holdings Inc. 

Management’s Discussion and Analysis for the three and twelve months ended December 31, 2020

 

	 	 	December 31, 

2019
	 	 	Carrying
 amount
 $	 	 	Total
 contractual
 cash flows
 $	 	 	Less than
 1
    year
 $	 	 	1 to 3
 Years
 $	 	 	> 3 years
 $	 
	Accounts payable and accrued liabilities	 	 	26,330,763	 	 	 	26,330,763	 	 	 	26,330,763	 	 	 	 	 	 	 	 	 
	Revolving line of credit	 	 	15,384,498	 	 	 	15,384,498	 	 	 	15,384,498	 	 	 	-	 	 	 	-	 
	International Loans	 	 	2,443,319	 	 	 	2,443,319	 	 	 	1,006,653	 	 	 	1,436,666	 	 	 	-	 
	Term loans	 	 	3,452,331	 	 	 	3,452,331	 	 	 	1,210,500	 	 	 	2,241,831	 	 	 	-	 
	Lease Obligations	 	 	6,148,603	 	 	 	6,499,839	 	 	 	2,990,552	 	 	 	3,252,263	 	 	 	257,024	 
	 	 	 	53,759,514	 	 	 	54,110,750	 	 	 	46,922,966	 	 	 	6,930,760	 	 	 	257,024	 

 

OFF-BALANCE SHEET ARRANGEMENTS

 

The Company has no off-balance sheet arrangements
that have or are reasonably likely to have a current or future material adverse effect on its financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources.

 

TRANSACTIONS WITH RELATED PARTIES

 

During the year ended December 31, 2019,
the Company issued to each of the four founders of the Company a non-interest loan of $60,000. The loan was fully repaid during the year
ended December 31, 2020.

 

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

 

The preparation of the Consolidated Financial
Statements and application of IFRS often involve management’s judgment and the use of estimates and assumptions deemed to be reasonable
at the time they are made. Significant assumptions and estimates used in preparing the financial statements include those related to
credit quality of accounts receivable, income tax credits receivable, share-based payments, impairment tests for non-financial assets,
as well as revenue and cost recognition. AcuityAds bases its estimates on historical experience and on various other assumptions that
it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values
of assets, liabilities, equity, revenue and expenses that are not readily apparent from other sources. The Company reviews estimates
and underlying assumptions on an ongoing basis. Revisions are recognized in the period in which estimates are revised and may impact
future periods as well. Other results may be derived with different judgments or using different assumptions or estimates and events
may occur that could require a material adjustment. Significant accounting policies and estimates under IFRS are found in Note 2 of the
Company’s Condensed Interim Consolidated Financial Statements which are available on SEDAR at www.sedar.com.

 

    18

     

    

 

AcuityAds Holdings Inc. 

Management’s Discussion and Analysis for the three and twelve months ended December 31, 2020

 

CHANGES IN ACCOUNTING POLICIES

 

Recently adopted accounting pronouncements

 

For the period the ending December 31, 2020,
the Company has not adopted any new accounting policies.

 

DISCLOSURE CONTROLS AND INTERNAL CONTROLS OVER
FINANCIAL REPORTING

 

Management of AcuityAds is responsible for establishing
and maintaining disclosure controls and procedures for the Company as defined under National Instrument 52-109 - Certification of Disclosure
in Issuers’ Annual and Interim Filings (“NI 52-109”) issued by the Canadian Securities Administrators. Management has
designed such disclosure controls and procedures, or caused them to be designed under its supervision, to provide reasonable assurance
that material information relating to the Company, including its consolidated subsidiaries, is made known to the Chief Executive Officer
and the Chief Financial Officer by others within those entities on a timely basis, particularly during the period in which the annual
filings are being prepared, so that appropriate decisions can be made regarding public disclosure.

 

As required by NI 52-109, an evaluation of the
adequacy of the design (quarterly) and effective operation (annually) of the Company’s disclosure controls and procedures was conducted
under the supervision of management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”),
as at December 31, 2020. Based on that evaluation, the CEO and the CFO have concluded that the design and operation of the system
of disclosure controls and procedures were effective as at December 31, 2020.

 

Management of the Company is responsible for designing
and evaluating the effectiveness of internal controls over financial reporting for the Company as defined under NI 52-109 issued by the
Canadian Securities Administrators. Management has designed such internal controls over financial reporting using the Integrated Control
- Integrated Framework: 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission, or caused them to be designed
under their supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial
statements for external purposes in accordance with IFRS. In designing such controls, it should be recognized that due to inherent limitations,
any controls, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives
and may not prevent or detect misstatements. Additionally, management is required to use judgment in evaluating controls and procedures.

 

As required by NI 52-109, management, including
the CEO and CFO, evaluated the adequacy of the design (quarterly) and the effective operation (annually) of the Company’s internal
control over financial reporting as defined in NI 52-109, as at December 31, 2020. In making this assessment, management, including
the CEO and CFO, used the framework set forth in the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on that evaluation, the CEO and the CFO have concluded that the design and operation of
the Company’s internal controls over financial reporting, as defined by NI 52-109, were effective as at December 31, 2020.

 

    19

     

    

 

AcuityAds Holdings Inc. 

Management’s Discussion and Analysis for the three and twelve months ended December 31, 2020

 

There have been no changes to AcuityAds’
internal controls over financial reporting that occurred during the quarter and year ended December 31, 2020 that have materially
affected, or are reasonably likely to materially affect, AcuityAds’ internal control over financial reporting.

 

OUTSTANDING SHARE DATA

 

As of March 1, 2021, 53,516,945 common shares
and no preference shares were issued and outstanding. In addition, as of March 1, 2021, there were 1,900,519 stock options outstanding,
each of which represents the right to acquire one Common Share, with exercise prices ranging from $0.64 to $4.60 per share. As at March 1,
2021, there were 1,166,952 DSUs outstanding under the Company’s deferred share unit plan, each of which represents the right to
acquire one common share when the participant is no longer rendering service to the Company. As at March 1, 2021, there were 1,223,945
RSUs outstanding under the Company’s deferred share unit plan, each of which represents the right to acquire one common share when
the participant is no longer rendering service to the Company. As at March 1, 2021, there were 1,700 warrants outstanding, each of
which represents the right to acquire one Common Share, with exercise prices of $1.55 per share.

 

RISK FACTORS

 

AcuityAds is exposed to a variety of business
risks, financial and accounting risks and industry risks in the normal course of operations. A detailed description of risk factors associated
with the Company’s business is given in the “Risk Factors” section of the 2020 AIF dated March 1, 2021 which is
available under the Company’s profile on SEDAR at www.sedar.com.

 

ADDITIONAL INFORMATION

 

Additional information relating to the Company,
including the Company’s AIF, is posted on SEDAR at www.sedar.com. The Company’s shares are listed on the TSX under
the symbol “AT”.

 

    20

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