illumin Holdings Inc 6-K, filed Nov 10, 2022
illumin Holdings Inc. (ILLMF)
About this 6-K
illumin Holdings Inc filed this 6-K on November 10, 2022.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT
TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the month of November 2022
Commission File Number 001-40469
AcuityAds Holdings Inc.
(Translation of registrant’s name into English)
70 University Ave., Suite 1200
Toronto, Ontario
M5J 2M4
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
| ¨ Form 20-F | x Form 40-F |
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨
INCORPORATION BY REFERENCE
Exhibits 99.1, 99.2, 99.3 and 99.4 of this Form 6-K are incorporated by reference as additional exhibits to the registrant’s Registration Statement on Form F-10 (File No. 333-256909) and Registration Statement on Form S-8 (File No. 333-258901).
DOCUMENTS INCLUDED AS PART OF THIS REPORT
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| ACUITYADS HOLDINGS INC. | |||
| Date: November 10, 2022 | By: | /s/ Elliot Muchnik | |
| Name: | Elliot Muchnik | ||
| Title: | Chief Financial Officer | ||
Exhibit 99.1
AcuityAds Holdings Inc.
Condensed Interim Consolidated
Financial Statements
(Unaudited)
Three and nine months ended
September 30, 2022, and 2021
(Expressed in Canadian dollars)
AcuityAds Holdings Inc.
Condensed Interim Consolidated Statements of Financial Position
(Expressed in Canadian dollars)
(Unaudited)
September 30, 2022 $ | December 31, 2021 $ | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | 88,231,834 | 102,208,807 | ||||||
| Accounts receivable | 28,448,325 | 30,972,608 | ||||||
| Prepaid expenses and other | 3,172,384 | 3,278,624 | ||||||
| 119,852,543 | 136,460,039 | |||||||
| Non-current assets | ||||||||
| Deferred tax asset (note 16) | 81,803 | 81,803 | ||||||
| Other assets | 360,836 | - | ||||||
| Property and equipment (note 3) | 6,950,092 | 5,369,619 | ||||||
| Intangible assets (note 4) | 4,557,717 | 3,044,278 | ||||||
| Goodwill | 4,869,841 | 4,869,841 | ||||||
| 136,672,832 | 149,825,580 | |||||||
| Liabilities | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | 20,204,928 | 24,853,497 | ||||||
| Income tax payable | 558,690 | 910,165 | ||||||
| Borrowings (note 15) | 4,800,272 | 2,946,150 | ||||||
| Lease obligations (note 5) | 1,866,511 | 2,058,161 | ||||||
| 27,430,401 | 30,767,973 | |||||||
| Non-current liabilities | ||||||||
| Borrowings (note 15) | 214,590 | 3,852,891 | ||||||
| Lease obligations (note 5) | 4,362,910 | 2,148,708 | ||||||
| 32,007,901 | 36,769,572 | |||||||
| Shareholders’ equity (note 7) | 104,664,931 | 113,056,008 | ||||||
| 136,672,832 | 149,825,580 | |||||||
AcuityAds Holdings Inc.
Condensed Interim Consolidated Statements of Comprehensive Income (Loss)
(Expressed in Canadian dollars)
(Unaudited)
Three months September 30, 2022 $ | Three months September 30, 2021 $ | Nine months September 30, 2022 $ | Nine months September 30, 2021 $ | |||||||||||||
| Revenue | ||||||||||||||||
| Managed services | 20,424,781 | 19,320,662 | 54,337,640 | 65,197,665 | ||||||||||||
| Self-service | 8,522,515 | 8,164,158 | 26,690,889 | 20,026,969 | ||||||||||||
| 28,947,296 | 27,484,820 | 81,028,529 | 85,224,634 | |||||||||||||
| Media costs | 14,102,830 | 13,232,069 | 39,601,460 | 40,798,761 | ||||||||||||
| Gross profit | 14,844,466 | 14,252,751 | 41,427,069 | 44,425,873 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Sales and marketing (note 17) | 5,904,181 | 5,260,944 | 16,745,908 | 14,982,171 | ||||||||||||
| Technology (notes 11 and 17) | 4,243,954 | 2,581,090 | 11,764,959 | 9,716,514 | ||||||||||||
| General and administrative (note 17) | 3,173,827 | 2,012,256 | 10,084,466 | 5,439,210 | ||||||||||||
| Share-based compensation (note 7) | 1,893,845 | 1,465,706 | 5,447,830 | 3,954,217 | ||||||||||||
| Depreciation and amortization | 1,124,790 | 1,172,334 | 3,527,168 | 3,816,994 | ||||||||||||
| 16,340,597 | 12,492,330 | 47,570,331 | 37,909,106 | |||||||||||||
| Income (loss) from operations | (1,496,131 | ) | 1,760,421 | (6,143,262 | ) | 6,516,767 | ||||||||||
| Finance costs (note 8) | 158,453 | 263,220 | 429,557 | 797,074 | ||||||||||||
| Foreign exchange gain | (5,835,813 | ) | (1,864,926 | ) | (7,228,072 | ) | (2,599,487 | ) | ||||||||
| (5,677,360 | ) | (1,601,706 | ) | (6,798,515 | ) | (1,802,413 | ) | |||||||||
| Net income before income taxes | 4,181,229 | 3,362,127 | 655,253 | 8,319,180 | ||||||||||||
| Income taxes (note 16) | 1,378,607 | - | 1,432,242 | 231,600 | ||||||||||||
| Net income (loss) for the period | 2,802,622 | 3,362,127 | (776,989 | ) | 8,087,580 | |||||||||||
| Basic net income (loss) per share (note 9) | 0.05 | 0.06 | (0.01 | ) | 0.14 | |||||||||||
| Diluted net income (loss) per share (note 9) | 0.05 | 0.05 | (0.01 | ) | 0.14 | |||||||||||
| Exchange (gain) loss on translating foreign operations | (224,097 | ) | (331,401 | ) | 10,238 | 671,363 | ||||||||||
| Comprehensive income (loss) for the period | 3,026,719 | 3,693,528 | (787,227 | ) | 7,416,217 | |||||||||||
AcuityAds Holdings Inc.
Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity
(Expressed in Canadian dollars unless otherwise stated)
(Unaudited)
For the nine months ended September 30, 2022, and 2021
| 2022 | ||||||||||||||||||||||||||||
| Common shares | ||||||||||||||||||||||||||||
Number | Amount $ | Contributed surplus $ | Warrants $ | Other reserves $ | Deficit $ | Total $ | ||||||||||||||||||||||
| Balance – December 31, 2021 | 60,733,803 | 124,036,377 | 10,620,976 | - | 446,218 | (22,047,563 | ) | 113,056,008 | ||||||||||||||||||||
| Shares issued – options exercised | 247,866 | 374,037 | - | - | - | - | 374,037 | |||||||||||||||||||||
| Repurchase of shares for cancellation (note 7 (f)) | (4,080,880 | ) | (8,284,393 | ) | (4,715,582 | ) | - | - | - | (12,999,975 | ) | |||||||||||||||||
| Share-based compensation (note 7(c)) | - | - | 5,447,830 | - | - | - | 5,447,830 | |||||||||||||||||||||
| Shares issued – DSUs/RSUs exercised (notes 7(d) and 7(e)) | 480,397 | 2,085,543 | (2,085,543 | ) | - | - | - | - | ||||||||||||||||||||
| Other comprehensive income | - | - | - | - | (435,980 | ) | - | (435,980 | ) | |||||||||||||||||||
| Net loss for the period | - | - | - | - | - | (776,989 | ) | (776,989 | ) | |||||||||||||||||||
| Balance – September 30, 2022 | 57,381,186 | 118,211,564 | 9,267,681 | - | 10,238 | (22,824,552 | ) | 104,664,931 | ||||||||||||||||||||
| 2021 | ||||||||||||||||||||||||||||
| Common shares | ||||||||||||||||||||||||||||
Number | Amount $ | Contributed surplus $ | Warrants $ | Other reserves $ | Deficit $ | Total $ | ||||||||||||||||||||||
| Balance – December 31, 2020 | 53,422,024 | 56,983,111 | 7,224,222 | 31,279 | 415,049 | (32,603,073 | ) | 32,050,588 | ||||||||||||||||||||
| Shares issued – options exercised | 742,183 | 1,056,189 | - | - | - | - | 1,056,189 | |||||||||||||||||||||
| Equity financing (note 7(b)) | 5,665,025 | 63,955,491 | - | - | - | - | 63,955,491 | |||||||||||||||||||||
| Share-based compensation (note 7(c)) | - | - | 3,954,217 | - | - | - | 3,954,217 | |||||||||||||||||||||
| Shares issued – warrants exercised | 39,821 | 61,723 | 31,279 | (31,279 | ) | - | - | 61,723 | ||||||||||||||||||||
| Shares issued – DSUs/RSUs exercised (notes 7(d) and 7(e)) | 768,569 | 1,434,848 | (1,434,848 | ) | - | - | - | - | ||||||||||||||||||||
| Other comprehensive income | - | - | - | - | 256,314 | - | 256,314 | |||||||||||||||||||||
| Net income for the period | - | - | - | - | - | 8,087,580 | 8,087,580 | |||||||||||||||||||||
| Balance – September 30, 2021 | 60,637,622 | 123,491,362 | 9,774,870 | - | 671,363 | (24,515,493 | ) | 109,422,102 | ||||||||||||||||||||
AcuityAds Holdings Inc.
Condensed Interim Consolidated Statements of Cash Flows
(Expressed in Canadian dollars)
(Unaudited)
For the nine months ended September 30, 2022, and 2021
2022 $ | 2021 $ | |||||||
| Cash provided by (used in) | ||||||||
| Operating activities | ||||||||
| Net income (loss) for the period | (776,989 | ) | 8,087,580 | |||||
| Adjustments to reconcile net income (loss) to net cash flows | ||||||||
| Depreciation and amortization | 3,527,168 | 3,816,994 | ||||||
| Finance costs (note 8) | 429,557 | 797,074 | ||||||
| Share-based compensation (note 7(c)) | 5,447,830 | 3,954,217 | ||||||
| Foreign exchange gain | (7,228,072 | ) | (2,599,487 | ) | ||||
| Change in non-cash operating working capital | ||||||||
| Accounts receivable | 2,637,300 | 7,333,843 | ||||||
| Prepaid expenses and other | 106,237 | (1,209,249 | ) | |||||
| Other assets | (360,836 | ) | - | |||||
| Accounts payable and accrued liabilities | (4,296,278 | ) | (3,390,866 | ) | ||||
| Income tax payable | (351,475 | ) | - | |||||
| Interest paid, net | (328,332 | ) | (695,976 | ) | ||||
| (1,193,890 | ) | 16,094,130 | ||||||
| Investing activities | ||||||||
| Additions to property and equipment (note 3) | (161,646 | ) | (779,828 | ) | ||||
| Additions to intangible assets (note 4) | (2,650,031 | ) | (964,636 | ) | ||||
| (2,811,677 | ) | (1,744,464 | ||||||
| Financing activities | ||||||||
| Repayment of term loans principal (note 15) | (1,679,881 | ) | (1,818,053 | ) | ||||
| Proceeds from international loans (note 15) | 1,135,985 | 852,486 | ||||||
| Repayment of international loans (note 15) | (1,406,950 | ) | (1,410,960 | ) | ||||
| Addition to leases | - | 358,644 | ||||||
| Repayment of leases | (1,535,249 | ) | (2,345,510 | ) | ||||
| Net proceeds from equity financing (note 7) | - | 63,955,491 | ||||||
| Repurchase of shares for cancellation (note 7 (f)) | (12,999,975 | ) | - | |||||
| Proceeds from the exercise of warrants | - | 61,723 | ||||||
| Proceeds from the exercise of stock options | 374,037 | 1,056,189 | ||||||
| (16,112,033 | ) | 60,710,010 | ||||||
| Increase (decrease) in cash and cash equivalents | (20,117,600 | ) | 75,059,676 | |||||
| Impact of foreign exchange on cash and cash equivalents | 6,140,627 | 2,599,487 | ||||||
| Cash and cash equivalents – beginning of period | 102,208,807 | 22,638,300 | ||||||
| Cash and cash equivalents – end of period | 88,231,834 | 100,297,463 | ||||||
| Supplemental disclosure of non-cash transactions | ||||||||
| Additions to property and equipment under leases | 3,809,403 | 447,869 | ||||||
AcuityAds Holdings Inc.
Notes to Condensed Interim Consolidated Financial Statements
(Expressed in Canadian dollars)
(Unaudited)
For the nine months ended September 30, 2022, and 2021
| 1 | Corporate information |
AcuityAds Holdings Inc. (“AcuityAds” or the “Company”), and its wholly owned subsidiaries AcuityAds Inc., AcuityAds US Inc., 140 Proof Inc., and ADman Interactive S.L.U. (“ADman”), a company that holds certain technology assets, is a leading provider of targeted digital media solutions, enabling advertisers to connect intelligently with their audiences across online display, video, social and mobile campaigns. AcuityAds is a publicly traded company, incorporated in Canada, with its head office located at 70 University Ave, Suite 1200, Toronto, Ontario M5J 2M4. The Company’s common shares are listed on the Toronto Stock Exchange in Canada under the trading symbol “AT”, and on the Nasdaq Capital Market in the United States, under the trading symbol “ATY”.
| 2 | Summary of significant accounting policies |
Statement of compliance
These unaudited condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board, applicable to the preparation of condensed interim consolidated financial statements, including International Accounting Standards (IAS) 34, Interim Financial Reporting. The date the Board of Directors authorized the consolidated financial statements for issue was November 10, 2022.
Basis of presentation
These consolidated financial statements are prepared in Canadian dollars (“CAD”), which is the Company’s functional and reporting currency and have been prepared mainly under the historical cost basis. Other measurement bases used are described in the applicable notes.
Significant accounting policies
The disclosures contained in these unaudited condensed interim consolidated financial statements do not include all the requirements of IFRS for annual financial statements. The unaudited condensed interim consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements for the year ended December 31, 2021.
These unaudited condensed interim consolidated financial statements are based on accounting policies, including significant judgements and estimates, as described in note 2 to the 2021 audited annual consolidated financial statements, supplemented by the item below.
Economic factors
Changes in economic conditions may affect the Company’s results of operations and predictability of future income. Demand and supply are both driven by movements in the end consumer market, which may be affected by factors such as high inflation, recessionary fear and geopolitical instability. These conditions may reduce the spending committed by existing and potential customers on marketing campaigns, and a less observable impact of the Company’s product (such as conversion rate) as received by the end consumers. Therefore, the Company’s revenue and other results may fluctuate, due to end consumers’ reaction to these economic factors. Any estimate of the length and severity of these developments is therefore subject to significant uncertainty, and accordingly estimates of the extent to which these economic factors may materially and adversely affect the Company’s operations, financial results and condition in future periods are also subject to significant uncertainty.
1
AcuityAds Holdings Inc.
Notes to Condensed Interim Consolidated Financial Statements
(Expressed in Canadian dollars)
(Unaudited)
For the nine months ended September 30, 2022, and 2021
New accounting standards
The following amendments to standards and interpretations became effective for the annual periods beginning on or after January 1, 2022. The application of these amendments and interpretations had no significant impact on the Company’s condensed interim consolidated financial position or results of operations.
Reference to the Conceptual Framework (Amendments to IFRS 3, Business Combinations). The amendments to IFRS 3 update an outdated reference in IFRS 3 without significantly changing its requirements and add an explicit statement that an acquirer does not recognize contingent assets acquired in a business combination.
Fees in the “10 Per Cent Test” for Derecognition of Financial Liabilities (Amendments to IFRS 9, Financial Instruments). The amendments to IFRS 9 clarify which fees an entity includes when it applies the “10 per cent test” in assessing whether to derecognize a financial liability. An entity includes only fees paid or received between the entity (the borrower) and the lender, including fees paid or received by either the entity or the lender on the other’s behalf.
Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37, Provisions, Contingent Liabilities and Contingent Assets). The amendments to IAS 37 provide guidance regarding the costs a company should include as the cost of fulfilling a contract when assessing whether a contract is onerous. The amendments specify that the cost of fulfilling a contract comprises the costs that relate directly to the contract and can either be incremental costs of fulfilling that contract or an allocation of other costs that relate directly to fulfilling contracts.
Future accounting standards
Classification of Liabilities as Current or Non-current (Amendments to IAS 1, Presentation of Financial Statements). The amendments to IAS 1 provide a more general approach to the classification of liabilities based on the contractual arrangements in place at the reporting date. The amendments clarify that the classification of liabilities as current or non-current should be based on rights that are in existence at the end of the reporting period and align the wording in all affected paragraphs to refer to the right to defer settlement by at least twelve months and make explicit that only rights in place at the end of the reporting period should affect the classification of a liability. The amendments are effective for annual reporting periods beginning on or after January 1, 2023 and are to be applied retroactively.
Disclosure of Accounting Policies (Amendments to IAS 1). The amendments to IAS 1 require an entity to disclose its material accounting policies instead of its significant accounting policies. The amendments clarify that accounting policy information is material if users of an entity’s financial statements would need it to understand other material information in the financial statements. The amendments are effective for annual reporting periods beginning on or after January 1, 2023 and are to be applied prospectively.
Definition of Accounting Estimates (Amendments to IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors). The amendments to IAS 8 provide guidance to assist entities in distinguishing between accounting policies and accounting estimates. The amendments replace the definition of a change in accounting estimates with the definition of accounting estimates. Under the new definition, accounting estimates are monetary amounts in financial statements that are subject to measurement uncertainty. The amendments also clarify that a change in accounting estimate that results from new information or new developments is not the correction of an error. In addition, the effects of a change in an input or a measurement technique used to develop an accounting estimate are changes in accounting estimates if they do not result from the correction of prior period errors. The amendments are effective for annual periods beginning on or after January 1, 2023 and are to be applied prospectively.
2
AcuityAds Holdings Inc.
Notes to Condensed Interim Consolidated Financial Statements
(Expressed in Canadian dollars)
(Unaudited)
For the nine months ended September 30, 2022, and 2021
Deferred Tax on Assets and Liabilities Arising from Lease and Decommissioning Obligation Transactions (Amendments to IAS 12, Income Taxes). The amendments to IAS 12 provide clarifications in accounting for deferred tax on certain transactions such as leases and decommissioning obligations. The amendments clarify that the initial recognition exemption does not apply to transactions such as leases and decommissioning obligations. As a result, entities may need to recognize both a deferred tax asset and a deferred tax liability for temporary differences arising on initial recognition of leases and decommissioning obligations.
These amendments are effective for annual periods beginning on or after January 1, 2023 and are to be applied to transactions that occur on or after the beginning of the earliest comparative period presented. The Company is still assessing the impact of adopting these amendments on its future financial statements
| 3 | Property and equipment |
Furniture and fixtures $ | Data centre equipment $ | Office computer equipment $ | Right of $ | Total $ | ||||||||||||||||
| Net book value – December 31, 2021 | 642,205 | 1,580 | 466,287 | 4,259,547 | 5,369,619 | |||||||||||||||
| Additions | 12,769 | - | 148,877 | 3,809,403 | 3,971,049 | |||||||||||||||
| Depreciation | (174,108 | ) | (1,580 | ) | (209,133 | ) | (2,005,755 | ) | (2,390,576 | ) | ||||||||||
| Net book value – September 30, 2022 | 480,866 | - | 406,031 | 6,063,195 | 6,950,092 | |||||||||||||||
Furniture and fixtures $ | Data centre equipment $ | Office computer equipment $ | Right of $ | Total $ | ||||||||||||||||
| Net book value – December 31, 2020 | 850,831 | 8,824 | 367,405 | 6,718,050 | 7,945,110 | |||||||||||||||
| Additions | 1,514 | - | 330,445 | 447,869 | 779,828 | |||||||||||||||
| Depreciation | (174,594 | ) | (5,664 | ) | (190,484 | ) | (2,410,955 | ) | (2,781,697 | ) | ||||||||||
| Net book value – September 30, 2021 | 677,751 | 3,160 | 507,366 | 4,754,964 | 5,943,241 | |||||||||||||||
| 4 | Intangible assets |
Customer relationships $ | Technology $ | Total $ | ||||||||||
| Net book value – December 31, 2021 | - | 3,044,278 | 3,044,278 | |||||||||
| Additions | - | 2,650,031 | 2,650,031 | |||||||||
| Amortization | - | (1,136,592 | ) | (1,136,592 | ) | |||||||
| Net book value – September 30, 2022 | - | 4,557,717 | 4,557,717 | |||||||||
3
AcuityAds Holdings Inc.
Notes to Condensed Interim Consolidated Financial Statements
(Expressed in Canadian dollars)
(Unaudited)
For the nine months ended September 30, 2022, and 2021
Customer relationships $ | Technology $ | Total $ | ||||||||||
| Net book value – December 31, 2020 | 52,460 | 3,145,493 | 3,197,953 | |||||||||
| Additions | - | 964,636 | 964,636 | |||||||||
| Amortization | (52,460 | ) | (982,837 | ) | (1,035,297 | ) | ||||||
| Net book value – September 30, 2021 | - | 3,127,292 | 3,127,292 | |||||||||
During the nine months ended September 30, 2022, the Company capitalized $2,650,031 (2021 – $964,636) of development costs relating to revenue generating technology.
| 5 | Lease obligations |
September 30, 2022 $ | December 31, 2021 $ | |||||||
| Obligations under leases | 6,229,421 | 4,206,869 | ||||||
| Less: Current portion | 1,866,511 | 2,058,161 | ||||||
| 4,362,910 | 2,148,708 | |||||||
The Company has minimum lease payment commitments under leases for the following amounts:
| $ | ||||
| 2022 | 783,224 | |||
| 2023 | 2,818,847 | |||
| 2024 | 1,675,112 | |||
| 2025 | 351,481 | |||
| 2026 | 233,911 | |||
| 2027 | 240,933 | |||
| 2028 | 248,166 | |||
| 2029 | 125,918 | |||
| 6,477,592 | ||||
| Less: Interest | 248,171 | |||
| Present value of minimum lease payments | 6,229,421 | |||
| 6 | Related party transactions and balances |
Directors and officers are eligible to participate in the Company’s long-term incentive plans. No stock options were granted to directors and officers of the Company since March 31, 2020 (note 7(c)).
During the three and nine months ended September 30, 2022, the Company issued nil and 88,397 DSUs (2021 – nil and nil) to directors in lieu of director fees. The directors’ DSUs vest fully after one year.
During the three and nine months ended September 30, 2022, the Company issued nil and 936,404 (2021 – 9,553 and 107,051) RSUs to officers of the Company in lieu of cash bonuses. The officers’ RSUs vest fully over a period of 6 to 36 months.
4
AcuityAds Holdings Inc.
Notes to Condensed Interim Consolidated Financial Statements
(Expressed in Canadian dollars)
(Unaudited)
For the nine months ended September 30, 2022, and 2021
| 7 | Share capital and share-based payments |
| a) | Share capital |
As of September 30, 2022, the Company had an unlimited number of common shares authorized for issuance (2021 – unlimited) and 57,381,186 common shares outstanding (2021 – 60,637,622).
| b) | Equity financings |
On June 14, 2021, the Company closed a public offering comprised of 5,665,025 common shares issued from treasury and offered by the Company at a price of US$10.15 ($12.25) per share for gross proceeds to the Company of US$57,500,003 ($69,396,556). The offering was completed by a syndicate of underwriters. In consideration for their services, the underwriters received aggregate compensation equal to 5.5% of the gross proceeds of the offering. The Company incurred additional share issuance costs of $1,640,742 in connection with the offering which was recorded as a reduction of equity.
| c) | Stock Option Plan and Omnibus Incentive Plan |
The Company has a stock option plan (the “Stock Option Plan”), a deferred share unit plan (the “Deferred Share Unit Plan”) and an omnibus long-term incentive plan (the “Omnibus Incentive Plan”). Since the adoption of the Omnibus Incentive Plan by shareholders on June 16, 2020, the Company has stopped issuing new stock options under its Stock Option Plan and new DSUs under its Deferred Share Unit plan. Previously issued stock options and DSUs remain outstanding and are governed by the plans under which they were initially issued.
Under the Stock Option Plan, the Board of Directors granted stock options to employees, officers, directors and consultants of the Company. The expiry date of options granted under the Stock Option Plan typically did not exceed five years from the grant date. The vesting schedule was at the discretion of the Board of Directors and was generally annually over a three-year period. The exercise price of options was equal to the market price per share on the day preceding the grant date.
The Omnibus Incentive Plan allows for a variety of equity-based awards to be granted to officers, directors, employees, and consultants (in the case of stock options, PSUs and RSUs) and non-employee directors (in the case of DSUs). Stock options, PSUs, RSUs and DSUs are collectively referred to herein as “Awards”. Each Award represents the right to receive common shares, or in the case of PSUs, RSUs and DSUs, common shares or cash, in accordance with the terms of the Omnibus Incentive Plan.
The maximum number of common shares reserved for issuance, in the aggregate, under the Omnibus Incentive Plan, the Stock Option Plan, the Deferred Share Unit Plan of the Company and any other security-based compensation arrangement, collectively, is 15% of the aggregate number of common shares issued and outstanding from time to time.
As at September 30, 2022, the Company was entitled to issue a maximum of 8,607,178 equity-based awards, collectively under the Omnibus Incentive Plan, the existing Stock Option Plan, the existing DSU Plan and any other security-based compensation arrangement.
5
AcuityAds Holdings Inc.
Notes to Condensed Interim Consolidated Financial Statements
(Expressed in Canadian dollars)
(Unaudited)
For the nine months ended September 30, 2022, and 2021
The following table summarizes the continuity of options issued under the Stock Option Plan:
September 30, 2022 | September 30, 2021 | |||||||||||||||
Number of options | Weighted average exercise price $ | Number of options | Weighted average exercise price $ | |||||||||||||
| Outstanding – beginning of period | 1,094,001 | 1.90 | 1,865,519 | 1.69 | ||||||||||||
| Granted | - | - | 3,333 | 1.06 | ||||||||||||
| Forfeited or cancelled | (138,333 | ) | 4.13 | (27,667 | ) | 1.06 | ||||||||||
| Exercised | (247,866 | ) | 1.51 | (730,517 | ) | 1.42 | ||||||||||
| Outstanding – end of period | 707,802 | 1.60 | 1,110,668 | 1.89 | ||||||||||||
| Options exercisable – end of period | 657,801 | 1.61 | 883,669 | 1.98 | ||||||||||||
The following table summarizes the continuity of options issued under the Omnibus Incentive Plan:
September 30, 2022 | September 30, 2021 | |||||||||||||||
Number of options | Weighted average exercise price $ | Number of options | Weighted average exercise price $ | |||||||||||||
| Outstanding – beginning of period | 23,334 | 2.09 | 35,000 | 2.09 | ||||||||||||
| Granted | - | - | - | - | ||||||||||||
| Forfeited or cancelled | - | - | - | - | ||||||||||||
| Exercised | - | - | (11,666 | ) | 2.09 | |||||||||||
| Outstanding – end of period | 23,334 | 2.09 | 23,334 | 2.09 | ||||||||||||
| Options exercisable – end of period | 11,668 | - | - | - | ||||||||||||
6
AcuityAds Holdings Inc.
Notes to Condensed Interim Consolidated Financial Statements
(Expressed in Canadian dollars)
(Unaudited)
For the nine months ended September 30, 2022, and 2021
A summary of the Company’s combined stock options and Omnibus options outstanding under the above plans is as follows:
| September 30, 2022 | ||||||||||||
Range of exercise prices $ | Number of options | Weighted average remaining contractual life (years) | Weighted average number of options exercisable | |||||||||
| 0.96 | 3,333 | 0.96 | 3,333 | |||||||||
| 1.06 | 15,134 | 1.00 | 15,134 | |||||||||
| 1.13 | 55,000 | 2.67 | 55,000 | |||||||||
| 1.14 | 10,000 | 1.17 | 10,000 | |||||||||
| 1.15 | 20,000 | 2.17 | 13,333 | |||||||||
| 1.27 | 6,667 | 1.92 | 6,667 | |||||||||
| 1.55 | 36,333 | 1.67 | 36,333 | |||||||||
| 1.59 | 143,334 | 2.42 | 100,000 | |||||||||
| 1.71 | 378,001 | 1.50 | 378,001 | |||||||||
| 1.94 | 40,000 | 0.17 | 40,000 | |||||||||
| 2.09 | 23,334 | 2.92 | 11,668 | |||||||||
| 731,136 | 669,469 | |||||||||||
| September 30, 2021 | ||||||||||||
Range of exercise prices $ | Number of options | Weighted average remaining contractual life (years) | Weighted average number of options exercisable | |||||||||
| 0.96 | 3,333 | 1.92 | 3,333 | |||||||||
| 1.06 | 91,301 | 2.00 | 91,301 | |||||||||
| 1.13 | 68,333 | 3.67 | 55,000 | |||||||||
| 1.14 | 10,000 | 2.17 | 6,667 | |||||||||
| 1.15 | 20,000 | 3.17 | 6,667 | |||||||||
| 1.27 | 8,334 | 2.92 | 5,000 | |||||||||
| 1.55 | 58,033 | 2.67 | 18,700 | |||||||||
| 1.59 | 185,000 | 3.42 | 51,668 | |||||||||
| 1.71 | 506,334 | 2.50 | 485,333 | |||||||||
| 1.94 | 40,000 | 1.17 | 40,000 | |||||||||
| 2.09 | 23,334 | 3.92 | - | |||||||||
| 4.12 | 7,500 | 0.67 | 7,500 | |||||||||
| 4.47 | 22,500 | 0.92 | 22,500 | |||||||||
| 4.60 | 90,000 | 0.50 | 90,000 | |||||||||
| 1,134,002 | 883,669 | |||||||||||
During the three and nine months ended September 30, 2022, the Company recorded share-based compensation expense under the Black-Scholes option pricing model, related to stock options granted to employees, officers, directors and consultants of the Company of $1,893,845 and $5,447,830 (2021 – $1,465,706 and $3,954,217).
During the three and nine months ended September 30, 2022, the Company granted nil and nil (2021 – nil and 3,333) stock options to employees, officers, directors, and consultants of the Company. Of those options, nil and nil (2021 – nil and nil) options were granted to officers or employees of the Company. Nil and nil (2021 – nil and 3,333) options were granted to consultants as compensation for services rendered.
7
AcuityAds Holdings Inc.
Notes to Condensed Interim Consolidated Financial Statements
(Expressed in Canadian dollars)
(Unaudited)
For the nine months ended September 30, 2022, and 2021
During the three and nine months ended September 30, 2022, 57,000 and 247,866 options were exercised at a weighted average exercise price of $1.42 and $1.51 per option, for gross proceeds of $80,820 and $374,037 (2021 – 58,866 and 742,183 were exercised at a weighted average price of $1.21 and $1.43 for gross proceeds of $71,014 and $1,063,155).
During the three and nine months ended September 30, 2022, the Company granted nil and nil (2021 – nil and nil) options under the Omnibus Incentive Plan with a weighted average exercise price of nil and nil (2021 – nil and nil) to employees, officers, and directors.
During the three and nine months ended September 30, 2022, nil and nil (2021 – 11,666 and 11,666) options under the Omnibus Incentive Plan were exercised.
Share-based compensation expense was determined based on the fair value of the options at the date of measurement using the Black-Scholes option pricing model with the weighted average assumptions for options granted during the period ended September 30, 2022 and 2021 as follows:
| 2022 | 2021 | |||||||
| Weighted average grant date fair value of options granted | - | $ | 1.45 | |||||
| Weighted average assumptions used | ||||||||
| Expected option life | - | 5 years | ||||||
| Risk-free interest rate | - | 1.45 | % | |||||
| Expected volatility | - | 101 | % | |||||
The expected volatility was estimated based on the historical volatility of the Company’s common shares that covers the expected life of the options granted. The expected option life was estimated based on historical data and represents the numbers of years the options are expected to be outstanding. The risk-free rate was estimated based on the Government of Canada marketable bonds with a term that covers the expected life of the options granted.
| d) | Deferred share units |
During the three and nine months ended September 30, 2022, the Company issued a total of nil and 110,136 (2021 – nil and nil) DSUs, of which nil and 88,397 were issued to directors with one year vesting periods and nil and 21,739 were issued to consultants of the Company, vesting every year in the measure of one third. During the three and nine months ended September 30, 2022, 14,134 and 177,638 DSUs were exercised (2021 – 72,933 and 508,178).
| e) | Restricted share units |
During the three and nine months ended September 30, 2022, the Company issued 226,420 and 1,796,579 (2021 – 122,619 and 354,159) RSUs to employees, officers, directors, and consultants of the Company. During the three and nine months ended September 30, 2022, 19,908 and 302,759 (2021 – 70,577 and 260,391) RSUs were exercised.
8
AcuityAds Holdings Inc.
Notes to Condensed Interim Consolidated Financial Statements
(Expressed in Canadian dollars)
(Unaudited)
For the nine months ended September 30, 2022, and 2021
| f) | Repurchase of shares for cancellation under NCIB |
On May 4, 2022, the Company received approval from the TSX on its notice of intention to make a Normal Course Issuer Bid (“NCIB”) to purchase for cancellation up to 5,500,000 of its outstanding common shares.
During the three and nine months ended September 30, 2022, the Company repurchased 1,811,400 and 4,080,880 common shares at an average price of $3.23 and $3.19 per share totaling $5,859,678 and $12,999,975.
| 8 | Finance costs |
Three months September 30, 2022 $ | Three months September 30, 2021 $ | Nine months September 30, 2022 $ | Nine months September 30, 2021 $ | |||||||||||||
| Interest on finance leases and other interest | 32,358 | 161,235 | 141,444 | 456,098 | ||||||||||||
| Interest and fees on term loans (note 15 (a)) | 126,095 | 101,985 | 288,113 | 340,976 | ||||||||||||
| 158,453 | 263,220 | 429,557 | 797,074 | |||||||||||||
| 9 | Net income (loss) per share |
The computations for basic and diluted net income (loss) per share for the three and nine months ended September 30, 2022, and 2021 are as follows:
Three months ended September 30, 2022 $ | Three months ended September 30, 2021 $ | Nine months ended September 30, 2022 $ | Nine months ended September 30, 2021 $ | |||||||||||||
| Net income (loss) for the period | 2,802,622 | 3,362,127 | (776,989 | ) | 8,087,580 | |||||||||||
| Weighted average number of shares outstanding – basic | 57,524,111 | 60,609,370 | 59,113,153 | 57,614,037 | ||||||||||||
| Net income (loss) per share – basic | 0.05 | 0.06 | (0.01 | ) | 0.14 | |||||||||||
| Dilutive effect of stock options | 317,532 | 714,705 | - | 766,240 | ||||||||||||
| Dilutive effect on DSUs | 319,975 | 405,395 | - | 405,395 | ||||||||||||
| Dilutive effect on RSUs | 721,120 | 273,665 | - | 273,665 | ||||||||||||
| Diluted weighted average number of shares outstanding | 58,882,738 | 62,003,135 | 59,113,153 | 59,059,337 | ||||||||||||
| Net income (loss) per share – diluted | 0.05 | 0.05 | (0.01 | ) | 0.14 | |||||||||||
| Items excluded from the calculation of diluted net income (loss) per share due to their anti-dilutive effect | ||||||||||||||||
| Stock options, DSUs, and RSUs | 3,029,872 | 1,714,136 | 4,388,499 | 1,662,601 | ||||||||||||
9
AcuityAds Holdings Inc.
Notes to Condensed Interim Consolidated Financial Statements
(Expressed in Canadian dollars)
(Unaudited)
For the nine months ended September 30, 2022, and 2021
Net income (loss) per share is calculated by dividing the net income (loss) by the weighted average number of shares outstanding during the relevant period. Diluted weighted average number of shares reflects the dilutive effect of equity instruments, such as any “in the money” stock options, RSUs, or DSUs. In the periods with reported net losses, all stock options, RSUs, and DSUs are deemed anti-dilutive such that basic net loss per share and diluted net loss per share are equal, and thus “in the money” stock options, RSUs, and DSUs have not been included in the computation of net loss per share because to do so would be anti-dilutive.
| 10 | Segment information |
The Company’s assets and operations are substantially located in Canada however, the Company also has employees and customers in the United States and Europe and generates revenue in each region. Revenue by region for the three and nine months ended September 30, 2022, and 2021 is as follows:
Three months ended September 30, 2022 $ | Three months September 30, 2021 $ | Nine months September 30, 2022 $ | Nine months September 30, 2021 $ | |||||||||||||
| United States | 20,863,361 | 18,508,561 | 54,923,565 | 62,569,389 | ||||||||||||
| Canada | 3,495,524 | 4,453,527 | 12,955,235 | 11,338,764 | ||||||||||||
| Europe and other | 4,588,411 | 4,522,732 | 13,149,729 | 11,316,481 | ||||||||||||
| 28,947,296 | 27,484,820 | 81,028,529 | 85,224,634 | |||||||||||||
During the three and nine months ended September 30, 2022, the Company had two customers and one customer that each represented greater than 5% (2021 – one and two customers represented 6% and 7%) of total revenue, respectively.
| 11 | Government assistance |
During the year ended December 31, 2020, the Company secured a $3,000,000 commitment funding from the National Research Council’s Industrial Research Assistance Program (“IRAP”). In January 2021, the Company secured an additional $535,200 commitment to bring the total commitment to $3,535,200. During the year ended December 31, 2021, the Company received $2,149,092 of this commitment from IRAP, and the amount was used to reduce technology costs on the consolidated statement of comprehensive income. As of December 31, 2021, the Company has recognized the full amount of $3,535,200 from the IRAP commitment.
10
AcuityAds Holdings Inc.
Notes to Condensed Interim Consolidated Financial Statements
(Expressed in Canadian dollars)
(Unaudited)
For the nine months ended September 30, 2022, and 2021
| 12 | Financial instruments |
Classification of financial instruments
The following table provides the allocation of financial instruments and their associated financial instrument classifications:
Loans and receivables/ financial liabilities (Amortized cost) | ||||||||
Measurement basis | September 30, 2022 $ | December 31, 2021 $ | ||||||
| Financial assets | ||||||||
| Cash and cash equivalents | 88,231,834 | 102,208,807 | ||||||
| Accounts receivable | 28,448,325 | 30,972,608 | ||||||
| 116,680,159 | 133,181,415 | |||||||
Loans and receivables/ financial liabilities | ||||||||
| (Amortized cost) | ||||||||
Measurement basis | September 30, 2022 $ | December 31, $ | ||||||
| Financial liabilities | ||||||||
| Accounts payable and accrued liabilities | 20,204,928 | 24,853,497 | ||||||
| Term loans | 4,468,030 | 5,916,956 | ||||||
| International loans | 546,832 | 882,085 | ||||||
| Lease obligations | 6,229,421 | 4,206,869 | ||||||
| 31,449,211 | 35,859,407 | |||||||
Fair value measurements
The Company provides disclosure of the three-level hierarchy that reflects the significance of the inputs used in making the fair value measurement. The carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, current portion of finance lease obligations, and current portion of term loans approximate their fair values given their short-term nature. The carrying value of the non-current liabilities approximates their fair value, given that the difference between the discount rates used to recognize the liabilities in the consolidated statements of financial position and the market rates of interest is not considered significant. The three levels of fair value hierarchy based on the reliability of inputs are as follows:
| ∙ | Level 1 – inputs are quoted prices in active markets for identical assets and liabilities. |
| ∙ | Level 2 – inputs are based on observable market data, either directly or indirectly other than quoted prices; and |
| ∙ | Level 3 – inputs are not based on observable market data. |
11
AcuityAds Holdings Inc.
Notes to Condensed Interim Consolidated Financial Statements
(Expressed in Canadian dollars)
(Unaudited)
For the nine months ended September 30, 2022, and 2021
There were no transfers of financial assets during the nine months ended September 30, 2022, and 2021 between any of the levels.
| 13 | Capital risk management |
The Company’s objectives in managing capital are to ensure sufficient liquidity to pursue its strategy of organic growth combined with strategic acquisitions and to provide returns to its shareholders. The Company defines capital that it manages as the aggregate of its shareholders’ equity, which comprises issued capital, contributed surplus and deficit. The Company manages its capital structure and makes adjustments to it in working capital requirements. In order to maintain or adjust its capital structure, the Company, upon approval from the Board of Directors, may issue shares, repurchase shares, pay dividends or undertake other activities as deemed appropriate under the specific circumstances. The Company is not subject to externally imposed capital requirements, except for certain monthly financial covenants associated with the revolving line of credit as described in note 15.
| 14 | Financial risk management |
The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework and reviews the Company’s risk management policies on an annual basis. Management identifies and evaluates financial risks and is charged with the responsibility of establishing controls and procedures to ensure that financial risks are mitigated in accordance with the approved policies.
Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises from the Company’s accounts receivable and cash. As of September 30, 2022, two customers each represented more than 5% of the gross accounts receivable balance of $28,848,325. As of December 31, 2021, two customers represented more than 5% of the gross accounts receivable balance of $31,310,642.
The Company reviews the components of these accounts on a regular basis to evaluate and monitor this risk. The Company’s customers are generally financially established organizations, which limits the credit risk relating to the customers. In addition, credit reviews by the Company take into account the counterparty’s financial position, past experience and other factors.
As of September 30, 2022, the allowance for expected credit loss was $400,000 (2021 – $338,034). In establishing the appropriate allowance for expected credit loss, management makes assumptions with respect to the future collectability of the receivables. Assumptions are based on an individual assessment of a customer’s credit quality as well as subjective factors and trends. Overdue accounts as of September 30, 2022, were $4,040,902 (2021 – $3,572,670), which is in the normal course of business. Management believes that the allowance is adequate.
The Company, from time to time, invests its excess cash in accounts with Schedule I banks and Silicon Valley Bank (“SVB”), a large U.S. based bank, with the objective of maintaining the safety of the principal and providing adequate liquidity to meet current payment obligations and future planned capital expenditures and with the secondary objective of maximizing the overall yield of the portfolio. The Company’s cash as of September 30, 2022, is not subject to external restrictions. Investments must be rated at least investment grade by recognized rating agencies. Given these high credit ratings, the Company does not expect any counterparties to these investments to fail to meet their obligations.
12
AcuityAds Holdings Inc.
Notes to Condensed Interim Consolidated Financial Statements
(Expressed in Canadian dollars)
(Unaudited)
For the nine months ended September 30, 2022, and 2021
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. The Company’s approach to managing liquidity is to ensure, to the extent possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. The Company manages its liquidity risk by continually monitoring forecasted and actual revenue and expenditures and cash flows from operations. Management is also actively involved in the review and approval of planned expenditures. The Company’s principal cash requirements are for principal and interest payments on its debt, capital expenditures and working capital needs. The Company uses its operating cash flows, loans and borrowings and cash balances to maintain liquidity. In the event that future cash flows from operations are lower than expected, the Company may need to seek additional financing, either by issuing additional equity or by undertaking additional borrowings. There is no certainty that additional financing will be available or that it will be available on attractive terms.
The following are the contractual maturities for the financial liabilities:
| September 30, 2022 | ||||||||||||||||||||
Carrying amount $ | Total contractual cash flows $ | Less than 1 year $ | 1 to 3 Years $ | >3 years $ | ||||||||||||||||
| Accounts payable and accrued liabilities | 20,204,928 | 20,204,928 | 20,204,928 | - | - | |||||||||||||||
| International loans | 546,832 | 546,832 | 332,242 | 214,590 | - | |||||||||||||||
| Term loans | 4,468,030 | 4,674,658 | 4,674,658 | - | - | |||||||||||||||
| Lease obligation | 6,229,421 | 6,477,592 | 1,866,511 | 4,611,081 | - | |||||||||||||||
| 31,449,211 | 31,904,010 | 27,078,339 | 4,825,671 | - | ||||||||||||||||
| December 31, 2021 | ||||||||||||||||||||
Carrying amount $ | Total contractual cash flows $ | Less than 1 year $ | 1 to 3 Years $ | >3 years $ | ||||||||||||||||
| Accounts payable and accrued liabilities | 24,853,497 | 24,853,497 | 24,853,497 | - | - | |||||||||||||||
| International loans | 882,085 | 882,085 | 467,312 | 414,773 | - | |||||||||||||||
| Term loans | 5,916,956 | 6,222,416 | 2,478,838 | 3,743,578 | - | |||||||||||||||
| Lease obligation | 4,206,869 | 4,724,847 | 2,058,161 | 2,666,686 | ||||||||||||||||
| 35,859,407 | 36,682,845 | 29,857,808 | 6,825,037 | - | ||||||||||||||||
13
AcuityAds Holdings Inc.
Notes to Condensed Interim Consolidated Financial Statements
(Expressed in Canadian dollars)
(Unaudited)
For the nine months ended September 30, 2022, and 2021
Interest rate risk
Interest rate risk is the risk of financial loss to the Company if interest rates increase on interest-bearing instruments. The revolving line of credit bears interest at 4.6%. The term loans bear interest at a fixed rate of 6.85%, which the Company believes is consistent with market interest rates for this type of debt.
Foreign exchange or currency risk
The Company is exposed to foreign exchange risk from sales and purchase transactions, as well as recognized financial assets and liabilities denominated in U.S. dollars. The Company’s main objective in managing its foreign exchange risk is to maintain U.S. cash on hand to support US forecasted obligations and cash flows. To achieve this objective, the Company monitors forecasted cash flows in foreign currencies and attempts to mitigate the risk by modifying the nature of cash held.
If a shift in foreign currency exchange rates of 10% were to occur, the foreign exchange gain or loss on the Company’s net monetary assets could change by approximately $9,174,796 due to the fluctuation and this would be recorded in the consolidated statements of comprehensive income.
Balances held in U.S. dollars are as follows in CAD:
September 30, 2022 $ | December 31, 2021 $ | |||||||
| Cash | 82,980,287 | 99,118,059 | ||||||
| Accounts receivable | 19,751,768 | 22,017,575 | ||||||
| Accounts payable | 10,984,093 | 15,530,451 | ||||||
| 15 | Borrowings |
| a) | Term Loan |
On April 12, 2020, the Company borrowed US$5,400,000 from SVB in the form of a secured term loan that expires April 1, 2024 (the “Secured Term Loan”), and bears interest at the annual rate equal to the greater of (i) prime plus 2.0% and (ii) 6.75%. All transaction costs related to the Secured Term Loan have been capitalized and deferred and are being amortized over the term of the Secured Term Loan under the effective interest rate method and included in finance costs.
On November 9, 2020, the Company and SVB agreed to increase the availability under the Secured Term Loan by an additional US$2,350,000 to a total of US$7,750,000.
On December 24, 2020, the Company and SVB agreed to amend the applicable interest rate of the Secured Term Loan to the greater of prime plus 1.50% and 4.75%.
On May 4, 2021, the Company and SVB agreed to amend the applicable interest rate of the Secured Term Loan to the greater of prime plus 0.60% and 3.85%. On September 30, 2022, the prime rate was 6.25%.
14
AcuityAds Holdings Inc.
Notes to Condensed Interim Consolidated Financial Statements
(Expressed in Canadian dollars)
(Unaudited)
For the nine months ended September 30, 2022, and 2021
The following table outlines the activity of the term loans during the nine months ended September 30, 2022, and 2021:
| $ | ||||
| Amortized cost – January 1, 2022 | 5,916,956 | |||
| Accrued interest | 288,113 | |||
| Payment of interest | (186,889 | ) | ||
| Principal amount repaid | (1,679,881 | ) | ||
| Exchange | 129,731 | |||
| Balance – September 30, 2022 | 4,468,030 | |||
| $ | ||||
| Amortized cost – January 1, 2021 | 8,278,004 | |||
| Accrued interest | 340,976 | |||
| Payment of interest | (239,878 | ) | ||
| Principal amount repaid | (1,818,053 | ) | ||
| Exchange | (152,320 | ) | ||
| Balance – September 30, 2021 | 6,408,729 | |||
The credit facilities are subject to certain general and financial covenants, including the delivery of annual audited consolidated financial statements to the holders. The credit facilities are secured by all material assets of the Company. The Company was in breach of one covenant as at September 30, 2022. Accordingly, the entire loan balance of $4,468,030 has been classified as current liabilities as at September 30, 2022. However, the Company received a waiver from SVB after September 30, 2022 indicating that the bank does not intend to take any action and demand repayment of the loan balance under the agreement.
| b) | International loans |
On June 15, 2018, as a part of the acquisition of Adman, the Company assumed various government and bank loans and lines of credits.
International term loans
International term loans outstanding amounted to $490,137 (Euro 366,238) as at September 30, 2022 (2021: $1,026,585: Euro 698,827). The interest rates of 1.75% to 4.60% and maturity date from August 17, 2022 to May 21, 2025 for these unsecured term loans held during the period ended September 30, 2022, and 2021.
Line of credit
The line of credit payables amounted to $56,695 (Euro 42,363) as at September 30, 2022 (2021: $395,167: Euro 269,934) and is secured against Adman’s accounts receivable as at September 30, 2022 and 2021. The interest rates of 1.75% to Euribor + 1.95% and maturity date from May 19, 2022 to April 16, 2023 for these line of credit payables held during the period ended September 30, 2022, and 2021.
15
AcuityAds Holdings Inc.
Notes to Condensed Interim Consolidated Financial Statements
(Expressed in Canadian dollars)
(Unaudited)
For the nine months ended September 30, 2022, and 2021
The following table outlines the current portion and non-current portion of the borrowings:
September 30, 2022 $ | December 31, 2021 $ | |||||||
| Current portion of term loan | 4,468,030 | 2,478,838 | ||||||
| Current portion of international loans | 332,242 | 467,312 | ||||||
| Total current borrowings | 4,800,272 | 2,946,150 | ||||||
| Non-current portion of term loan | - | 3,438,118 | ||||||
| Non-current portion of international loans | 214,590 | 414,773 | ||||||
| Total borrowings | 5,014,862 | 6,799,041, | ||||||
| 16 | Income taxes |
Income tax expense is recognized based on management’s estimate of the weighted average annual income tax rate expected for the full financial year.
For the three and nine months ended September 30, 2022, the Company recognized an income tax expense of $1,378,607 and $1,432,242 (2021: nil and $231,600).
As at September 30, 2022, the income tax payable was $558,690 (2021: $910,165)
16
AcuityAds Holdings Inc.
Notes to Condensed Interim Consolidated Financial Statements
(Expressed in Canadian dollars)
(Unaudited)
For the nine months ended September 30, 2022, and 2021
| 17 | Expenses by nature |
Three months September 30, 2022 $ | Three months September 30, 2021 $ | Nine months September 30, 2022 $ | Nine months September 30, 2021 $ | |||||||||||||
| Employee wages, salaries and benefits | 8,123,168 | 6,219,290 | 23,445,142 | 18,662,799 | ||||||||||||
| Professional fees | 348,321 | 196,427 | 1,331,264 | 989,580 | ||||||||||||
| Contractor consulting fees | 932,823 | 657,968 | 2,630,804 | 2,113,240 | ||||||||||||
| Hosting and data costs | 1,614,412 | 909,817 | 4,331,056 | 4,294,388 | ||||||||||||
| Insurance | 594,738 | 753,851 | 2,095,213 | 1,057,626 | ||||||||||||
| Public company fees | 118,803 | 70,877 | 655,104 | 405,983 | ||||||||||||
| Other | 1,589,697 | 1,046,060 | 4,106,750 | 2,614,279 | ||||||||||||
| $ | 13,321,962 | $ | 9,854,290 | $ | 38,595,333 | $ | 30,137,895 | |||||||||
For the three and nine months ended September 30, 2022 and 2021, the Company recorded the following subsidies which have all been offset against employee wages, salaries and benefits:
| Three months ended September 30, 2022 $ | Three months ended September 30, 2021 $ | Nine months ended September 30, 2022 $ | Nine months ended September 30, 2021 $ | ||||||||||||||
| IRAP | - | - | - | 1,613,892 | |||||||||||||
| - | - | - | 1,613,892 | ||||||||||||||
17
Exhibit 99.2
AcuityAds Holdings Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022
Dated November 10, 2022
70 University Ave
Suite 1200
Toronto, ON M5J 2M4
www.acuityads.com
AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and nine months ended September 30, 2022
Management’s Discussion & Analysis
This Management’s Discussion and Analysis (“MD&A”) explains the variations in the consolidated operating results, financial position, and cash flows of AcuityAds Holdings Inc. (“AcuityAds” or the “Company”) as at and for the three and nine months ended September 30, 2022. In this MD&A, “this quarter”, “the quarter”, or “third quarter” refer to the three months ended September 30, 2022, and “year to date” refers to the nine months ended September 30, 2022 unless the context indicates otherwise. All results commentary is compared to the equivalent period in 2021 or as at December 31, 2021, as applicable, unless otherwise indicated. This analysis should be read in conjunction with AcuityAds’ condensed interim consolidated financial statements for the three and nine months ended September 30, 2022, and related notes (the “Condensed Interim Consolidated Financial Statements”). The Condensed Interim Consolidated Financial Statements and extracts of those Condensed Interim Consolidated Financial Statements provided in this MD&A, were prepared in Canadian dollars and in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board, using the accounting policies described therein. As a result of the rounding of dollar differences, certain total dollar amounts in this MD&A may not add exactly to their constituent amounts. All amounts are presented in Canadian dollars unless otherwise indicated. Throughout this MD&A, percentage changes are calculated using numbers rounded as they appear. Readers are cautioned that this MD&A contains certain forward-looking information. (Please see the “Forward Looking Statements” section below for a discussion of the use of such information in this MD&A).
The Condensed Interim Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated on consolidation.
The information in this report is dated as at November 10, 2022.
Non-IFRS Financial Measures
This MD&A includes certain measures which are not defined terms in accordance with IFRS such as “Net Revenue”, “Net Revenue Margin”, and “Adjusted EBITDA”.
The term “Net Revenue” or Gross Profit refers to the net amount of revenue after deducting direct media costs. Net Revenue is used for internal management purposes as an indicator of the performance of the Company’s solution in balancing the goals of delivering excellent results to advertisers while meeting the Company’s margin objectives and, accordingly the Company believes it is useful supplemental information to include in this MD&A. The term “Net Revenue Margin” or Gross Margin refers to the amount that “Net Revenue” represents as a percentage of total revenue for a given period.
“Adjusted EBITDA” refers to net income after adjusting for finance costs, impairment loss, fair value gain, income taxes, foreign exchange (gain) loss, depreciation and amortization, share-based compensation, acquisition and related integration costs, severance expenses, and executive transition expenses. The Company believes that Adjusted EBITDA is useful supplemental information as it provides an indication of the results generated by the Company’s main business activities before taking into consideration how those activities are financed and taxed and also prior to taking into consideration depreciation of property and equipment and certain other items listed above. It is a key measure used by the Company’s management and board of directors to understand and evaluate the Company’s operating performance, to prepare annual budgets and to help develop operating plans.
1
AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and nine months ended September 30, 2022
“Net Revenue”, “Net Revenue Margin”, and “Adjusted EBITDA” are not measures of performance under IFRS and should not be considered in isolation or as a substitute for comprehensive income (loss) prepared in accordance with IFRS or as a measure of operating performance or profitability. “Net Revenue”, “Net Revenue Margin”, and “Adjusted EBITDA” do not have a standardized meaning prescribed by IFRS and are not necessarily comparable to similar measures presented by other companies.
FORWARD-LOOKING STATEMENTS
Certain statements in this MD&A that are not current or historical factual information may constitute “forward-looking” statements within the meaning of applicable securities laws, regarding, among other things, the beliefs, plans, objectives, strategies, estimates, intentions or expectations of the Company, including as they relate to its financial results and its projected total revenue growth, its ability to execute on its investing and business strategies, the benefits of the illumin platform and AcuityAds’ programmatic marketing platform (the “Programmatic Marketing Platform”), and the effect of the COVID-19 pandemic on the Company’s business and operations. When used in this MD&A, forward looking statements can be identified by the use of words such as “may”, or by such words as “will”, “intend”, “believe”, “estimate”, “consider”, “expect”, “anticipate”, and “objective” and similar expressions or variations of such words. Forward-looking statements are, by their nature, not guarantees of the Company’s future operational or financial performance and are subject to risks and uncertainties and other factors that could cause the Company’s actual results, performance, prospects, or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. No representation or warranty is intended with respect to anticipated future results, or that estimates, or projections will be sustained. Forward-looking information is provided for the purpose of providing information about management’s current expectations and plans and allowing investors and others to get a better understanding of the Company’s operations. Forward-looking information may not be appropriate for other purposes.
In developing the forward-looking statements in this MD&A, the Company has applied several material assumptions, including the availability of financing on reasonable terms, and general business and economic conditions. Many risks, uncertainties and other factors could cause the actual results of AcuityAds to differ materially from the results, performance, achievements, or developments expressed or implied by forward-looking statements that are contained in this MD&A. These risks, uncertainties and other factors include, but are not limited to the following: overall economic conditions, rapid technological changes, use of cookies, demand for the Company’s products and services, the Company’s ability to retain existing customers and attract new customers, including under the illumin platform; the Company’s ability to expand into additional advertising channels and expand its customer base in Canada, the U.S. and globally; the introduction of competing technologies, competitive pressures, network restrictions, fluctuations in foreign currency exchange rates, and other factors that may cause the actual results, performance or achievements to differ materially from those expressed or implied in these forward-looking statements. In addition, the effects of COVID-19, including the duration, spread and severity of the pandemic, create additional risks and uncertainties for the Company. In particular, the impact of the virus and government authorities’ and public health officials’ responses thereto may affect the Company’s actual results, performance, prospects, or opportunities; domestic and global credit and capital markets and the Company’s ability to access capital on favorable terms, or at all; and the health and safety of the Company’s employees.
2
AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and nine months ended September 30, 2022
Any financial outlook and future-oriented financial information (as defined in applicable securities laws) contained in this MD&A regarding prospective financial performance, financial position or cash flows, is based on assumptions about future economic conditions or courses of action based on management’s assessment of the relevant information that is currently available. Future-oriented financial information contains forward-looking information and is based on a number of material assumptions and factors, as are set out above. The actual results of the Company’s operations for any period will likely vary from the amounts set forth in these projections and such variations may be material. Actual results will vary from projected results. Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of the MD&A or as of the date otherwise specifically indicated herein. Due to risks and uncertainties, including the risks and uncertainties elsewhere in this MD&A, actual events may differ materially from current expectations. These risks and uncertainties include, among other things, the factors discussed in “Risk Factors” section of this MD&A and under the “Risk Factors” section of the Annual Information Form for the year ended December 31, 2021 available on SEDAR at www.sedar.com. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. All forward-looking statements contained in the MD&A are expressly qualified in their entirety by this cautionary statement.
OVERVIEW
AcuityAds is a technology company that enables marketers to connect intelligently with audiences across video, mobile, social and online display advertising campaigns. AcuityAds’ Programmatic Marketing Platform, powered by proprietary machine learning technology, is at the core of its business, accompanied by patented 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 the key challenges that digital advertisers face. AcuityAds is headquartered in Toronto and has offices in the U.S., Canada, Spain, France, Brazil, Chile, Mexico, Colombia and Argentina. Its key customers include both 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.
AcuityAds’ Programmatic Marketing Platform allows advertisers to manage their purchasing of online display advertising in real-time using programmatic ad buying, a method of buying online display advertising in which ad spots (called impressions) are released in an auction that occurs in milliseconds. AcuityAds purchases impressions for advertisers through agreements with publishers, ad networks and ad exchanges. Its technology platform benefits advertisers by enabling them to target specific audiences based on demographic and psychographic parameters as well as manage their bid amounts to purchase the advertising inventory that is most relevant for their campaigns. Real-time reporting enables advertisers to monitor specific performance metrics and react and pivot quickly to optimize campaigns to help ensure they achieve consumer targeting goals and key performance indicators.
3
AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and nine months ended September 30, 2022
On October 1, 2020, the Company officially launched its advertising automation platform, illumin™. 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. For the three and nine months ended September 30, 2022, revenue derived from illumin was $13,204,733 and $31,311,540 compared to $7,418,596 and $15,848,151 revenue in the comparable 2021 period. This represents continued growth in the illumin platform as we reach the target customer base and realize on our significant growth potential.
RESULTS OF OPERATIONS
Significant developments during the three and nine months ended September 30, 2022, and to the date of this report include the following:
On May 4, 2022, the Company announced that the Toronto Stock Exchange (“TSX”) has accepted the Company’s notice of intention to make a normal course issuer bid ("NCIB") to purchase up to 5,500,000 common shares. The NCIB commenced on May 16, 2022. The Company is permitted to purchase up to the calculated amount or 10% of the public float.
All common shares purchased by the Company under the NCIB will be purchased at prevailing market prices in accordance with the rules and policies of the TSX and applicable securities laws. The actual number of common shares that may be purchased, and the timing of any such purchases, will be determined by the Company, subject to the applicable terms and limitations of the NCIB. All common shares acquired by the Company under the NCIB will be cancelled.
The NCIB will terminate one year after its commencement, or earlier if the maximum number of common shares under the NCIB have been purchased. Although the Company has a present intention to acquire its common shares pursuant to the NCIB, the Company will not be obligated to make any purchases and purchases may be suspended by the Company at any time. The Company reserves the right to terminate the NCIB earlier if it feels it is appropriate to do so.
As of September 30, 2022, the Company purchased and cancelled 4,080,880 common shares at an average price of $3.19 per share totaling $12,999,975 through the NCIB
Factors Affecting the Company’s Performance
We believe that the growth and success of the Company in the future depends on factors including, but not limited to, those described below.
Economic factors
Economic conditions may affect the Company’s results of operations and predictability of future income. Demand and supply are both driven by movements in the end consumer market, which may be affected by factors such as high inflation, recessionary fear and geopolitical instability. These conditions may reduce the spending committed by our existing and potential customers on marketing campaigns, and a less observable impact of our product (such as conversion rate) as received by the end consumers. Therefore, we foresee a less predictable period in the foreseeable future, where the Company’s revenue and other results may fluctuate, as we lack the visibility as to how customers may react to the economic factors discussed above.
4
AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and nine months ended September 30, 2022
Seasonality
Seasonality and cyclicality of the retail sales business may affect the Company’s revenue and operating results. Typically, retail advertisers concentrate spending in the fourth quarter during holiday seasons. However, some advertisers, such as those in the entertainment industry, may concentrate advertising spending outside of the fourth quarter, to coincide with launch and display of contents or programs. As a result of these factors, one quarter’s operating results do not necessarily indicate future quarters’ operating results.
Foreign Currency
A large portion of the Company’s revenue is earned in US Dollars from customers based in the US. Our results of operations are converted into our functional currency, Canadian dollars, using the average foreign exchange rates for each period presented. Given the material magnitude of our revenue earned in USD, our operating results may be adversely impacted by an increase in the value of the Canadian dollar in relation to the US dollar.
Results for the three and nine months ended September 30, 2022, and 2021
The following table provides selected financial information from the condensed interim consolidated statements of income (loss) for the three and six months ended September 30, 2022, and 2021:
| Three months ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenue | $ | 28,947,296 | $ | 27,484,820 | $ | 81,028,529 | $ | 85,224,634 | ||||||||
| By line of service: | ||||||||||||||||
| Managed services | 20,424,781 | 19,320,662 | 54,337,640 | 65,197,665 | ||||||||||||
| Self-service | 8,522,515 | 8,164,158 | 26,690,889 | 20,026,969 | ||||||||||||
| By geography: | ||||||||||||||||
| US | 20,863,361 | 18,508,561 | 54,923,565 | 62,569,389 | ||||||||||||
| Canada | 3,495,524 | 4,453,527 | 12,955,235 | 11,338,764 | ||||||||||||
| Other | 4,588,411 | 4,522,732 | 13,149,729 | 11,316,481 | ||||||||||||
| Gross Profit (Net Revenue) 1 | 14,844,466 | 14,252,751 | 41,427,069 | 44,425,873 | ||||||||||||
| Adjusted EBITDA1 | 1,638,336 | 4,419,336 | 3,309,131 | 14,399,611 | ||||||||||||
| Income (loss) from operations | (1,496,131 | ) | 1,760,421 | (6,143,262 | ) | 6,516,767 | ||||||||||
| Net income (loss) | 2,802,622 | 3,362,127 | (776,989 | ) | 8,087,580 | |||||||||||
| Net income (loss) per share (basic and diluted) 2 | 0.05 | 0.06 | (0.01 | ) | 0.14 | |||||||||||
| (1) | As defined in “Non-IFRS Financial Measures”. |
| (2) | Exercisable options to purchase 657,801 (2021 – 883,669) common shares and nil (2021 – nil) warrants were outstanding as at September 30, 2022. The weighted average number of options and warrants were excluded from the calculation of diluted loss per share for the periods ended September 30, 2022, and 2021 because their inclusion would have been anti-dilutive. |
Three months ended September 30, 2022, and 2021
Revenue for the quarter was $28,947,296, an increase of $1,462,476, or 5.3% from the same prior year period. Sales of the Company’s managed services platform for the quarter were $20,424,781, an increase of $1,104,119, or 5.7%, from the same prior year period. Sales of the Company’s self-service platform for the quarter were $8,522,515, an increase of $358,357, or 4.4%, from the same prior year period. The increase in total revenue for the quarter was primarily a result of higher spend by existing clients that have, because of a short learning curve, gained traction on our illumin platform resulting in organic growth.
Revenue generated in the United States for the quarter was $20,863,361, an increase of $2,354,800, or 12.7%, from the same prior year period. Revenue generated in Canada for the quarter was $3,495,524, a decrease of $958,003, or 21.5% from the same prior year period. Revenue from other geographies for the quarter was $4,588,411, an increase of 1.5%.
5
AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and nine months ended September 30, 2022
Adjusted EBITDA for the quarter was $1,638,336, a decrease of $2,781,000 from the same prior year period and was primarily attributable to higher operating expenses. Net income for the quarter was $2,802,622, a decrease of $559,505, or 16.6%, primarily as a result of an increase in operating expenses as discussed under the operating expense section.
Nine months ended September 30, 2022, and 2021
Revenue for the nine months ended September 30, 2022 was $81,028,529, a decrease of $4,196,105, or 4.9%, from the same prior year period. Sales of the Company’s managed services platform for the nine months ended September 30, 2022 were $54,337,640, a decrease of $10,860,025, or 16.7%, from the same prior year period. Sales of the Company’s self-service platform for the nine months ended September 30, 2022 were $26,690,889, an increase of $6,663,920, or 33.3% from the same prior year period. The decrease in total revenue for the nine months ended September 30, 2022 was primarily a result of lower spend by clients driven by economic headwinds such as historically high inflation, the anticipation of lower inventory and lower demand due to persisting supply chain challenges and recessionary fears and pressures.
Revenue generated in the United States for the nine months ended September 30, 2022 was $54,923,565, a decrease of $7,645,824, or 12.2%, from the same prior year period. Revenue generated in Canada for the nine months ended September 30, 2022 was $12,955,235, an increase of $1,616,471, or 14.3% from the same prior year period. Revenue from other geographies for the nine months ended was $13,149,729, an increase of $1,833,248, or 16.2%, from the same prior year period.
Adjusted EBITDA for the nine months ended September 30, 2022 was $3,309,131, a decrease of $11,090,480 from $14,399,611, or 77.0%, from the same prior year period and was primarily attributable to higher operating expenses and lower revenues. Net loss for the nine months ended September 30, 2022 was $776,989, a decrease of $8,864,569 from Net Income of $8,087,580 from the same prior year period. The decrease in net income was a result of an increase in operating expenses due to growth initiatives and a decrease in managed revenue.
Net Revenue
The following table sets out a reconciliation of Net Revenue (Gross Profit) to Revenue for each of the periods indicated:
| Three months ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenue | $ | 28,947,296 | $ | 27,484,820 | $ | 81,028,529 | $ | 85,224,634 | ||||||||
| Media costs | 14,102,830 | 13,232,069 | 39,601,460 | 40,798,761 | ||||||||||||
| Net Revenue | 14,844,466 | 14,252,751 | 41,427,069 | 44,425,873 | ||||||||||||
| Net Revenue Margin | 51.28 | % | 51.86 | % | 51.13 | % | 52.13 | % | ||||||||
Three months ended September 30, 2022, and 2021
Media costs are comprised of advertising impressions that the Company purchased from real-time advertising exchanges or through other third parties. Media costs were $14,102,830 for the quarter compared to $13,232,069 for the same prior year period, for an increase of $870,761, or 6.6%. This increase in media costs was attributable to the increased revenue during the period. Net revenue Margin was 51% for the quarter compared to 52% for the same prior year period.
6
AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and nine months ended September 30, 2022
Nine months ended September 30, 2022, and 2021
For the nine months ended September 30, 2022, media costs were $39,601,460 compared to $40,798,761 for the same prior year period. The decrease in media costs of $1,197,301, or 2.9%, was attributable to the decreased revenue during the period. Net Revenue Margin was 51% for the nine months ended September 30, 2022, compared to 52% for the same prior year period.
Reconciliation of net income (loss) to Adjusted EBITDA for the three months ended September 30, 2022, and 2021
The following table presents a reconciliation of Net Income (loss) to Adjusted EBITDA for the periods indicated:
| Three months ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Net income (loss) for the period | $ | 2,802,622 | $ | 3,362,127 | $ | (776,989 | ) | $ | 8,087,580 | |||||||
| Adjustments: | ||||||||||||||||
| Finance costs | 158,453 | 263,220 | 429,557 | 797,074 | ||||||||||||
| Foreign exchange gain | (5,835,813 | ) | (1,864,926 | ) | (7,228,072 | ) | (2,599,487 | ) | ||||||||
| Depreciation and amortization | 1,124,790 | 1,172,334 | 3,527,168 | 3,816,994 | ||||||||||||
| Income taxes | 1,378,607 | - | 1,432,242 | 231,600 | ||||||||||||
| Share-based compensation | 1,893,845 | 1,465,706 | 5,447,830 | 3,954,217 | ||||||||||||
| Severance expenses | 115,832 | 20,875 | 398,263 | 111,633 | ||||||||||||
| Other expenses | - | - | 79,132 | - | ||||||||||||
| Total adjustments | (1,164,286 | ) | 1,057,209 | 4,086,120 | 6,312,031 | |||||||||||
| Adjusted EBITDA | $ | 1,638,336 | $ | 4,419,336 | $ | 3,309,131 | $ | 14,399,611 | ||||||||
Three months ended September 30, 2022 and 2021
Adjusted EBITDA for the three months ended September 30, 2022 was $1,638,336 compared to $4,419,336 for the same prior year period. The year-over-year decrease of $2,781,000 in Adjusted EBITDA was primarily attributable to higher operating expenses as discussed under the operating expenses section.
Nine months ended September 30, 2022 and 2021
Adjusted EBITDA for the nine months ended September 30, 2022 was $3,309,131 compared to $14,399,611 for the same prior year period. The year-over-year decrease of $11,090,480 in Adjusted EBITDA was primarily attributable to higher operating expenses and lower revenues.
7
AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and nine months ended September 30, 2022
Operating Expenses, Finance Costs, and Foreign Exchange
The following table summarizes various expenses for the three and nine months ended September 30, 2022, and 2021:
| Three months ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Sales and marketing | $ | 5,904,181 | $ | 5,260,944 | $ | 16,745,908 | $ | 14,982,171 | ||||||||
| Technology | 4,243,954 | 2,581,090 | 11,764,959 | 9,716,514 | ||||||||||||
| General and administrative | 3,173,827 | 2,012,256 | 10,084,466 | 5,439,210 | ||||||||||||
| Share-based compensation | 1,893,845 | 1,465,706 | 5,447,830 | 3,954,217 | ||||||||||||
| Depreciation and amortization | 1,124,790 | 1,172,334 | 3,527,168 | 3,816,994 | ||||||||||||
| Finance costs | 158,453 | 263,220 | 429,557 | 797,074 | ||||||||||||
| Foreign exchange gain | (5,835,813 | ) | (1,864,926 | ) | (7,228,072 | ) | (2,599,487 | ) | ||||||||
The Company’s rapid growth has led to fluctuating overall operating results due to expenditure in sales and marketing and research and development from quarter to quarter and increases in employee headcount.
Sales and marketing expenses
Sales and marketing expenses consist of all costs associated with selling and marketing the Company’s services and products. The costs include all salary and benefit costs, personnel costs, commissions and variable compensation, travel, marketing, payroll taxes and employee health and related benefit expenses, for the sales, marketing, and account management teams. Sales and marketing expenses for the quarter were $5,904,181, an increase of $643,237, or 12.2% compared to the same period of the prior year. The year-over-year increase was primarily related to the increase in the sales team and increase in sales-related expense due to the lifting of COVID-19 travel restrictions, capacity limits, and vaccine requirements. Sales and marketing expenses represented 20% of revenue for the quarter, compared with 19% for the same period of the prior year.
Sales and marketing expenses for the nine months ended September 30, 2022 were $16,745,908, an increase of $1,763,737, or 11.8%, compared to the same prior year period. The year-over-year increase was primarily related to the increase in the sales team and an increase in sales-related expense due to the lifting of COVID-19 travel restrictions, capacity limits, and vaccine requirements. Sales and marketing expenses represented 21% of revenue for the nine months ended September 30, 2022, compared with 18% for the same prior year period.
Technology
Technology expenses consist of all costs associated with increasing the Programmatic Marketing Platform’s effectiveness and efficiency. The majority of such costs are comprised of salary and benefit costs and costs associated with housing the required computer equipment. Technology expenses for the quarter were $4,243,954, an increase of $1,662,864, or 64.0% compared to the same period of the prior year. Excluding government grants and capitalized salaries, technology expenses for the quarter increased by $1,603,639 compared to the same period from the prior year. Excluding government grants and capitalized salaries, technology expenses for the quarter represented 18% of revenue compared to 14% for the same period of the prior year.
8
AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and nine months ended September 30, 2022
During the quarter, the Company recognized nil in government grants related to technology from IRAP compared to nil during the same prior year period. During the quarter, the Company capitalized $916,119 of salary costs that related to revenue generating technology compared to $964,636 for the same prior year period.
Technology expenses for the nine months ended September 30, 2022 were $11,764,959, an increase of $2,048,445, or 21.1%, compared to the same period of the prior year. Excluding government grants and capitalized salaries, during the nine months ended September 30, 2022, technology expenses increased by $3,062,559 compared to the same period from the prior year. Excluding government grants and capitalized salaries, for the nine months ended September 30, 2022, technology expenses represented 18% of revenue compared to 13% for the same period of the prior year.
During the nine months ended September 30, 2022, the Company recognized nil in government grants related to technology from IRAP compared to $1,613,892 during the same prior year period. During the nine months ended September 30, 2022, the Company capitalized $2,650,031 of salary costs that related to revenue generating technology compared to $964,636 for the same prior year period.
General and administrative
General and administrative expenses include salaries and benefits of the administrative staff, occupancy costs, public company fees, insurance, professional fees, and supplies. General and administrative expenses for the third quarter were $3,173,827, an increase of $1,161,571, or 57.7%, compared to the same period of the prior year. The year-over-year increase was primarily related to the increased legal and audit fees, as well as an increase to the overall size of the executive team. General and administrative expenses for the quarter represented 11% of revenue compared to 7% for the same period of the prior year.
General and administrative expenses for the nine months ended September 30, 2022 were $10,084,466, an increase of $4,645,256, or 85.4%, compared to the same period of the prior year. The year-over-year increase was primarily related to the increased legal advisory and insurance costs that arose from listing on the NASDAQ, as well as an increase to the overall size of the executive team. General and administrative expenses for the nine months ended September 30, 2022, represented 12% of revenue compared to 6% for the same period of the prior year.
Share-based compensation
Share-based compensation expenses for the quarter were $1,893,845, an increase of $428,139, or 29.2%, compared to the same period of the prior year. This increase in share-based compensation expense was related to an increase in grants issued to attract and also retain senior leadership positions.
Share-based compensation expenses for the nine months ended September 30, 2022 were $5,447,830, an increase of $1,493,613, or 37.8%, compared to the same period of the prior year. This increase in share-based compensation expense was related to an increase in grants issued to attract and also retain senior leadership positions.
Depreciation and amortization
Depreciation and amortization expense for the quarter was $1,124,790, a decrease of $47,544, or 4.1%, compared to the same period of the prior year. The year-over-year decrease was attributable to the lower fixed asset balance as a result of fully amortizing certain fixed assets during 2022.
9
AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and nine months ended September 30, 2022
Depreciation and amortization expense for the nine months ended September 30, 2022 was $3,527,168, a decrease of $289,826, or 7.6%, compared to the same period of the prior year. The year-over-year decrease was attributable to the lower fixed asset balance as a result of fully amortizing certain fixed assets during 2022.
Finance costs
Finance costs for the quarter were $158,453, a decrease of $104,767, or 39.8%, compared to the same period of the prior year. The decrease in finance costs was primarily due to the debt repayment during the period, resulting in a lower outstanding debt balance as compared to the same period of the prior year.
Finance costs for the nine months ended September 30, 2022 were $429,557, a decrease of $367,517, or 46.1%, compared to the same prior year period. The decrease in finance costs was primarily due to the debt repayment during the period, resulting in a lower outstanding debt balance as compared to the same period of the prior year.
Foreign exchange gain
Foreign exchange gain consists of the realized and unrealized exchange differences due to fluctuations between the Canadian dollar, the U.S. dollar, and the Euro. The Company recorded a net foreign exchange gain of $5,835,813 for the quarter compared to a gain of $1,864,926 for the same prior year period. The foreign exchange gain was a result of the large increase in the U.S. dollar in the quarter in conjunction with the large U.S. dollar cash balance held.
For the nine months ended September 30, 2022, the Company recorded a net foreign exchange gain of $7,228,072 compared to a gain of $2,599,487 for the same prior year period. The foreign exchange gain was a result of the large increase in the U.S. dollar in the period in conjunction with the large U.S. dollar cash balance held.
Historically, the Company has not hedged foreign currency transactions, but may elect to do so in the future if it is determined to be advantageous.
Summary of Quarterly Results
The following unaudited table sets out selected financial information for the Company on a consolidated basis for the last eight most recently completed quarters. The unaudited quarterly information has been prepared in accordance with IFRS.
| Quarter Ended | ||||||||||||||||||||||||||||||||
| Sept 30, | June 30, | Mar 31, | Dec 31, | Sept 30, | Jun 30, | Mar 31, | Dec 31, | |||||||||||||||||||||||||
| 2022 | 2022 | 2022 | 2021 | 2021 | 2021 | 2021 | 2020 | |||||||||||||||||||||||||
| Revenue | $ | 28,947,296 | $ | 28,260,345 | $ | 23,820,888 | $ | 36,801,680 | $ | 27,484,820 | $ | 30,285,222 | $ | 27,454,592 | $ | 35,057,316 | ||||||||||||||||
| Net income (loss) | 2,802,622 | $ | 910,782 | $ | (4,490,393 | ) | $ | 2,467,930 | $ | 3,362,127 | $ | 3,361,572 | $ | 1,363,881 | $ | 4,165,399 | ||||||||||||||||
| Net income (loss) per share: | $ | 0.05 | $ | 0.02 | $ | (0.07 | ) | $ | 0.04 | $ | 0.06 | $ | 0.06 | $ | 0.03 | $ | 0.07 | |||||||||||||||
| Weighted average number of shares outstanding (000’S) | 57,524,111 | 59,414,313 | 60,886,379 | 60,720,142 | 60,609,370 | 58,014,013 | 54,398,478 | 52,855,998 | ||||||||||||||||||||||||
10
AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and nine months ended September 30, 2022
LIQUIDITY AND CAPITAL RESOURCES
Selected financial information from the statements of financial position as at September 30, 2022 and December 31, 2021 are as follows:
| September 30, 2022 | December 31, 2021 | |||||||
| Cash and cash equivalents | $ | 88,231,834 | $ | 102,208,807 | ||||
| Working capital(1) | 92,422,142 | 105,692,066 | ||||||
| Total assets | 136,672,832 | 149,825,580 | ||||||
| Current liabilities | 27,430,401 | 30,767,973 | ||||||
| Other non-current liabilities | 4,577,500 | 6,001,599 | ||||||
| Shareholders’ equity | 104,664,931 | 113,056,008 | ||||||
(1) Working capital is defined as current assets less current liabilities.
As at September 30, 2022, the Company had cash and cash equivalents of $88,231,834 compared to $102,208,807 as at December 31, 2021 for a decrease of $13,976,973, or 13.7%. This decrease was largely due to the NCIB program, investments in our platform and other property and equipment, and cash used in operations, partially offset by the impact of foreign exchange on cash and cash equivalents.
Cash flows used in operations were $1,193,890 during the nine months ended September 30, 2022, as compared to cash generated of $16,094,130 during the same prior year period.
Cash flows used in investing activities were $2,811,677 during the nine months ended September 30, 2022, compared to $1,744,464 during the same prior year period. The increase was primarily due to an increase in asset purchases and intangible assets compared to the prior year period.
Cash flows used in financing activities were $16,112,033 during the nine months ended September 30, 2022, compared to a cash generation of $60,710,010 during the same prior year period. This decrease was primarily due to an equity raise that was completed during the prior year period.
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. The Company’s approach to managing liquidity is to ensure, to the extent possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. The Company manages its liquidity risk by continually monitoring forecasted and actual revenue and expenditures and cash flows from operations. While the Company currently has sufficient operating capital to meet its day-to-day operating expenses, it is possible that the Company could experience a working capital deficiency in the future, which would have a materially adverse effect on the Company’s liquidity. The Company currently has sufficient operating capital to meet its day to day operating expenses. The Company has credit facilities that are subject to certain general and financial covenants, including the delivery of annual audited consolidated financial statements to the holders. The credit facilities are secured by all material assets of the Company. The Company was in breach of one covenant as at September 30, 2022 and accordingly, the entire loan balance of $4,468,030 has been classified as a current liability as at September 30, 2022. However, the Company received a waiver from its creditor, Silicon Valley Bank (“SVB”) after September 30, 2022 indicating that the bank does not intend to take any action and demand repayment of the loan balance under the agreement.
11
AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and nine months ended September 30, 2022
Management is also actively involved in the review and approval of planned expenditures. The Company’s principal cash requirements are for principal and interest payments on its debt, capital expenditures and working capital needs. The Company uses its operating cash flows, loans and borrowings and cash balances to maintain liquidity. In the event future cash flows from operations are lower than expected, the Company may need to seek additional financing, either by issuing additional equity or by undertaking additional debt. There is no certainty that additional financing, whether debt or equity, will be available or that it will be available on commercially attractive terms. Additional information can be found in the Company’s Consolidated Financial Statements which are available on SEDAR at www.sedar.com
Common Shares
Changes in the number of issued common shares of the Company from December 31, 2021 to September 30, 2022 are as follows:
| Number of Common Shares | ||||
| Balance as at December 31, 2021 | 60,733,803 | |||
| Shares issued – Options exercised | 247,866 | |||
| Shares issued – DSUs exercised | 177,638 | |||
| Shares issued – RSUs exercised | 302,759 | |||
| Repurchase of shares for cancellation under NCIB | (4,080,880 | ) | ||
| Balance as at September 30, 2022 | 57,381,186 | |||
Preference Shares
While the Company is authorized to issue an unlimited number of preference shares, the Company has no preference shares issued and outstanding.
Stock Options
The Company presently issues stock options, deferred share units (“DSUs”), performance share units (“PSUs”) and restricted share units (RSUs”) pursuant to its omnibus long-term incentive plan (the “Omnibus Incentive Plan”). Prior to June 16, 2020, the Company issued stock options pursuant to its predecessor stock option plan (the “Stock Option Plan”) and DSUs pursuant to its predecessor deferred share unit plan (the “DSU Plan”). Although the Company no longer issues new stock options or DSUs pursuant to the predecessor Stock Option Plan and DSU Plan, respectively, previously issued stock options and DSUs remain outstanding and are governed by the existing plans under which they were initially issued.
The maximum number of common shares reserved for issuance, in the aggregate, under the Omnibus Incentive Plan, the Stock Option Plan, the DSU Plan and any other security-based compensation arrangement of the Company, collectively, is 15% of the aggregate number of common shares issued and outstanding from time to time. As at September 30, 2022, the Company was entitled to issue a maximum of 8,607,178 equity-based awards collectively under the Omnibus Incentive Plan, the existing Stock Option Plan, the existing DSU Plan and any other security-based compensation arrangement.
12
AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and nine months ended September 30, 2022
The following table summarizes the continuity of stock options issued by the Company under the Stock Option Plan:
| September 30, 2022 | September 30, 2021 | |||||||||||||||
| Number of options | Weighted average exercise price $ | Number of options | Weighted average exercise price $ | |||||||||||||
| Options outstanding – Beginning of year | 1,094,001 | 1.90 | 1,865,519 | 1.69 | ||||||||||||
| Granted | - | - | 3,333 | 1.06 | ||||||||||||
| Forfeited or cancelled | (138,333 | ) | 4.13 | (27,667 | ) | 1.06 | ||||||||||
| Exercised | (247,866 | ) | 1.51 | (730,517 | ) | 1.42 | ||||||||||
| Options outstanding – End of period | 707,802 | 1.60 | 1,110,668 | 1.89 | ||||||||||||
| Options exercisable – End of period | 657,801 | 1.61 | 883,669 | 1.98 | ||||||||||||
The following table summarizes the continuity of stock options issued by the Company under the Omnibus Incentive Plan:
| September 30, 2022 | September 30, 2021 | |||||||||||||||
| Number of options | Weighted average exercise price $ | Number of options | Weighted average exercise price $ | |||||||||||||
| Options outstanding – Beginning of year | 23,334 | 2.09 | 35,000 | 2.09 | ||||||||||||
| Granted | - | - | - | - | ||||||||||||
| Forfeited or cancelled | - | - | - | - | ||||||||||||
| Exercised | - | - | (11,666 | ) | 2.09 | |||||||||||
| Options outstanding – End of period | 23,334 | 2.09 | 23,334 | 2.09 | ||||||||||||
| Options exercisable – End of period | 11,668 | 2.09 | - | - | ||||||||||||
Deferred Share Units
During the three and nine months ended September 30, 2022, the Company issued nil and 110,136 DSUs to employees, officers, directors, and consultants of the Company as compared to nil and nil during the prior year periods, respectively.
During the three and nine months ended September 30, 2022, 14,134 and 177,638 DSUs, respectively, were exercised as compared to 72,933 and 508,178 during the prior year periods, respectively.
Restricted Share Units
During the three and nine months ended September 30, 2022, the Company issued 226,420 and 1,796,579 RSUs to employees, officers, directors, and consultants of the Company as compared to 122,619 and 354,159 during the prior year periods, respectively.
During the three and nine months ended September 30, 2022, 19,908 and 302,759 RSUs were exercised as compared to 70,577 and 260,391 during the prior year periods, respectively. As at September 30, 2022, the Company had 3,034,895 RSUs outstanding.
13
AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and nine months ended September 30, 2022
CONTRACTUAL OBLIGATIONS
The following are the contractual maturities for the financial liabilities:
| September 30, 2022 | ||||||||||||||||||||
| Carrying amount $ | Total contractual cash flows $ | Less than 1 year $ | 1 to 3 Years $ | > 3 years $ | ||||||||||||||||
| Accounts payable and accrued Liabilities | 20,204,928 | 20,204,928 | 20,204,928 | - | - | |||||||||||||||
| International Loans | 546,832 | 546,832 | 332,242 | 214,590 | - | |||||||||||||||
| Term loans | 4,468,030 | 4,674,658 | 4,674,658 | - | - | |||||||||||||||
| Lease Obligations | 6,229,421 | 6,477,592 | 1,866,511 | 4,611,081 | - | |||||||||||||||
| 31,449,211 | 31,904,010 | 27,078,339 | 4,825,671 | - | ||||||||||||||||
| December 31, 2021 | ||||||||||||||||||||
| Carrying amount $ | Total contractual cash flows $ | Less than 1 year $ | 1 to 3 Years $ | > 3 years $ | ||||||||||||||||
| Accounts payable and accrued liabilities | 24,853,497 | 24,853,497 | 24,853,497 | - | - | |||||||||||||||
| International Loans | 882,085 | 882,085 | 467,312 | 414,773 | - | |||||||||||||||
| Term loans | 5,916,956 | 6,222,416 | 2,478,838 | 3,743,578 | - | |||||||||||||||
| Lease Obligations | 4,206,869 | 4,724,847 | 2,058,161 | 2,666,686 | - | |||||||||||||||
| 35,859,407 | 36,682,845 | 29,857,808 | 6,825,037 | - | ||||||||||||||||
OFF-BALANCE SHEET ARRANGEMENTS
The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future material adverse effect on its financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
TRANSACTIONS WITH RELATED PARTIES
During the three and nine months ended September 30, 2022, there were no transactions with related parties.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of the Consolidated Financial Statements and application of IFRS often involve management's judgment and the use of estimates and assumptions deemed to be reasonable at the time they are made. Significant assumptions and estimates used in preparing the financial statements include those related to credit quality of accounts receivable, income tax credits receivable, share-based payments, impairment tests for non-financial assets, as well as revenue and cost recognition. AcuityAds bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets, liabilities, equity, revenue and expenses that are not readily apparent from other sources. The Company reviews estimates and underlying assumptions on an ongoing basis. Revisions are recognized in the period in which estimates are revised and may impact future periods as well. Other results may be derived with different judgments or using different assumptions or estimates and events may occur that could require a material adjustment. Significant accounting policies and estimates under IFRS are found in Note 2 of the Company’s Condensed Interim Consolidated Financial Statements which are available on SEDAR at www.sedar.com.
14
AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and nine months ended September 30, 2022
CHANGES IN ACCOUNTING POLICIES
Recently adopted accounting pronouncements
For the period ended September 30, 2022, the Company has adopted new accounting policies as disclosed in Note 2 of the Company’s condensed interim consolidated financial statements. The application of those amendments and interpretations had no significant impact on the Company’s condensed interim consolidated financial position or results of operations.
DISCLOSURE CONTROLS AND INTERNAL CONTROLS OVER FINANCIAL REPORTING
Management of the Company, under the supervision of the Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining disclosure controls and procedures (as defined under applicable Canadian securities laws and by the United States Securities and Exchange Commission (“SEC”) in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) for the Company to ensure that material information relating to the Company, including its consolidated subsidiaries, that is required to be made known to the Chief Executive Officer and Chief Financial Officer by others within the Company and disclosed by the Company in reports filed or submitted by it under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and (ii) accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed by, or under the supervision of, the Chief Executive Officer and the Chief Financial Officer and effected by the Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Management determined that there were no material weaknesses in the its internal control over financial reporting as at September 30, 2022.
There have been no changes to the Company’s internal controls over financial reporting during the period ended September 30, 2022 that have materially affected, or are reasonably likely to materially affect, AcuityAds’ internal control over financial reporting.
OUTSTANDING SHARE DATA
As at November 10, 2022, 57,381,186 common shares and no preference shares were issued and outstanding. In addition, as at November 10, 2022, there were 731,136 stock options outstanding, each of which represents the right to acquire one common share, with exercise prices ranging from $0.96 to $2.09 per share. As at November 10, 2022, there were 622,469 DSUs outstanding and 3,034,895 RSUs outstanding, each of which represents the right to acquire one common share.
15
AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and nine months ended September 30, 2022
RISK FACTORS
AcuityAds is exposed to a variety of business risks, financial and accounting risks, and industry risks in the normal course of operations. A detailed description of risk factors associated with the Company’s business is given in the “Risk Factors” section of the Annual Information Form for the year ended December 31, 2021, which is available under the Company’s profile on SEDAR at www.sedar.com.
ADDITIONAL INFORMATION
Additional information relating to the Company, including the Company’s AIF, is posted on SEDAR at www.sedar.com. The Company’s common shares are listed on the TSX under the symbol “AT” and the NASDAQ under the symbol “ATY”.
16
Exhibit 99.3
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE
I, Tal Hayek, the Chief Executive Officer of AcuityAds Holdings Inc., certify the following:
| 1. | Review: I have reviewed the interim financial report and interim MD&A (together, the "interim filings") of AcuityAds Holdings Inc. (the "issuer") for the interim period ended September 30, 2022. |
| 2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
| 3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
| 4. | Responsibility: The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, for the issuer. |
| 5. | Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer(s) and I have, as at the end of the period covered by the interim filings |
| (a) | designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that |
| (i) | material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and |
| (ii) | information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
| (b) | designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP. |
- 2 -
| 5.1 | Control framework: The control framework the issuer's other certifying officer(s) and I used to design the issuer's ICFR is based on the principles set out in the “Internal Control – Integrated Framework (2013)” issued by The Committee of Sponsoring Organizations of the Treadway Commission (COSO). |
| 5.2 | ICFR -- material weakness relating to design: N/A |
| 5.3 | Limitation on scope of design: N/A |
| 6. | Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on July 1, 2022 and ended on September 30, 2022 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR. |
Date: November 10, 2022
| /s/ Tal Hayek | |
| Tal Hayek | |
| Chief Executive Officer |
Exhibit 99.4
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE
I, Elliot Muchnik, the Chief Financial Officer of AcuityAds Holdings Inc., certify the following:
| 1. | Review: I have reviewed the interim financial report and interim MD&A (together, the "interim filings") of AcuityAds Holdings Inc. (the "issuer") for the interim period ended September 30, 2022. |
| 2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
| 3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
| 4. | Responsibility: The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, for the issuer. |
| 5. | Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer(s) and I have, as at the end of the period covered by the interim filings |
| (a) | designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that |
| (i) | material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and |
| (ii) | information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
| (b) | designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP. |
- 2 -
| 5.1 | Control framework: The control framework the issuer's other certifying officer(s) and I used to design the issuer's ICFR is based on the principles set out in the “Internal Control – Integrated Framework (2013)” issued by The Committee of Sponsoring Organizations of the Treadway Commission (COSO). |
| 5.2 | ICFR -- material weakness relating to design: N/A |
| 5.3 | Limitation on scope of design: N/A |
| 6. | Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on July 1, 2022 and ended on September 30, 2022 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR. |
Date: November 10, 2022
| /s/ Elliot Muchnik | |
| Elliot Muchnik | |
| Chief Financial Officer |