ATY AcuityAds Holdings Inc

 

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 2023
Commission File Number 001-40469

 

illumin 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

☐

 

 

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

 

 

Exhibit
99.1	Condensed Interim Consolidated Financial Statements (Unaudited) of the Registrant for the three and nine months ended September 30, 2023 and 2022
99.2	Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Registrant for the three and nine months ended September 30, 2023
99.3	AcuityAds Holdings Inc. – Form 52-109F2 Certificate of Interim Filings by CEO (pursuant to Canadian regulations)
99.4	AcuityAds Holdings Inc. – Form 52-109F2 Certificate of Interim Filings by CFO (pursuant to Canadian regulations)
99.5	Press Release Dated November 9, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

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.

 

	ILLUMIN HOLDINGS INC.
Date:  November 9, 2023	By: /s/ Elliot Muchnik Name: Elliot Muchnik Title: Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 99.1

 

 

 

 

 

 

illumin Holdings Inc.

(formerly AcuityAds Holdings Inc.)

 

 

Condensed Interim Consolidated Financial Statements

(Unaudited)

 

Three and nine months ended September 30, 2023 and 2022

(Expressed in thousands of Canadian dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

illumin Holdings Inc.

Condensed Interim Consolidated Statements of Financial Position

(Unaudited)

(In thousands of Canadian dollars, except share amounts)

 

		September 30, 2023				December 31, 2022
Assets
Current assets
Cash and cash equivalents		$	59,823			$	85,941
Accounts receivable			28,261				33,792
Income tax receivable			2,405				848
Prepaid expenses and other			5,947				3,153
			96,436				123,734
Non-current assets
Deferred tax asset			449				449
Other assets			275				248
Property and equipment (note 3)			9,171				7,117
Intangible assets (note 4)			8,186				5,229
Goodwill			4,870				4,870
			119,387				141,647
Liabilities
Current liabilities
Accounts payable and accrued liabilities			24,873				26,545
Income tax payable			215				43
Borrowings (note 15)			344				4,032
Lease obligations (note 5)			2,343				2,882
			27,775				33,502
Non-current liabilities
Borrowings (note 15)			79				191
Deferred tax liability			1,035				1,060
Lease obligations (note 5)			6,561				3,768
			35,450				38,521
Shareholders’ equity (note 7)			83,937				103,126
			119,387				141,647

 

The accompanying notes are an integral part of the condensed interim consolidated financial statements.

 

 

illumin Holdings Inc.

Condensed Interim Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)
(In thousands of Canadian dollars, except share amounts)

For the three and nine months ended September 30, 2023 and 2022

 

		Three months ended								Nine months ended
			2023				2022				2023				2022
Revenue							(As restated Note 7(g))								(As restated Note 7(g))
Managed services		$	17,268			$	20,425			$	54,344			$	54,338
Self-service			12,360				8,523				34,969				26,691
			29,628				28,948				89,313				81,029
Media costs			15,739				14,103				47,066				39,601
Gross profit			13,889				14,845				42,247				41,428
Operating expenses
Sales and marketing (note 16)			6,336				5,904				19,023				16,746
Technology (note 16)			4,471				4,244				14,937				11,765
General and administrative (note 16)			3,007				3,174				9,718				10,084
Share-based compensation (note 7(b))			1,571				1,544				4,584				4,606
Depreciation and amortization			1,433				1,125				4,372				3,527
			16,818				15,991				52,634				46,728
Loss from operations			(2,929	)			(1,146	)			(10,387	)			(5,300	)
Finance costs (income) (note 8)			(612	)			158				(1,594	)			430
Foreign exchange loss (gain)			(1,666	)			(5,836	)			793				(7,228	)
			(2,278	)			(5,678	)			(801	)			(6,798	)
Net income (loss) before income taxes			(651	)			4,532				(9,586	)			1,498
Income tax expense (benefit) (note 17)			(1,413	)			1,379				(1,177	)			1,432
Net income (loss) for the period			762				3,153				(8,409	)			66
Basic and diluted net income (loss) per share (note 9)			0.01				0.05				(0.15	)			0.00
Other Comprehensive Income (Loss)
Items that may be subsequently reclassified to net income (loss):
Exchange gain (loss) on translating foreign operations			(681	)			(224	)			(734	)			10
Comprehensive income (loss) for the period			81				2,929				(9,143	)			76

 

The accompanying notes are an integral part of the condensed interim consolidated financial statements.

 

 

illumin Holdings Inc.

Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity

(Unaudited)

(In thousands of Canadian dollars, except share amounts)

For the nine months ended September 30, 2023 and 2022

 

																						2023
		Common shares
		Number				$ Amount				Contributed surplus				Other reserves				Deficit				Total
Balance – December 31, 2022			56,808,921			$	119,933			$	4,990			$	(455	)		$	(21,342	)		$	103,126
Repurchase of common shares for cancellation (notes 7(e) and 7(f))			(5,294,314	)			(11,175	)			(3,462	)			-				-				(14,637	)
Share-based compensation (note 7(b))			-				-				4,584				-				-				4,584
Shares issued – options exercised (note 7(b))			6,667				12				(5	)			-				-				7
Shares issued – DSUs/RSUs exercised (notes 7(c) and 7(d))			162,961				580				(580	)			-				-				-
Other comprehensive loss			-				-				-				(734	)			-				(734	)
Net loss for the period			-				-				-				-				(8,409	)			(8,409	)
Balance – September 30, 2023			51,684,235				109,350				5,527				(1,189	)			(29,751	)			83,937

 

 

																						2022
		Common shares
		Number				$ Amount				Contributed surplus				Other reserves				Deficit				Total
						(As restated Note 7(g))				(As restated Note 7(g))								(As restated Note 7(g))
Balance – December 31, 2021			60,733,803			$	126,737			$	6,461			$	446			$	(20,588	)		$	113,056
Shares issued – options exercised			247,866				626				(252	)			-				-				374
Repurchase of common shares for cancellation (notes 7(e) and 7(f))			(4,080,880	)			(8,478	)			(4,522	)			-				-				(13,000	)
Share-based compensation (note 7(b))			-				-				4,606				-				-				4,606
Shares issued – DSUs/RSUs exercised (notes 7(c) and 7(d))			480,397				2,086				(2,086	)			-				-				-
Other comprehensive loss			-				-				-				(436	)			-				(436	)
Net income for the period			-				-				-				-				66				66
Balance – September 30, 2022			57,381,186				120,971				4,207				10				(20,522	)			104,666

 

The accompanying notes are an integral part of the condensed interim consolidated financial statements.

 

 

illumin Holdings Inc.

Condensed Interim Consolidated Statements of Cash Flows

(Unaudited)

(In thousands of Canadian dollars, except share amounts)

For the nine months ended September 30, 2023 and 2022

 

		2023				2022
						(As restated Note 7(g))
Cash provided by (used in)
Operating activities
Net income (loss) for the period		$	(8,409	)		$	66
Adjustments to reconcile net income (loss) to net cash flows
Depreciation and amortization			4,372				3,527
Finance costs (income) (note 8)			(1,594	)			430
Share-based compensation (note 7(b))			4,584				4,606
Foreign exchange loss (gain)			793				(7,228	)
Income tax benefit (note 17)			(1,177	)			-
Change in non-cash operating working capital
Accounts receivable			4,564				2,637
Prepaid expenses and other			(2,086	)			106
Other assets			(25	)			(361	)
Accounts payable and accrued liabilities			(1,813	)			(4,296	)
Income tax payable			-				(351	)
Income taxes received			133				-
Interest received (paid), net			1,965				(328	)
			1,307				(1,192	)
Investing activities
Additions to property and equipment (note 3)			(443	)			(162	)
Additions to intangible assets (note 4)			(5,072	)			(2,650	)
			(5,515	)			(2,812	)
Financing activities
Repayment of term loans (note 15)			(4,411	)			(1,680	)
Proceeds from international loans (note 15)			638				1,136
Repayment of international loans (note 15)			(647	)			(1,407	)
Repayment of leases			(2,411	)			(1,535	)
Repurchase of common shares for cancellation (notes 7(e) and 7(f))			(14,637	)			(13,000	)
Proceeds from the exercise of stock options			7				374
			(21,461	)			(16,112	)
Decrease in cash and cash equivalents			(25,669	)			(20,116	)
Impact of foreign exchange on cash and cash equivalents			(449	)			6,141
Cash and cash equivalents – beginning of period			85,941				102,209
Cash and cash equivalents – end of period			59,823				88,234
Supplemental disclosure of non-cash transactions
Additions to property and equipment under leases			4,710				3,809

 

The accompanying notes are an integral part of the condensed interim consolidated financial statements.

 

 

 

1

Corporate information

 

illumin Holdings Inc. (formerly AcuityAds Holdings Inc.) (“illumin” or the “Company”), and its wholly owned subsidiaries illumin Inc. (formerly AcuityAds Inc.), illumin US Inc. (formerly AcuityAds US Inc.), 140 Proof Inc., Visible Measures LLC, 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. illumin is a publicly traded company, incorporated in Canada, with its head office located at 70 University Ave, Suite 1200, Toronto, Ontario M5J 2M4. The Company changed its legal name from AcuityAds Holdings Inc. to illumin Holdings Inc. on June 14, 2023, and changed both of its Toronto Stock Exchange and Nasdaq Capital Market trading symbols from “AT” to “ILLM” and “ATY” to “ILLM”, respectively, on April 17, 2023.

 

On September 11, 2023, the Company voluntarily delisted its common shares from the Nasdaq Capital Market. The Company’s common shares are currently listed on the Toronto Stock Exchange in Canada under the trading symbol “ILLM”.

 

2

Summary of significant accounting policies

 

Statement of compliance

 

These condensed interim consolidated financial statements for the three and nine months ended September 30, 2023, have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board, applicable to the preparation of interim financial statements, including International Accounting Standard 34, Interim Financial Reporting. The date the board of directors of the Company (the “Board”) authorized the consolidated interim financial statements for issue was November 8, 2023.

 

Basis of presentation

 

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

 

Material 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, 2022. The unaudited condensed interim consolidated financial statements are based on accounting policies, as described in note 2 to the 2022 audited annual consolidated financial statements.

 

New accounting standards

 

The following amendments to standards and interpretations became effective for the annual periods beginning on or after January 1, 2023. The application of these amendments and interpretations had no significant impact on the Company’s condensed interim consolidated financial position or results of operations.

 

Disclosure of Accounting Policies (Amendments to IAS 1). The amendments to IAS 1 require an entity to disclose its material accounting policies instead of its significant accounting policies. The amendments clarify that accounting policy information is material if users of an entity’s financial statements would need it to understand other material information in the financial statements.

 

 

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

 

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

 

Future accounting standards

 

The following new and amended standards and interpretations will become effective in a future year. The Company intends to adopt these new and amended standards and interpretations, if applicable, when they become effective and are not expected to have a significant impact on these condensed interim consolidated financial statements:

 

·

Lease Liability in a Sale and Leaseback (Amendments to IFRS 16), clarifying initial recognition and subsequent accounting for a seller-lessee account in a sale-and-leaseback transaction.

 

The Company is in the process of assessing any potential impacts of the following:

 

·

Classification of Liabilities as Current or Non-current (Amendments to IAS 1, Presentation of Financial Statements), clarifying classification requirements for liabilities as current or non-current.

 

 

 

 

 

3

Property and equipment

 

		Furniture and fixtures				Data center equipment				Office computer equipment				Right of use assets				Total
Cost
As at January 1, 2023		$	1,330			$	52			$	1,345			$	19,461			$	22,188
Additions			300				-				143				4,537				4,980
Dispositions			-				-				-				(2,605	)			(2,605	)
As at September 30, 2023			1,630				52				1,488				21,393				24,563
Accumulated depreciation
As at January 1, 2023			907				52				1,072				13,040				15,071
Amortization			181				-				130				2,615				2,926
Dispositions			-				-				-				(2,605	)			(2,605	)
As at September 30, 2023			1,088				52				1,202				13,050				15,392
Net carrying amount
As at January 1, 2023			423				-				273				6,421				7,117
As at September 30, 2023			542				-				286				8,343				9,171

 

 

		Furniture and fixtures				Data center equipment				Office computer equipment				Right of use assets				Total
Cost
As at January 1, 2022		$	1,317			$	52			$	1,266			$	14,505			$	17,140
Additions			13				-				149				3,809				3,971
As at September 30, 2022			1,330				52				1,415				18,314				21,111
Accumulated depreciation
As at January 1, 2022			675				50				800				10,245				11,770
Amortization			174				2				209				2,006				2,391
As at September 30, 2022			849				52				1,009				12,251				14,161
Net carrying amount
As at January 1, 2022			642				2				466				4,260				5,370
As at September 30, 2022			481				-				406				6,063				6,950

 

 

4

Intangible assets

 

		Technology
Cost
As at January 1, 2023		$	16,529
Additions			4,403
As at September 30, 2023			20,932
Accumulated depreciation
As at January 1, 2023			11,300
Amortization			1,446
As at September 30, 2023			12,746
Net carrying amount
As at January 1, 2023			5,229
As at September 30, 2023			8,186

 

 

		Technology
Cost
As at January 1, 2022		$	12,792
Additions			2,650
As at September 30, 2022			15,442
Accumulated depreciation
As at January 1, 2022			9,748
Amortization			1,136
As at September 30, 2022			10,884
Net carrying amount
As at January 1, 2022			3,044
As at September 30, 2022			4,558

 

The Technology intangible asset is internally derived from capitalizing development costs related to revenue generating technology. During the nine months ended September 30, 2023, the Company capitalized $4,403 (2022 – $2,650). The 2023 addition amount includes a reversal of $669 related to a portion of the funding grant received attributable to previously capitalized expenses.

 

5

Lease obligations

 

		September 30, 2023				December 31, 2022
Obligations under leases		$	8,904			$	6,650
Less: Current portion			2,343				2,882
			6,561				3,768

 

 

6

Related party transactions and balances

 

Directors and officers are eligible to participate in the Company’s long-term incentive plans. No stock options have been granted to directors and officers of the Company since March 31, 2020 (note 7(b)).

 

During the three and nine months ended September 30, 2023, the Company issued 83,664 and 83,664 DSUs (2022 – nil and 88,397) to directors. The directors’ DSUs vested fully on October 1, 2023.

 

During the three and nine months ended September 30, 2023, the Company paid out a cash portion of directors fees to the directors of $217 and $217 (2022 – nil and nil) in addition to the DSUs granted.

 

During the three and nine months ended September 30, 2023, the Company issued nil and 898,325 (2022 – nil and 936,404) RSUs to officers of the Company in lieu of cash bonuses. The officers’ RSUs vest fully over a period of six to thirty-six months.

 

7

Share capital and share-based payments

 

a)

Share capital

 

As at September 30, 2023, the Company had an unlimited number of common shares authorized for issuance (2022 – unlimited) and 51,684,235 common shares outstanding (2022 – 57,381,186) (without par value).

 

b)

Stock Option Plan and Omnibus Incentive Plan

 

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

 

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

 

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

 

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

 

 

As at September 30, 2023, the Company was entitled to issue a maximum of 7,752,635 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:

 

						2023								2022
		Number of options				Weighted average exercise price				Number of options				Weighted average exercise price
Outstanding – January 1			704,469			$	1.60				1,094,001			$	1.90
Forfeited or cancelled			(26,800	)			1.33				(138,333	)			4.13
Exercised			(6,667	)			1.01				(247,866	)			1.51
Outstanding – September 30			671,002				1.62				707,802				1.60
Options exercisable – September 30			671,002				1.62				657,801				1.61

 

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

 

						2023								2022
		Number of options				Weighted average exercise price				Number of options				Weighted average exercise price
Outstanding – January 1			23,334			$	2.09				23,334			$	2.09
Forfeited or cancelled			(6,667	)			2.09				-				-
Outstanding – September 30			16,667				2.09				23,334				2.09
Options exercisable – September 30			16,667				2.09				11,668				2.09

 

  

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

 

								September 30, 2023
Range of exercise prices $				Number of options				Weighted average remaining contractual life (years)				Weighted average number of options exercisable
1.13				55,000				1.67				55,000
1.14				10,000				0.17				10,000
1.15				20,000				1.17				20,000
1.27				3,334				0.92				3,334
1.55				21,333				0.67				21,333
1.59				143,334				1.42				143,334
1.71				378,001				0.50				378,001
1.94				40,000				0.17				40,000
2.09				16,667				1.92				16,667
				687,669								687,669

  

				September 30, 2022
Range of exercise prices $				Number of options				Weighted average remaining contractual life (years)				Weighted average number of options exercisable
0.96				3,333				0.96				3,333
1.06				15,134				1.00				15,134
1.13				55,000				2.67				55,000
1.14				10,000				1.17				10,000
1.15				20,000				2.17				13,333
1.27				6,667				1.92				6,667
1.55				36,333				1.67				36,333
1.59				143,334				2.42				100,000
1.71				378,001				1.50				378,001
1.94				40,000				0.17				40,000
2.09				23,334				2.92				11,668
				731,136								669,469

 

During the three and nine months ended September 30, 2023, the Company recorded share-based compensation expense under the Black-Scholes option pricing model, related to stock options, DSUs and RSUs granted to employees, officers, directors and consultants of the Company of $1,571 and $4,584 (2022 – $1,544 and $4,606).

 

During the three and nine months ended September 30, 2023, 6,667 and 6,667 stock options under the Stock Option Plan were exercised at a weighted average price of $1.01 and $1.01 for gross proceeds of $7 and $7 (2022 – 57,000 and 247,866 were exercised at a weighted average price of $1.42 and $1.51 for gross proceeds of $81 and $374).

 

 

c)

Deferred share units

 

During the three and nine months ended September 30, 2023, the Company issued 83,664 and 83,664 (2022 – nil and 110,136) DSUs, of which all were issued to directors, with 75% immediate vesting periods and 25% vesting periods after 1 month and nil were issued to consultants of the Company. During the three and nine months ended September 30, 2023, 5,749 and 37,415, DSUs were exercised (2022 – 14,134 and 177,638).

 

d)

Restricted share units

 

During the three and nine months ended September 30, 2023, the Company issued 41,153 and 1,544,243 (2022 – 226,420 and 1,796,579) RSUs to employees, officers, and consultants of the Company. During the three and nine months ended September 30, 2023, 79,388 and 125,546 (2022 – 19,908 and 302,759) RSUs were exercised.

 

e)

Repurchase of shares for cancellation under NCIB

 

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

 

During the three and nine months ended September 30, 2023, the Company repurchased nil and 701,114 common shares at an average price of $nil and $2.14 per share totaling nil and $1,500 (2022 – 1,811,400 and 4,080,880 at $3.23 and $3.19 for a total of $5,860 and $13,000).

 

f)

Repurchase of shares for cancellation under SIB

 

On July 27, 2023, the Company commenced a substantial issuer bid (“SIB”) to purchase for cancellation up to 15,810,276 of its outstanding common shares for an aggregate purchase price not to exceed $40,000. The offer expired on August 30, 2023.

 

Pursuant to the SIB, the Company purchased for cancellation 4,593,200 of its outstanding common shares at a purchase price of $2.65 per share for an aggregate purchase price of approximately $12,172.

 

The total transaction costs that were associated with the SIB totaled $965 and were subsequently capitalized.

 

g)

Restatement of previously issued financial statements

 

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

 

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

 

The Company concluded that the above errors were material to the previously issued consolidated financial statements and as such, the Company has restated its comparative condensed interim consolidated financial statements, as applicable. The following table presents the impact of the restatements on the company’s comparative Condensed Interim Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2022:

 

 

			Three months ended								Nine months ended
			As Reported				As Restated				As Reported				As Restated
Share-based compensation expense		$	1,894			$	1,544			$	5,448			$	4,606
Operating expenses			16,341				15,991				47,570				46,728
Loss from operations			(1,496	)			(1,146	)			(6,143	)			(5,300	)
Net income before income taxes			4,181				4,532				655				1,498
Net income (loss) for the period			2,803				3,153				(777	)			66
Basic and diluted net income (loss) per share			0.05				0.05				(0.01	)			0.00
Comprehensive income (loss) for the period			3,027				2,929				(787	)			76

 

The following table presents the impact of the restatements on the Company’s comparative Condensed Interim Consolidated Statement of Changes in Shareholders’ Equity as at September 30, 2022:

 

			As Reported				As Restated
Common shares		$	118,212			$	120,971
Contributed surplus			9,268				4,207
Deficit			(22,825	)			(20,522	)

 

 

8

Finance costs (income)

 

			Three months ended								Nine months ended
			September 30, 2023				September 30, 2022				September 30, 2023				September 30, 2022
Interest on leases and other interest		$	146			$	152			$	299			$	385
Interest income			(758	)			(120	)			(2,609	)			(243	)
Interest and fees on term loans (note 15(a))			-				126				716				288
			(612	)			158				(1,594	)			430

 

 

 

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, 2023 and 2022 are as follows:

 

			Three months ended								Nine months ended
			September 30, 2023				September 30, 2022				September 30, 2023				September 30, 2022
							(As restated Note 7(g))								(As restated Note 7(g))
Net income (loss) for the period		$	762			$	3,153			$	(8,409	)		$	66
Weighted average number of shares outstanding – basic			53,923,067				57,524,111				55,667,946				59,113,153
Net income (loss) per share – basic		$	0.01			$	0.05			$	(0.15	)		$	0.00
Dilutive effect of stock options			205,303				317,532				-				349,982
Dilutive effect of DSUs			654,269				319,975				-				319,975
Dilutive effect of RSUs			1,757,788				721,120				-				721,120
Diluted weighted average number of shares outstanding			56,540,427				58,882,738				55,667,946				60,504,230
Net income (loss) per share – diluted		$	0.01			$	0.05			$	(0.15	)		$	0.00
Items excluded from the calculation of diluted net income (loss) per share due to their anti-dilutive effect
Stock options, DSUs, and RSUs			4,241,261				3,029,872				6,858,622				2,997,422

 

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

 

10

Segment information

 

The Company’s CEO has been identified as the chief operating decision maker (“CODM”). The CODM reviews financial information, makes decisions, and assesses the performance of the company as a single operating segment. The Company’s assets and operations are substantially located in Canada, however, the Company also has employees and customers in the United States, Europe, and LATAM and generates revenue in each region. Revenue by region for the three and nine months ended September 30, 2023, and 2022 is as follows:

 

			Three months ended								Nine months ended
			September 30, 2023				September 30, 2022				September 30, 2023				September 30, 2022
United States		$	17,763			$	20,864			$	56,975			$	54,924
Canada			2,718				3,495				8,510				12,955
Europe, LATAM & other1			9,147				4,589				23,828				13,150
			29,628				28,948				89,313				81,029

 

(1)

This line includes revenue previously classified in the U.S. geography according to billing arrangements. Management considers current breakdown more relevant and reflective of business in each geography.

 

 

During the three and nine months ended September 30, 2023, the Company had two and two customers that represented greater than 5% (2022 – two and one customer) of total revenue.

 

11

Government assistance

 

During the three months ended September 30, 2023, the Company had substantial certainty over securing a commitment of up to a maximum of $10,000 funding from the National Research Council’s Industrial Research Assistance Program (“IRAP”) towards eligible research and development expenses. On October 6, 2023, the formal documentation was executed. The commitment covers expenses incurred for the period April 1, 2023 to December 31, 2024. As of the date of these condensed interim financial statements, the Company has identified and received approval for the eligible IRAP expenses incurred for the period April 1, 2023 to June 30, 2023. During the three and nine months ended September 30, 2023, $1,376 and $1,376 of eligible expenses for recovery was recognized as: (a) a reduction to sales and marketing costs and technology costs on the Condensed Interim Statement of Comprehensive Income (Loss) amounting to $707 and (b) a reduction of previously capitalized development expenses (intangible assets) amounting to $669.

 

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)
			September 30, 2023				December 31, 2022
Measurement basis
Financial assets
Cash and cash equivalents		$	59,823			$	85,941
Accounts receivable			28,261				33,792
Other assets			3,023				-
			91,107				119,733

 

Financial liabilities
Accounts payable and accrued liabilities		$	24,873			$	26,545
Term loans			-				3,791
International loans			423				432
Lease obligations			8,904				6,650
			34,200				37,418

 

Fair value measurements

 

The Company provides disclosure of the three-level hierarchy that reflects the significance of the inputs used in making the fair value measurement. The carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, lease obligations, and 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 periods ended September 30, 2023, and 2022 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, 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.

 

14

Financial risk management

 

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

 

Credit risk

 

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises from the Company’s accounts receivable and cash. As of September 30, 2023, two customers represented more than 5% of the gross accounts receivable balance of $28,486. As of December 31, 2022, three customers each represented more than 5% of the gross accounts receivable balance of $34,320.

 

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, 2023, the allowance for expected credit loss was $226 (2022 – $400). In establishing the appropriate allowance for expected credit loss, management makes assumptions with respect to the future collectability of the receivables. Assumptions are based on an individual assessment of a customer’s credit quality as well as subjective factors and trends. As at September 30, 2023, 73% of the Company’s customers are current, 7% are from 1 to 30 days, 8% are from 31 to 60 days, 5% are from 61 to 90 days, and 7% are greater than 90 days.

 

The Company, from time to time, invests its excess cash in accounts with Canadian 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 of September 30, 2023 is not subject to external restrictions. Investments must be rated at least investment grade by recognized rating agencies. The Canada Deposit Insurance Corporation (“CDIC”) provides insurance of up to $100 per depositor, per insured bank, for each account ownership category on Canadian-domiciled bank accounts. The Federal Deposit Insurance Corporation (“FDIC”) also provides insurance on U.S.-domiciled bank accounts. The standard deposit insurance amount is $250 U.S. per depositor, per insured bank, for each account ownership category. The Company’s bank account deposits exceed these insured amounts.

 

 

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, 2023
			Carrying amount				Total contractual cash flows				Less than 1 year				1 to 3 years				>3 years
Accounts payable and accrued liabilities		$	24,873			$	24,873			$	24,873			$	-			$	-
International loans			423				423				344				79				-
Term loans			-				-				-				-				-
Lease obligation			8,904				9,689				2,343				4,934				2,412
			34,200				34,985				27,560				5,013				2,412

 

 

			December 31, 2022
			Carrying amount				Total contractual cash flows				Less than 1 year				1 to 3 years				>3 years
Accounts payable and accrued liabilities		$	26,545			$	26,545			$	26,545			$	-			$	-
International loans			432				432				241				191				-
Term loans			3,791				3,963				3,963				-				-
Lease obligation			6,650				7,113				2,882				3,092				1,139
			37,418				38,053				33,631				3,283				1,139

 

 

Interest rate risk

 

Interest rate risk is the risk of financial loss to the Company if interest rates increase on interest-bearing instruments. The Company has various revolving lines of credit and term loans (see Note 15) with interest rates that the Company believes are consistent with market interest rates for this type of debt.

 

Foreign exchange or currency risk

 

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

 

If a shift in foreign currency exchange rates of 10% were to occur, the foreign exchange gain or loss on the Company’s net monetary assets could change by approximately $7,903 due to the fluctuation and this would be recorded in the consolidated statements of comprehensive income.

 

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

 

			September 30, 2023				December 31, 2022
Cash		$	58,341			$	82,257
Accounts receivable			15,811				24,157
Accounts payable			9,988				13,050
Term loan			-				3,791

 

15

Borrowings

 

a)

Term Loan

 

During the year ended December 31, 2020, the Company had a secured term loan with Silicon Valley Bank (“SVB”) that expired on April 1, 2024 with total availability of U.S. $7,750 bearing interest at the greater of prime plus 0.60% and 3.85%. On May 31, 2023, the term loan was repaid in full including any and all outstanding interest.

 

The following table outlines the activity of the term loan during the nine months ended September 30, 2023, and 2022:

 

			2023				2022
Balance – January 1		$	3,791			$	5,917
Accrued interest			716				288
Payment of interest			(116	)			(187	)
Principal amount repaid			(4,411	)			(1,680	)
Exchange			20				130
Balance – September 30			-				4,468

 

 

b)

International loans

 

International term loans

 

International term loans outstanding amounted to $230 (€160) as at September 30, 2023 (2022: $490: €366). The interest rates for these unsecured term loans range from 1.75% to 2.25% with maturity dates ranging from May 22, 2024 to May 21, 2025.

 

Lines of credit

 

The lines of credit payable amounted to $193 (€134) as at September 30, 2023 (2022: $57: €42) and are secured against certain accounts receivable. The interest rates on these lines of credit range from 2.90% to Euribor plus 1.95% with maturity dates ranging from August 6, 2023 to April 16, 2026 during the periods ended September 30, 2023 and 2022.

 

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

 

			September 30, 2023				December 31, 2022
Current portion of term loan		$	-			$	3,791
Current portion of international loans			344				241
Total current borrowings			344				4,032
Non-current portion of term loan			-				-
Non-current portion of international loans			79				191
Total borrowings			423				4,223

16

Expenses by nature

 

			Three months ended								Nine months ended
			September 30, 2023				September 30, 2022				September 30, 2023				September 30, 2022
Employee wages, salaries, and benefits		$	7,345			$	8,123			$	24,659			$	23,445
Professional fees			551				348				1,611				1,331
Contractor consulting fees			1,290				933				3,680				2,631
Hosting and data costs			1,823				1,614				5,262				4,331
Insurance			562				595				1,787				2,095
Travel and entertainment			571				663				2,004				1,743
Advertising and promotion			249				397				1,019				902
Public company fees			342				119				774				655
Other			1,081				530				2,882				1,462
			13,814				13,322				43,678				38,595

 

 

17

Income tax expense (benefit)

 

During the three months ended September 30, 2023, the Company recognized a current tax benefit and current tax receivable of $1,387 on a consolidated basis, which relates to a tax benefit from losses in 2023 that may be carried back, offset by current tax expense from provisions in a subsidiary.

 

18

Subsequent events

 

Effective November 13, 2023 and subject to TSX approval, the Company intends to commence a NCIB to purchase for cancellation up to 4,330,226 of its outstanding common shares.

 

The NCIB will also have an automatic share purchase plan (“ASPP”) component with its designated broker to allow for the purchase of shares under the NCIB at times when illumin normally would not be active in the market due to internal trading black-out periods. Such purchases will be determined by the broker at its sole discretion, based on the purchasing parameters set out by the Company in accordance with the rules of the TSX, applicable securities laws and the terms of the ASPP. During the term of the ASPP, the Company will not communicate any material undisclosed or non-public information to the trading staff of the broker. Accordingly, the broker may make purchases regardless of whether a trading blackout period is in effect or whether there is material undisclosed or non-public information about the Company at the time that purchases are made under the ASPP.

 

The NCIB was approved by the board on November 8, 2023 and announced on November 9, 2023.

 

 

 

 

 

 

 

 

16

Exhibit 99.2

 

 

 

 

 

 

 

illumin Holdings Inc.

(formerly AcuityAds Holdings Inc.)

 

 

 

 

MANAGEMENT’S DISCUSSION AND ANALYSIS

 

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023

 

 

Dated November 8, 2023

 

 

 

70 University Ave

Suite 1200

Toronto, ON M5J 2M4

www.illumin.com

 

 

 

 

MANAGEMENT’S DISCUSSION AND ANALYSIS

 

This Management’s Discussion and Analysis (“MD&A”) explains the variations in the consolidated operating results, financial position, and cash flows of illumin Holdings Inc. (“illumin” or the “Company”) as at and for the three and nine months ended September 30, 2023. In this MD&A, “this quarter”, “the quarter”, or “third quarter” refer to the three months ended September 30, 2023, unless the context indicates otherwise. All results commentary is compared to the equivalent period in 2022 or as at September 30, 2022, as applicable, unless otherwise indicated. This analysis should be read in conjunction with illumin’s unaudited condensed interim consolidated financial statements for the three and nine months ended September 30, 2023, and related notes (the “Condensed Interim Consolidated Financial Statements”) thereto, which have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (IASB). 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 dollar amounts are presented in Canadian dollars unless otherwise indicated and are unaudited. Throughout this MD&A, percentage changes are calculated using numbers rounded as they appear. Readers are cautioned that this MD&A contains certain forward-looking information (please see the “Forward Looking Statements” section below for a discussion of the use of such information in this MD&A).

 

The Condensed Interim Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated on consolidation.

 

The information in this report is dated as at November 8, 2023.

 

NON-IFRS FINANCIAL MEASURES

 

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

 

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

 

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

 

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

 

 

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 illumin’s programmatic marketing platform (the “Programmatic Marketing Platform”), and the continuing competitiveness and strategy relating to the Company’s service offerings, such as its Programmatic Marketing Platform (as described herein) and the illumin platform. When used in this MD&A, forward looking statements can be identified by the use of words such as “may”, or by such words as “will”, “intend”, “believe”, “estimate”, “consider”, “expect”, “anticipate”, and “objective” and similar expressions or variations of such words. Forward-looking statements are, by their nature, not guarantees of the Company’s future operational or financial performance and are subject to risks and uncertainties and other factors that could cause the Company’s actual results, performance, prospects, or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. No representation or warranty is intended with respect to anticipated future results, or that estimates, or projections will be sustained. Forward-looking information is provided for the purpose of providing information about management’s current expectations and plans and allowing investors and others to get a better understanding of the Company’s operations. Forward-looking information may not be appropriate for other purposes.

 

In developing the forward-looking statements in this MD&A, the Company has applied several material assumptions, including the availability of financing on reasonable terms, and general business and economic conditions. Many risks, uncertainties and other factors could cause the actual results of illumin to differ materially from the results, performance, achievements, or developments expressed or implied by forward-looking statements that are contained in this MD&A. These risks, uncertainties and other factors include, but are not limited to the following: overall economic conditions, rapid technological changes, use of cookies, demand for the Company’s products and services, the Company’s ability to retain existing customers and attract new customers, including under the illumin platform; the Company’s ability to expand into additional advertising channels and expand its customer base in Canada, the U.S. and globally; the introduction of competing technologies, competitive pressures, network restrictions, fluctuations in foreign currency exchange rates, and other factors that may cause the actual results, performance or achievements to differ materially from those expressed or implied in these forward-looking statements.

 

Any financial outlook or future-oriented financial information (as defined in applicable securities laws) contained in this MD&A regarding prospective financial performance, financial position or cash flows is based on assumptions about future economic conditions or courses of action based on management’s assessment of the relevant information that is currently available. Future-oriented financial information contains forward-looking information and is based on a number of material assumptions and factors, as are set out above. The actual results of the Company’s operations for any period will likely vary from the amounts set forth in these projections and such variations may be material. Actual results will vary from projected results. Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein.

 

 

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of the MD&A or as of the date otherwise specifically indicated herein. Due to risks and uncertainties, including the risks and uncertainties contained elsewhere in this MD&A, actual events may differ materially from current expectations. These risks and uncertainties include, among other things, the factors discussed in the “Risk Factors” section of this MD&A and under the “Risk Factors” section of the most recent Annual Information Form and included or discussed in the Company’s other periodic filings, such as previous MD&A, which are available under the Company’s profile on SEDAR+ at www.sedarplus.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

 

illumin is a technology company that enables marketers to connect intelligently with audiences across video, mobile, social and online display advertising campaigns. illumin’s Programmatic Marketing Platform, powered by proprietary machine learning technology, is at the core of its business, accompanied by patented solutions for analytics-led video and mobile targeting that leverages data. illumin empowers marketers by offering near real-time reporting and analytics, bringing accountability to programmatic advertising to deliver business results and help solve the key challenges that digital advertisers face. illumin is headquartered in Toronto and has offices in the U.S., Canada, Spain, France, Brazil, Chile, Mexico, Colombia and Argentina. Its key customers include both agencies and brands, including large Fortune 500 enterprises and small to mid-sized businesses. illumin’s technology enables programmatic advertising, which is the automated buying and selling of advertising inventory electronically. The platform is based on proprietary machine learning technology, the branch of artificial intelligence involving systems that learn from data inputs and outputs and can perform actions without the need for explicit programming. The platform has the capability to process billions of bid requests on a daily basis.

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

The illumin^TM software enables the creation of consumer journeys with custom messages tied to a propensity-scored audience, increasing efficiency and return on advertising investments. illumin is an advertising automation technology that offers planning, media buying and omnichannel intelligence from a single platform, allowing advertisers to map their consumer journey playbooks across screens and execute in real-time using programmatic technology. illumin has had excellent traction and experienced rapid growth since its launch and now accounts for a significant portion of the Company’s total revenue. For the three and nine months ended September 30, 2023, revenue derived from illumin was $20,014 and $60,306 compared to $13,205 and $31,312 of revenue in the comparable 2022 period.

This represents continued growth in the illumin platform as we reach the target customer base and realize on our significant growth potential.

 

RESULTS OF OPERATIONS

 

Significant developments during the three and nine months ended September 30, 2023, and to the date of this report

 

On May 16, 2022, illumin commenced a normal course issuer bid ("NCIB") for its common shares, which was open for one year, or until May 15, 2023. In connection with the NCIB, the Company established an Automatic Share Purchase Plan (“ASPP”) to facilitate the purchase of shares during times when the Company would ordinarily not be permitted to purchase shares due to regulatory restrictions. For the nine months ended September 30, 2023, the Company purchased 701,114 common shares pursuant to the ASPP and the NCIB, which expired on May 15, 2023. Over the duration of the NCIB, the Company acquired and cancelled 5,404,894 shares at an average price of $2.96. 

On March 10, 2023, the California Department of Financial Protection and Innovation (“DFPI”) announced that it had taken possession of Silicon Valley Bank (“SVB”), the Company’s main banking partner at the time, citing inadequate liquidity and insolvency of SVB. The DFPI appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver of SVB. Since then, the Company has successfully moved funds previously held in SVB to Schedule I Canadian banks, where it was on deposit as at the date of this report.

On April 17, 2023, the Company changed both of its Toronto Stock Exchange and Nasdaq Capital Market trading symbols from “AT” to “ILLM” and “ATY” to “ILLM”, respectively.

On May 31, 2023, the Company repaid the outstanding term loan in full including all outstanding interest.

On June 14, 2023, the Company changed its name from AcuityAds Holdings Inc. to illumin Holdings Inc.

On July 26, 2023, the Company announced the launch of a substantial issuer bid (“SIB”) to purchase for cancellation up to 15,810,276 of its common shares for an aggregate purchase price not to exceed $40,000. The SIB commenced on July 27, 2023 and expired on August 30, 2023. At the conclusion of the SIB, on August 31, 2023, the Company repurchased 4,593,200 of its outstanding common shares at a purchase price of $2.65 per share for an aggregate purchase price of approximately $12,172. The total transaction costs that were associated with the SIB totaled $965 and were subsequently capitalized.

On September 11, 2023, the Company voluntarily delisted its common shares from the Nasdaq Capital Market. The Company’s common shares are currently listed on the Toronto Stock Exchange in Canada under the trading symbol “ILLM”.

As at September 30, 2023, the Company had substantial certainty over securing a commitment of up to a maximum of $10,000 funding from the National Research Council’s Industrial Research Assistance Program (“IRAP”) towards eligible research and development expenses. On October 6, 2023, the formal documentation was executed. The commitment covers expenses incurred for the period April 1, 2023 to December 31, 2024. As of the date of this report, the Company has identified and received approval for the eligible IRAP expenses incurred for the period April 1, 2023 to June 30, 2023. During the three and nine months ended September 30, 2023, $1,376 and $1,376 of eligible expenses for recovery was recognized as a reduction to sales and marketing costs and technology costs on the Condensed Interim Consolidated Statement of Comprehensive Income (Loss). As a result of the IRAP funding, previously capitalized development expenses were reversed and the net effect on the Condensed Interim Consolidated Statement of Comprehensive Income (Loss) was $707.

Effective November 13, 2023 and subject to TSX approval, the Company intends to commence a NCIB to purchase for cancellation up to 4,330,226 of its outstanding common shares.

The NCIB will also have an ASPP component with its designated broker to allow for the purchase of shares under the NCIB at times when illumin normally would not be active in the market due to internal trading black-out periods. Such purchases will be determined by the broker at its sole discretion, based on the purchasing parameters set out by the Company in accordance with the rules of the TSX, applicable securities laws and the terms of the ASPP. During the term of the ASPP, the Company will not communicate any material undisclosed or non-public information to the trading staff of the broker. Accordingly, the broker may make purchases regardless of whether a trading blackout period is in effect or whether there is material undisclosed or non-public information about the Company at the time that purchases are made under the ASPP.

 

The NCIB was approved by the board on November 8, 2023 and announced on November 9, 2023.

Factors Affecting the Company’s Performance

 

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

 

Economic factors

 

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

 

Seasonality

 

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

 

Foreign Currency

 

A large portion of the Company’s revenue is earned in U.S. dollars from customers based in the U.S. Our results of operations are converted into our functional currency, Canadian dollars, using the average foreign exchange rates for the Condensed Interim Consolidated Statement of Comprehensive Income (Loss) and the spot rate for the Condensed Interim Consolidated Statement of Financial Position for each period presented. Given the material magnitude of our revenue earned in U.S. dollars, our operating results may be adversely impacted by an increase in the value of the Canadian dollar in relation to the U.S. dollar.

 

 

Results for the three and nine months ended September 30, 2023 and 2022

The following table provides selected financial information from the Condensed Interim Consolidated Statements of Income (Loss) for the three and nine months ended September 30, 2023 and 2022:

 

			Three months ended								Nine months ended
			September 30,				September 30,				September 30,				September 30,
			2023				2022 (As restated)3				2023				2022 (As restated)3
Revenue		$	29,628			$	28,948			$	89,313			$	81,029
By line of service:
Managed services			17,268				20,425				54,344				54,338
Self-service			12,360				8,523				34,969				26,691
By geography:
U.S.			17,763				20,864				56,975				54,924
Canada			2,718				3,495				8,510				12,955
Europe, LATAM & Other4			9,147				4,589				23,828				13,150
Gross Profit (Net Revenue) 1			13,889				14,845				42,247				41,428
Adjusted EBITDA1			194				1,639				(1,064	)			3,310
Loss from operations			(2,929	)			(1,146	)			(10,387	)			(5,300	)
Net income (loss)			762				3,153				(8,409	)			66
Net income (loss) per share (basic and diluted) 2			0.01				0.05				(0.15	)			0.00

(1)

As defined in “Non-IFRS Financial Measures”.

(2)

Exercisable options to purchase 687,669 (2022 – 657,801) common shares were outstanding as at September 30, 2023. The weighted average number of options and warrants were excluded from the calculation of diluted loss per share for the nine months ended September 30, 2023 because their inclusion would have been anti-dilutive.

(3)

See “Restatement of previously issued financial statements” disclosure in this MD&A.

(4)

This line includes revenue previously classified in the U.S. geography according to billing arrangements. Management considers current breakdown more relevant and reflective of business in each geography.

 

Three months ended September 30, 2023 and 2022

 

Revenue for the quarter was $29,628, an increase of $680, or 2%, from the same prior year period. The Company’s managed service revenue for the quarter was $17,268, a decrease of $3,157, or 15%, from the same prior year period. The Company’s self-service revenue for the quarter was $12,360, an increase of $3,837, or 45%, from the same prior year period. The increase in total revenue for the quarter was primarily a result of growth in our illumin self-service business.

 

Revenue generated in the United States for the quarter was $17,763, a decrease of $3,101, or 15%, from the same prior year period. Revenue generated in Canada for the quarter was $2,718, a decrease of $777, or 22%, from the same prior year period. Revenue outside of North America for the quarter was $9,147, an increase of $4,558, or 99%, driven by revenue generated in LATAM subsidiaries.

 

Adjusted EBITDA for the quarter was $194, a decrease of $1,445 from the same prior year period and was primarily attributable to higher operating expenses and lower margin from business outside North America. This increase in operating expenses was mostly derived from growth in strategic investments started in 2022 that are now fully impacting our 2023 results. Net income for the quarter was $762, a decrease of $2,391, primarily as a result of increases in overall operating costs and lower margin revenue, offset by the recognition of a current income tax benefit from losses carried back within illumin Inc.

 

 

Nine months ended September 30, 2023 and 2022

 

Revenue for the period was $89,313, an increase of $8,284, or 10% from the same prior year period. The Company’s managed service revenue for the period was $54,344, an increase of $6, or relatively unchanged, from the same prior year period. The Company’s self-service revenue for the period was $34,969, an increase of $8,278, or 31%, from the same prior year period. The increase in total revenue for the period was primarily a result of higher spend by existing clients that, because of a short learning curve, have gained traction on our illumin platform resulting in organic growth.

 

Revenue generated in the United States for the period was $56,975, an increase of $2,051, or 4%, from the same prior year period. Revenue generated in Canada for the period was $8,510, a decrease of $4,445, or 34% from the same prior year period. Revenue outside North America for the period was $23,828, an increase of $10,678, or 81%, the increase was driven by revenue generated in LATAM subsidiaries.

 

Adjusted EBITDA for the period was ($1,064), a decrease of $4,374 from the same prior year period and was primarily attributable to higher operating expenses and lower margins from business outside North America. This increase in operating expenses was mostly derived from growth in strategic investments started in 2022 that are now fully impacting the 2023 results. Net income (loss) for the period was ($8,409), a decrease of $8,475, primarily as a result of an increase in operating costs and lower margin revenue, and foreign exchange due to a weakened U.S. dollar compared to the prior year period, partially offset by the recognition of a current income tax benefit from losses carried back within illumin Inc.

 

Net Revenue

 

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

 

			Three months ended								Nine months ended
			September 30,				September 30,				September 30,				September 30,
			2023				2022				2023				2022
Revenue		$	29,628			$	28,948			$	89,313			$	81,029
Media costs			15,739				14,103				47,066				39,601
Net Revenue			13,889				14,845				42,247				41,428
Net Revenue Margin			47	%			51	%			47	%			51	%

 

Three months ended September 30, 2023 and 2022

 

Media costs are comprised of advertising impressions that the Company purchases from real-time advertising exchanges or through other third parties. Media costs were $15,739 for the quarter compared to $14,103 for the same prior year period, for an increase of $1,636, or 12%. This increase in media costs was attributable to the increased revenue during the period, partly due to the increased self-service revenue, which has lower margins than managed service revenue. Net Revenue Margin was 46.9% for the quarter compared to 51.3% for the same prior year period. This drop in Net Revenue Margin was largely due to increased self-service revenue which has lower margins.

 

Nine months ended September 30, 2023 and 2022

 

Media costs are comprised of advertising impressions that the Company purchases from real-time advertising exchanges or through other third parties. Media costs were $47,066 for the period compared to $39,601 for the same prior year period, for an increase of $7,465, or 19%. This increase in media costs was attributable to the increased revenue during the period partly due to the increased self-service revenue, which has lower margins than managed. Net Revenue Margin was 47.3% for the quarter compared to 51.1% for the same prior year period. This drop in Net Revenue Margin was largely due to increased self-service revenue which has lower margins.

 

 

Reconciliation of Net income (loss) to Adjusted EBITDA for the three and nine months ended September 30, 2023 and 2022

 

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

			Three months ended								Nine months ended
			September 30,				September 30,				September 30,				September 30,
			2023				2022 (As restated)1				2023				2022 (As restated)1
Net income (loss) for the period		$	762			$	3,153			$	(8,409	)		$	66
Adjustments:
Finance costs (income)			(612	)			158				(1,594	)			430
Foreign exchange loss (gain)			(1,666	)			(5,836	)			793				(7,228	)
Depreciation and amortization			1,433				1,125				4,372				3,527
Income tax expense (benefit)			(1,413	)			1,379				(1,177	)			1,432
Share-based compensation			1,571				1,544				4,584				4,606
Severance expenses			119				116				367				398
Other expenses			-				-				-				79
Total adjustments			(568	)			(1,514	)			7,345				3,244
Adjusted EBITDA		$	194			$	1,639			$	(1,064	)		$	3,310

(1)

See “Restatement of previously issued financial statements” disclosure in this MD&A.

 

Three months ended September 30, 2023 and 2022

 

Adjusted EBITDA for the three months ended September 30, 2023 was $194 compared to $1,639 for the same prior year period. The year-over-year decrease of $1,445 was primarily attributable to higher operating expenses as discussed under the operating expenses section.

 

Nine months ended September 30, 2023 and 2022

 

Adjusted EBITDA for the nine months ended September 30, 2023 was ($1,064) compared to $3,310 for the same prior year period. The year-over-year decrease of $4,374 was primarily attributable to higher operating expenses as discussed under the operating expenses section.

 

 

Operating Expenses, Finance Costs, and Foreign Exchange

 

The following table summarizes various expenses for the three and nine months ended September 30, 2023 and 2022:

 

			Three months ended								Nine months ended
			September 30,				September 30,				September 30,				September 30,
			2023				2022 (As restated)1				2023				2022 (As restated)1
Sales and marketing		$	6,336			$	5,904			$	19,023			$	16,746
Technology			4,471				4,244				14,937				11,765
General and administrative			3,007				3,174				9,718				10,084
Share-based compensation			1,571				1,544				4,584				4,606
Depreciation and amortization			1,433				1,125				4,372				3,527
Finance costs (income)			(612	)			158				(1,594	)			430
Foreign exchange loss (gain)			(1,666	)			(5,836	)			793				(7,228	)

(1)

See “Restatement of previously issued financial statements” disclosure in this MD&A.

 

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

 

Sales and marketing expenses

 

Sales and marketing expenses consist of all costs associated with selling and marketing the Company’s services. The costs include all salary and benefit costs, commissions and variable compensation, travel, marketing, payroll taxes and employee health and related benefit expenses for the sales, marketing, and account management teams. Sales and marketing expenses for the quarter were $6,336, an increase of $432, or 7%, compared to the same period of the prior year. The year-over-year increase was primarily related to increased salaries and benefits costs, consulting, and marketing spend. Sales and marketing expenses represented 21% of revenue for the quarter, compared to 20% in the prior year period.

 

During the quarter, the Company recognized $238 in government grants related to sales and marketing costs from IRAP compared to nil for the prior year period. Excluding government grants, sales and marketing expenses for the quarter increased by $670 compared to the same period from the prior year and represented 22% of revenue compared to 20% for the same period of the prior year.

 

Sales and marketing expenses for the nine month period were $19,023, an increase of $2,277, or 14%, compared to the same period of the prior year. The year-over-year increase was primarily related to increased salaries and benefits costs, consulting, and marketing spend. Sales and marketing expenses represented 21% of revenue for the nine month period, compared to 21% in the prior year period.

 

During the quarter, the Company recognized $238 in government grants related to sales and marketing costs from IRAP compared to nil for the prior year period. Excluding government grants, sales and marketing expenses for the quarter increased by $2,515 compared to the same period from the prior year and represented 22% of revenue compared to 21% 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 are comprised of salary and benefit costs and costs associated with housing the required computer equipment. Technology expenses for the quarter were $4,471, an increase of $227, or 5%, compared to the same period of the prior year. Excluding capitalized salaries and government grants, technology expenses for the quarter increased by $2,028 compared to the same period from the prior year and represented 24% of revenue compared to 18% for the same period of the prior year. The year-over-year increase was primarily related to an increase in the size of the team and the average employee compensation, as well as increases in data hosting costs that were largely due to macroeconomic factors in Europe.

 

During the quarter, the Company capitalized $1,579 of salary costs that related to revenue generating technology compared to $916 for the same prior year period.

 

During the quarter, the Company recognized $1,138 in government grants related to technology from IRAP compared to nil for the prior year period.

 

Technology expenses for the nine month period were $14,937, an increase of $3,172, or 27%, compared to the same period of the prior year. Excluding capitalized salaries and government grants, technology expenses for the nine month period increased by $6,063 compared to the same period from the prior year and represented 23% of revenue compared to 18% for the same period of the prior year. The year-over-year increase was primarily related to an increase in the size of the team and the average employee compensation, as well as increases in data hosting costs that were largely due to macroeconomic factors in Europe.

 

During the nine month period, the Company capitalized $4,403 of salary costs that related to revenue generating technology compared to $2,650 for the same prior year period.

 

During the nine month period, the Company recognized $1,138 in government grants related to technology from IRAP compared to nil for the prior year period.

 

General and administrative

 

General and administrative expenses include salaries and benefits of the administrative staff, occupancy costs, public company fees, insurance, professional fees, and supplies. General and administrative expenses for the quarter were $3,007, a decrease of $167, or 5%, compared to the same period of the prior year. The year-over-year decrease was primarily related to a focus on cost reduction in non-strategic areas of the Company. General and administrative expenses for the quarter represented 10% of revenue compared to 11% for the same period of the prior year.

 

General and administrative expenses for the nine month period were $9,718, a decrease of $366, or 4%, compared to the same period of the prior year. The year-over-year decrease was primarily related to decreased insurance and professional fees, as well as a focus on cost reduction in non-strategic areas of the Company, which have been reallocated to key areas in the business, such as Technology

and Marketing. General and administrative expenses for the nine month period represented 11% of revenue compared to 12% for the same period of the prior year.

 

 

Share-based compensation

 

Share-based compensation expense for the quarter was $1,571 and was relatively flat to the prior year period.

 

Share-based compensation expense for the nine month period was $4,584, a decrease of $22, and was relatively unchanged compared to the same period of the prior year. This decrease in share-based compensation expense was related to fully vested grants that are no longer expensed as compared to the prior year period.

 

Depreciation and amortization

 

Depreciation and amortization expense for the quarter was $1,433, an increase of $308, or 27%, compared to the same period of the prior year. The year-over-year increase was attributable to the growing balance of intangibles and fixed assets.

 

Depreciation and amortization expense for the nine month period was $4,372, an increase of $845, or 24%, compared to the same period of the prior year. The year-over-year increase was attributable to the growing balance of intangibles and fixed assets.

 

Finance costs (income)

 

Finance costs (income) for the quarter were ($612), a change of $770, compared to the same period of the prior year. The change was due to an increase in finance income and was primarily due to higher interest income earned during the period.

 

Finance costs (income) for the nine month period were ($1,594), a change of $2,024 compared to the same period of the prior year. The change was due to an increase in finance income and was primarily due to the interest income earned during the period as a result of higher interest rates and the repayment of debt earlier in the year.

 

Foreign exchange loss (gain)

 

Foreign exchange loss (gain) consists of the realized and unrealized exchange differences due to fluctuations between the Canadian dollar, the U.S. dollar, and the Euro. The Company recorded a net foreign exchange gain of $1,666 for the quarter compared to $5,836 for the same prior year period. The foreign exchange gain was a result of an increase in the U.S. dollar relative to the prior year quarter.

 

The Company recorded a net foreign exchange loss of $793 for the nine month period compared to a gain of $7,228 for the same prior year period. The foreign exchange loss was a result of a decrease in the U.S. dollar balance held by the Company relative to the prior period and a weaker U.S. dollar.

 

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

 

 

Summary of Quarterly Results

 

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

 

Quarter Ended
			Sept 30, 2023				Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Sep 30, 20221				Jun 30, 20221				Mar 31, 20221				Dec 31, 20211
Revenue		$	29,628			$	33,190			$	26,496			$	40,010			$	28,948			$	28,260			$	23,821			$	36,802
Net income (loss)			762				(5,608	)			(3,562	)			(818	)			3,153				1,164				(4,250	)			2,645
Net income (loss) per share		$	0.01			($	0.10	)		($	0.06	)		($	0.01	)		$	0.05			$	0.02			($	0.07	)		$	0.04
Weighted average number of shares outstanding			53,923,067				56,929,238				56,811,532				56,903,951				57,524,111				59,414,313				60,886,379				60,720,142

(1)

These quarters have been restated. See “Restatement of previously issued financial statements” disclosure in this MD&A.

 

LIQUIDITY AND CAPITAL RESOURCES

 

Selected financial information from the statements of financial position as at September 30, 2023 and December 31, 2022 are as follows:

 

			September 30, 2023				December 31, 2022
Cash and cash equivalents		$	59,823			$	85,941
Working capital(1)			68,661				90,232
Total assets			119,387				141,647
Current liabilities			27,775				33,502
Other non-current liabilities			7,675				5,019
Shareholders’ equity			83,937				103,126

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

 

As at September 30, 2023, the Company had cash and cash equivalents of $59,823 compared to $85,941 as at December 31, 2022 for a decrease of $26,118, or 30%. This decrease was substantially attributable to a combination of share repurchases, net loan repayments, lease payments, and investments in our platform, partially offset by positive cash from operations.

 

Cash flows generated from operations were $1,307 during the nine months ended September 30, 2023, compared to cash flows used in operations of $1,192 during the same prior year period. The increase of $2,499 in cash flow from operations was primarily due to the change in non-cash working capital largely due to an increase in interest received, as well as management’s focus on managing its accounts payable and receivables.

 

Cash flows used in investing activities were $5,515 during the nine months ended September 30, 2023, compared to $2,812 during the same prior year period. The increase was primarily due to an increase in investments in our platform and property and equipment compared to the same prior year period.

 

Cash flows used in financing activities were $21,461 during the nine months ended September 30, 2023, compared to $16,112 during the same prior year period. The increase was primarily due to repayment of the term debt and share repurchases made under the NCIB and the SIB.

 

 

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

Management is also actively involved in the review and approval of planned expenditures. The Company’s principal cash requirements are for capital expenditures and working capital needs. The Company uses its operating cash flows 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 Condensed Interim Consolidated Financial Statements which are available on SEDAR+ at www.sedarplus.com.

 

Common Shares

 

Changes in the number of issued common shares of the Company from December 31, 2022 to September 30, 2023 are as follows:

		Number of Common Shares
Balance as at December 31, 2022			56,808,921
Shares issued – Options exercised			6,667
Shares issued – DSUs exercised			37,415
Shares issued – RSUs exercised			125,546
Repurchase of shares for cancellation under NCIB			(701,114	)
Repurchase of shares for cancellation under SIB			(4,593,200	)
Balance as at September 30, 2023			51,684,235

Preference Shares

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

 

Stock Options

The Company presently issues stock options, deferred share units (“DSUs”), performance share units (“PSUs”) and restricted share units (RSUs”) pursuant to its omnibus long-term incentive plan (the “Omnibus Incentive Plan”). Prior to June 16, 2020, the Company issued stock options pursuant to its predecessor stock option plan (the “Stock Option Plan”) and DSUs pursuant to its predecessor deferred share unit plan (the “DSU Plan”). Although the Company no longer issues new stock options or DSUs pursuant to the predecessor Stock Option Plan and DSU Plan, respectively, previously issued stock options and DSUs remain outstanding and are governed by the existing plans under which they were initially issued.

The maximum number of common shares reserved for issuance, in the aggregate, under the Omnibus Incentive Plan, the Stock Option Plan, the DSU Plan and any other security-based compensation arrangement of the Company, collectively, is 15% of the aggregate number of common shares issued and outstanding from time to time. As at September 30, 2023, the Company was entitled to issue a maximum of 7,752,635 equity-based awards collectively under the Omnibus Incentive Plan, the existing Stock Option Plan, the existing DSU Plan and any other security-based compensation arrangement.

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

 

			September 30, 2023								September 30, 2022
			Number of options				Weighted average exercise price				Number of options				Weighted average exercise price
Options outstanding – January 1			704,469			$	1.60				1,094,001			$	1.90
Granted			-				-				-				-
Forfeited or cancelled			(26,800	)			1.33				(138,333	)			4.13
Exercised			(6,667	)			1.01				(247,866	)			1.51
Options outstanding – September 30			671,002				1.62				707,802				1.60
Options exercisable – September 30			671,002				1.62				657,801				1.61

 

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

 

			September 30, 2023								September 30, 2022
			Number of options				Weighted average exercise price				Number of options				Weighted average exercise price
Options outstanding – January 1			23,334			$	2.09				23,334			$	2.09
Forfeited or cancelled			(6,667	)			2.09				-				-
Options outstanding – September 30			16,667				2.09				23,334				2.09
Options exercisable – September 30			16,667				2.09				-				-

 

Deferred Share Units

 

During the three and nine months ended September 30, 2023, the Company issued 83,664 and 83,664 DSUs to employees, officers, directors, and consultants of the Company as compared to nil and 110,136 during the prior year period.

 

During the three and nine months ended September 30, 2023, 5,749 and 37,415 DSUs were exercised as compared to 14,134 and 177,638 during the prior year period. As at September 30, 2023, the Company had 709,147 DSUs outstanding.

 

 

Restricted Share Units

 

During the three and nine months ended September 30, 2023, the Company issued 41,153 and 1,544,243 RSUs to employees, officers, directors, and consultants of the Company as compared to 226,420 and 1,796,579 during the prior year period.

 

During the three and nine months ended September 30, 2023, 79,338 and 125,546 RSUs were exercised as compared to 19,908 and 302,759 during the prior year period. As at September 30, 2023, the Company had 5,461,806 RSUs outstanding.

 

RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

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

 

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

 

The Company concluded that the above errors were material to the previously issued consolidated financial statements and as such, the Company has restated its comparative consolidated financial statements, as applicable. The following table presents the impact of the restatements on the Company’s comparative Condensed Interim Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2022:

 

			Three months ended								Nine months ended
			September 30, 2022				September 30, 2022				September 30, 2022				September 30, 2022
			As Reported				As Restated				As Reported				As Restated
Share-based compensation expense		$	1,894			$	1,544			$	5,448			$	4,606
Operating expenses			16,341				15,991				47,570				46,728
Loss from operations			(1,496	)			(1,146	)			(6,143	)			(5,300	)
Net income before income taxes			4,181				4,532				655				1,498
Net income (loss) for the period			2,803				3,153				(777	)			66
Basic and diluted net income (loss) per share			0.05				0.05				(0.01	)			0.00
Comprehensive income (loss) for the period			3,027				2,929				(787	)			76

The following table presents the impact of the restatements on the Company’s comparative Condensed Interim Consolidated Statement of Changes in Shareholders’ Equity as at September 30, 2022:

			As Reported				As Restated
Common shares		$	118,212			$	120,971
Contributed surplus			9,268				4,207
Deficit			(22,825	)			(20,522	)

 

 

CONTRACTUAL OBLIGATIONS

 

The following are the contractual maturities for the financial liabilities:

 

			September 30, 2023
			Carrying Amount				Total contractual cash flows				Less than 1 year				1 to 3 years				>3 years
Accounts payable and accrued liabilities		$	24,873			$	24,873			$	24,873			$	-			$	-
International loans			423				423				344				79				-
Term loans			-				-				-				-				-
Lease obligations			8,904				9,689				2,343				4,934				2,412
			34,200				34,985				27,560				5,013				2,412

 

			December 31, 2022
			Carrying Amount				Total contractual cash flows				Less than 1 year				1 to 3 years				>3 years
Accounts payable and accrued liabilities		$	26,545			$	26,545			$	26,545			$	-			$	-
International loans			432				432				241				191				-
Term loans			3,791				3,963				3,963				-				-
Lease obligations			6,650				7,113				2,882				3,092				1,139
			37,418				38,053				33,631				3,283				1,139

 

OFF-BALANCE SHEET ARRANGEMENTS

 

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

 

TRANSACTIONS WITH RELATED PARTIES

 

During the three and nine months ended September 30, 2023, 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. illumin 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. Material 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.sedarplus.com.

 

 

CHANGES IN ACCOUNTING POLICIES

 

Recently adopted accounting pronouncements

 

For the nine months ended September 30, 2023, the Company has adopted new accounting policies as disclosed in Note 2 of the Company’s Condensed Interim Consolidated Financial Statements. The application of those amendments and interpretations had no significant impact on the Company’s consolidated financial position or results of operations.

 

DISCLOSURE CONTROLS AND INTERNAL CONTROL OVER FINANCIAL REPORTING

 

Management, under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer (collectively the “Certifying Officers”), is responsible for establishing and maintaining disclosure controls and procedures (“DC&P”), as that term is defined in National Instrument 52-109 Certification of Disclosure in Issuer’s Annual and Interim Filings and Rule 13a-15(e) of the U.S. Securities Exchange Act of 1934 (the “Exchange Act”). DC&P have been designed to ensure that information required to be disclosed by the Company is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure. Management, including the Certifying Officers evaluated the effectiveness of the Company’s DC&P and have concluded that, because of the material weakness in the Company’s ICFR described below, the Company’s DC&P were not effective as of September 30, 2023.

 

Management, under the supervision of the Certifying Officers, is responsible for establishing and maintaining an adequate system of “internal control over financial reporting” (“ICFR”), as that term is defined in National Instrument 52-109 Certification of Disclosure in Issuer’s Annual and Interim Filings and Rule 13a-15(f) of the Exchange Act. Management, including the Certifying Officers, have assessed the effectiveness of the Company’s ICFR in accordance with the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management, including the Certifying Officers, have determined that the Company’s ICFR was not effective as of September 30, 2023.

 

As of September 30, 2023, management, including the Certifying Officers, determined a material weakness existed in the Company’s ICFR in the assessment of complex accounting transactions and in the design and implementation of the oversight processes related to the appropriate calculation of share-based compensation expense and the subsequent classification of exercised options between Share Capital and Contributed Surplus. One of the impacts of the material weakness described above resulted in the restatement of the 2021 Consolidated Statement of Comprehensive Income (Loss) and a further adjustment for the year ended December 31, 2022. The improper classification within Shareholders’ Equity resulted in an overstatement of Contributed Surplus and an understatement of Share Capital. Management determined that there was a deficiency in the adequacy of the review of the process as well as having individuals with the requisite technical accounting knowledge preparing the journal entries.

 

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

 

 

Management has concluded that, except as otherwise described above, there were no changes to the Company's ICFR for the three and nine months ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, the Company's ICFR.

 

OUTSTANDING SHARE DATA

 

As at November 8, 2023, 51,684,235 common shares and no preference shares were issued and outstanding. In addition, as at November 8, 2023, there were 687,669 stock options outstanding, each of which represents the right to acquire one common share, with exercise prices ranging from $0.96 to $2.09 per share. As at November 8, 2023, there were 709,147 DSUs outstanding and 5,442,473 RSUs outstanding, each of which represents the right to acquire one common share.

 

RISK FACTORS

 

illumin is exposed to a variety of business risks, financial and accounting risks, and industry risks in the normal course of operations. A detailed description of risk factors associated with the Company’s business is given in the “Risk Factors” section of the Annual Information Form for the year ended December 31, 2022, which is available under the Company’s profile on SEDAR+ at www.sedarplus.com.

 

ADDITIONAL INFORMATION

 

Additional information relating to the Company, including the Company’s AIF, is posted on SEDAR+ at www.sedarplus.com. The Company’s common shares are listed on the TSX under the symbol “ILLM” (formally “AT”).

 

 

 

18

 

Exhibit 99.3

 

 

 

FORM 52-109F2

 

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

 

 

I, Tal Hayek, the Chief Executive Officer of illumin Holdings Inc., certify the following:

 

1.

Review: I have reviewed the interim financial statements and interim MD&A (together, the “interim filings”) of illumin Holdings Inc. (the “issuer”) for the interim period ended September 30, 2023.

 

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 statements 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(s) and I have, as at the end of the period covered by the interim filings,

 

(a)

designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

 

(i)

material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

 

(ii)

information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

 

(b)

designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.

 

5.1

Control framework: The control framework the issuer's other certifying officer and I used to design the issuer's ICFR is based on the principles set out in the “Internal Control - Integrated Framework (2013)” published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

 

 

 

5.2

ICFR -- material weakness relating to design: The Issuer has disclosed in its interim MD&A for each material weakness relating to design existing at the end of the interim period

 

(a)

a description of the material weakness;

 

(b)

the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

 

(c)

the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

 

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, 2023 and ended on September 30, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.

 

Date: November 9, 2023

 

 

 

 

 

/s/ Tal Hayek                                

Tal Hayek

Chief Executive Officer

 

 

 

Exhibit 99.4

 

 

FORM 52-109F2

 

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

 

 

I, Elliot Muchnik, the Chief Financial Officer of illumin Holdings Inc., certify the following:

 

1.

Review: I have reviewed the interim financial statements and interim MD&A (together, the “interim filings”) of illumin Holdings Inc. (the “issuer”) for the interim period ended September 30, 2023.

 

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 statements 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(s) and I have, as at the end of the period covered by the interim filings,

 

(a)

designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

 

(i)

material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

 

(ii)

information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

 

(b)

designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.

 

5.1

Control framework: The control framework the issuer's other certifying officer(s) and I used to design the issuer's ICFR is based on the principles set out in the “Internal Control-Integrated Framework (2013) published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

 

 

5.2

ICFR -- material weakness relating to design: The Issuer has disclosed in its interim MD&A for each material weakness relating to design existing at the end of the interim period

 

(a)

a description of the material weakness;

 

(b)

the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

 

(c)

the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

 

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, 2023 and ended on September 30, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.

 

Date: November 9, 2023

 

 

 

 

 

/s/ Elliot Muchnik                       

Elliot Muchnik

Chief Financial Officer

EXHIBIT 99.5

illumin Reports Third Quarter 2023 Financial Results

Total Revenue of $29.6 million Up 2.4% YoY
348% YoY Increase in illumin Self-Serve Revenue

(All monetary figures are expressed in thousands of Canadian dollars unless otherwise stated)

TORONTO, Nov. 09, 2023 (GLOBE NEWSWIRE) -- illumin Holdings Inc. (TSX: ILLM) (“illumin” or the “Company”), a journey advertising technology company that empowers marketers to make smarter decisions about communicating with online consumers, today announced its financial results for the third quarter ended September 30, 2023.

Third Quarter 2023 Highlights

• Third quarter 2023 revenue was $29.6 million up 2.4% year-over-year, reflecting growth in our self-serve business.
• illumin self-serve revenue was up 348% to $5.1 million, compared to $1.2 million in the year ago period and represented 17% of total revenue, up from 16% in Q2 2023. Self-serve growth was driven by an increase in new customers and platform utilization.
• The Company onboarded 33 net new self-serve clients during the quarter, reflecting sales initiatives targeting higher-spend clients and positioning the Company for continued illumin self-serve revenue growth in Q4 2023.
• Third quarter 2023 gross margin was 47%, compared to 51% for the same period in 2022, reflecting changes in both geographic mix and an increasing proportion of self-service revenue.
• Net revenue or gross profit (revenue less media costs) for the three months ended September 30, 2023 was $13.9 million, compared with $14.8 million in the same quarter in the prior year.
• Adjusted EBITDA was $0.2 million for the third quarter, compared to $1.6 million in the prior year period, primarily due to ongoing strategic investments in R&D, sales and marketing to support our growth as well as lower margin revenue outside of North America.
• Q3 2023 net income was $0.8 million, compared to net income of $3.2 million in Q3 2022, the decrease was primarily a result of lower Adjusted EBITDA and foreign exchange impact due to a weakened US dollar compared to the prior year period.
• At September 30, 2023, the Company had cash and cash equivalents of $60 million, compared to $86 million as of December 31, 2022. This decrease was attributable to positive cash flow from operations ($1.3 million), which was more than offset by a combination of share repurchases ($14.6 million), net loan repayments ($4.4 million), lease payments ($2.4 million), and strategic investments in our business ($5.5 million).
• At the conclusion of the previously announced substantial issuer bid (“SIB”) on August 31, 2023, the Company repurchased 4.6 million of its outstanding common shares at a purchase price of $2.65 per share for an aggregate purchase price of approximately $12.2 million.
• On September 11, we voluntarily delisted and ceased trading on the Nasdaq Capital Market. illumin’s shares continue to be listed on the Toronto Stock Exchange under the trading symbol “ILLM”.
• On October 26, the Company announced the planned transition of its Chief Executive Officer, Tal Hayek. Once a new CEO is appointed, Mr. Hayek will transition from his current CEO role to that of Non-Executive Vice Chairman on the Board of Directors of illumin.
  

Tal Hayek, Co-Founder and Chief Executive Officer of illumin, stated, “During the third quarter, we generated substantial year-over-year growth in illumin self-serve revenue. We also continued to enhance the illumin brand by establishing a fully integrated connection with Meta to provide new Facebook and Instagram capabilities, allowing end-to-end Social Advertising, and thereby providing marketers with additional connected journey advertising intelligence.”

Mr. Hayek added, “We are encouraged by the year-over-year growth generated by our illumin self-serve offering and together with very positive and ongoing customer feedback, we will look to refine our sales efforts and identify additional strategic opportunities within the marketplace for this offering. We have also bolstered our efforts aimed at signing long-term self-serve contracts, including guaranteed revenue minimums with terms greater than one year”.

“Finally, regarding my intention to transition my role as a co-founder of illumin - I’m extremely proud of what we have accomplished together with this incredibly talented team. We have brought a revolutionary illumin journey advertising platform to life. I am committed to working closely with the Board and my eventual successor for a smooth transition and to ensure we take the Company to the next level,” concluded Mr. Hayek.

Elliot Muchnik, illumin’s Chief Financial Officer, commented, “In addition to sales growth, we achieved positive Adjusted EBITDA in the quarter despite a challenging macroeconomic environment. Moreover, our planned normal course issuer bid (“NCIB”), following the completion of our SIB, shows our unwavering belief in illumin’s potential.

In addition, the Company generated positive cash from operations of $1.3 million for the nine months ended, an improvement of $2.5 million from the prior year. This further bolsters our exceptionally strong balance sheet and allows us to continue investing in illumin’s future and to build upon our market-leading status.”

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

	Three months ended						Nine months ended
	September 30,			September 30,			September 30,			September 30,
		2023		2022 (As restated)				2023		2022 (As restated)
Net income (loss) for the period	$	762		$	3,153		$	(8,409	)	$	66
Adjustments:
Finance costs (income)		(612	)		158			(1,594	)		430
Foreign exchange loss (gain)		(1,666	)		(5,836	)		793			(7,228	)
Depreciation and amortization		1,433			1,125			4,372			3,527
Income tax expense (benefit)		(1,413	)		1,379			(1,177	)		1,432
Share-based compensation		1,571			1,544			4,584			4,606
Severance expenses		119			116			367			398
Other expenses		-			-			-			79
Total adjustments		(568	)		(1,514	)		7,345			3,244
Adjusted EBITDA	$	194		$	1,639		$	(1,064	)	$	3,310

Conference Call Details:

Date: Thursday, November 9, 2023
Time: 8:30AM Eastern Time

To register for the conference call webcast and presentation, please visit

https://illumin.com/investor-information/earnings-call/

Please connect 15 minutes prior to the conference call to ensure time for any software download that may be needed to hear the webcast.

A recording of the conference call webcast will be available after the call by visiting the Company’s website at https://illumin.com/investor-information/

Non-IFRS Measures

This press release makes reference to certain non-IFRS measures. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS, and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. We use non-IFRS measures including “revenue less media costs”, “revenue less media costs margin”, “Adjusted EBITDA” and “Adjusted Net Income (Loss)” (as well as other measures discussed elsewhere in this press release).

The term “revenue less media costs margin” refers to the amount that “revenue less media costs” represents as a percentage of total revenue for a given period, while the term “revenue less media costs” refers to the net amount of revenue after deducting direct media costs. Revenue less media costs 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.

“Adjusted EBITDA” refers to net income (loss) after adjusting for finance costs (income), impairment loss, fair value gain, income taxes, foreign exchange loss (gain), 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 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.

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

These non-IFRS measures are used to provide investors with supplemental measures of our operating performance and thus highlight trends in our business that may not otherwise be apparent when relying solely on IFRS measures. We believe that securities analysts, investors, and other interested parties frequently use non-IFRS measures in the evaluation of issuers, and that these non-IFRS measures are relevant to their analysis of the Company.

About illumin:

illumin is a journey advertising platform that enables marketers to reach consumers at every stage of their journey by leveraging advanced machine learning algorithms and real-time data analytics. The company’s mission is to illuminate the path for brands to connect with their customers through the power of data-driven advertising. Headquartered in Toronto, Canada, illumin serves clients across North America, Latin America, and Europe.

Disclaimer with regard to forward looking statements

Certain statements included herein constitute “forward-looking statements” within the meaning of applicable securities laws. These statements may relate to the Company’s future financial outlook, financial position, anticipated events, results, success of its work from home policies, the Company’s strategy with respect to the illumin platform. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management at this time, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Many factors could cause the Company’s actual results, level of activity, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the factors discussed in the "Risk Factors" section of the Company's Annual Information Form dated March 9, 2023 for the fiscal year ended December 31, 2022 (the "AIF") and the Company’s Management Discussion and Analysis for the three and nine months ended September 30, 2023 dated November 9, 2023 (the “MD&A”). A copy of the AIF, MD&A and the Company's other publicly filed documents can be accessed under the Company's profile on the System for Electronic Data Analysis and Retrieval + ("SEDAR+") at www.sedarplus.ca and on the Electronic Data Gathering, Analysis, and Retrieval system (“EDGAR”) at www.sec.gov. The Company cautions that the list of risk factors and uncertainties described in the AIF and the MD&A are not exhaustive and other factors could also adversely affect its results. Readers are urged to consider the risks, uncertainties, and assumptions carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such information.

Except as required by law, illumin does not intend, and undertakes no obligation, to update any forward-looking statement to reflect, in particular, new information or future events.

For further information, please contact:

Steve Hosein Investor Relations Coordinator illumin Holdings Inc. 416-918-5647 investors@illumin.com

Babak Pedram Investor Relations – Canada Virtus Advisory Group Inc. 416-646-6779 bpedram@virtusadvisory.com

David Hanover Investor Relations – U.S. KCSA Strategic Communications 212-896-1220 dhanover@kcsa.com

Please note that the following financial information is an extract from the Company’s Condensed Interim Consolidated Financial Statements (unaudited) for the three and nine months ended September 30, 2023 and 2022 (the “Financial Statements”) provided for readers’ convenience and should be viewed in conjunction with the Notes to the Financial Statements, which are an integral part of the statements. The full Financial Statements and MD&A for the period may be found by accessing SEDAR+ and EDGAR.

illumin Holdings Inc.
Condensed Interim Consolidated Statements of Financial Position
(Unaudited; Expressed in thousands of Canadian dollars)

		September 30, 2023			December 31, 2022
Assets
Current assets
Cash and cash equivalents		$	59,823		$	85,941
Accounts receivable			28,261			33,792
Income tax receivable			2,405			848
Prepaid expenses and other			5,947			3,153
			96,436			123,734
Non-current assets
Deferred tax asset			449			449
Other assets			275			248
Property and equipment			9,171			7,117
Intangible assets			8,186			5,229
Goodwill			4,870			4,870
			119,387			141,647
Liabilities
Current liabilities
Accounts payable and accrued liabilities			24,873			26,545
Income tax payable			215			43
Borrowings			344			4,032
Lease obligations			2,343			2,882
			27,775			33,502
Non-current liabilities
Borrowings			79			191
Deferred tax liability			1,035			1,060
Lease obligations			6,561			3,768
			35,450			38,521
Shareholders’ equity			83,937			103,126
			119,387			141,647

illumin Holdings Inc.
Condensed Interim Consolidated Statements of Comprehensive Loss
(Unaudited; Expressed in thousands of Canadian dollars)
For the three and nine months ended September 30, 2023 and 2022

	Three months ended						Nine months ended
		2023		2022 (As restated)				2023		2022 (As restated)
Revenue
Managed services	$	17,268		$	20,425		$	54,344		$	54,338
Self-service		12,360			8,523			34,969			26,691
		29,628			28,948			89,313			81,029
Media costs		15,739			14,103			47,066			39,601
Gross profit		13,889			14,845			42,247			41,428
Operating expenses
Sales and marketing		6,336			5,904			19,023			16,746
Technology		4,471			4,244			14,937			11,765
General and administrative		3,007			3,174			9,718			10,084
Share-based compensation		1,571			1,544			4,584			4,606
Depreciation and amortization		1,433			1,125			4,372			3,527
		16,818			15,991			52,634			46,728
Loss from operations		(2,929	)		(1,146	)		(10,387	)		(5,300	)
Finance costs (income)		(612	)		158			(1,594	)		430
Foreign exchange loss (gain)		(1,666	)		(5,836	)		793			(7,228	)
		(2,278	)		(5,678	)		(801	)		(6,798	)
Net income (loss) before income taxes		(651	)		4,532			(9,586	)		1,498
Income tax expense (benefit)		(1,413	)		1,379			(1,177	)		1,432
Net income (loss) for the period		762			3,153			(8,409	)		66
Basic and diluted net income (loss) per share		0.01			0.05			(0.15	)		0.00
Other Comprehensive Income (Loss)
Items that may be subsequently reclassified to net income (loss):
Exchange gain (loss) on translating foreign ops		(681	)		(224	)		(734	)		10
Comprehensive income (loss) for the period		81			2,929			(9,143	)		76

illumin Holdings Inc.
Condensed Interim Consolidated Statements of Cash Flows
(Unaudited; Expressed in thousands of Canadian dollars)
For the nine months ended September 30, 2023 and 2022

			2023			2022 (As restated)
Cash provided by (used in)
Operating activities
Net income (loss) for the period		$	(8,409	)		$	66
Adjustments to reconcile net loss to net cash flows
Depreciation and amortization			4,372				3,527
Finance costs (income)			(1,594	)			430
Share-based compensation			4,584				4,606
Foreign exchange loss (gain)			793				(7,228	)
Income tax benefit			(1,177	)			-
Change in non-cash operating working capital
Accounts receivable			4,564				2,637
Prepaid expenses and other			(2,086	)			106
Other assets			(25	)			(361	)
Accounts payable and accrued liabilities			(1,813	)			(4,296	)
Income tax payable			-				(351	)
Income taxes received			133				-
Interest received (paid), net			1,965				(328	)
			1,307				(1,192	)
Investing activities
Additions to property and equipment			(443	)			(162	)
Additions to intangible assets			(5,072	)			(2,650	)
			(5,515	)			(2,812	)
Financing activities
Repayment of term loans			(4,411	)			(1,680	)
Proceeds from international loans			638				1,136
Repayment of international loans			(647	)			(1,407	)
Repayment of leases			(2,411	)			(1,535	)
Repurchase of common shares for cancellation			(14,637	)			(13,000	)
Proceeds from the exercise of stock options			7				374
			(21,461	)			(16,112	)
Decrease in cash and cash equivalents			(25,669	)			(20,116	)
Impact of foreign exchange on cash and cash equivalents			(449	)			6,141
Cash and cash equivalents – beginning of period			85,941				102,209
Cash and cash equivalents – end of period			59,823				88,234
Supplemental disclosure of non-cash transactions
Additions to property and equipment under leases			4,710				3,809

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