Document:

Exhibit 10.8

 

INDEMNITY AGREEMENT

 

THIS
INDEMNITY AGREEMENT (this “Agreement”) is entered into on [●], 2021, by and between Galata Acquisition
Corp., a Cayman Islands exempted company (the “Company”), and [●] (“Indemnitee”).

 

RECITALS

 

WHEREAS,
it is customary to provide officers and/or directors with adequate protection through insurance or adequate indemnification against claims
and actions against them arising out of their service to and activities on behalf of such corporations;

 

WHEREAS,
the board of directors of the Company (the “Board”) has determined that, in order to attract and retain qualified individuals,
the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company
and any of its subsidiaries from certain liabilities;

 

WHEREAS,
the Board believes that traditional insurance may be available to it in the future only at higher premiums and with more exclusions. The
Amended and Restated Memorandum and Articles of Association (the “Memorandum and Articles”) of the Company provide
for the indemnification of the officers and directors of the Company. Indemnitee may also be entitled to indemnification pursuant to applicable
Cayman Islands law. The Memorandum and Articles provide that the indemnification provisions set forth therein are not exclusive, and thereby
contemplate that contracts may be entered into between the Company and members of the Board, officers and other persons with respect to
indemnification, hold harmless, exoneration, advancement and reimbursement rights;

 

WHEREAS,
the uncertainties relating to such insurance and its scope make the increased protection afforded by indemnification appropriate;

 

WHEREAS,
it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, hold harmless, exonerate and to
advance expenses on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve
the Company;

 

WHEREAS,
this Agreement is a supplement to and in furtherance of the Memorandum and Articles and any resolutions adopted pursuant thereto, and
shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder; and

 

WHEREAS, Indemnitee
may not be willing to serve as an officer and/or director, advisor or in another capacity without adequate protection, and the Company
desires Indemnitee to serve in such capacity. Indemnitee is willing to serve, continue to serve and to take on additional service for
or on behalf of the Company on the condition that he, she or they be so indemnified.

 

NOW,
THEREFORE, in consideration of the premises and the covenants contained herein and subject to the provisions of the letter
agreement dated as of February 23, 2021 between the Company and Indemnitee pursuant to the Underwriting Agreement among the Company
and the underwriters in connection with the Company’s initial public offering, the Company and Indemnitee do hereby covenant and
agree as follows:

 

TERMS AND CONDITIONS

 

1.            SERVICES
TO THE COMPANY. In consideration of the Company's covenants and obligations hereunder, Indemnitee will serve or continue
to serve as an officer, director, advisor, key employee or in any other capacity of the Company, as applicable, for so long as Indemnitee
is duly elected, appointed or retained or until Indemnitee tenders his, her or their resignation or until Indemnitee is removed. The foregoing
notwithstanding, this Agreement shall continue in full force and effect after Indemnitee has ceased to serve as a director, officer, advisor,
key employee or in any other capacity of the Company, as provided in Section 17. This Agreement, however, shall not impose any obligation
on Indemnitee or the Company to continue Indemnitee’s service to the Company beyond any period otherwise required by law or by other
agreements or commitments of the parties, if any.

 

    

     

    

 

2.            DEFINITIONS.
As used in this Agreement:

 

2.1.         References
to “agent” shall mean any person who is or was a director, officer or employee of the Company or a subsidiary of the
Company or other person authorized by the Company to act for the Company, to include such person serving in such capacity as a director,
officer, advisor, employee, fiduciary or other official of another corporation, partnership, limited liability company, joint venture,
trust or other enterprise at the request of, for the convenience of, or to represent the interests of the Company or a subsidiary of the
Company.

 

2.2.         The
terms “Beneficial Owner” and “Beneficial Ownership” shall have the meanings set forth in Rule 13d-3
promulgated under the Exchange Act as in effect on the date hereof.

 

2.3.          “Cayman
Court” means the courts of the Cayman Islands.

 

2.4.         A
 “Change in Control” shall be deemed to occur upon the earliest to occur after the date of this Agreement of any of
the following events:

 

2.4.1.      Acquisition
of Shares by Third Party. Other than an affiliate of CGC Sponsor LLC (the “Sponsor”), any Person (as defined below)
is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing fifteen percent (15%) or more of
the combined voting power of the Company’s then outstanding securities entitled to vote generally in the election of directors,
unless (i) the change in the relative Beneficial Ownership of the Company’s securities by any Person results solely from a
reduction in the aggregate number of outstanding shares of securities entitled to vote generally in the election of directors, or (ii) such
acquisition was approved in advance by the Continuing Directors (as defined below) and such acquisition would not constitute a Change
in Control under any other part of this definition;

 

2.4.2.      Change
in Board of Directors. Individuals who, as of the date hereof, constitute the Board, and any new director whose election by the Board
or nomination for election by the Company’s shareholders was approved by a vote of at least two thirds of the directors then still
in office who were directors on the date hereof or whose election or nomination for election was previously so approved (collectively,
the “Continuing Directors”), cease for any reason to constitute at least a majority of the members of the Board;

 

2.4.3.      Corporate
Transactions. The effective date on which the Company merges or engages in a share exchange, asset acquisition, share purchase,
or reorganization or engages in any other similar initial business combination with one or more businesses or entities (a “Business
Combination”), in each case, unless, following such Business Combination: (i) all or substantially all of the individuals
and entities who were the Beneficial Owners of securities entitled to vote generally in the election of directors immediately prior to
such Business Combination beneficially own, directly or indirectly, more than 50% of the combined voting power of the then outstanding
securities of the Company entitled to vote generally in the election of directors resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s
assets either directly or through one or more Subsidiaries (as defined below)) in substantially the same proportions as their ownership
immediately prior to such Business Combination, of the securities entitled to vote generally in the election of directors; (ii) other
than an affiliate of the Sponsor, no Person (excluding any corporation resulting from such Business Combination) is the Beneficial Owner,
directly or indirectly, of 15% or more of the combined voting power of the then outstanding securities entitled to vote generally in the
election of directors of the surviving corporation except to the extent that such ownership existed prior to the Business Combination;
and (iii) at least a majority of the board of directors of the corporation resulting from such Business Combination were Continuing
Directors at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination;

 

2.4.4.      Liquidation.
The approval by the shareholders of the Company of a complete liquidation of the Company or an agreement or series of agreements for the
sale or disposition by the Company of all or substantially all of the Company’s assets, other than factoring the Company’s
current receivables or escrows due (or, if such approval is not required, the decision by the Board to proceed with such a liquidation,
sale, or disposition in one transaction or a series of related transactions); or

 

    2 

     

    

 

2.4.5.      Other
Events. There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A
of Regulation 14A (or any successor rule) (or a response to any similar item on any similar schedule or form) promulgated under the Exchange
Act (as defined below), whether or not the Company is then subject to such reporting requirement.

 

2.5         “Corporate
Status” describes the status of a person who is or was a director, officer, trustee, general partner, manager, managing member,
fiduciary, employee or agent of the Company or of any other Enterprise (as defined below) which such person is or was serving at the request
of the Company.

 

2.6.        “Disinterested
Director” means a director of the Company who is not and was not a party to the Proceeding (as defined below) in respect of
which indemnification is sought by Indemnitee.

 

2.7.        “Enterprise”
means the Company and any other corporation, constituent corporation (including any constituent of a constituent) absorbed in a consolidation
or merger to which the Company (or any of its wholly owned subsidiaries) is a party, limited liability company, partnership, joint venture,
trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at the request of the Company as a director, officer,
trustee, general partner, manager, managing member, fiduciary, employee or agent.

 

2.8.        “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended.

 

2.9.        “Expenses”
shall include all direct and indirect costs, fees and expenses of any type or nature whatsoever, including, without limitation, all attorneys’
fees and costs, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, fees of private investigators
and professional advisors, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, fax transmission
charges, secretarial services and all other disbursements, obligations or expenses, in each case reasonably incurred in connection with,
or as a result of, prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a deponent or a witness
in, settlement or appeal of, or otherwise participating in, a Proceeding, including reasonable compensation for time spent by the Indemnitee
for which he, she or they is or are not otherwise compensated by the Company or any third party. Expenses also shall include Expenses
incurred in connection with any appeal resulting from any Proceeding, including without limitation the principal, premium, security for,
and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent. Expenses, however, shall not include
amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.

 

2.10.      “Independent
Counsel” shall mean a reputable law firm or a member of a law firm with significant experience in matters of corporation law
and that neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter
material to either such party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees
under similar indemnification agreements); or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards
of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action
to determine Indemnitee’s rights under this Agreement.

 

2.11.      References
to “fines” shall include any excise tax assessed on Indemnitee with respect to any employee benefit plan; references
to “serving at the request of the Company” shall include any service as a director, officer, employee, agent or fiduciary
of the Company which imposes duties on, or involves services by, such director, officer, employee, agent or fiduciary with respect to
an employee benefit plan, its participants or beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee reasonably
believed to be in the best interests of the participants and beneficiaries of an employee benefit plan, Indemnitee shall be deemed
to have acted in a manner “not opposed to the best interests of the Company” as referred to in this Agreement.

 

2.12.      “New
York Court” shall mean the courts of the State of New York or the United States District Court for the Southern District of
the State of New York.

 

    3 

     

    

 

2.13.     The
term “Person” shall have the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act as in effect
on the date hereof; provided, however, that “Person” shall exclude: (i) the Company; (ii) any Subsidiaries of the
Company; (iii) any employment benefit plan of the Company or of a Subsidiary of the Company or of any corporation owned, directly
or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of shares of the Company; and
(iv) any trustee or other fiduciary holding securities under an employee benefit plan of the Company or of a Subsidiary of the Company
or of a corporation owned directly or indirectly by the shareholders of the Company in substantially the same proportions as their ownership
of shares of the Company.

 

2.14.       The
term “Proceeding” shall include any threatened, pending or completed action, suit, arbitration, mediation, alternate
dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding,
whether brought in the right of the Company or otherwise and whether of a civil (including intentional or unintentional tort claims),
criminal, administrative, legislative or investigative or related nature (whether formal or informal), including any appeal therefrom,
in which Indemnitee was, is, will or might be involved as a party, potential party, non-party witness or otherwise by reason of the fact
that Indemnitee is or was a director or officer of the Company, by reason of any action (or failure to act) taken by him, her or them
or of any action (or failure to act) on his, her or their part while acting as a director or officer of the Company, or by reason of the
fact that he, she or they is/are or was/were serving at the request of the Company as a director, officer, trustee, general partner, manager,
managing member, fiduciary, employee, advisor, or agent of any other Enterprise, in each case whether or not serving in such capacity
at the time any liability or expense is incurred for which indemnification, reimbursement, or advancement of Expenses can be provided
under this Agreement.

 

2.15        The
term “Registration Statement” shall mean the Company’s Registration Statement on Form S-1 (File No. 333-
252784), filed with the U.S. Securities and Exchange Commission for its initial public offering of securities.

 

2.16        The
term “Subsidiary,” with respect to any Person, shall mean any corporation, limited liability company, partnership,
joint venture, trust or other entity of which a majority of the voting power of the voting equity securities or equity interest is owned,
directly or indirectly, by that Person.

 

2.17.       The
term “Trust Account” shall mean the gross proceeds of the initial public offering of securities pursuant to the Registration
Statement and sale of units by the Company deposited into a trust account for the benefit of the Company and the holders of the Company’s
ordinary shares, no par value.

 

3.          INDEMNITY
IN THIRD-PARTY PROCEEDINGS. To the fullest extent permitted by applicable law, the Company shall indemnify, hold harmless and
exonerate Indemnitee in accordance with the provisions of this Section 3 if Indemnitee was, is, or is threatened to be made, a party
to or a participant (as a witness, deponent or otherwise) in any Proceeding, other than a Proceeding by or in the right of the Company
to procure a judgment in its favor by reason of Indemnitee’s Corporate Status. Pursuant to this Section 3, Indemnitee
shall be indemnified, held harmless and exonerated against all Expenses, judgments, liabilities, fines, penalties and amounts paid in
settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments,
fines, penalties and amounts paid in settlement) actually and reasonably incurred by Indemnitee or on his, her or their behalf in connection
with such Proceeding or any claim, issue or matter therein, if Indemnitee acted honestly and in good faith and in a manner he, she or
they reasonably believed to be in the best interests of the Company and, in the case of a criminal Proceeding, had no reasonable cause
to believe that his, her or their conduct was unlawful; provided, in no event shall Indemnitee be entitled to be indemnified, held harmless
or advanced any amounts hereunder in respect of any Expenses, judgments, liabilities, fines, penalties and amounts paid in settlement
(if any) that Indemnitee may incur by reason of his, her or their own actual fraud or intentional misconduct. Indemnitee shall not be
found to have committed actual fraud or intentional misconduct for any purpose of this Agreement unless or until a court of competent
jurisdiction shall have made a finding to that effect.

 

4.          INDEMNITY
IN PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. To the fullest extent permitted by applicable law, the Company shall indemnify,
hold harmless and exonerate Indemnitee in accordance with the provisions of this Section 4 if Indemnitee was, is, or is threatened
to be made, a party to or a participant (as a witness, deponent or otherwise) in any Proceeding by or in the right of the Company to procure
a judgment in its favor by reason of Indemnitee’s Corporate Status. Pursuant to this Section 4, Indemnitee shall be indemnified,
held harmless and exonerated against all Expenses actually and reasonably incurred by him, her or them or on his, her or their behalf
in connection with such Proceeding or any claim, issue or matter therein, provided that Indemnitee acted honestly and in good faith and
in a manner he, she or they reasonably believed to be in the best interests of the Company and, in the case of a criminal Proceeding,
had no reasonable cause to believe that his, her or their conduct was unlawful. No indemnification, hold harmless or exoneration for Expenses
shall be made under this Section 4 in respect of any claim, issue or matter as to which Indemnitee shall have been finally adjudged
by a court of competent jurisdiction to be liable to the Company, unless and only to the extent that any court in which the Proceeding
was brought or the Cayman Court shall determine upon application that, despite the adjudication of liability but in view of all the circumstances
of the case, Indemnitee is fairly and reasonably entitled to indemnification, to be held harmless or to exoneration.

 

    4 

     

    

 

5.          INDEMNIFICATION
FOR EXPENSES OF A PARTY WHO IS WHOLLY OR PARTLY SUCCESSFUL. Notwithstanding any other provisions of this Agreement, but subject
to Section 27, to the extent that Indemnitee was or is a party to (or a participant in) and is successful, on the merits or otherwise,
in any Proceeding or in defense of any claim, issue or matter therein, in whole or in part, the Company shall, to the fullest extent permitted
by applicable law, indemnify, hold harmless and exonerate Indemnitee against all Expenses actually and reasonably incurred by him, her
or them or on his, her or their behalf in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful,
on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall, to the
fullest extent permitted by applicable law and provided in all cases that Indemnitee acted honestly and in good faith and in a manner
he, she or they reasonably believed to be in the best interests of the Company and, in the case of a criminal Proceeding, had no reasonable
cause to believe that his, her or their conduct was unlawful, indemnify, hold harmless and exonerate Indemnitee against all Expenses actually
and reasonably incurred by him, her or them or on his, her or their behalf in connection with each successfully resolved claim, issue
or matter. If Indemnitee is not wholly successful in such Proceeding, the Company also shall, to the fullest extent permitted by applicable
law and provided in all cases that Indemnitee acted honestly and in good faith and in a manner he, she or they reasonably believed to
be in the best interests of the Company and, in the case of a criminal Proceeding, had no reasonable cause to believe that his, her or
their conduct was unlawful, indemnify, hold harmless and exonerate Indemnitee against all Expenses reasonably incurred in connection with
a claim, issue or matter related to any claim, issue, or matter on which Indemnitee was successful. For purposes of this Section 5
and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall
be deemed to be a successful result as to such claim, issue or matter.

 

6.          INDEMNIFICATION
FOR EXPENSES OF A WITNESS. Notwithstanding any other provision of this Agreement, but subject to Section 27, to the extent
that Indemnitee is, by reason of Indemnitee’s Corporate Status, a witness or deponent in any Proceeding to which Indemnitee is not
a party or threatened to be made a party, Indemnitee shall, to the fullest extent permitted by applicable law, be indemnified, held
harmless and exonerated against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection
therewith.

 

7.          ADDITIONAL
INDEMNIFICATION, HOLD HARMLESS AND EXONERATION RIGHTS. Notwithstanding any limitation in Sections 3, 4 or 5, but subject
to Section 27, the Company shall, to the fullest extent permitted by applicable law, indemnify, hold harmless and exonerate Indemnitee
if Indemnitee is a party to or threatened to be made a party to any Proceeding (including a Proceeding by or in the right of the Company
to procure a judgment in its favor) against all Expenses, judgments, fines, penalties and amounts paid in settlement (including all interest,
assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, fines, penalties and amounts
paid in settlement) actually and reasonably incurred by Indemnitee in connection with the Proceeding, provided always that Indemnitee
acted honestly and in good faith and in a manner he, she or they reasonably believed to be in the best interests of the Company and, in
the case of a criminal Proceeding, had no reasonable cause to believe that his, her or their conduct was unlawful. No indemnification,
hold harmless or exoneration rights shall be available under this Section 7 on account of Indemnitee’s conduct which constitutes
a breach of Indemnitee’s duty.

 

8.          CONTRIBUTION
IN THE EVENT OF JOINT LIABILITY.

 

8.1. To the fullest extent
permissible under applicable law, if the indemnification, hold harmless and/or exoneration rights provided for in this Agreement are unavailable
to Indemnitee in whole or in part for any reason whatsoever, the Company, in lieu of indemnifying, holding harmless or exonerating Indemnitee,
shall pay, in the first instance, the entire amount incurred by Indemnitee, whether for judgments, liabilities, fines, penalties, amounts
paid or to be paid in settlement and/or for Expenses, in connection with any Proceeding without requiring Indemnitee to contribute to
such payment, and the Company hereby waives and relinquishes any right of contribution it may have at any time against Indemnitee.

 

    5 

     

    

 

8.2. The Company shall not
enter into any settlement of any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding)
unless such settlement provides for a full and final release of all claims asserted against Indemnitee.

 

8.3. The Company hereby agrees
to fully indemnify, hold harmless and exonerate Indemnitee from any claims for contribution which may be brought by officers, directors
or employees of the Company other than Indemnitee who may be jointly liable with Indemnitee.

 

9.          EXCLUSIONS.
Notwithstanding any provision in this Agreement, but subject to Section 27, the Company shall not be obligated under this Agreement
to make any indemnification, advance Expenses, hold harmless or exoneration payment in connection with any claim made against Indemnitee:

 

(i)          for
which payment has actually been received by or on behalf of Indemnitee under any insurance policy or other indemnity or advancement provision,
except with respect to any excess beyond the amount actually received under any insurance policy, contract, agreement, other indemnity
or advancement provision or otherwise;

 

(ii)          for
an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the
meaning of Section 16(b) of the Exchange Act or similar provisions of state statutory law or common law; or

 

(iii)        except
as otherwise provided in Sections 14.5 hereof, prior to a Change in Control, in connection with any Proceeding (or any part of any
Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company
or its directors, officers, employees or other indemnitees, unless (a) the Board authorized the Proceeding (or any part of any Proceeding)
prior to its initiation or (b) the Company provides the indemnification, hold harmless or exoneration payment, in its sole discretion,
pursuant to the powers vested in the Company under applicable law.

 

10.         ADVANCES
OF EXPENSES; DEFENSE OF CLAIM.

 

10.1. Notwithstanding any
provision of this Agreement to the contrary, but subject to Section 27, and to the fullest extent not prohibited by applicable law,
the Company shall pay the Expenses incurred by Indemnitee (or reasonably expected by Indemnitee to be incurred by Indemnitee within three
months) in connection with any Proceeding within ten (10) days after the receipt by the Company of a statement or statements requesting
such advances from time to time, prior to the final disposition of any Proceeding. Advances shall, to the fullest extent permitted by
law, be unsecured and interest free. Advances shall, to the fullest extent permitted by law, be made without regard to Indemnitee’s
ability to repay the Expenses and without regard to Indemnitee’s ultimate entitlement to be indemnified, held harmless or exonerated
under the other provisions of this Agreement. Advances shall include any and all reasonable Expenses incurred pursuing a Proceeding to
enforce this right of advancement, including Expenses incurred preparing and forwarding statements to the Company to support the advances
claimed. To the fullest extent required by applicable law, such payments of Expenses in advance of the final disposition of the Proceeding
shall be made only upon the Company’s receipt of an undertaking, by or on behalf of Indemnitee, to repay the advance to the extent
that it is ultimately determined that Indemnitee is not entitled to be indemnified by the Company under the provisions of this Agreement,
the Memorandum and Articles, applicable law or otherwise. If it shall be determined by a final judgment or other final adjudication that
Indemnitee was not so entitled to indemnification, any advancement shall be returned to the Company (without interest) by the Indemnitee.
This Section 10.1 shall not apply to any claim made by Indemnitee for which an indemnification, hold harmless or exoneration payment
is excluded pursuant to Section 9, but shall apply to any Proceeding referenced in Section 9(b) prior to a final determination
that Indemnitee is liable therefor.

 

10.2. The Company will be
entitled to participate in the Proceeding at its own expense.

 

10.3. The Company shall not
settle any action, claim or Proceeding (in whole or in part) which would impose any Expense, judgment, fine, penalty or limitation on
Indemnitee without Indemnitee’s prior written consent.

 

    6 

     

    

 

11.         PROCEDURE
FOR NOTIFICATION AND APPLICATION FOR INDEMNIFICATION.

 

11.1. Indemnitee agrees to
notify promptly the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other
document relating to any Proceeding, claim, issue or matter which may be subject to indemnification, hold harmless or exoneration rights,
or advancement of Expenses covered hereunder. The failure of Indemnitee to so notify the Company shall not relieve the Company of any
obligation which it may have to Indemnitee under this Agreement, or otherwise.

 

11.2. Indemnitee may deliver
to the Company a written application to indemnify, hold harmless or exonerate Indemnitee in accordance with this Agreement. Such application(s) may
be delivered from time to time and at such time(s) as Indemnitee deems appropriate in his, her or their sole discretion. Following
such a written application for indemnification by Indemnitee, Indemnitee’s entitlement to indemnification shall be determined
according to Section 12.1 of this Agreement.

 

12.         PROCEDURE
UPON APPLICATION FOR INDEMNIFICATION.

 

12.1. A determination, if
required by applicable law and/or the Memorandum and Articles, with respect to Indemnitee’s entitlement to indemnification shall
be made in the specific case by one of the following methods, which shall be at the election of Indemnitee: (i) by a majority vote
of the Disinterested Directors, even though less than a quorum of the Board, (ii) by a committee of such directors designated by
majority vote of such directors, (iii) if there are no Disinterested Directors or if such directors so direct, by Independent Counsel
in a written opinion to the Board, a copy of which shall be delivered to Indemnitee, or (iv) by vote of the shareholders by ordinary
resolution. The Company will promptly advise Indemnitee in writing with respect to any determination that Indemnitee is or is not entitled
to indemnification, including a description of any reason or basis for which indemnification has been denied. If it is so determined that
Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten (10) days after such determination. Indemnitee
shall reasonably cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement
to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information
which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary
to such determination. Any Expenses incurred by Indemnitee in so cooperating with the person, persons or entity making such determination
shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company
hereby agrees to indemnify and hold Indemnitee harmless therefrom.

 

12.2. In the event the determination
of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 12.1 hereof, the Independent Counsel shall
be selected as provided in this Section 12.2. The Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request
that such selection be made by the Board), and Indemnitee shall give written notice to the Company advising it of the identity of the
Independent Counsel so selected and certifying that the Independent Counsel so selected meets the requirements of “Independent Counsel”
as defined in Section 2 of this Agreement. If the Independent Counsel is selected by the Board, the Company shall give written notice
to Indemnitee advising him, her or them of the identity of the Independent Counsel so selected and certifying that the Independent Counsel
so selected meets the requirements of “Independent Counsel” as defined in Section 2 of this Agreement. In either event, Indemnitee
or the Company, as the case may be, may, within ten (10) days after such written notice of selection shall have been received, deliver
to the Company or to Indemnitee, as the case may be, a written objection to such selection; provided, however, that such objection may
be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel”
as defined in Section 2 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion.
Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If such written objection is so made and
substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or
a court of competent jurisdiction has determined that such objection is without merit. If, within twenty (20) days after submission
by Indemnitee of a written request for indemnification pursuant to Section 11.2 hereof, no Independent Counsel shall have been selected
and not objected to, either the Company or Indemnitee may petition the Cayman Court for resolution of any objection which shall have been
made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel
of a person selected by the Cayman Court, and the person with respect to whom all objections are so resolved or the person so appointed
shall act as Independent Counsel under Section 12.1 hereof. Upon the due commencement of any judicial proceeding or arbitration pursuant
to Section 14.1 of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such
capacity (subject to the applicable standards of professional conduct then prevailing).

 

    7 

     

    

 

12.3. The Company agrees to
pay the reasonable fees and expenses of Independent Counsel and to fully indemnify and hold harmless such Independent Counsel against
any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

 

13.         PRESUMPTIONS
AND EFFECT OF CERTAIN PROCEEDINGS.

 

13.1. In making a determination
with respect to entitlement to indemnification hereunder, the person, persons or entity making such determination shall presume that Indemnitee
is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 11.2
of this Agreement, and the Company shall have the burden of proof to overcome that presumption in connection with the making by any person,
persons or entity of any determination contrary to that presumption. Neither the failure of the Company (including by the Disinterested
Directors or Independent Counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that
indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination
by the Company (including by the Disinterested Directors or Independent Counsel) that Indemnitee has not met such applicable standard
of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.

 

13.2. If the person, persons
or entity empowered or selected under Section 12 of this Agreement to determine whether Indemnitee is entitled to indemnification
shall not have made a determination within thirty (30) days after receipt by the Company of the request therefor, the requisite determination
of entitlement to indemnification shall, to the fullest extent permitted by law, be deemed to have been made and Indemnitee shall be entitled
to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary
to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a final
judicial determination that any or all such indemnification is expressly prohibited under applicable law; provided, however, that such
30-day period may be extended for a reasonable time, not to exceed an additional fifteen (15) days, if the person, persons or entity
making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining
or evaluating of documentation and/or information relating thereto.

 

13.3. The termination of any
Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or
its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee
to indemnification or create a presumption that Indemnitee did not act honestly and in good faith and in a manner which he, she or they
reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee
had reasonable cause to believe that his conduct was unlawful.

 

13.4. For purposes of any
determination of honesty and/or good faith, Indemnitee shall be deemed to have acted in honestly and good faith if Indemnitee’s
action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee
by the directors, manager, or officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise,
its Board, any committee of the Board or any director, trustee, general partner, manager or managing member, or on information or records
given or reports made to the Enterprise, its Board, any committee of the Board or any director, trustee, general partner, manager or managing
member, by an independent certified public accountant or by an appraiser or other expert selected by the Enterprise, its Board, any committee
of the Board or any director, trustee, general partner, manager or managing member. The provisions of this Section 13.4 shall not
be deemed to be exclusive or to limit in any way the other circumstances in which Indemnitee may be deemed or found to have met the applicable
standard of conduct set forth in this Agreement.

 

13.5. The knowledge and/or
actions, or failure to act, of any other director, officer, trustee, partner, manager, managing member, fiduciary, agent or employee of
the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.

 

    8 

     

    

 

14.         REMEDIES
OF INDEMNITEE.

 

14.1. In the event that (i) a
determination is made pursuant to Section 12 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement,
(ii) advances of Expenses, to the fullest extent permitted by applicable law, is not timely made pursuant to Section 10 of this
Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 12.1 of this Agreement
within thirty (30) days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is
not made pursuant to Section 5, 6, 7 or the last sentence of Section 12.1 of this Agreement within ten (10) days after
receipt by the Company of a written request therefor, (v) a contribution payment is not made in a timely manner pursuant to Section 8
of this Agreement, (vi) payment of indemnification pursuant to Section 3 or 4 of this Agreement is not made within ten (10) days
after a determination has been made that Indemnitee is entitled to indemnification, or (vii) payment to Indemnitee pursuant to any
hold harmless or exoneration rights under this Agreement or otherwise is not made in accordance with this Agreement within ten (10) days
after receipt by the Company of a written request therefor, Indemnitee shall be entitled to an adjudication by the New York Court
to such indemnification, hold harmless, exoneration, contribution or advancement rights. Alternatively, Indemnitee, at his, her or
their option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules and
Mediation Procedures of the American Arbitration Association. Except as set forth herein, the provisions of Cayman Islands law (without
regard to its conflict of laws rules) shall apply to any such arbitration. The Company shall not oppose Indemnitee’s right to seek
any such adjudication or award in arbitration.

 

14.2. In the event that a
determination shall have been made pursuant to Section 12.1 of this Agreement that Indemnitee is not entitled to indemnification,
any judicial proceeding or arbitration commenced pursuant to this Section 14 shall be conducted in all respects as a de novo trial,
or arbitration, on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination. In any judicial proceeding
or arbitration commenced pursuant to this Section 14, Indemnitee shall be presumed to be entitled to be indemnified, held harmless,
exonerated to receive advances of Expenses under this Agreement and the Company shall have the burden of proving Indemnitee is not entitled
to be indemnified, held harmless, exonerated and to receive advances of Expenses, as the case may be, and the Company may not refer to
or introduce into evidence any determination pursuant to Section 12.1 of this Agreement adverse to Indemnitee for any purpose. If
Indemnitee commences a judicial proceeding or arbitration pursuant to this Section 14, Indemnitee shall not be required to reimburse
the Company for any advances pursuant to Section 10 until a final determination is made with respect to Indemnitee’s entitlement
to indemnification (as to which all rights of appeal have been exhausted or lapsed).

 

14.3. If a determination shall
have been made pursuant to Section 12.1 of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound
by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 14, absent (i) a misstatement
by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading,
in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.

 

14.4. The Company shall be
precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 14 that the procedures and
presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator
that the Company is bound by all the provisions of this Agreement.

 

14.5. The Company shall indemnify
and hold harmless Indemnitee to the fullest extent permitted by law against all Expenses and, if requested by Indemnitee, shall (within
ten (10) days after the Company’s receipt of such written request) pay to Indemnitee, to the fullest extent permitted by applicable
law, such Expenses which are incurred by Indemnitee in connection with any judicial proceeding or arbitration brought by Indemnitee (i) to
enforce his, her or their rights under, or to recover damages for breach of, this Agreement or any other indemnification, hold harmless,
exoneration, advancement or contribution agreement or provision of the Memorandum and Articles now or hereafter in effect; or (ii) for
recovery or advances under any insurance policy maintained by any person for the benefit of Indemnitee, regardless of the outcome and
whether Indemnitee ultimately is determined to be entitled to such indemnification, hold harmless or exoneration right, advancement, contribution
or insurance recovery, as the case may be (unless such judicial proceeding or arbitration was not brought by Indemnitee in good faith).

 

    9 

     

    

 

15.         SECURITY.
Notwithstanding anything herein to the contrary, but subject to Section 27, to the extent requested by Indemnitee and approved by
the Board, the Company may at any time and from time to time provide security to Indemnitee for the Company’s obligations hereunder
through an irrevocable bank line of credit, funded trust or other collateral. Any such security, once provided to Indemnitee, may not
be revoked or released without the prior written consent of Indemnitee.

 

16.         NON-EXCLUSIVITY;
SURVIVAL OF RIGHTS; INSURANCE; SUBROGATION

 

16.1. The rights of Indemnitee
as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under
applicable law, the Memorandum and Articles, any agreement, a vote of shareholders or a resolution of directors, or otherwise. No amendment,
alteration or repeal of this Agreement or the Memorandum and Articles or of any provision hereof or thereof shall limit or restrict any
right of Indemnitee under this Agreement or the Memorandum and Articles in respect of any Proceeding (regardless of when such Proceeding
is first threatened, commenced or completed) or claim, issue or matter therein arising out of, or related to, any action taken or omitted
by such Indemnitee in his Corporate Status prior to such amendment, alteration or repeal. To the extent that a change in applicable law,
whether by statute or judicial decision, permits greater indemnification, hold harmless or exoneration rights or advancement of Expenses
than would be afforded currently under the Memorandum and Articles or this Agreement, then this Agreement (without any further action
by the parties hereto) shall automatically be deemed to be amended to require that the Company indemnifies the Indemnitee to the fullest
extent permitted by law. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other
right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other right or remedy.

 

16.2. The Memorandum and Articles
permit the Company to purchase and maintain insurance or furnish similar protection or make other arrangements including, but not limited
to, providing a trust fund, letter of credit, or surety bond (each, an “Indemnification Arrangement”) on behalf of
Indemnitee against any liability asserted against him, her or them or incurred by or on behalf of him, her or them or in such capacity
as a director, officer, employee or agent of the Company, or arising out of his, her or their status as such, whether or not the Company
would have the power to indemnify him, her or them against such liability under the provisions of this Agreement. The purchase, establishment,
and maintenance of any such Indemnification Arrangement shall not in any way limit or affect the rights and obligations of the Company
or of Indemnitee under this Agreement except as expressly provided herein, and the execution and delivery of this Agreement by the Company
and Indemnitee shall not in any way limit or affect the rights and obligations of the Company or the other party or parties thereto under
any such Indemnification Arrangement.

 

16.3. To the extent that the
Company maintains an insurance policy or policies providing liability insurance for directors, officers, trustees, partners, managers,
managing members, fiduciaries, employees, or agents of the Company or of any other Enterprise which such person serves at the request
of the Company, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent
of the coverage available for any such director, officer, trustee, partner, managers, managing member, fiduciary, employee or agent under
such policy or policies. If, at the time the Company receives notice from any source of a Proceeding as to which Indemnitee is a party
or a participant (as a witness, deponent or otherwise), the Company has director and officer liability insurance in effect, the Company
shall give prompt notice of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies. The
Company shall thereafter use commercially reasonable efforts to cause such insurers to pay, on behalf of Indemnitee, all amounts payable
as a result of such Proceeding in accordance with the terms of such policies.

 

16.4. In the event of any
payment under this Agreement, the Company, to the fullest extent permitted by law, shall be subrogated to the extent of such payment to
all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights,
including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights. No such payment by
the Company shall be deemed to relieve any insurer of its obligations.

 

    10 

     

    

 

16.5. The Company’s
obligation to indemnify, hold harmless, exonerate or advance Expenses hereunder to Indemnitee who is or was serving at the request of
the Company as a director, officer, trustee, partner, manager, managing member, fiduciary, employee or agent of any other Enterprise shall
be reduced by any amount Indemnitee has actually received as indemnification, hold harmless or exoneration payments or advancement of
expenses from such Enterprise. Notwithstanding any other provision of this Agreement to the contrary, but subject to Section 27,
(i) Indemnitee shall have no obligation to reduce, offset, allocate, pursue or apportion any indemnification, hold harmless, exoneration,
advancement, contribution or insurance coverage among multiple parties possessing such duties to Indemnitee prior to the Company’s
satisfaction and performance of all its obligations under this Agreement, and (ii) the Company shall perform fully its obligations
under this Agreement without regard to whether Indemnitee holds, may pursue or has pursued any indemnification, advancement, hold harmless,
exoneration, contribution or insurance coverage rights against any person or entity other than the Company.

 

16.6. Notwithstanding anything
contained herein, the Company is the primary indemnitor, and any indemnification or advancement obligation of the Sponsor or its affiliates
or members or any other Person is secondary.

 

17.         DURATION
OF AGREEMENT. All agreements and obligations of the Company contained herein shall continue during the period Indemnitee serves
as a director or officer of the Company or as a director, officer, trustee, partner, manager, managing member, fiduciary, employee or
agent of any other corporation, partnership, joint venture, trust, employee benefit plan or other Enterprise which Indemnitee serves at
the request of the Company and shall continue thereafter so long as Indemnitee shall be subject to any possible Proceeding (including
any rights of appeal thereto and any Proceeding commenced by Indemnitee pursuant to Section 14 of this Agreement) by reason of his
Corporate Status, whether or not he, she or they is or are acting in any such capacity at the time any liability or expense is incurred
for which indemnification or advancement can be provided under this Agreement.

 

18.         SEVERABILITY.
If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (i) the
validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any
Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not
itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest
extent permitted by law; (ii) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable
law and to give the maximum effect to the intent of the parties hereto; and (iii) to the fullest extent possible, the provisions
of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any
such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed
so as to give effect to the intent manifested thereby.

 

19.         ENFORCEMENT
AND BINDING EFFECT.

 

19.1. The Company expressly
confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee
to serve as a director, officer or key employee of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement
in serving as a director, officer or key employee of the Company.

 

19.2. Without limiting any
of the rights of Indemnitee under the Memorandum and Articles of the Company as they may be amended from time to time, this Agreement
constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements
and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof.

 

19.3. The indemnification,
hold harmless, exoneration and advancement of expenses rights provided by or granted pursuant to this Agreement shall be binding upon
and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase,
merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company), shall continue as to an
Indemnitee who has ceased to be a director, officer, employee or agent of the Company or a director, officer, trustee, general partner,
manager, managing member, fiduciary, employee or agent of any other Enterprise at the Company’s request, and shall inure to the
benefit of Indemnitee and his, her or their spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.

 

19.4. The Company shall require
and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial
part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to
assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if
no such succession had taken place.

 

    11 

     

    

 

19.5. The Company and Indemnitee
agree herein that a monetary remedy for breach of this Agreement, at some later date, may be inadequate, impracticable and difficult of
proof, and further agree that such breach may cause Indemnitee irreparable harm. Accordingly, the parties hereto agree that Indemnitee
may, to the fullest extent permitted by law, enforce this Agreement by seeking, among other things, injunctive relief and/or specific
performance hereof, without any necessity of showing actual damage or irreparable harm and that by seeking injunctive relief and/or specific
performance, Indemnitee shall not be precluded from seeking or obtaining any other relief to which he, she or they may be entitled.
The Company and Indemnitee further agree that Indemnitee shall, to the fullest extent permitted by law, be entitled to such specific performance
and injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, without the necessity
of posting bonds or other undertaking in connection therewith. The Company acknowledges that in the absence of a waiver, a bond or undertaking
may be required of Indemnitee by a Court of competent jurisdiction and the Company hereby waives any such requirement of such a bond or
undertaking to the fullest extent permitted by law.

 

20.         MODIFICATION
AND WAIVER. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by the parties
hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this
Agreement nor shall any waiver constitute a continuing waiver.

 

21.         NOTICES.
All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly
given (i) if delivered by hand and received for by the party to whom said notice or other communication shall have been directed,
on such delivery, (ii) if mailed by certified or registered mail with postage prepaid, on the third (3rd) business day
after the date on which it is so mailed, or (iii) if delivered by electronic mail, on the date of such delivery:

 

(a)          If
to Indemnitee, at the address indicated on the signature page of this Agreement, or such other address as Indemnitee shall provide
in writing to the Company.

 

(b)          If
to the Company, to:

 

Galata Acquisition Corp.

2001 S Street NW, Suite 320

Washington, DC 20009

Attention: Kemal Kaya, Chief Executive Officer

Email: s.kemalkaya@gmail.com

 

With a copy, which shall not constitute notice, to:

 

Greenberg Traurig, LLP

1750 Tysons Boulevard

McLean, VA 22102

Attention: Jason T. Simon, Esq. and Yangyang Jia, Esq.

Email: simonj@gtlaw.com and jiay@gtlaw.com

 

or to any other address as
may have been furnished to Indemnitee in writing by the Company.

 

22.         APPLICABLE
LAW AND CONSENT TO JURISDICTION. This Agreement and the rights and obligations of the parties hereunder shall be construed
in accordance with and governed by the laws of the Cayman Islands, without giving effect to the conflict of law principles thereof. Except
with respect to any arbitration commenced by Indemnitee pursuant to Section 14.1 of this Agreement, to the fullest extent permitted
by law, the Company and Indemnitee hereby irrevocably and unconditionally: (i) agree that any action or proceeding arising out of
or in connection with this Agreement shall be brought only in the New York Court; (ii) consent to submit to the exclusive jurisdiction
of the New York Court for purposes of any action or proceeding arising out of or in connection with this Agreement; (iii) waive any
objection to the laying of venue of any such action or proceeding in the New York Court; and (iv) waive, and agree not to plead or
to make, any claim that any such action or proceeding brought in the New York Court has been brought in an improper or inconvenient forum,
or is subject (in whole or in part) to a jury trial.

 

    12 

     

    

 

23.         IDENTICAL
COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to
be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against
whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

 

24.         MISCELLANEOUS.
Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate. The headings of the paragraphs
of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction
thereof.

 

25.         PERIOD
OF LIMITATIONS. No legal action shall be brought and no cause of action shall be asserted by or in the right of the Company
against Indemnitee, Indemnitee’s spouse, heirs, executors or personal or legal representatives after the expiration of two
years from the date of accrual of such cause of action, and any claim or cause of action of the Company shall be extinguished and deemed
released unless asserted by the timely filing of a legal action within such two-year period; provided, however, that if any shorter period
of limitations is otherwise applicable to any such cause of action such shorter period shall govern. The period of limitations set forth
in this Section 25 shall no longer be applicable in the case of fraud, gross negligence and willful misconduct.

 

26.         ADDITIONAL
ACTS. If for the validation of any of the provisions in this Agreement any act, resolution, approval or other procedure is
required, to the fullest extent permitted by law, the Company undertakes to cause such act, resolution, approval or other procedure to
be affected or adopted in a manner that will enable the Company to fulfill its obligations under this Agreement.

 

27.         WAIVER
OF CLAIMS TO TRUST ACCOUNT. Notwithstanding anything contained herein to the contrary, Indemnitee hereby agrees that it
does not have any right, title, interest or claim of any kind (each, a “Claim”) in or to any monies in the Trust Account,
and hereby waives any Claim it may have in the future as a result of, or arising out of, any services provided to the Company and will
not seek recourse against such Trust Account for any reason whatsoever. Accordingly, Indemnitee acknowledges and agrees that any
indemnification provided hereto will only be able to be satisfied by the Company if (i) the Company has sufficient funds outside
of the Trust Account to satisfy its obligations hereunder or (ii) the Company consummates an initial business combination.

 

28.         MAINTENANCE
OF INSURANCE

 

The Company shall use commercially reasonable
efforts to obtain and maintain in effect during the entire period for which the Company is obligated to indemnify the Indemnitee under
this Agreement, one or more policies of insurance with reputable insurance companies to provide the officers/directors of the Company
with coverage for losses from wrongful acts and omissions and to ensure the Company’s performance of its indemnification obligations
under this Agreement. The Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum
extent of the coverage available for any such director or officer under such policy or policies. In all such insurance policies, the Indemnitee
shall be named as an insured in such a manner as to provide the Indemnitee with the same rights and benefits as are accorded to the most
favorably insured of the Company’s directors and officers.

 

[Signature Page Follows]

 

    13 

     

    

 

IN
WITNESS WHEREOF, the parties hereto have caused this Indemnity Agreement to be signed as of the day and year first above written.

 

		 	GALATA ACQUISITION CORP.
	 	 	 
	 	 	By:
	 	 	Name:
	 	 	Title:
	 	 	 
	 	 	INDEMNITEE
	 	 	 
	 	 	 
	 	 	Name:
	 	 	 
	 	 	Address:
	 	 	 
	 	 	c/o Galata Acquisition Corp.
	 	 	2001 S Street NW, Suite 320
	 	 	Washington, DC 20009
	 	 	 
	 	 	Email:

 

    14Exhibit 4.1

 

 

 

ACUITYADS HOLDINGS INC.

 

 

ANNUAL
INFORMATION FORM

 

FOR
THE YEAR ENDED DECEMBER 31, 2020

 

 

 

March 1, 2021

 

    

     

    

 

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

 

    -i-

     

    

 

MEANING
OF CERTAIN REFERENCES

 

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

 

FORWARD-LOOKING
INFORMATION

 

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

 

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

 

    

     

    

 

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

 

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

 

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

 

    2

     

    

 

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

 

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

 

MARKET
AND INDUSTRY DATA

 

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

 

TRADEMARKS
AND TRADE NAMES

 

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

 

    3

     

    

 

CORPORATE
STRUCTURE

 

Incorporation

 

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

 

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

 

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

 

Inter-corporate Relationships

 

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

 

 

 

    4

     

    

 

DESCRIPTION
AND GENERAL DEVELOPMENT OF THE BUSINESS

 

Business of the Corporation

 

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

 

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

 

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

 

In October 2020, AcuityAds
officially launched 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.

 

    5

     

    

 

Three Year History

 

Acquisitions

 

ADman Media

 

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

 

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

 

Magnetic Media

 

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

 

Product Expansions

 

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

 

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

 

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

 

    6

     

    

 

Financings

 

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

 

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

 

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

 

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

 

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

 

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

 

Exchanges

 

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

 

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

 

    7

     

    

 

COVID-19 Global Pandemic

 

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

 

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

 

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

 

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

 

AcuityAds’ Programmatic Marketing Platform

 

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

 

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

 

    8

     

    

 

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

 

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

 

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

 

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

 

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

 

    9

     

    

 

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

 

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

 

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

 

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

 

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

 

Competitive Conditions

 

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

 

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

 

    10

     

    

 

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

 

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

 

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

 

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

 

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

 

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

 

New Products

 

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

 

Growth Strategy

 

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

 

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

 

    11

     

    

 

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

 

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

 

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

 

Marketing Strategy

 

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

 

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

 

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

 

Specialized Skill and Knowledge

 

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

 

    12

     

    

 

Intangible Properties

 

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

 

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

 

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

 

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

 

Cycles

 

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

 

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

 

Economic Dependence

 

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

 

    13

     

    

 

Employees

 

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

 

Foreign Operations

 

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

 

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

 

Privacy

 

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

 

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

 

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

 

    14

     

    

 

Reorganizations

 

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

 

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

 

RISK
FACTORS

 

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

 

Business Risks

 

Fluctuation of Financial Results

 

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

 

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

 

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

 

    15

     

    

 

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

 

		·	changes in AcuityAds’ customer base and platform offerings;

 

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

 

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

 

		·	changes to AcuityAds’ channel mix;

 

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

 

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

 

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

 

		·	disruptions or outages on AcuityAds’ platforms;

 

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

 

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

 

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

 

		·	the length and unpredictability of AcuityAds’ sales cycle;

 

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

 

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

 

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

 

    16

     

    

 

Reliance on Key Customers

 

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

 

Retaining and Attracting Customers

 

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

 

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

 

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

 

    17

     

    

 

No Long-Term Customer Commitments

 

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

 

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

 

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

 

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

 

    18

     

    

 

Failure to Properly Manage Growth

 

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

 

Failure to Properly Forecast Growth

 

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

 

Acquisitions by the Corporation

 

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

 

		·	regulatory hurdles;

 

		·	failure of anticipated benefits to materialize;

 

    19

     

    

 

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

 

		·	retention of employees from the acquired company;

 

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

 

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

 

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

 

		·	coordination of product development and sales and marketing functions;

 

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

 

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

 

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

 

Reliance on Third Parties

 

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

 

    20

     

    

 

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

 

Personnel

 

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

 

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

 

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

 

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

 

    21

     

    

 

Conflicts of Interest

 

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

 

Dependence on Display Advertising

 

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

 

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

 

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

 

    22

     

    

 

Risks of Self-Service Model

 

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

 

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

 

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

 

Risks Related to COVID-19 pandemic

 

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

 

    23

     

    

 

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

 

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

 

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

 

    24

     

    

 

Financial and Accounting Risks

 

Additional Financing

 

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

 

Existing Debt

 

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

 

    25

     

    

 

Inability to Offset Increasing Costs

 

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

 

Negative Impact of Seasonal Fluctuations

 

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

 

Payment Risks

 

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

 

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

 

    26

     

    

 

Foreign Sales

 

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

 

Estimates or Judgments Relating to Critical
Accounting Policies

 

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

 

Internal Controls Over Financial Reporting
and Disclosure Controls and Procedures

 

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

 

    27

     

    

 

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

 

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

 

Liquidity

 

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

 

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

 

    28

     

    

 

Interest Rates

 

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

 

Foreign Exchange or Currency

 

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

 

Industry Risks

 

Competition

 

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

 

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

 

    29

     

    

 

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

 

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

 

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

 

Use of Third-Party Cookies and Other Tracking
Technologies

 

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

 

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

 

    30

     

    

 

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

 

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

 

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

 

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

 

    31

     

    

 

Potential “Do Not Track” Standards

 

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

 

Legislation and Regulation

 

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

 

    32

     

    

 

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

 

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

 

Ability to Protect AcuityAds’ Proprietary
Offering

 

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

 

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

 

    33

     

    

 

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

 

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

 

Infringement of Intellectual Property Rights

 

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

 

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

 

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

 

    34

     

    

 

Use of Open Source Software Components

 

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

 

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

 

Unanticipated Problems Associated with the
Programmatic Marketing Platform

 

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

 

    35

     

    

 

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

 

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

 

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

 

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

 

Failure to Access Advertising Inventory

 

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

 

    36

     

    

 

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

 

Social Data

 

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

 

Mobile Advertising

 

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

 

    37

     

    

 

Video Advertising

 

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

 

Fraud

 

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

 

Publisher Protection

 

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

 

Potential for Liability

 

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

 

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

 

    38

     

    

 

Ad Blockers

 

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

 

Obsolescence

 

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

 

Catastrophic Events

 

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

 

    39

     

    

 

Economic, Political and Market Conditions

 

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

 

Negative Industry Publicity

 

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

 

    40

     

    

 

Corporate Culture

 

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

 

Risks Related to the Common Shares

 

Market for Common Shares

 

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

 

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

 

    41

     

    

 

Substantial Control by Insiders

 

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

 

Dividend Policy

 

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

 

Public Company Implications

 

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

 

Analyst Coverage

 

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

 

    42

     

    

 

Tax Consequences

 

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

 

DIVIDENDS
AND DISTRIBUTIONS

 

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

 

DESCRIPTION
OF CAPITAL STRUCTURE

 

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

 

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

 

MARKET
FOR SECURITIES

 

Trading Price and Volume

 

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

 

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

 

 Notes:

(1)  Source: Capital IQ.

 

    43

     

    

 

Prior Sales

 

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

 

	Date of Issuance	 	Security	 	Number of

Securities Issued	 	Exercise Price Per

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

 

Notes:

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

 

DIRECTORS
AND OFFICERS

 

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

 

    44

     

    

 

	Name
    and

Residence	 	Position
    with the

    Corporation and

 Period(s) Served as a 

Director	 	Principal
    Occupation	 	Number
    of Common 

Shares Beneficially

 Owned or Controlled	 	Percentage
    of 

Common Shares

Beneficially Held	 
	Tal
    Hayek

    Ontario, Canada	 	Co-Founder,
    Chief Executive Officer and Director since October 9, 2009	 	Chief
    Executive Officer of the Corporation	 	2,640,801	 	4.9	%
	Jonathan
    Pollack

    Ontario, Canada	 	Chief
    Financial Officer since May 9, 2018	 	Chief
    Financial Officer of the Corporation	 	42,462	 	0.1	%
	Rachel
    Kapcan

    Ontario, Canada	 	Co-Founder
    and Vice President of Client Operations	 	Vice
    President of Client Operations of the Corporation	 	2,260,240	 	4.2	%
	Joe Ontman

    Ontario, Canada	 	Co-Founder,
    Chief Business Development Officer and Director since October 9, 2009	 	Chief
    Business Development Officer of the Corporation	 	2,287,894	 	4.3	%
	Oren
    Hisherik,

    Ontario, Canada	 	Chief
    Information and Technology Officer since February 18, 2019	 	Chief
    Information and Technology Officer of the Corporation	 	12,400	 	0.0	%
	Sheldon
    Pollack(1)(2)

    Ontario,
    Canada
	 	Chairman
    and Director since January 9, 2013	 	Co-founder
    of OnX Enterprise Solutions Inc. and early-stage investor	 	1,759,482	 	3.3	%
	Roger
    Dent(1)(2)

    Ontario, Canada	 	Director
    since July 16, 2014	 	Chief
    Executive Officer of Quinsam Capital Corporation	 	55,000	 	0.1	%
	Igal
    Mayer(1)(2)

    Ontario, Canada	 	Director
    since July 16, 2014	 	Chief
    Executive Officer of Kanetix Ltd.	 	51,667	 	0.1	%
	Yishay
    Waxman(1)(2)

    Ontario, Canada	 	Director
    since July 16, 2014	 	Co-founder
    and

    President, Platterz Inc.	 	18,700	 	0.0	%
	Corey
    Ferengul(1)(2)

    Illinois, U.S.A.	 	Director
    since May 28, 2019	 	Investor
    with Hyde

    Park Angels	 	0	 	0.0	%

 

 

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

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

 

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

 

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

 

    45

     

    

 

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

 

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

 

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

 

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

 

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

 

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

 

    46

     

    

 

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

 

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

 

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

 

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

 

    47

     

    

 

Corporate Cease Trade Orders, Bankruptcies,
Penalties or Sanctions

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

    48

     

    

 

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

 

Conflicts of Interest

 

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

 

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

 

AUDIT
COMMITTEE

 

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

 

Audit Committee Charter

 

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

 

Composition of the Audit Committee

 

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

 

    49

     

    

 

Relevant Education and Experience

 

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

 

Audit Committee Oversight

 

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

 

Pre-Approval Policies and Procedures

 

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

 

External Auditor Service Fees

 

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

 

	Year Ended	 	Audit Fees(1)	 	 	Audit Related

Fees(2)	 	 	Tax Fees(3)	 	 	All Other

 Fees(4)	 
	December 31, 2020	 	$	210,000	 	 	$	57,800	 	 	$	0	 	 	 	Nil	 
	December 31, 2019	 	$	200,000	 	 	$	75,000	 	 	$	0	 	 	 	Nil	 

 

 

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

 

    50

     

    

 

PROMOTERS

 

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

 

LEGAL
PROCEEDINGS AND REGULATORY ACTIONS

 

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

 

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

 

INTEREST
OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

 

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

 

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

 

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

 

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

 

    51

     

    

 

TRANSFER
AGENT AND REGISTRAR

 

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

 

MATERIAL
CONTRACTS

 

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

 

INTERESTS
OF EXPERTS

 

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

 

ADDITIONAL
INFORMATION

 

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

 

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

 

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

 

GLOSSARY

 

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

 

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

 

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

 

    52

     

    

 

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

 

“AIF” means this annual information
form;

 

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

 

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

 

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

 

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

 

“Canadian GAAP” means Canadian
generally accepted accounting principles;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“TSX” means the Toronto Stock
Exchange; and

 

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

 

    53

     

    

 

APPENDIX A

AUDIT COMMITTEE CHARTER

 

General

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Composition and Operation

 

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

 

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

 

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

 

Mandate

 

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

 

    A-1

     

    

 

Financial Reporting and Disclosure

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Oversight of Internal Controls

 

The Audit Committee will:

 

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

 

    A-2

     

    

 

		·	oversee the system of internal control, by:

 

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

 

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

 

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

 

		·	taking other actions as considered necessary.

 

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

 

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

 

External Audit Appointment and Removal

 

The Audit Committee will:

 

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

 

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

 

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

 

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

 

    A-3

     

    

 

External Audit Liaison

 

The external Auditor will report directly to the
Audit Committee.

 

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

 

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

 

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

 

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

 

External Audit Review

 

The Audit Committee will:

 

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

 

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

 

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

 

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

 

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

 

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

 

    A-4

     

    

 

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

 

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

 

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

 

Risk Management

 

The Audit Committee will:

 

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

 

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

 

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

 

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

 

Regulatory Compliance

 

The Audit Committee will:

 

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

 

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

 

    A-5

     

    

 

Related Party Transactions

 

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

 

Board of Directors Relationship and Reporting|

 

The Audit Committee will:

 

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

 

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

 

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

 

Chair

 

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

 

Meetings

 

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

 

Quorum

 

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

 

Removal and Vacancy

 

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

 

    A-6

     

    

 

Experts and Advisors

 

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

 

Access

 

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

 

Secretary and Minutes

 

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

 

    A-7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00328-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00328-of-00352.parquet"}]]