illumin Holdings Inc 6-K, filed Nov 3, 2021
illumin Holdings Inc. (ILLMF)
About this 6-K
illumin Holdings Inc filed this 6-K on November 3, 2021.
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 2021
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 | ¨ | Form 40-F | x |
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 3, 2021 | By: | /s/ Tatiana Kresling | |
| Name: | Tatiana Kresling | |||
| Title: | Interim Chief Financial Officer | |||
Exhibit 99.1
AcuityAds Holdings Inc.
Condensed Interim Consolidated
Financial Statements
(Unaudited)
Three and Nine Months ended
September 30, 2021 and 2020
(expressed in Canadian dollars)
AcuityAds Holdings Inc.
Condensed Interim Consolidated Statements of Financial Position
(Unaudited)
(expressed in Canadian dollars)
| September
30, 2021 $ | December
31, 2020 $ | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | 100,297,463 | 22,638,300 | ||||||
| Accounts receivable | 24,525,463 | 31,859,306 | ||||||
| Prepaid expenses and other | 3,132,237 | 1,901,067 | ||||||
| Investment tax credits receivable | - | 21,922 | ||||||
| 127,955,163 | 56,420,595 | |||||||
| Non-current assets | ||||||||
| Property and equipment (note 3) | 5,943,241 | 7,945,110 | ||||||
| Intangible assets (note 4) | 3,127,292 | 3,197,953 | ||||||
| Goodwill | 4,869,841 | 4,869,841 | ||||||
| 141,895,537 | 72,433,499 | |||||||
| Liabilities | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | 19,816,614 | 23,232,661 | ||||||
| Term loans (note 16) | 2,444,544 | 2,481,550 | ||||||
| International loans (note 17) | 852,232 | 1,092,297 | ||||||
| Lease obligations (notes 5) | 2,248,982 | 2,850,497 | ||||||
| 25,362,372 | 29,657,005 | |||||||
| Non-current liabilities | ||||||||
| Term loans (note 16) | 3,964,185 | 5,796,454 | ||||||
| International loans (note 17) | 569,522 | 887,932 | ||||||
| Lease obligations (notes 5) | 2,577,356 | 4,041,520 | ||||||
| 32,473,435 | 40,382,911 | |||||||
| Shareholders’ Equity (notes 7) | 109,422,102 | 32,050,588 | ||||||
| 141,895,537 | 72,433,499 | |||||||
AcuityAds Holdings Inc.
Condensed Interim Consolidated Statements of Income (Loss)
(Unaudited)
(expressed in Canadian dollars)
Three
months | Three
months | Nine
months | Nine
months | |||||||||||||
| Revenue | ||||||||||||||||
| Managed services | 19,320,662 | 18,766,560 | 65,197,665 | 52,724,493 | ||||||||||||
| Self-service | 8,164,158 | 7,297,762 | 20,026,969 | 17,112,239 | ||||||||||||
| 27,484,820 | 26,064,322 | 85,224,634 | 69,836,732 | |||||||||||||
| Media costs | 13,232,069 | 12,536,168 | 40,798,761 | 34,011,563 | ||||||||||||
| Gross profit | 14,252,751 | 13,528,154 | 44,425,873 | 35,825,169 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Sales and marketing | 5,260,944 | 5,043,490 | 14,982,171 | 13,623,418 | ||||||||||||
| Technology (note 11) | 2,581,090 | 2,943,386 | 9,716,514 | 9,819,590 | ||||||||||||
| General and administrative | 2,012,256 | 1,577,519 | 5,439,210 | 4,844,283 | ||||||||||||
| Share-based compensation (note 7) | 1,465,706 | 252,335 | 3,954,217 | 485,151 | ||||||||||||
| Depreciation and amortization | 1,172,334 | 2,217,626 | 3,816,994 | 6,640,617 | ||||||||||||
| 12,492,330 | 12,034,356 | 37,909,106 | 35,413,059 | |||||||||||||
| Income from operations | 1,760,421 | 1,493,798 | 6,516,767 | 412,110 | ||||||||||||
| Finance costs (note 8) | 263,220 | 251,159 | 797,074 | 1,304,195 | ||||||||||||
| Foreign exchange (gain) loss | (1,864,926 | ) | 350,743 | (2,599,487 | ) | (530,959 | ) | |||||||||
| (1,601,706 | ) | 601,902 | (1,802,413 | ) | 773,236 | |||||||||||
| Net income (loss) before income taxes | 3,362,127 | 891,897 | 8,319,180 | (361,126 | ) | |||||||||||
| Income taxes (recovery) (note 18) | - | (29,324 | ) | 231,600 | 113,284 | |||||||||||
| Net income (loss) for the period | 3,362,127 | 921,221 | 8,087,580 | (474,410 | ) | |||||||||||
| Net income (loss) per share (note 9) | ||||||||||||||||
| Basic and diluted | 0.06 | 0.02 | 0.14 | (0.01 | ) | |||||||||||
AcuityAds Holdings Inc.
Condensed Interim Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)
(expressed in Canadian dollars)
| Three
months ended September 30, 2021 $ | Three
months ended September 30, 2020 $ | Nine
months ended September 30, 2021 $ | Nine
months ended September 30, 2020 $ | |||||||||||||
| Net income (loss) for the period | 3,362,127 | 921,221 | 8,087,580 | (474,410 | ) | |||||||||||
| Exchange differences on translating foreign operations | (331,401 | ) | (129,637 | ) | 671,363 | 52,098 | ||||||||||
| Comprehensive income (loss) for the period | 3,693,528 | 1,058,858 | 7,416,217 | (526,508 | ) | |||||||||||
AcuityAds Holdings Inc.
Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity
(Unaudited)
For the nine-month periods ended September 30, 2021 and 2020
(expressed in Canadian dollars)
| 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 | ||||||||||||||||||||
| 2020 | ||||||||||||||||||||||||||||
| Common shares | ||||||||||||||||||||||||||||
Number
| Amount $ | Contributed surplus | Warrants $ | Other reserves $ | Deficit $ | Total $ | ||||||||||||||||||||||
Balance – December 31, 2019 | 47,824,212 | 42,185,794 | 6,954,447 | 2,337,372 | 415,915 | (36,294,063 | ) | 15,599,465 | ||||||||||||||||||||
Shares issued – options exercised | 832,667 | 674,961 | - | - | - | - | 674,961 | |||||||||||||||||||||
Share-based compensation (note 7(c)) | - | - | 485,151 | - | - | - | 485,151 | |||||||||||||||||||||
Warrants issued – term loan (note 16) | - | - | (1,922,271 | ) | - | - | - | (1,922,271 | ) | |||||||||||||||||||
Shares issued – Warrants exercised | 1,140,118 | 1,171,285 | 877,209 | (877,209 | ) | - | - | 1,171,285 | ||||||||||||||||||||
Shares issued – DSUs/RSUs exercised (notes 7(d) and 7(e)) | 664,679 | 566,659 | (566,659 | ) | - | - | - | - | ||||||||||||||||||||
Other comprehensive income | - | - | - | - | (468,013 | ) | - | (468,013 | ) | |||||||||||||||||||
Warrants cancelled and forfeited | - | - | 1,215,128 | (1,215,128 | ) | - | - | - | ||||||||||||||||||||
| Net loss for the period | - | - | - | - | - | (474,410 | ) | (474,410 | ) | |||||||||||||||||||
Balance – September 30, 2020 | 50,461,676 | 44,598,699 | 7,043,005 | 245,035 | (52,098 | ) | (36,768,473 | ) | 15,066,168 | |||||||||||||||||||
AcuityAds Holdings Inc.
Condensed Interim Consolidated Statements of Cash Flows
(Unaudited)
For the nine-month periods ended September 30, 2021 and 2020
(expressed in Canadian dollars)
| 2021 $ | 2020 $ | |||||||
| Cash provided by (used in) | ||||||||
| Operating activities | ||||||||
| Income (loss) for the period | 8,087,580 | (474,410 | ) | |||||
| Adjustments to reconcile net income to net cash flows | ||||||||
| Depreciation and amortization | 3,816,994 | 6,640,617 | ||||||
| Finance costs (note 8) | 797,074 | 1,304,195 | ||||||
| Share-based compensation (note 7(c)) | 3,954,217 | 485,151 | ||||||
| Change in non-cash operating working capital | ||||||||
| Accounts receivable | 7,333,843 | 14,523,223 | ||||||
| Prepaid expenses and other | (1,209,249 | ) | 4,696 | |||||
| Investment tax credits receivable | - | 304,821 | ||||||
| Accounts payable and accrued liabilities | (3,390,866 | ) | (5,694,479 | ) | ||||
| Interest paid – net | (695,976 | ) | (1,102,249 | ) | ||||
| 18,693,617 | 15,991,564 | |||||||
| Investing activities | ||||||||
| Additions to property and equipment (note 3) | (779,828 | ) | (3,553,449 | ) | ||||
| Additions to intangible assets (note 4) | (964,636 | ) | (351,686 | ) | ||||
| (1,744,464 | ) | (3,905,135 | ) | |||||
| Financing activities | ||||||||
| Amount drawn from revolving line of credit (note 15) | - | 60,154,399 | ||||||
| Repayment of revolving line of credit (note 15) | - | (74,138,115 | ) | |||||
| Net proceeds from term loans (note 16) | - | 9,205,581 | ||||||
| Repayment of term loans principal (note 16) | (1,818,053 | ) | (6,613,249 | ) | ||||
| Additions to international loans | 852,486 | 948,897 | ||||||
| Repayment of international loans | (1,410,960 | ) | (1,438,323 | ) | ||||
| Additions to leases | 358,644 | 2,535,440 | ) | |||||
| Repayment of leases | (2,345,510 | ) | (2,520,751 | ) | ||||
| Net proceeds from equity financing (note 7) | 63,955,491 | - | ||||||
| Proceeds from the exercise of warrants | 61,723 | 1,171,285 | ||||||
| Proceeds from the exercise of stock options | 1,056,189 | 674,961 | ||||||
| 60,710,010 | (10,019,875 | ) | ||||||
| Increase (decrease) in cash and cash equivalents | 77,659,163 | 2,066,554 | ||||||
| Cash and cash equivalents – Beginning of period | 22,638,300 | 7,407,122 | ||||||
| Cash and cash equivalents – End of period | 100,297,463 | 9,473,676 | ||||||
| Supplemental disclosure of non-cash transactions | ||||||||
| Additions to property and equipment under leases | 447,869 | 2,821,959 | ||||||
AcuityAds Holdings Inc.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
September 30, 2021 and 2020
(expressed in Canadian dollars)
| 1 | Corporate information |
AcuityAds Holdings Inc. (“AcuityAds” or the “Company”), and its wholly owned subsidiaries AcuityAds Inc., AcuityAds US Inc., 140 Proof Inc., 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, and its head office is located at 70 University Ave, Suite 1200, Toronto, Ontario M5J 2M4. The Company’s common shares are listed on the Toronto Stock Exchange in Canada, under the trading symbol “AT, and on the Nasdaq Capital Market in the United States, under the trading symbol “ATY”.
Effective January 1, 2020, AcuityAds MM Inc. and Visible Measures Corp were merged into AcuityAds US Inc. and 2422330 Ontario Inc. was amalgamated into AcuityAds Inc.
| 2 | Summary of significant accounting policies |
Statement of compliance
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board, as applicable to the preparation of interim financial statements, including International Accounting Standard 34 - Interim Financial Reporting. The date the Board of Directors authorized the consolidated financial statements for issue is November 3, 2021.
Basis of presentation
These condensed interim consolidated financial statements are prepared in Canadian dollars, which is the Company’s functional and reporting currency and have been prepared mainly under the historical cost basis. Other measurement bases used are described in the applicable notes.
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, 2020.
The unaudited condensed interim consolidated financial statements are based on accounting policies, as described in note 2 to the 2020 audited annual consolidated financial statements.
Risks and uncertainties
On March 11, 2020, the World Health Organization declared the outbreak of COVID-19, which continues to spread throughout Canada and around the world, as a global pandemic. To date, the Canadian federal and provincial governments as well as businesses have mandated various measures, including: travel restrictions, restrictions on public gatherings and the quarantine of individuals who have been exposed to the virus. COVID-19 and actions taken to mitigate the spread of it have had, and are expected to continue to have, an adverse impact on the economies and financial markets of many countries, including the geographical area in which the Company operates.
1
AcuityAds Holdings Inc.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
September 30, 2021 and 2020
(expressed in Canadian dollars)
The severity of the impact of the COVID-19 pandemic on the Company’s business will depend on a number of factors, including but not limited to the duration and severity of the pandemic and the extent and severity of the impact on the Company’s customers, all of which are uncertain and cannot be predicted. COVID-19 could cause a further and sustained decline in the Company’s share price or the occurrence of what management would deem to be a triggering event that could, under certain circumstances, cause the Company to perform a goodwill or intangible assets impairment test and result in an impairment charge being recorded for that period.
As of the date of issuance of these condensed interim consolidated financial statements, the extent to which the COVID-19 pandemic may materially impact the Company's financial condition, liquidity or results of operations is uncertain.
| 3 | Property and equipment |
Furniture and fixtures $ | Data centre equipment $ | Office computer equipment $ | Equipment under finance leases $ | 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 | ||||||||||||||||
Furniture and fixtures $ | Data centre equipment $ | Office computer equipment $ | Equipment under finance leases $ | Total $ | |||||||||||||||||
| Net book value – December 31, 2019 | 373,330 | 21,351 | 482,641 | 6,101,512 | 6,978,834 | ||||||||||||||||
| Additions | 663,520 | - | 67,970 | 2,821,959 | 3,553,449 | ||||||||||||||||
| Depreciation | (153,196 | ) | (9,561 | ) | (161,552 | ) | (2,621,163 | ) | (2,945,472 | ) | |||||||||||
| Net book value – September 30, 2020 | 883,654 | 11,790 | 389,059 | 6,302,308 | 7,586,811 | ||||||||||||||||
2
AcuityAds Holdings Inc.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
September 30, 2021 and 2020
(expressed in Canadian dollars)
| 4 | Intangible assets |
Customer relationships $ | Tradename $ | 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 | |||||||||||||
Customer relationships $ | Tradename $ | Technology $ | Total $ | ||||||||||||||
| Net book value – December 31, 2019 | 1,641,517 | 336,548 | 5,763,817 | 7,741,882 | |||||||||||||
| Additions | - | - | 387,615 | 387,615 | |||||||||||||
| Amortization | (1,206,244 | ) | (274,299 | ) | (2,214,599 | ) | (3,695,142 | ) | |||||||||
| Net book value – September 30, 2020 | 435,273 | 62,249 | 3,936,833 | 4,434,355 | |||||||||||||
During the nine months ended September 30, 2021, the Company capitalized $964,636 (2020 – $387,615) of development costs relating to revenue generating technology net of any proceeds received from government assistance (see Note 11).
| 5 | Lease obligations |
The Company has minimum lease payment commitments under leases for the following amounts:
September 30, 2021 $ | December 31, 2020 $ | |||||||
| Obligations under leases | 4,826,338 | 6,892,017 | ||||||
| Less: Current portion | 2,248,982 | 2,850,497 | ||||||
| 2,577,356 | 4,041,520 | |||||||
| $ | |||
| 2021 | 762,287 | ||
| 2022 | 2,275,414 | ||
| 2023 | 1,715,908 | ||
| 2024 | 621,351 | ||
| 5,374,960 | |||
| Less: Interest | 548,622 | ||
| Present value of minimum lease payments | 4,826,338 |
3
AcuityAds Holdings Inc.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
September 30, 2021 and 2020
(expressed in Canadian dollars)
| 6 | Related party transactions and balances |
Directors and officers are eligible to participate in the Company’s long-term incentive plans. During the three and nine months ended September 30, 2021, the Company issued nil and nil (2020 – nil and 170,000) stock options to directors and officers of the Company (note 7(c)).
During the three and nine months ended September 30, 2021, the Company issued 9,553 and 107,051 (2020 – 847,475 and 847,475) RSUs to directors and officers of the Company. Of those issued in 2021, 5,269 and 90,494 were granted to officers in lieu of cash bonuses and 4,284 and 16,557 were granted to directors in lieu of director fees.
| 7 | Share capital and share based payments |
| a) | Share capital |
As at September 30, 2021, the Company had an unlimited number of common shares authorized for issuance (2020 – unlimited) and 60,637,622 common shares outstanding (2020 – 50,461,676).
| b) | Equity financings |
On December 4, 2020, the Company closed a bought deal offering comprised of 1,968,000 common shares issued from treasury and offered by the Company at a price of $6.10 per share for total gross proceeds of $12,004,800, including the full exercise by the underwriters of the over-allotment option. The offering was completed by a syndicate of underwriters. In consideration for their services, the underwriters received aggregate compensation equal to 6% of the gross proceeds of the offering. The Company incurred additional share issuance costs of $1,386,913 in connection with the offering.
On 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 total 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.
4
AcuityAds Holdings Inc.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
September 30, 2021 and 2020
(expressed in Canadian dollars)
The Omnibus Incentive Plan allows for a variety of equity-based awards to be granted to officers, directors, employees and consultants (in the case of stock options, performance share units (“PSUs”) and restricted share units (“RSUs”)) and non-employee directors (in the case of deferred share units (“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, 2021, the Company was entitled to issue a maximum of 9,095,643 equity-based awards, collectively under the Omnibus Incentive Plan, the existing Stock Option Plan, the existing DSU Plan and any other security-based compensation arrangement.
The following table summarizes the continuity of options issued under the Stock Option Plan:
| September 30, 2021 | September 30, 2020 | |||||||||||||||
| Number of options | Weighted average exercise price $ | Number of options | Weighted average exercise price $ | |||||||||||||
| Outstanding – Beginning of year | 1,865,519 | 1.69 | 3,409,886 | 1.45 | ||||||||||||
| Granted | 3,333 | 1.06 | 340,000 | 1.53 | ||||||||||||
| Forfeited or cancelled | (27,667 | ) | 1.06 | (732,552 | ) | 1.06 | ||||||||||
| Exercised | (730,517 | ) | 1.42 | (832,667 | ) | 0.81 | ||||||||||
| Outstanding – End of period | 1,110,668 | 1.89 | 2,184,667 | 1.84 | ||||||||||||
| Options exercisable – End of period | 883,669 | 1.98 | 1,408,834 | 2.17 | ||||||||||||
5
AcuityAds Holdings Inc.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
September 30, 2021 and 2020
(expressed in Canadian dollars)
The following table summarizes the continuity of options issued under the Omnibus Incentive Plan:
| September 30, 2021 | September 30, 2020 | |||||||||||||||
| Number of options | Weighted average exercise price $ | Number of options | Weighted average exercise price $ | |||||||||||||
| Outstanding – Beginning of year | 35,000 | 2.09 | - | - | ||||||||||||
| Granted | - | - | 35,000 | 2.09 | ||||||||||||
| Forfeited or cancelled | - | - | - | - | ||||||||||||
| Exercised | (11,666 | ) | 2.09 | - | - | |||||||||||
| Outstanding – End of period | 23,334 | 2.09 | 35,000 | 2.09 | ||||||||||||
| Options exercisable – End of period | - | - | - | - | ||||||||||||
During the three and nine months ended September 30, 2021, 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 $1,465,706 and $3,954,217 (2020 – $252,335 and $485,151).
During the three and nine months ended September 30, 2021, the Company granted nil and 3,333 (2020 – 45,000 and 375,000) stock options to employees, officers, directors and consultants of the Company. Of those options, nil and nil (2020 – 10,000 and 340,000) options were granted to officers or employees of the Company. Nil and 3,333 (2020 – nil and nil) options were granted to consultants as compensation for services rendered.
During the three and nine months ended September 30, 2021, 58,866 and 742,183 options were exercised at a weighted average exercise price of $1.21 and $1.43 per option, for gross proceeds of $71,014 and $1,063,155 (2020 – 742,667 and 832,667 were exercised at a weighted average price of $1.06 and $0.81 for gross proceeds of $604,761 and $674,961).
During three and nine months ended September 30, 2021, the Company granted nil and nil (2020 – 35,000 and 35,000) options under the Omnibus Incentive Plan with a weighted average exercise price of $nil and $nil (2020 – $2.09 and $2.09) to employees, officers, and directors.
During the three and nine months ended September 30, 2021, 11,666 and 11,666 (2020 – nil and nil) options under the Omnibus Incentive Plan were exercised.
6
AcuityAds Holdings Inc.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
September 30, 2021 and 2020
(expressed in Canadian dollars)
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 nine months ended September 30 as follows:
| 2021 $ | 2020 $ | |||||||
| Weighted average grant date fair value of options granted | $ | 1.45 | $ | 1.45 | ||||
| Weighted average assumptions used | ||||||||
| Expected option life | 5 years | 5 years | ||||||
| Risk-free interest rate | 1.45 | % | 1.45 | % | ||||
| Expected volatility | 101 | % | 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, 2021, the Company issued nil and nil (2020 – nil and 204,008) DSUs to employees, officers, independent directors and consultants of the Company, vesting every year in the measure of one third. During the three and nine months ended September 30, 2021, 72,933 and 508,178 DSUs were exercised (2020 – 62,276 and 664,679).
| e) | Restricted share units |
During the three and nine months ended September 30, 2021, the Company issued 122,619 and 354,159 (2020 – 1,089,408 and 1,089,408) RSUs to employees, officers, directors and consultants of the Company. During the three and nine months ended September 30, 2021, 70,577 and 260,391 (2020 – nil and nil) RSUs were exercised.
| 8 | Finance costs |
| Three months ended September 30, 2021 $ | Three months ended September 30, 2020 $ | Nine months ended September 30, 2021 $ | Nine months ended September 30, 2020 $ | |||||||||||||
| Finance costs | ||||||||||||||||
| Interest on finance leases and other interest | 161,235 | 42,668 | 456,098 | 339,391 | ||||||||||||
| Interest and fees on revolving line of credit (note 15) | - | 71,867 | - | 482,349 | ||||||||||||
| Interest and fees on term loans (note 16) | 101,985 | 136,624 | 340,976 | 482,455 | ||||||||||||
| 263,220 | 251,159 | 797,074 | 1,304,195 | |||||||||||||
7
AcuityAds Holdings Inc.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
September 30, 2021 and 2020
(expressed in Canadian dollars)
| 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, 2021 and 2020 are as follows:
| Three months ended September 30, 2021 $ | Three months ended September 30, 2020 $ | Nine months ended September 30, 2021 $ | Nine months ended September 30, 2020 $ | |||||||||||||
| Net income (loss) for the period | 3,362,127 | 921,221 | 8,087,580 | (474,409 | ) | |||||||||||
| Weighted average number of shares outstanding – basic and diluted | 60,609,370 | 50,312,701 | 57,614,037 | 49,546,125 | ||||||||||||
| Net income (loss) per share – basic and diluted | 0.06 | 0.02 | 0.14 | (0.01 | ) | |||||||||||
Exercisable options to purchase 883,669 common shares (2020 – 1,408,834) and nil warrants (2020 – 318,226) were outstanding as at September 30, 2021. The weighted average numbers of options and warrants were excluded from the calculation of diluted income (loss) per share for the three and nine months ended September 30, 2021 and 2020 because their inclusion would have been 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, 2021 and 2020 is as follows:
| Three months ended September 30, 2021 $ | Three months ended September 30, 2020 $ | Nine months ended September 30, 2021 $ | Nine months ended September 30, 2020 $ | |||||||||||||
| United States | 18,508,561 | 19,174,998 | 62,569,389 | 52,435,005 | ||||||||||||
| Canada | 4,453,527 | 2,952,045 | 11,338,764 | 7,724,798 | ||||||||||||
| Europe and other | 4,522,732 | 3,937,279 | 11,316,481 | 9,676,929 | ||||||||||||
| 27,484,820 | 26,064,322 | 85,224,634 | 69,836,732 | |||||||||||||
During the three and nine months ended September 30, 2021, the Company had one and two customer(s) that represented 6% and 7% (2020 - 10% and 11%) of total revenue.
| 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”) that was paid in full between May 2020 and September 2021. In January 2021, the Company secured an additional $500,000 commitment to bring the total commitment to $3,500,000. During the three and nine months ended September 30, 2021, the Company has received $nil and $1,613,892 of this commitment from IRAP, respectively, and these amounts were used to reduce capitalized intangible technology costs on the statement of financial position and technology costs on the condensed interim consolidated statement of income (loss).
8
AcuityAds Holdings Inc.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
September 30, 2021 and 2020
(expressed in Canadian dollars)
| 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, 2021 $ | December 31, 2020 $ | ||||||
| Financial assets | ||||||||
| Cash and cash equivalents | 100,297,463 | 22,638,300 | ||||||
| Accounts receivable | 24,525,463 | 31,859,306 | ||||||
| Investment tax credit receivable | - | 21,922 | ||||||
| 124,822,926 | 54,519,528 | |||||||
| Loans
and receivables/ financial liabilities (amortized cost) | ||||||||
| Measurement basis | September 30, 2021 $ | December 31, 2020 $ | ||||||
| Financial liabilities | ||||||||
| Accounts payable and accrued liabilities | 19,816,614 | 23,232,661 | ||||||
| Term loans | 6,408,729 | 8,278,004 | ||||||
| International loans | 1,421,754 | 1,980,229 | ||||||
| Lease obligations | 4,826,338 | 6,892,017 | ||||||
| 32,473,435 | 40,382,911 | |||||||
9
AcuityAds Holdings Inc.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
September 30, 2021 and 2020
(expressed in Canadian dollars)
Fair value measurements
The Company provides disclosure of the three-level hierarchy that reflects the significance of the inputs used in making the fair value measurement. The carrying values of cash and cash equivalents, restricted cash, accounts receivable, input tax credit (“ITC”) receivable, revolving line of credit, repayable government grant, accounts payable and accrued liabilities, current portion of finance lease obligations, current portion of contingent consideration and current portion of term loans approximate their fair values given their short-term nature. The carrying value of the non-current liabilities approximates their fair value, given that the difference between the discount rates used to recognize the liabilities in the consolidated statements of financial position and the market rates of interest is not considered significant. The three levels of fair value hierarchy based on the reliability of inputs are as follows:
| • | Level 1 – inputs are quoted prices in active markets for identical assets and liabilities; |
| • | Level 2 – inputs are based on observable market data, either directly or indirectly other than quoted prices; and |
| • | Level 3 – inputs are not based on observable market data. |
There were no transfers of financial assets during the nine months ended September 30, 2021 and 2020 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 at September 30, 2021, 3 customers each represented 5% of the gross accounts receivable balance of $24,813,425. As at September 30, 2020, one customer represented more than 5% of the gross accounts receivable balance of $24,201,571.
10
AcuityAds Holdings Inc.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
September 30, 2021 and 2020
(expressed in Canadian dollars)
The Company reviews the components of these accounts on a regular basis to evaluate and monitor this risk. The Company’s customers are generally financially established organizations, which limits the credit risk relating to the customers. In addition, credit reviews by the Company take into account the counterparty’s financial position, past experience and other factors.
As at September 30, 2021, the allowance for doubtful accounts was $287,962 (2020 – $500,000). In establishing the appropriate allowance for doubtful accounts, management makes assumptions with respect to the future collectability of the receivables. Assumptions are based on an individual assessment of a customer’s credit quality as well as subjective factors and trends. Overdue accounts as at September 30, 2021 were $3,610,575 (2020 – $3,491,029), 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, with the objective of maintaining the safety of the principal and providing adequate liquidity to meet current payment obligations and future planned capital expenditures and with the secondary objective of maximizing the overall yield of the portfolio. The Company’s cash as at September 30, 2021 is not subject to external restrictions. Investments must be rated at least investment grade by recognized rating agencies. Given these high credit ratings, the Company does not expect any counterparties to these investments to fail to meet their obligations.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. The Company’s approach to managing liquidity is to ensure, to the extent possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. The Company manages its liquidity risk by continually monitoring forecasted and actual revenue and expenditures and cash flows from operations. Management is also actively involved in the review and approval of planned expenditures. The Company’s principal cash requirements are for principal and interest payments on its debt, capital expenditures and working capital needs. The Company uses its operating cash flows, loans and borrowings and cash balances to maintain liquidity. In the event that future cash flows from operations are lower than expected, the Company may need to seek additional financing, either by issuing additional equity or by undertaking additional borrowings. There is no certainty that additional financing will be available or that it will be available on attractive terms.
The following are the contractual maturities for the financial liabilities:
September 30, 2021 | ||||||||||||||||||||
Carrying amount $ | Total contractual cash flows $ | Less than 1 year $ | 1 to 3 Years $ | >3 years $ | ||||||||||||||||
| Accounts payable and accrued liabilities | 19,816,614 | 19,816,614 | 19,816,614 | - | - | |||||||||||||||
| Revolving line of credit | - | - | - | - | - | |||||||||||||||
| International Loans | 1,421,754 | 1,421,754 | 852,232 | 569,522 | - | |||||||||||||||
| Term Loans | 6,408,729 | 6,747,467 | 2,444,544 | 4,302,923 | - | |||||||||||||||
| Lease Obligation | 4,826,338 | 5,374,960 | 2,248,982 | 3,125,978 | - | |||||||||||||||
| 32,473,435 | 33,360,795 | 25,362,372 | 7,998,423 | - | ||||||||||||||||
11
AcuityAds Holdings Inc.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
September 30, 2021 and 2020
(expressed in Canadian dollars)
December 31, 2020 | ||||||||||||||||||||
Carrying amount $ | Total contractual cash flows $ | Less than 1 year $ | 1 to 3 Years $ | >3 years $ | ||||||||||||||||
| Accounts payable and accrued liabilities | 23,232,661 | 23,232,661 | 23,232,661 | - | - | |||||||||||||||
| Revolving line of credit | - | - | - | - | - | |||||||||||||||
| International Loans | 1,980,229 | 1,980,229 | 1,092,297 | 887,932 | - | |||||||||||||||
| Term loans | 8,278,004 | 8,710,774 | 2,481,550 | 6,229,224 | - | |||||||||||||||
| Lease Obligation | 6,892017 | 7,315,497 | 3,366,199 | 3,949,298 | ||||||||||||||||
| 40,382,911 | 41,239,161 | 30,172,707 | 11,066,454 | |||||||||||||||||
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 3.85%, 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 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 $10,166,120 due to the fluctuation and this would be recorded in the consolidated statements of comprehensive loss.
Balances held in U.S. dollars are as follows in CAD:
September 30, 2021 $ | December 31, 2020 $ | |||||||
| Cash | 94,725,017 | 9,255,266 | ||||||
| Accounts receivable | 18,116,700 | 24,011,673 | ||||||
| Accounts payable | 11,180,521 | 14,547,342 | ||||||
12
AcuityAds Holdings Inc.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
September 30, 2021 and 2020
(expressed in Canadian dollars)
| 15 | Revolving line of credit |
The Company currently has a revolving line of credit with Silicon Valley Bank (“SVB”). The line of credit has been amended several times in 2016, 2018, and 2019. Currently the line of credit has a maximum borrowing availability of US$18 million ($22 million). Actual availability from time to time depends on the Company’s borrowing base at such time.
Most recently on December 24, 2020, the Company and SVB agreed to amend the applicable interest rate on the line of credit to the greater of prime plus 1.35% and 4.60%. At September 30, 2021, the prime rate was 3.25%. The line of credit is secured by a general security agreement, an assignment of ITCs and a pledge of all shares of any direct or indirect subsidiary of the Company.
The following table outlines the activity of the line of credit during the nine months ended September 30, 2021 and 2020:
| $ | ||||
| Amortized cost – January 1, 2021 | - | |||
| Amount drawn from revolving line of credit | - | |||
| Principal amount repaid | - | |||
| Accrued interest on revolving line of credit | - | |||
| Payment of interest on revolving line of credit | - | |||
| Foreign exchange differences | - | |||
| Amortized cost – September 30, 2021 | - |
| $ | ||||
| Amortized cost – January 1, 2020 | 15,384,498 | |||
| Amount drawn from revolving line of credit | 60,154,399 | |||
| Principal amount repaid | (74,138,115 | ) | ||
| Accrued interest on revolving line of credit | 482,349 | |||
| Payment of interest on revolving line of credit | (393,599 | ) | ||
| Foreign exchange differences | 792,616 | |||
| Amortized cost – September 30, 2020 | 2,282,148 | |||
During the nine months ended September 30, 2021, transaction costs incurred relating to the line of credit were $nil (2020 – $nil). All transaction costs have been capitalized and deferred. These deferred transaction costs are being amortized over the term of the agreement under the effective interest method and are included in finance costs.
| 16 | Term loans |
On June 15, 2018, all outstanding principal balances related to previous term loans were repaid and the Company obtained a new $7,263,000 term loan (the “2018 Loan”) from a group of private lenders (the “Lenders”). The 2018 Loan was made pursuant to a credit agreement dated June 15, 2018, between the Company and various Lenders, including several individuals who are non-arms length to the Company (the “NAL Lenders”). The NAL Lenders included several officers and directors of the Company who funded an aggregate of $2,263,000 of the 2018 Loan.
13
AcuityAds Holdings Inc.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
September 30, 2021 and 2020
(expressed in Canadian dollars)
The 2018 Loan was subordinate to the Company’s existing line of credit with SVB and had a term of two years. The 2018 Loan accrued interest at the rate of 12.0% per annum and the Lenders were issued an aggregate of 2,420,990 warrants (the “Warrants”) as bonus warrants in connection with the 2018 Loan. Each Warrant entitled the Lender to acquire one common share for a period of two years at an exercise price of $1.01 per common share, which represented the closing price of the common shares on June 14, 2018. At the time of issuance, the 2,420,990 Warrants had a fair value of $0.46 per Warrant. The fair value of the Warrants was determined using the Black-Scholes option pricing model using the following assumptions: risk-free interest rate of 2.18%, expected volatility of 98%, expected life of 1.75 years and expected dividends of $nil.
Transaction costs incurred in securing the 2018 Loan were $256,403. Included in that amount are nominal fees that the Company agreed to pay to two eligible parties assisting in the 2018 Loan. All transaction costs were capitalized and deferred. These deferred transaction costs are being amortized over the term of the agreement under the effective interest rate method and included in the finance costs.
Fifty percent of the principal portion of the 2018 Loan was to be repaid in ten equal quarterly installments beginning January 1, 2019. The remaining 50% of the 2018 Loan was to be paid at maturity.
On March 31, 2019, the Company entered into an amending agreement to its credit agreement dated June 15, 2018, whereby the maturity date of the 2018 Loan was extended from June 15, 2020 to June 15, 2021.
On April 12, 2020, the Company borrowed US$5,400,000 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 April 17, 2020, all outstanding principal balances related to the 2018 Loan were repaid in the amount of $5,144,625 and the Company incurred an early repayment penalty of 2.5% totalling $128,616. During the year ended December 31, 2020, $372,188 of transaction costs were incurred securing the Secured Term Loan. All transaction costs have been capitalized and deferred. These deferred transaction costs are being amortized over the term of the agreement under the effective interest method and included in finance costs.
On November 9, 2020, the Company and SVB agreed to increase the availability under the Secured Term Loan by additional US$2,350,000 to a total of US$7,750,000.
On December 24, 2020, the Company and SVB agreed to amend the applicable interest rate of the Secured Term Loan to the greater of prime plus 1.50% and 4.75%. At December 31, 2020, the prime rate was 3.25%.
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%. At September 30, 2021, the prime rate was 3.25%.
On May 5, 2020, the Company secured a loan of US$1,390,294 ($1,816,836) pursuant to the Paycheck Protection Program as part of the United States’ Coronavirus Aid, Relief and Economic Security Act. On October 12, 2020, the Company applied for the loan forgiveness in accordance with the terms of that program, and the loan was fully forgiven on November 25, 2020. The total loan of US$1,390,294 ($1,816,836) was used to reduce salary costs on the statement of income (loss), $1,282,208 for sales and marketing costs, $465,481 for technology costs, and $69,147 for general and administrative costs.
14
AcuityAds Holdings Inc.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
September 30, 2021 and 2020
(expressed in Canadian dollars)
The following table outlines the activity of the term loans during the nine months ended September 30, 2021 and 2020:
| $ | ||||
| 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 | |||
| $ | ||||
| Amortized cost – January 1, 2020 | 3,452,331 | |||
| Accrued interest | 482,455 | |||
| Payment of interest | (369,259 | ) | ||
| Principal amount repaid | (6,613,249 | ) | ||
| Exchange | (193,781 | ) | ||
| Adjustment for warrants granted for repaid term loan | 1,922,271 | |||
| Amounts borrowed – net of costs and warrants issued | 9,135,921 | |||
| Balance – September 30, 2020 | 7,816,689 | |||
| 17 | International loans |
On June 15, 2018, as a part of the acquisition of ADman, the Company assumed various government and bank loans and lines of credits.
Term loans
The interest rate and maturity date of each of the unsecured term loans held and the activity during the nine months ended September 30, 2021 and 2020 are set out in the table below.
15
AcuityAds Holdings Inc.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
September 30, 2021 and 2020
(expressed in Canadian dollars)
Line of credit
The line of credit is secured against the Company’s accounts receivable. The interest rate and term date of line of credit held and the activity during the nine months ended September 30, 2021 and 2020 are set out in the table below:
Balance – January 1, 2021 $ | Amount drawn $ | Principal amount repaid $ | Balance – September 30 2021 $ | Interest rate % | Maturity date | |||||||||||||||||
| Term Loans | ||||||||||||||||||||||
| Bankinter | 20,054 | - | 20,054 | - | 2.75 | % | May 20, 2021 | |||||||||||||||
| Banco Sabadell | 29,346 | - | 29,346 | - | 3.25 | % | October 15, 2021 | |||||||||||||||
| Bankinter | 119,770 | - | 57,074 | 62,696 | 2.35 | % | August 17, 2022 | |||||||||||||||
| Banco Sabadell | 67,648 | - | 28,744 | 38,904 | 4.60 | % | October 20, 2022 | |||||||||||||||
| Santander | 353,658 | - | 113,526 | 240,132 | 2.53 | % | May 18, 2023 | |||||||||||||||
| Bankinter_ICO 2020 | 53,580 | 71,096 | 28,368 | 96,308 | 2.25 | % | May 22, 2024 | |||||||||||||||
| Santander _ ICO | 390,200 | - | 37,607 | 352,593 | 2.03 | % | April 8, 2025 | |||||||||||||||
| Sabadell_ICO 2020 | 156,082 | - | 12,082 | 144,000 | 1.75 | % | May 21, 2025 | |||||||||||||||
| Santander | - | 1,623 | 1,623 | - | 1.45 | % | July 31, 2021 | |||||||||||||||
| CDTI | 125,167 | - | 33,215 | 91,952 | 3.00 | % | December 31, 2022 | |||||||||||||||
| 1,315,505 | 72,719 | 361,639 | 1,026,585 | |||||||||||||||||||
| Line of credit | ||||||||||||||||||||||
| Bankinter | 7,554 | 23,763 | 31,317 | - | 2.65 | % | July 17, 2021 | |||||||||||||||
| Bankinter | 120,141 | 28,916 | 120,141 | 28,916 | Euribor + 2,25 | May 19, 2022 | ||||||||||||||||
| Santander | 525,890 | 664,402 | 824,038 | 366,254 | Euribor + 1,95 | April 16, 2023 | ||||||||||||||||
| Banco Sabadell | - | 62,686 | 62,686 | - | 1.75 | % | May 21, 2023 | |||||||||||||||
| Bankia | 11,139 | - | 11,139 | - | 2.90 | % | August 6, 2023 | |||||||||||||||
| 664,724 | 779,767 | 1,049,321 | 395,170 | |||||||||||||||||||
| Total | 1,980,229 | 852,486 | 1,410,960 | 1,421,755 | ||||||||||||||||||
Balance – January 1, 2020 $ | Amount drawn $ | Principal amount repaid $ | Balance – September 30, 2020 $ | Interest rate % | Maturity date | |||||||||||||||||
| Term Loans | ||||||||||||||||||||||
| Bankinter | 80,322 | - | 39,436 | 40,886 | 2.75 | May 20, 2021 | ||||||||||||||||
| La Caixa | 24,305 | - | 24,305 | - | 1.96 | June 1, 2020 | ||||||||||||||||
| Santander | 508,026 | - | 79,075 | 428,951 | 2.53 | May 18, 2023 | ||||||||||||||||
| Banco Sabadell | 106,025 | - | 21,039 | 84,986 | 4.60 | October 20, 2021 | ||||||||||||||||
| Bankinter | 197,310 | - | 44,016 | 153,294 | 2.35 | August 17, 2022 | ||||||||||||||||
| Banco Sabadell | 21,918 | 70,340 | 92,258 | - | 3.25 | October 15, 2022 | ||||||||||||||||
| Santander | - | 390,775 | - | 390,775 | 2.03 | April 8, 2025 | ||||||||||||||||
| Bankinter | - | 58,114 | 992 | 57,122 | 2.35 | May 22, 2024 | ||||||||||||||||
| Banco Sabadell | - | 156,310 | - | 156,310 | 1.75 | May 21, 2025 | ||||||||||||||||
| Banco Sabadell | 69,193 | - | 24,836 | 44,357 | 3.25 | October 15, 2022 | ||||||||||||||||
| CDTI | 159,258 | 11,445 | - | 170,703 | 3.00 | December 31, 2020 | ||||||||||||||||
| Avanza 2014 | 270,409 | - | 270,409 | - | 3.00 | December 20, 2020 | ||||||||||||||||
| 1,436,766 | 686,984 | 596,366 | 1,527,384 | |||||||||||||||||||
| Line of credit | ||||||||||||||||||||||
| Banco Sabadell | 85,045 | 143,517 | 134,267 | 94,295 | 1.75 | May 21, 2023 | ||||||||||||||||
| Bankinter | 92,177 | 13,578 | 42,808 | 62,947 | Euribor + 2.25 | May 19, 2022 | ||||||||||||||||
| Santander | - | 21,319 | 21,319 | - | 2.12 | May 31, 2021 | ||||||||||||||||
| Santander | 524,066 | 530,318 | 532,372 | 522,012 | Euribor + 1,95 | April 16, 2023 | ||||||||||||||||
| Bankinter | 129,794 | 44,149 | 173,943 | - | 1.75 | July 23, 2020 | ||||||||||||||||
| Santander | 175,571 | - | 175,571 | - | Euribor + 1,75 | April 25, 2021 | ||||||||||||||||
| 1,006,653 | 752,881 | 1,080,280 | 679,254 | |||||||||||||||||||
| Total | 2,443,419 | 1,439,865 | 1,676,646 | 2,206,638 | ||||||||||||||||||
16
AcuityAds Holdings Inc.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
September 30, 2021 and 2020
(expressed in Canadian dollars)
| 18 | 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.
17
Exhibit 99.2
AcuityAds Holdings Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021
Dated November 3, 2021
70 University Ave
Suite 1200
Toronto, ON M5J 2M4
www.acuityads.com
AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and nine months ended September 30, 2021
Management’s discussion & analysis
This Management’s Discussion and Analysis (“MD&A”) explains the variations in the consolidated operating results and financial position and cash flows of AcuityAds Holdings Inc. (“AcuityAds” or the “Company”) as at and for the three and nine months ended September 30, 2021. This analysis should be read in conjunction with AcuityAds’ condensed interim consolidated financial statements for the three and nine months ended September 30, 2021 and related notes (the “Condensed Interim Consolidated Financial Statements”). The Condensed Interim Consolidated Financial Statements and extracts of those Condensed Interim Consolidated Financial Statements provided in this MD&A, were prepared in Canadian dollars and in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board, using the accounting policies described therein. As a result of the rounding of dollar differences, certain total dollar amounts in this MD&A may not add exactly to their constituent amounts. All amounts are presented in Canadian dollars unless otherwise indicated. Throughout this MD&A, percentage changes are calculated using numbers rounded as they appear. Readers are cautioned that this MD&A contains certain forward-looking information. (Please see the “Forward Looking Statements” section below for a discussion of the use of such information in this MD&A).
The Condensed Interim Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries AcuityAds Inc., AcuityAds US Inc., 140 Proof Inc., and ADman Interactive S.L.U. All intercompany balances and transactions have been eliminated on consolidation.
The information in this report is dated as of November 3, 2021.
Non-IFRS Financial Measures
This MD&A includes certain measures which are not defined terms in accordance with IFRS such as “Net Revenue”, “Net Revenue margin”, and “Adjusted EBITDA”.
The term “Net Revenue” refers to the net amount of revenue after deducting direct media costs. Net Revenue is used for internal management purposes as an indicator of the performance of the Company’s solution in balancing the goals of delivering excellent results to advertisers while meeting the Company’s margin objectives and, accordingly the Company believes it is useful supplemental information to include in this MD&A. The term “Net Revenue margin” refers to the amount that “Net Revenue” represents as a percentage of total revenue for a given period.
“Adjusted EBITDA” refers to net income after adjusting for finance costs, impairment loss, fair value gain, income taxes, foreign exchange (gain) loss, depreciation and amortization, share-based compensation, acquisition and related integration costs, severance expenses and adjustments to the carrying value of investment tax credits receivable. The Company believes that Adjusted EBITDA is useful supplemental information as it provides an indication of the results generated by the Company’s main business activities before taking into consideration how those activities are financed and taxed and also prior to taking into consideration depreciation of property and equipment and certain other items listed above. It is a key measure used by the Company’s management and board of directors to understand and evaluate the Company’s operating performance, to prepare annual budgets and to help develop operating plans.
“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.
1
AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and nine months ended September 30, 2021
FORWARD-LOOKING STATEMENTS
Certain statements in this MD&A that are not current or historical factual information may constitute “forward-looking” statements within the meaning of applicable securities laws, regarding, among other things, the beliefs, plans, objectives, strategies, estimates, intentions or expectations of the Company, including as they relate to its financial results and its projected total revenue growth, its ability to execute on its investing and business strategies, the benefits of the illumin platform, and the effect of the COVID-19 pandemic on the Company’s business and operations. When used in this MD&A, forward looking statements can be identified by the use of words such as “may”, or by such words as “will”, “intend”, “believe”, “estimate”, “consider”, “expect”, “anticipate”, and “objective” and similar expressions or variations of such words. Forward-looking statements are, by their nature, not guarantees of the Company’s future operational or financial performance, and are subject to risks and uncertainties and other factors that could cause the Company’s actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. No representation or warranty is intended with respect to anticipated future results, or that estimates or projections will be sustained. Forward-looking information is provided for the purpose of providing information about management’s current expectations and plans and allowing investors and others to get a better understanding of the Company’s operations. Forward-looking information may not be appropriate for other purposes.
In developing the forward-looking statements in this MD&A, the Company has applied several material assumptions, including the availability of financing on reasonable terms, and general business and economic conditions. The existence of the COVID-19 pandemic creates a unique environment in which to consider the likelihood of forward-looking statements being accurate, and given the evolving circumstances surrounding the COVID-19 pandemic, it is difficult to predict how significant the adverse impact of the pandemic will be on the global and domestic economy, the business, operations and financial position of the Company’s clients and the business, operations and financial position of the Company. Many risks, uncertainties and other factors could cause the actual results of AcuityAds to differ materially from the results, performance, achievements or developments expressed or implied by forward-looking statements that are contained in this MD&A. These risks, uncertainties and other factors include, but are not limited to the following: overall economic conditions, rapid technological changes, use of cookies, demand for the Company’s products and services, the 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 favourable terms, or at all; and the health and safety of the Company’s employees.
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.
2
AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and nine months ended September 30, 2021
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, 2020 available on SEDAR at www.sedar.com. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. All forward-looking statements contained in the MD&A are expressly qualified in their entirety by this cautionary statement.
OVERVIEW
AcuityAds is a technology company that enables marketers to connect intelligently with audiences across video, mobile, social and online display advertising campaigns. AcuityAds’ programmatic marketing platform (the “Programmatic Marketing Platform”), powered by proprietary machine learning technology, is at the core of its business, accompanied by proprietary solutions for analytics-led video and mobile targeting that leverages data. AcuityAds empowers marketers by offering near real-time reporting and analytics, bringing accountability to programmatic advertising to deliver business results and help solve some of the key challenges that digital advertisers face. AcuityAds is headquartered in Toronto and has offices in the U.S., Canada, Spain and throughout Latin America. Its key customers include both advertising agencies and brands, including large Fortune 500 enterprises and small- to mid-sized businesses.
AcuityAds’ technology enables programmatic advertising, which is the automated buying and selling of advertising inventory electronically. The Programmatic Marketing Platform is based on proprietary machine learning technology, the branch of artificial intelligence involving systems that learn from data inputs and outputs and can perform actions without the need for explicit programming. The Programmatic Marketing Platform has the capability to process billions of bid requests on a daily basis.
The Programmatic Marketing Platform allows advertisers to purchase online advertisements in real-time using an ad-buying method whereby open online ad spots (called impressions) are traded via auctions on digital exchanges at market clearing prices in milliseconds. AcuityAds purchases impressions on behalf of advertisers through agreements with publishers directly and through agreements with supply side platforms and exchanges. Its technology platform benefits advertisers by enabling them to target audience segments based on a variety of first, second, and third-party data as well as manage their real-time bids for the advertising inventory most relevant for their campaigns. Real-time reporting enables advertisers to monitor relevant performance metrics and adjust budget allocations to optimize for audience reach and ad frequency and business outcomes (key performance indicators).
In October 2020, AcuityAds officially launched illumin™, the next generation advertising automation technology, that offers advertisers the ability to plan, buy, optimize and report on omnichannel advertising programs from a single, intuitive user-interface. Advertisers can now map consumer journey playbooks across devices and communication channels, and execute in real-time using programmatic technology. illumin enables delivery of custom creative advertising based on audience receptivity (time, place and context), which has proven to increase both efficiency and overall return on advertising investments. For the three and nine months ended September 30, 2021, revenue derived from illumin was $7,418,596 and $15,848,151 compared to no revenue in the comparable 2020 periods.
3
AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and nine months ended September 30, 2021
RESULTS OF OPERATIONS
Significant developments during the three and nine months ended September 30, 2021 and to the date of this report include the following:
On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic, which continues to spread throughout Canada and economies around the world. To date, the Canadian and U.S. governments as well as businesses have mandated various measures, including: travel restrictions, restrictions on public gatherings and the quarantine of people who may have been exposed to the virus. In response, AcuityAds has changed its work environment and made arrangements to ensure compliance with all applicable health authority regulations.
Despite the ongoing COVID-19 pandemic and the Company’s changes to its work environment, AcuityAds continued to operate its business in the normal course. To date, none of the Company’s operations have closed down or have otherwise been materially affected by the ongoing COVID-19 pandemic. Certain of the Company’s offices have been subject to government-mandated lockdowns for some periods of time. However, the Company’s staff has been able to perform their functions remotely without meaningful reductions in the Company’s ability to service its customers.
Based on the most recent trends, the Company currently does not expect the COVID-19 pandemic will have a material impact on its future revenues, as more consumers are consuming media digitally as they work from home resulting in higher demand for digital advertising. The COVID-19 pandemic has not directly restricted the Company’s growth plans as the Company’s business is all online, the Company’s staff are generally able to work from home and demand for the Company’s products and services is growing as the Company’s customers increase their digital advertising budgets. However, there is a measure of uncertainty surrounding the COVID-19 pandemic, including the resurgence of COVID-19 infection rates and governmental and other reactions thereto. Accordingly, because the COVID-19 pandemic continues to evolve, it is possible that it could have a material impact on our revenues.
However, there are certain specific client segments, most notably the travel and entertainment industries, that have been more affected by the COVID-19 pandemic than other businesses. COVID-19 has affected the amount of revenues that we earn from our clients in these industries, and the continuation of the pandemic does have an impact on our growth from these clients. See “Risk Factors”.
During the twelve months ended December 31, 2020, the Company secured a $3,000,000 commitment from the National Research Council’s Industrial Research Assistance Program (“IRAP”) that was paid in full between May 2020 and September 2021. The Company received $1,386,108 of this commitment during the twelve months ended December 31, 2020. In January 2021, the Company secured an additional $500,000 commitment to bring the total commitment to $3,500,000. During the three and nine months ended September 30, 2021, the Company received $797,962 and $1,613,892, respectively, of this commitment, and those amounts were used to reduce technology costs on the Consolidated Statement of Income (loss) for the same period.
On June 10, 2021, the Company’s common shares were added to and began trading on the Nasdaq Capital Market.
4
AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and nine months ended September 30, 2021
On June 14, 2021, the Company closed a public offering of common shares in the United States and Canada. A total of 5,665,025 common shares of AcuityAds were sold, including the exercise in full by the underwriters of their over-allotment option, at a price of US$10.15 ($12.25) per share, for gross proceeds to the 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.
On September 21, 2021, the Company appointed Tatiana Kresling as Interim Chief Financial Officer, succeeding Jonathan Pollack who retired from the Company in accordance with his previously announced plans.
Results for the three and nine months ended September 30, 2021 and 2020
The following table provides selected financial information from the consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2021 and 2020:
| Three months ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Revenue | $ | 27,484,820 | $ | 26,064,322 | $ | 85,224,634 | $ | 69,836,732 | ||||||||
| By line of service: | ||||||||||||||||
| Managed services | 19,320,662 | 18,766,560 | 65,197,665 | 52,724,493 | ||||||||||||
| Self-service | 8,164,158 | 7,297,762 | 20,026,969 | 17,112,239 | ||||||||||||
| By geography: | ||||||||||||||||
| US | 18,508,561 | 19,174,998 | 62,569,389 | 52,435,005 | ||||||||||||
| Canada | 4,453,527 | 2,952,045 | 11,338,764 | 7,724,798 | ||||||||||||
| Other | 4,522,732 | 3,937,279 | 11,316,481 | 9,676,929 | ||||||||||||
| Gross Profit (Net Revenue) | 14,252,751 | 13,528,154 | 44,425,873 | 35,825,169 | ||||||||||||
| Adjusted EBITDA1 | 4,419,336 | 4,034,402 | 14,399,611 | 7,978,149 | ||||||||||||
| Income (loss) from operations | 1,760,421 | 1,493,798 | 6,516,767 | 412,110 | ||||||||||||
| Net income | 3,362,127 | 921,220 | 8,087,580 | (474,410 | ) | |||||||||||
| Net income per share (basic and diluted) 2 | 0.06 | 0.02 | 0.14 | (0.01 | ) | |||||||||||
| (1) | As defined in “Non-IFRS Financial Measures”. |
| (2) | Exercisable options to purchase 883,669 (2020 – 1,408,834) common shares and nil (2020 – 318,226) warrants were outstanding as at September 30, 2021. The weighted average number of options and warrants were excluded from the calculation of diluted loss per share for the period ended September 30, 2021 and 2020 because their inclusion would have been anti-dilutive. |
Three months ended September 30, 2021 and 2020
Revenue for the three months ended September 30, 2021 was $27,484,820, an increase of $1,420,498 from $26,064,322 for the three months ended September 30, 2020. Sales of the Company’s managed services platform for the three months ended September 30, 2021 were $19,320,662, an increase of $554,102 from $18,766,560 for the three months ended September 30, 2020. Sales of the Company’s self-service platform for the three months ended September 30, 2021 were $8,164,158, an increase of $866,396 from $7,297,762 for the three months ended September 30, 2020. The increase in total revenue for the three months ended September 30, 2021 was primarily a result of the new illumin revenue.
5
AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and nine months ended September 30, 2021
Revenue generated in the United States for the three months ended September 30, 2021 was $18,508,561, a decrease of $666,437 from $19,174,998 for the three months ended September 30, 2020. Revenue generated in Canada for the three months ended September 30, 2021 was $4,453,527, an increase of $1,501,482 from $2,952,045 for the three months ended September 30, 2020. Other revenue increased from $3,937,279 to $4,522,732 during the three months ended September 30, 2021.
Adjusted EBITDA for the three months ended September 30, 2021 was $4,419,336, an increase of $384,934 from $4,034,402 for the three months ended September 30, 2020. The year-over-year increase in Adjusted EBITDA was primarily attributable to higher net revenues. Net income for the three months ended September 30, 2021 was $3,362,127, an increase of $2,440,907 from $921,220 for the three months ended September 30, 2020. The increase in net income was a result of a reduction in depreciation expense and a positive impact on the foreign exchange fluctuation.
Nine months ended September 30, 2021 and 2020
Revenue for the nine months ended September 30, 2021 was $85,224,634, an increase of $15,387,902 from $69,836,732 for the nine months ended September 30, 2020. Sales of the Company’s managed services platform for the nine months ended September 30, 2021 were $65,197,665, an increase of $12,473,172 from $52,724,493 for the nine months ended September 30, 2020. Sales of the Company’s self-service platform for the nine months ended September 30, 2021 were $20,026,969, an increase of $2,914,730 from $17,112,239 for the nine months ended September 30, 2020. The increase in total revenue for the nine months ended September 30, 2021 was a result of the new illumin revenue and the revenue reduction for the same period of 2020 due to the COVID-19 pandemic.
Revenue generated in the United States for the nine months ended September 30, 2021 was $62,569,389, an increase of $10,134,384 from $52,435,005 for the nine months ended September 30, 2020. Revenue generated in Canada for the nine months ended September 30, 2021 was $11,338,764, an increase of $3,613,966 from $7,724,798 for the nine months ended September 30, 2020. Other revenue increased from $9,676,929 to $11,316,481 during the nine months ended September 30, 2021.
Adjusted EBITDA for the nine months ended September 30, 2021 was $14,399,611, an increase of $6,421,462 from $7,978,149 for the nine months ended September 30, 2020. The year-over-year increase in Adjusted EBITDA was primarily attributable to higher net revenues. Net income for the nine months ended September 30, 2021 was $8,087,580, an increase of $8,561,990 from a net loss of $474,410 for the nine months ended September 30, 2020. The increase in net income was primarily due to higher net revenues.
The Company’s revenues and operating results may vary from quarter to quarter as a result of a variety of factors, some of which are outside of the Company’s control, including seasonality and cyclicality, and, in fiscal 2021, the implications of the current COVID-19 pandemic.
Seasonality may be affected by customer mix, such that retail advertisers may concentrate their advertising spending with AcuityAds in the fourth quarter while entertainment advertisers may concentrate their spending to coincide with the launch and display of content, such as television shows or movies. The Company’s rapid growth has led to fluctuating overall operating results due to investments in AcuityAds’ sales and marketing and research and development from quarter to quarter and increases in employee headcount. As a result of these factors, one quarter’s operating results are not necessarily indicative of a future quarter’s operating results.
6
AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and nine months ended September 30, 2021
Net Revenue
The following table sets out a reconciliation of Net Revenue to Revenue for each of the periods indicated:
| Three months ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Revenue | $ | 27,484,820 | $ | 26,064,322 | $ | 85,224,634 | $ | 69,836,732 | ||||||||
| Media costs | 13,232,069 | 12,536,168 | 40,798,761 | 34,011,563 | ||||||||||||
| Net Revenue | 14,252,751 | 13,528,154 | 44,425,873 | 35,825,169 | ||||||||||||
| Net Revenue margin | 51.9 | % | 51.9 | % | 52.1 | % | 51.3 | % | ||||||||
Three months ended September 30, 2021 and 2020
Media costs comprise advertising impressions that the Company purchased from real-time advertising exchanges or through other third parties. For the three months ended September 30, 2021 media costs were $13,232,069 compared to $12,536,168 for the three months ended September 30, 2020. The increase of $695,901 in media costs was attributable to the increased revenue during the period. Net revenue margin was 51.9% for the three months ended September 30, 2021 compared to 51.9% for the three months ended September 30, 2020.
Nine months ended September 30, 2021 and 2020
Media costs comprise advertising impressions that the Company purchased from real-time advertising exchanges or through other third parties. For the nine months ended September 30, 2021, media costs were $40,798,761 compared to $34,011,563 for the nine months ended September 30, 2020. The increase of $6,787,198 in media costs was attributable to the increased revenue during the period. Net revenue margin was 52.1% for the nine months ended September 30, 2021 compared to 51.3% for the nine months ended September 30, 2020.
Reconciliation of net income to Adjusted EBITDA for the three and nine months ended September 30, 2021 and 2020
The following table presents a reconciliation of Net Income to Adjusted EBITDA for the periods indicated:
| Three months ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Net income for the period | $ | 3,362,127 | $ | 921,220 | $ | 8,087,580 | $ | (474,410 | ) | |||||||
| Adjustments: | ||||||||||||||||
| Finance costs | 263,220 | 251,159 | 797,074 | 1,304,195 | ||||||||||||
| Foreign exchange (gain) loss | (1,864,926 | ) | 350,743 | (2,599,487 | ) | (530,959 | ) | |||||||||
| Depreciation and amortization | 1,172,334 | 2,217,626 | 3,816,994 | 6,640,617 | ||||||||||||
| Income taxes (refunds) | - | (29,324 | ) | 231,600 | 113,284 | |||||||||||
| Share-based compensation | 1,465,706 | 252,335 | 3,954,217 | 485,151 | ||||||||||||
| Severance expenses | 20,875 | 70,643 | 111,633 | 241,134 | ||||||||||||
| Non recurring expenses | - | - | - | 199,137 | ||||||||||||
| Total adjustments | 1,057,209 | 3,113,182 | 6,312,031 | 8,452,559 | ||||||||||||
| Adjusted EBITDA | $ | 4,419,336 | $ | 4,034,402 | $ | 14,399,611 | $ | 7,978,149 | ||||||||
7
AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and nine months ended September 30, 2021
Three months ended September 30, 2021 and 2020
Adjusted EBITDA for the three months ended September 30, 2021 was $4,419,336 compared to $4,034,402 for the three months ended September 30, 2020. The year-over-year increase of $384,934 in Adjusted EBITDA was primarily attributable to higher net revenues.
Nine months ended September 30, 2021 and 2020
Adjusted EBITDA for the nine months ended September 30, 2021 was $14,399,611 compared to $7,978,149 for the nine months ended September 30, 2020. The year-over-year increase of $6,421,462 in Adjusted EBITDA was primarily attributable to higher net revenues.
Operating Expenses, Finance Costs, and Foreign Exchange
The following table summarizes various expenses for the three and nine months ended September 30, 2021 and 2020:
| Three months ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Sales and marketing | $ | 5,260,944 | $ | 5,043,490 | $ | 14,982,171 | $ | 13,623,418 | ||||||||
| Technology | 2,581,090 | 2,943,386 | 9,716,514 | 9,819,590 | ||||||||||||
| General and administrative | 2,012,256 | 1,577,519 | 5,439,210 | 4,844,283 | ||||||||||||
| Share-based compensation | 1,465,706 | 252,335 | 3,954,217 | 485,151 | ||||||||||||
| Depreciation and amortization | 1,172,334 | 2,217,626 | 3,816,994 | 6,640,617 | ||||||||||||
| Finance costs | 263,220 | 251,159 | 797,074 | 1,304,195 | ||||||||||||
| Foreign exchange (gain) loss | (1,864,926 | ) | 350,743 | (2,599,487 | ) | (530,959 | ) | |||||||||
Sales and marketing expenses
Sales and marketing expenses consist of all costs associated with selling and marketing the Company’s services and products. The costs include all salary and benefit costs, personnel costs, commissions and variable compensation, travel, marketing, payroll taxes and employee health and related benefit expenses, for the sales, marketing, and account management teams. Sales and marketing expenses for the three months ended September 30, 2021 were $5,260,944, an increase of $217,454 compared to the same period of the prior year. The year-over-year increase was primarily related to an increase in total revenue. Sales and marketing expenses represented 19% of revenue for the three months ended September 30, 2021, consistent with 19% for the same period of the prior year.
Sales and marketing expenses for the nine months ended September 30, 2021 were $14,982,171, an increase of $1,358,753 compared to the same period of the prior year. The year-over-year increase was primarily related to an increase in total revenue. Sales and marketing expenses represented 18% of revenue for the nine months ended September 30, 2021, compared to 20% for the same period of the prior year.
Technology
Technology expenses consist of all costs associated with increasing the Programmatic Marketing Platform’s effectiveness and efficiency. The majority of such costs comprise of salary and benefit costs and costs associated with housing the required computer equipment. Technology expenses for the three months ended September 30, 2021 were $2,581,090, a decrease of $362,296 compared to the same period of the prior year. Excluding government grants and capitalized salaries, during the three months ended September 30, 2021, technology expenses decreased by $77,391 compared to the same period from the prior year. Excluding government grants and capitalized salaries, for the three months ended September 30, 2021, technology expenses represented 13% 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, 2021
During the three months ended September 30, 2021, the Company received $nil in government grants related to technology from IRAP compared to $588,598 during the three months ended September 30, 2020. During the three months ended September 30, 2021, the Company capitalized $964,636 salary costs that related to revenue generating technology compared to $nil for the three months ended September 30, 2020. During the three months ended September 30, 2021, the Company received nil from the Canadian Employment Wage Subsidy “CEWS” compared to $91,133 for the three months ended September 30, 2020.
Technology expenses for the nine months ended September 30, 2021 were $9,716,514, a decrease of $103,076 compared to the same period of the prior year. Excluding government grants and capitalized salaries, during the nine months ended September 30, 2021, technology expenses increased by $536,035 compared to the same period from the prior year. Excluding government grants and capitalized salaries, for the nine months ended September 30, 2021, technology expenses represented 14% of revenue compared to 17% for the same period of the prior year.
During the nine months ended September 30, 2021, the Company received $1,613,892 in government grants related to technology from IRAP compared to $818,700 for the nine months ended September 30, 2020. During the nine months ended September 30, 2021, the Company capitalized $964,636 in salaries related to revenue generating technology compared to $387,615 for the nine months ended September 30, 2020. During the nine months ended September 30, 2021, the Company received nil from the Canadian Employment Wage Subsidy “CWS” compared to $733,102 for the nine months ended September 30, 2020.
General and administrative
General and administrative expenses include salaries and benefits of the administrative staff, occupancy costs, public company fees, insurance, professional fees, and supplies. General and administrative expenses for the three months ended September 30, 2021 were $2,012,256, an increase of $434,737 compared to the same period of the prior year. For the three months ended September 30, 2021, general and administrative expenses represented 7% of revenue compared to 6% for the same period of the prior year.
General and administrative expenses for the nine months ended September 30, 2021 were $5,439,210, an increase of $594,927 compared to the same period of the prior year. For the nine months ended September 30, 2021, general and administrative expenses represented 6% of revenue compared to 7% for the same period of the prior year.
Share-based compensation
Share-based compensation expenses for the three months ended September 30, 2021 were $1,465,706, an increase of $1,213,371 compared to the same period of the prior year. Share-based compensation expenses for the nine months ended September 30, 2021 were $3,954,217, an increase of $3,469,066 compared to the same period of the prior year. The increase in share-based compensation expense was related to an increase in share compensation granted in the three and nine months ending September 30, 2021.
9
AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and nine months ended September 30, 2021
Depreciation and amortization
Depreciation and amortization for the three months ended September 30, 2021 were $1,172,334, a decrease of $1,045,292 compared to the same period of the prior year. Depreciation and amortization for the nine months ended September 30, 2021 were $3,816,994, a decrease of $2,823,623 compared to the same period of the prior year. The year-over-year decrease was attributable to the lower intangible asset balance as a result of fully amortizing the asset in December 2020.
Finance costs
Finance costs for the three months ended September 30, 2021 were $263,220, an increase of $12,061 compared to the same period of the prior year. Finance costs for the nine months ended September 30, 2021 were $797,074, a decrease of $507,121 compared to the same period of the prior year. The decrease in finance costs was primarily due to the debt repayment during the period, resulting in a lower outstanding debt balance as compared to the same period of the prior year as well as the term loan interest rate decreasing from 12% to 3.85% as a result of the April 2020 debt refinancing with Silicon Valley Bank.
Foreign exchange (gain) loss
Foreign exchange (gain) loss consists of the realized and unrealized exchange differences due to fluctuations between the Canadian dollar, the U.S. dollar and the Euro. The Company recorded a net foreign exchange gain of ($1,864,926) for the three months ended September 30, 2021 compared to a loss of $350,743 for the three months ended September 30, 2020.
The Company recorded a net foreign exchange gain of ($2,599,487) for the nine months ended September 30, 2021 compared to a gain of ($530,959) for the nine months ended September 30, 2020.
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.
OUTLOOK
While the impact of the COVID-19 pandemic has created short-term uncertainty with respect to the Company’s revenues, Adjusted EBITDA and net income, the Company expects continued revenue and Adjusted EBITDA growth in 2021 compared to 2020.
See “Forward-Looking Information”.
10
AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and nine months ended September 30, 2021
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, 2021 | Jun
30, 2021 | Mar
31, 2021 | Dec
31, 2020 | Sept
30, 2020 | Jun
30, 2020 | Mar
31, 2020 | Dec
31, 2019 | |||||||||||||||||
| Revenue | $ | 27 ,484,820 | $ | 30,285,222 | $ | 27,454,592 | $ | 35,057,316 | $ | 26,064,322 | $ | l9,556,810 | $ | 24,215,600 | $ | 38,536,725 | ||||||||
| Net income (loss) | $ | 3,362,127 | $ | 3,361,572 | $ | l,363,881 | $ | 4,165,399 | $ | 921,220 | $ | (l,600,405 | ) | $ | 204,774 | $ | l,995,245 | |||||||
| Net income (loss) per share: | $ | 0.06 | $ | 0.06 | $ | 0.03 | $ | 0.08 | $ | 0.02 | $ | (0.03 | ) | $ | 0.00 | $ | 0.04 | |||||||
| Weighted average number of shares outstanding (000'S) | 60,609,370 | 58,014,013 | 54,398,478 | 52,855,998 | 50,312,701 | 49,523,122 | 48,997,938 | 47,814,816 | ||||||||||||||||
LIQUIDITY AND CAPITAL RESOURCES
Selected financial information from the statements of financial position as at September 30, 2021 and December 31, 2020 are as follows:
| September 30,
2021 | December 31,
2020 | |||||||
| Cash and cash equivalents | $ | 100,297,463 | $ | 22,638,300 | ||||
| Working capital(1) | 102,592,791 | 26,763,590 | ||||||
| Total assets | 141,895,537 | 72,433,499 | ||||||
| Current liabilities | 25,362,372 | 29,657,005 | ||||||
| Other non-current liabilities | 7,111,063 | 10,725,906 | ||||||
| Shareholders’ equity | 109,422,102 | 32,050,588 | ||||||
(1) Working capital is defined as current assets less current liabilities.
As at September 30, 2021, the Company had cash and cash equivalents and restricted cash of $100,297,463 compared to $22,638,300 as at December 31, 2020.
Cash flows generated from operations were $18,693,617 during the nine months ended September 30, 2021 as compared to $15,991,564 during the nine months ended September 30, 2020.
Cash flows used in investing activities were $1,744,464 during the nine months ended September 30, 2021, compared to $3,905,135 during the nine months ended September 30, 2020. The decrease was primarily due to a reduction in asset purchases compared to the prior-year period.
Cash flows generated from financing activities were $60,710,010 during the nine months ended September 30, 2021, compared to cash used of $10,019,875 during the nine months ended September 30, 2020. The increase was primarily due to the public equity offering completed during the period ended September 30, 2021, which generated $63,955,491.
Liquidity risk is the risk the Company will not be able to meet its financial obligations as they come due. The Company’s approach to managing liquidity is to ensure, to the extent possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. The Company manages its liquidity risk by continually monitoring forecasted and actual revenue and expenditures and cash flows from operations. While the Company currently has sufficient operating capital to meet its day-to-day operating expenses, it is possible that the Company could experience a working capital deficiency in the future, which would have a materially adverse effect on the Company’s liquidity.
11
AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and nine months ended September 30, 2021
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, 2020 to September 30, 2021 are as follows:
| Number of Common Shares | ||||
| Balance December 31, 2020 | 53,422,024 | |||
| Shares issued –Warrants exercised | 39,821 | |||
| Shares issued – Equity financing | 5,665,025 | |||
| Shares issued –Options exercised | 742,183 | |||
| Shares issued – DSUs exercised | 508,178 | |||
| Shares issued – RSUs exercised | 260,391 | |||
| Balance September 30, 2021 | 60,637,622 | |||
Preference Shares
While the Company is authorized to issue and unlimited number of preference shares, the Company has no preference shares issued and outstanding.
Stock Options
The 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, 2021, the Company was entitled to issue a maximum of 9,095,643 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, 2021
The following table summarizes the continuity of stock options issued by the Company under the Stock Option Plan:
September 30, 2021 | September 30, 2020 | |||||||||||||||
Number of options | Weighted average exercise price $ | Number of options | Weighted average exercise price $ | |||||||||||||
| Options outstanding – Beginning of year | 1,865,519 | 1.69 | 3,409,886 | 1.45 | ||||||||||||
| Granted | 3,333 | 1.06 | 350,000 | 1.53 | ||||||||||||
| Forfeited or cancelled | (27,667 | ) | 1.06 | (732,552 | ) | 1.06 | ||||||||||
| Exercised | (730,517 | ) | 1.45 | (832,667 | ) | 0.81 | ||||||||||
| Options outstanding – End of period | 1,110,668 | 1.89 | 2,184,667 | 1.84 | ||||||||||||
| Options exercisable – End of period | 883,669 | 1.98 | 1,408,834 | 2.17 | ||||||||||||
The following table summarizes the continuity of stock options issued by the Company under the Omnibus Incentive Plan:
|
September 30, 2021 |
September 30, 2020 |
|||||||||||||||
|
Number of options |
Weighted average exercise price $ |
Number of options |
Weighted average exercise price $ |
|||||||||||||
| Options outstanding – Beginning of year | 35,000 | 2.09 | - | - | ||||||||||||
| Granted | - | - | 35,000 | 2.09 | ||||||||||||
| Forfeited or cancelled | - | - | - | - | ||||||||||||
| Exercised | (11,666 | ) | 2.09 | - | - | |||||||||||
| Options outstanding – End of period | 23,334 | 2.09 | 35,000 | 2.09 | ||||||||||||
| Options exercisable – End of period | - | - | - | - | ||||||||||||
Deferred Share Units
During the three and nine months ended September 30, 2021, the Company issued, respectively, nil and nil DSUs to employees, officers, directors and consultants of the Company as compared to nil and 204,008 during the three and nine months ended September 30, 2020, respectively.
During the three and nine months ended September 30, 2021, 72,933 and 508,178 DSUs, respectively, were exercised as compared to 62,276 and 664,679 during the three and nine months ended September 30, 2020, respectively.
13
AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and nine months ended September 30, 2021
Restricted Share Units
During the three and nine months ended September 30, 2021, the Company issued 122,619 and 354,159 RSUs to employees, officers, directors and consultants of the Company as compared to 1,089,408 and 1,089,408 during the three and nine months ended September 30, 2020, respectively.
During the three and nine months ended September 30, 2021, 70,577 and 260,391 RSUs were exercised as compared to nil and nil during the three and nine months ended September 30, 2020, respectively. As of September 30, 2021, the Company had 1,297,458 RSUs outstanding.
Warrants
For the three and nine months ended September 30, 2021, the Company did not issue any warrants and during the same period, nil and 39,821 warrants were exercised. During the three and nine months ended September 30, 2021, nil and 800 warrants, respectively, were forfeited. As a result, as of September 30, 2021, the Company had no warrants outstanding.
CONTRACTUAL OBLIGATIONS
The following are the contractual maturities for the financial liabilities:
September 30, 2021 | ||||||||||||||||||||
Carrying amount $ | Total contractual cash flows $ | Less than 1 year $ | 1 to 3 Years $ | >3 years $ | ||||||||||||||||
| Accounts payable and accrued Liabilities | 19,816,614 | 19,816,614 | 19,816,614 | - | - | |||||||||||||||
| International Loans | 1,421,754 | 1,421,754 | 852,232 | 569,522 | - | |||||||||||||||
| Term loans | 6,408,729 | 6,747,467 | 2,444,544 | 4,302,923 | - | |||||||||||||||
| Lease Obligations | 4,826,338 | 5,374,960 | 2,248,982 | 3,125,978 | - | |||||||||||||||
| 32,473,435 | 33,360,795 | 25,362,372 | 7,998,423 | - | ||||||||||||||||
| December 31, 2020 | ||||||||||||||||||||
Carrying amount $ | Total contractual cash flows $ | Less than 1 year $ | 1 to 3 Years $ | >3 years $ | ||||||||||||||||
| Accounts payable and accrued liabilities | 23,232,661 | 23,232,661 | 23,232,661 | - | ||||||||||||||||
| International Loans | 1,980,229 | 1,980,229 | 1,092,297 | 887,932 | - | |||||||||||||||
| Term loans | 8,278,004 | 8,710,774 | 2,481,550 | 6,229,224 | - | |||||||||||||||
| Lease Obligations | 6,892,017 | 7,315,497 | 3,366,199 | 3,949,298 | - | |||||||||||||||
| 40,382,911 | 41,239,161 | 30,172,707 | 11,066,454 | - | ||||||||||||||||
OFF-BALANCE SHEET ARRANGEMENTS
The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future material adverse effect on its financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
14
AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and nine months ended September 30, 2021
TRANSACTIONS WITH RELATED PARTIES
During the nine months ended September 30, 2021, there were no transactions with related parties.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of the Consolidated Financial Statements and application of IFRS often involve management's judgment and the use of estimates and assumptions deemed to be reasonable at the time they are made. Significant assumptions and estimates used in preparing the financial statements include those related to credit quality of accounts receivable, income tax credits receivable, share-based payments, impairment tests for non-financial assets, as well as revenue and cost recognition. AcuityAds bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets, liabilities, equity, revenue and expenses that are not readily apparent from other sources. The Company reviews estimates and underlying assumptions on an ongoing basis. Revisions are recognized in the period in which estimates are revised and may impact future periods as well. Other results may be derived with different judgments or using different assumptions or estimates and events may occur that could require a material adjustment. Significant accounting policies and estimates under IFRS are found in Note 2 of the Company’s Condensed Interim Consolidated Financial Statements which are available on SEDAR at www.sedar.com.
CHANGES IN ACCOUNTING POLICIES
Recently adopted accounting pronouncements
For the nine months ending September 30, 2021, the Company has not adopted any new accounting policies.
DISCLOSURE CONTROLS AND INTERNAL CONTROLS OVER FINANCIAL REPORTING
Management of AcuityAds is responsible for establishing and maintaining disclosure controls and procedures for the Company as defined under National Instrument 52-109 - Certification of Disclosure in Issuers’ Annual and Interim Filings (“NI 52-109”) issued by the Canadian Securities Administrators. Management has designed such disclosure controls and procedures, or caused them to be designed under its supervision, to provide reasonable assurance that material information relating to the Company, including its consolidated subsidiaries, is made known to the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”) by others within those entities on a timely basis, particularly during the period in which the annual filings are being prepared, so that appropriate decisions can be made regarding public disclosure.
As required by NI 52-109, an evaluation of the adequacy of the design (quarterly) and effective operation (annually) of the Company’s disclosure controls and procedures was conducted under the supervision of management, including the CEO and CFO, as at December 31, 2020. Based on that evaluation, the CEO and the CFO have concluded that the design and operation of the system of disclosure controls and procedures were effective as at December 31, 2020.
There have been no changes to AcuityAds’ internal control over financial reporting during the nine-months ended September 30, 2021 that have materially affected, or are reasonably likely to materially affect, AcuityAds’ internal control over financial reporting.
15
AcuityAds Holdings Inc.
Management’s Discussion and Analysis for the three and nine months ended September 30, 2021
OUTSTANDING SHARE DATA
As of November 2, 2021, 60,637,622 common shares and no preference shares were issued and outstanding. In addition, as of November 2, 2021, there were 1,132,335 stock options outstanding, each of which represents the right to acquire one common share, with exercise prices ranging from $0.96 to $4.60 per share. As at November 2, 2021, there were 676,441 DSUs outstanding and 1,294,458 RSUs outstanding, each of which represents the right to acquire one common share.
RISK FACTORS
AcuityAds is exposed to a variety of business risks, financial and accounting risks and industry risks in the normal course of operations. A detailed description of risk factors associated with the Company’s business is given in the “Risk Factors” section of the Annual Information Form for the year ended December 31, 2020 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 Capital Market under the symbol “ATY”.
16
Exhibit 99.3
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE
I, Tal Hayek, 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, 2021. |
| 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 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 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 and I used to design the issuer's ICFR is Internal Control-Integrated Framework (2013 COSO Framework) published by the Committee of Sponsoring Organizations of the Treadway Commission. |
| 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, 2021 and ended on September 30, 2021 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR. |
Date: November 2, 2021
| /s/ Tal Hayek | |
| Tal Hayek | |
| Chief Executive Officer |
Exhibit 99.4
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE
I, Tatiana Kresling, Interim 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, 2021. |
| 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 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 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. |
- 4 -
| 5.1 | Control framework: The control framework the issuer's other certifying officer and I used to design the issuer's ICFR is Internal Control-Integrated Framework (2013 COSO Framework) published by the Committee of Sponsoring Organizations of the Treadway Commission. |
| 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, 2021 and ended on September 30, 2021 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR. |
Date: November 2, 2021
| /s/ Tatiana Kresling | |
| Tatiana Kresling | |
| Interim Chief Financial Officer |