MDA Q3 Draft 29102010 for Post Harvey Track Changes

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management’s discussion and analysis of financial condition and results of operations, dated March 26, 2019 of Mood Media Corporation (“Mood Media”, “Mood” or the “Company”) should be read together with the attached audited consolidated financial statements and related notes for the year ended December 31, 2018. Additional historical information related to the Company can be found on SEDAR at www.sedar.com for the fiscal year ended December 31, 2016. The fiscal year of the Company ends on December 31. The Company’s reporting currency is the U.S. dollar and, unless otherwise noted, all amounts (including in the narrative) are in thousands of U.S. dollars except for shares and per-share amounts. Per-share amounts are calculated using the weighted average number of shares outstanding for the period ended December 31, 2018.

This discussion contains forward-looking statements. Please see “Forward-Looking Statements” for a discussion of the risks, uncertainties and assumptions relating to these statements.

As used in this management’s discussion and analysis of financial condition and results of operation, the terms the “Company”, “we”, “us”, “our” or other similar terms refer to Mood Media and its consolidated subsidiaries.

The presentation of any information identified as a non-International Financial Reporting Standards (“IFRS”) measure throughout this document is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with IFRS, and it is presented with the sole purpose of providing readers of this document with relevant information to better assess the company’s operating performance.

Forward-Looking Statements

Certain statements in this management’s discussion and analysis contain “forward-looking” statements that involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this management’s discussion and analysis, such statements use such words as “may,” “will,” “intend,” “should,” “expect,” “expect to,” “believe,” “plan,” “anticipate,” “estimate,” “predict,” “potential,” “continue,” or the negative of these terms or other similar terminology. These statements reflect current expectations regarding future events and operating performance and speak only as of the date of this management’s discussion and analysis. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to, the impact of general market, industry, credit and economic conditions and other risks as described within this document. These forward-looking statements are made as of the date of release of this management’s discussion and analysis, and the Company does not assume any obligation to update or revise them to reflect new events or circumstances. In addition, the Company does not provide financial outlooks or future-oriented financial information in this management’s discussion and analysis and, accordingly, no forward-looking information or statements should be construed as such.

Business Overview

We are a leading global provider of in-store audio, visual and other forms of media and marketing solutions in North America, Europe and Australia to more than 400,000 commercial locations across a broad range of industries including food retail, retail, hospitality, grocery, financial services, auto, and telecom.

We benefit from economies of scope and scale, generating revenue from multiple product and service offerings across more than 40 countries. Our strategy of combining audio, visual and other forms of media has helped our clients enhance their branding and improve the shopping experience for their customers. The breadth and depth of our customizable offerings and the quality of our customer service has helped make us the preferred media and marketing solutions provider to more than 850 North American and international brands. Mood’s strategy is to combine our media services into a single comprehensive experience solution comprising audio, visual, scent, interactive and similar solutions and to leverage our leading market positions and solutions portfolio to enhance financial returns.

Our audio solutions emphasize the use of music to create a distinct atmosphere within a commercial environment. By law, the public performance of music in a commercial environment requires specific-use permissions from the relevant copyright owners. Each country has its own legal system and may have specific copyright rules making global and pan-European compliance a complex undertaking. Furthermore, penalties for infringement vary from country to country and can be significant for commercial enterprises that do not comply with the relevant rules. We have worldwide experience and extensive knowledge of the various licensing requirements throughout the world. We are viewed as an established distribution network by music producers, performance rights organizations and third-party advertisers.

Our visual solutions deliver highly customized content management solutions with a scalable delivery platform to enable retailers to deliver “infotainment”, product information and branding messages to their customers at the point-of-purchase. Our visual solutions range from relatively simple applications to large-scale, highly immersive consumer experiences.

In-store audio, visual and marketing solutions create a communication channel between our clients’ brands and their customers at the point-of-purchase. By enhancing the brand experience of our clients’ consumers and establishing an emotional connection between our clients and their consumers, these products and services can have an impact on consumer purchasing decisions. We tailor both our media’s content and delivery by scheduling specific content to be delivered at a specific time in order to target a specific audience. Our media is delivered through customizable technology systems, supported by ongoing maintenance and technical support and integrated into our clients’ existing IT infrastructure.

Geographic Footprint

Revenue is primarily derived from recurring monthly subscription fees for providing customized and tailored music, visual displays, messaging and other ancillary services through contracts ranging from two to five years. Revenue is also derived from equipment, installation and service fees and royalties.

The Company’s revenue can be divided into two key trading areas: (1) North America (comprising In-Store Media, North America and Technomedia Solutions, LLC, Technomedia NY, LLC, ServiceNET Exp, LLC and Convergence, LLC (collectively, “Technomedia”)) and (2) International (comprising In-Store Media, International).

The Mood North America trading area represented 75% of revenue for the year ended December 31, 2018, while the Mood International trading area represented the remaining 25% of revenue. Geographically, the most significant revenue producing countries in Mood International include France, the United Kingdom, Germany and Netherlands. There are also operations in Australia, Spain, Ireland, the Nordic region, Central and Eastern Europe, South America and Asia.

The Company’s principal place of business is located at 2100 South IH Frontage Road, Suite 200, Austin, Texas 78704. The following table sets forth the material subsidiaries of the Company as at December 31, 2018:

Proportion of Ownership Interest Held by Name of Subsidiary Jurisdiction of Incorporation the Company (directly or indirectly) Muzak, LLC Delaware 100% DMX, LLC Texas 100% Mood Media SAS France 100% Technomedia Solutions, LLC Florida 100% Convergence, LLC Florida 100%

The Company has offices, third-party relationships, affiliates and joint ventures in over 40 countries, including China, India, Greece, Croatia, Singapore, South Africa, New Zealand and South Korea. Management believes that the Company has the broadest geographical reach of any provider of in-store media solutions and that it has market-leading positions based on the number of sites serviced in the United States, Australia, France, Germany, Netherlands and the United Kingdom.

As a company with international reach, the Company may at times engage, or in the past has, directly or indirectly, conducted business with or has sales to various persons and entities in jurisdictions in respect of which economic sanction measures with various restrictions have been imposed by the United States, Canada and/or the European Union member states. Such measures may be revised or removed from time to time. Any sales made pursuant to such business are not material to the Company’s business as a whole, nor to its financial condition. Management of the Company will assess such business on an ongoing basis.

Competitive Landscape

The in-store media and marketing solutions industry is dynamic and characterized by a variety of competitive formats and technology solutions. Management believes that the Company is unique among its competitors given the breadth of its product and service offerings, as well as in its geographic reach. The Company has over four times as many locations as its next largest competitor. Based on locations served, PlayNetwork, Imagesound, KVH Media and POS Audio are currently among the Company’s larger competitors in Europe while PlayNetwork, DMI, Imagesound, Retail Radio and InStore Audio Network are among the Company’s larger competitors in North America.

The Company also competes against unlicensed alternatives. The music industry polices the illegal use of music, with the performance rights organizations being active in this process by inquiring into businesses using music directly. Unlicensed alternatives are not only illegal, but they also do not provide any messaging capabilities, which are considered highly desired for clients with more than one location.

Employees

The Company and its subsidiaries currently employ approximately 1,650 associates across its core markets in Mood North America and Mood International locations. Approximately 900 of the Company’s employees work in operations. Operations provide equipment, installation and maintenance services at the Company’s client’s premises. In countries without an operations team, installation services are outsourced to a variety of third parties. The Company’s operations team manages the Company’s customer service call centers and updates customers on available new media and marketing solutions. Approximately 20% of the Company’s employees are in business development, sales, and after-sales support, which includes the account management of existing clients and the generation of new business. Account management is key to ensuring quality customer service and in retaining the customer base. Account management and sales support provide the Company with a platform for up-selling advanced and new solution technologies to existing clients in day-to-day ongoing operations.

The remainder of the Company’s employees works in finance, technology, creative and content development, human resources, legal and licensing and other areas supporting the core business.

A minimal number of the Company’s employees are unionized in the Company’s North American and French subsidiaries.

Seasonality

Revenues are derived primarily from service subscription billings on subscription agreements with terms ranging from two to five years. As a result, the Company is not as susceptible to significant seasonal fluctuations in its subscription billings. However, the Company also sells and installs audio-visual systems, which can exhibit a seasonal revenue pattern depending upon the timing of shipments to customers.

Recent Developments and Related Party Transactions

Sale of Foreign Joint Venture

On October 22, 2018, the Company completed the sale of assets related to a foreign joint venture for the equivalent of $715. There was no goodwill or intangible assets attributed to the assets sold and therefore there was no amount included in the $118 gain on sale recognized on the asset sale from either goodwill or intangible assets.

Acquisition of Focus Four, LLC (“Focus Four”)

On July 2, 2018, Muzak, LLC (“Muzak), a subsidiary of the Company, acquired certain assets and liabilities of Focus Four, one of its larger franchisees, for $14,530 in cash. A portion of the purchase price in the amount of $2,250 was deposited in an escrow account with $2,050 to be distributed to Focus Four on the 15-month anniversary from the date of sale, net of any valid permitted claims submitted by Muzak. The remainder of the escrow amount is to be distributed to Focus Four on the 24-month anniversary from the date of sale, which is also subject to any valid permitted claims submitted by Muzak. Expenses related to the Focus Four acquisition of $519 and $1,396 for the three months and year ended December 31, 2018, respectively (three months and year ended December 31, 2017 – $nil), were recorded as transaction costs within other expenses in the consolidated statement of (loss) income and comprehensive (loss) income. Focus Four offers a range of in-store audio, visual, and scent solutions, operating in Alabama, Tennessee, Virginia, and Florida. The Company believes the acquisition will complement and derive synergies from combining Focus Four’s operations into the Company’s core in-store media business. The valuation of the fair values of the identifiable assets and assumed liabilities has been completed. There were no changes to the management’s preliminary figures. Goodwill arising from this acquisition was $4,096.

Amendment to the HPS First Lien Credit Facilities

On July 2, 2018, the Company entered into an amendment to the HPS First Lien Credit Facilities (the “Amendment") to finance the asset purchase of Focus Four, to permit incremental funding, and to obtain greater flexibility under its financial covenants. The Amendment increased the HPS First Lien Credit Facilities contractual balance owed by $15,144 (“2018 HPS Term Loan”), including an amendment fee of $2,257 and an original issue discount of $386, maintaining substantially identical terms to those of the existing HPS First Lien Credit Facilities. As a result of the 2018 HPS Term Loan increase to the HPS First Lien Credit Facilities, the quarterly repayment amount increased by $97 from $2,194 to $2,291. For clarity purposes, references to the HPS First Lien Credit Facilities after the Amendment will encompass the 2018 HPS Term Loan.

The 2018 HPS Term Loan transaction was accounted for as a debt modification resulting in a $1,639 gain recorded within finance costs, net from the change in the net present value of the future modified cash flows compared to the carrying value of the original debt at the time of closing the Amendment. In connection with the 2018 HPS Term Loan, the Company recorded $3,068 of deferred financing costs, reducing the carrying value of the debt. The carrying value of the debt is accreted using the effective interest rate method over the remaining term of the HPS First Lien Credit Facilities with the accretion recognized within finance costs, net.

Issuance of Incremental Second Lien Debt and Reinvestment Agreement

As part of the financing of the Focus Four acquisition and permitted incremental funding within the Amendment, the Company issued $12,872 of additional Second Lien Senior Secured PIK Notes (the "2018 Second Lien Notes"), including an original issue discount of $372, to Apollo Global Management, LLC and its subsidiaries (“Apollo”) (NYSE:APO) and funds managed, advised or sub-advised by Apollo, GSO Capital Partners LP or its affiliates (“GSO”) and FS/KKR Advisor, LLC (collectively, the “Sponsors”) in exchange for $12,500 in cash. Additionally, the Company entered into an investment agreement with the Sponsors pursuant to which the Sponsors agreed to reinvest their cash interest received of LIBOR + 6% in respect of the Second Lien Senior Secured PIK Notes on each semi-annual interest payment date in exchange for additional Second Lien Senior Secured PIK Notes (“Reinvestment PIK Notes”) or common shares of the Company at the discretion of the Sponsor, subject to certain terms and conditions. On July 3, 2018, the Company issued $4,996 of Reinvestment PIK Notes, including an original issue discount of $144. The form and terms of the 2018 Second Lien Notes and the Reinvestment PIK Notes are identical to those of the Company's existing Second Lien Senior Secured PIK Notes, except that interest began accruing on July 1, 2018, and are issued under the existing Second Lien Senior Secured PIK Notes indenture (collectively, the “Second Lien Senior Secured PIK Notes”). As a result, these issuances of additional notes do not require an accounting assessment for a debt modification or extinguishment. Transaction costs related to the 2018 Second Lien Notes and Reinvestment PIK Notes of $1,918 were incurred and netted against the related debt, reducing its carrying value. The carrying value of the debt is accreted using the effective interest rate method over the remaining term of the Second Lien Senior Secured PIK Notes with the accretion recognized within finance costs, net.

For reference purposes, the 2018 HPS Term Loan, the 2018 Second Lien Notes, and the Reinvestment PIK Notes will collectively be referred to as the “2018 Incremental Borrowings”.

ABL Facility

On May 21, 2018, the Company’s wholly owned British subsidiary, Mood Media Limited (“MUK”), completed a U.S. denominated $2,500 asset-based revolving credit facility (“ABL Facility”) with Bank of America, N.A. The ABL Facility is secured by MUK’s receivables. In addition, Mood Media UK Holdings Limited, the parent company of MUK, also another wholly owned British subsidiary, has guaranteed the ABL Facility. Interest accrues at a rate of LIBOR + 2.25% per annum. Financing costs associated with the issuance of the ABL Facility totaling $166 were deducted from the ABL Facility and are accreted over the life of the facility. On October 12, 2018, MUK amended the ABL Facility to obtain greater flexibility under the debt covenants, specifically on the interest coverage ratio. The amendment provides that the interest coverage ratio requirement does not apply as long as MUK maintains a $500 balance or less, however the interest rate spread increases from 2.25% to 4.25% during the time the interest coverage ratio is not met. There were no financing costs associated with the amendment. The ABL Facility had an outstanding balance of $323 as at December 31, 2018 (December 31, 2017 – nil).

Apollo and GSO Transaction

On June 28, 2017, the Company completed the terms of an arrangement agreement (the “Arrangement”) with affiliates of several key stakeholders, including funds affiliated with or controlled by Apollo and funds advised or sub-advised by GSO to affect a comprehensive transaction pursuant to which substantially all of the Company’s outstanding debt was refinanced or redeemed and all of the issued and outstanding common shares of Mood Media were acquired for C$0.17 whole Canadian dollars in cash per share (the “Share Acquisitions”).

As part of the transaction, the Company was re-domiciled from Canada to Delaware. All elements of the Arrangement, including the Share Acquisitions and the Arrangement, are collectively referred to as the “Transaction”. Following completion of the Transaction, the Company became a private company, ceasing to be a reporting issuer under applicable Canadian securities laws, and its securities were delisted from the Toronto Stock Exchange.

The Arrangement resulted in the refinancing of the 9.25% Senior Unsecured Notes. This was accomplished through the issuance of $175,000 aggregate principal amount of new notes (the “Second Lien Senior Secured PIK Notes”) to Company noteholders. For every $1,000 whole dollar aggregate principal amount of 9.25% Senior Unsecured Notes held, $500 whole dollar aggregate principal amounts of Second Lien Senior Secured PIK Notes were exchanged with the remaining $500 whole dollar aggregate principal amounts of 9.25% Senior Unsecured Notes exchanged for new common shares of the Company, in the following amounts: up to 175 new common shares if the 9.25% Senior Unsecured Note holder validly elected to participate and made the corresponding election through The Depository Trust Company in the new equity issuance described below or 150 new common shares of the Company if they did not elect to participate or failed to make a valid election through The Depository Trust Company.

A total of $339,221 of the total $350,000 9.25% Senior Unsecured Note holders validly elected to participate and made the corresponding election through The Depository Trust Company in the new equity issuance and therefore received 175 new common shares for a total of 59,363,675 new common shares and the remaining Senior Unsecured Note holders that chose not to participate in the new equity issuance, or failed to make a valid election through The Depository Trust Company, received 150 new common shares for a total of 1,616,850 new common shares. The total amount of new common shares of the Company resulting from the exchange of the 9.25% Senior Unsecured Notes was 60,980,525 new common shares.

The Second Lien Senior Secured PIK Notes accrue interest at a rate of LIBOR + 14% (8% of which is payable-in-kind), mature on July 1, 2024, and are governed by the terms of the Second Lien Senior Secured PIK Notes Indenture. The LIBOR rate has a 1% floor. The Company assessed the interest rate floor embedded derivative and determined it was closely related to the host contract and therefore was not required to be bifurcated. The Second Lien Senior Secured PIK Notes include an optional redemption provision at specified redemption prices throughout the term of the debt. The Company assessed the prepayment option embedded derivative and determined it was closely related to the host contract and therefore was not required to be bifurcated.

Additionally, in connection with the 9.25% Senior Unsecured Notes refinancing, a new equity issuance resulted in 49,999,992 new common shares of the Company being issued in exchange for $40,000 in cash. The proceeds of the new equity issuance were used to refinance or redeem the Company’s other debt obligations.

Pursuant to the Arrangement, the Company obtained funding from HPS Investment Partners, LLC (“HPS”), for a new first lien credit facility (the “HPS Term Loan Credit Facility”) and revolving credit facility (the “HPS Revolving Credit Facility”; collectively the “HPS First Lien Credit Facilities”) in order to: (a) fund the refinancing of the 2014 First Lien Credit Facilities; (b) fund the redemption of the MMG Notes; and (c) pay costs and expenses in connection with the Arrangement. The principal amount borrowed at closing under the HPS Term Loan Credit Facility was $292,574 and the amount available to the Company under the HPS Revolving Credit Facility was $15,000. The HPS Term Loan Credit Facility is repayable at $2,194 per quarter, with the remainder payable on June 28, 2022. Interest on the HPS First Lien Credit Facilities accrues at a rate of adjusted LIBOR plus 7.25% per annum. The LIBOR rate has a 1% interest rate floor. The Company assessed the interest rate floor embedded derivative and determined it was closely related to the host contract and therefore was not required to be bifurcated. The HPS Term Loan Credit Facility includes an optional redemption provision at specified redemption prices throughout the term of the debt. The Company assessed the prepayment option embedded derivative and determined it was closely related to the host contract and therefore was not required to be bifurcated. The Company was in compliance with its HPS First Lien Credit Facilities covenants as at December 31, 2018.

As part of the HPS Term Loan Credit Facility, the Company also issued 2,635,432 warrants (“HPS Warrants”) for the purchase of new common shares of the Company to HPS. The warrants’ exercise price is $1.00 whole dollar per share and expires on June 28, 2022. The HPS Warrants were ascribed a fair value of $1,030 at the time of grant based on the Black-Scholes option pricing model, which is affected by the Company’s share price as well as assumptions regarding a number of subjective variables. The Company allocated the fair value of the HPS Term Loan Credit Facility of $292,574 on a relative fair value basis using the fair value of the HPS Term Loan Credit Facility and the HPS Warrants, which resulted in an ascribed value of $1,027 to the warrants and $291,536 to the HPS Term Loan Credit Facility. The HPS Warrants are accounted for as a liability at fair value and will be subsequently fair valued with the change in fair value recognized within finance costs, net. In addition, transaction costs incurred related to the HPS First Lien Credit Facilities were netted against the debt ($19,215). The carrying value of the debt will be amortized using the effective interest rate method over the term of the HPS First Lien Credit Facility with the amortization recognized within finance costs, net.

Proceeds from the Arrangement were also used to redeem the MMG Notes prior to maturity and on August 6, 2017, the Company’s indebtedness was fully discharged upon the repayment of the MMG Notes.

Collectively, the Company via the Arrangement obtained the $292,574 HPS Term Loan Credit Facility with a $15,000 revolver facility and issued $175,000 Second Lien Senior Secured PIK Notes which allowed the Company to effectively refinance the 2014 First Lien Credit Facilities, redeem the MMG Notes, deferred share units, options, and shares outstanding, and refinance the 9.25% Senior Unsecured Notes with a debt and equity component, thereby reducing the Company’s total indebtedness and improving its consolidated statement of financial position. As a result of this comprehensive transaction, the Company recognized a gain of $55,728.

Sale of BIS

On June 1, 2017, the Company sold Audio Visual Solutions Holding B.V., Aplusk B.V., BIS Bedrijfs Informatie Systemen B.V., and BIS Business Information Systems N.V. (collectively “BIS”) to Econocom Financial Services International B.V. for proceeds of €19,950 following a strategic decision to focus on the Company’s core businesses. The sale constitutes the entire BIS reporting segment, which was not previously classified as held-for- sale or as a discontinued operation. BIS is no longer disclosed as a separate reportable segment. Proceeds of €1,000 were deposited in an escrow account with 50% to be distributed to the Company on the second anniversary from the date of sale and the remainder to be distributed to the Company on the fourth anniversary from the date of sale, net of any valid permitted claims submitted by the purchaser. The $1,836 loss recognized on the sale included goodwill and intangible assets attributed to the BIS assets sold totaling $8,474 and $5,019, respectively.

Directors, Executive Officers & Corporate Governance

Directors

The following tables set forth the names, ages and positions held with Mood for the directors and executive officers of Mood. Mood has adopted a code of ethics that applies to the executive officers.

The Board of Directors is currently comprised of Salim Hirji, Jodi Kahn, Steven Price, Reed Rayman, David Sambur, Lee Solomon, Lee Stewart, David Weiser and David Hoodis.

Name Director tenure with Mood Media Age Salim Hirji…………………………………………… 2017 – Present 29 Jodi Kahn……………………………………………. 2018 – Present 55 Steven Price……………………………………….. 2018 – Present 56 Reed Rayman……………………………………… 2017 – Present 32 David Sambur…………………………………….. 2017 – Present 38 Lee Solomon………………………………………. 2017 – Present 46 Lee Stewart………………………………………… 2017 – Present 70 David Weiser……………………………………… 2017 – Present 38 David Hoodis……………………………………… 2019 – Present (1) 50

(1) David Hoodis also serves as an executive officer with Mood Media.

Executive Officers

Name Position and Tenure with Mood Media Age David Hoodis……………………………………… Chief Executive Officer 2019 – Present (1) 50 Stephen Duggan………………………………… Executive Vice President and Chief 53 Financial Officer 2018 – Present Ken Eissing………………………………………… President of Mood Media 2013 – 48 Present Randal J. Rudniski……………………………… Executive Vice President, Investor 53 Relations and Global Business Development 2012 – Present Michael F. Zendan II…………………………… Executive Vice President, Chief 56 Administrative Officer and General Counsel 2015 – Present

(1) David Hoodis also serves as a director with Mood Media.

Salim Hirji

Salim Hirji is a Principal at Apollo, having joined in 2013. Prior to that time, Mr. Hirji was a member of the Financial Institutions Investment Banking Group of Goldman, Sachs & Co. Mr. Hirji serves on the board of directors of Mood Media and Presidio. Mr. Hirji graduated summa cum laude with a B.A. in Economics and Political Science from Columbia University.

Jodi Kahn

Jodi Kahn is a principal at JVK Ventures and provides counsel and advisory services on ecommerce, consumer media and digital transformations. Prior to forming JVK Ventures, Ms. Kahn served as Chief Consumer Officer at FreshDirect from August 2013 to December 2016 and President of iVillage (a division of NBC Universal) from December 2008 to December 2012. Ms. Kahn‘s experiences in ecommerce, consumer media and digital transformations include leadership roles at Reader’s Digest Association, where as president of global digital media, she oversaw allrecipes.com, executed a strategy for digital expansion, and developed a global licensing business, as well as at Time Inc. (then a division of Time Warner Inc.), where over the course of 16 years she held a number of senior level positions in consumer marketing and business management. Ms. Kahn serves on the boards of Claritas and Water.org, is an independent advisor to the board of Brandless.com, and holds a B.A. in psychology from the State University of New York at Albany.

Steven Price

Steven Price is CEO and co-founder of 25Madison, LLC, a startup studio, innovation hub and investment vehicle for early stage companies that was launched in April 2018. He is also Executive Chairman of Townsquare Media, Inc. a publicly traded diversified media, entertainment and digital marketing services company which he founded with Oaktree Capital and GE Capital. Prior to founding Townsquare in 2010, he was Senior Managing Director at Centerbridge Partners, a leading private equity and distressed debt firm. Prior thereto, he was appointed Deputy Assistant Secretary of Defense (Spectrum, Space and Communications) and served from 2001-2003. He subsequently served on the advisory board of two government agencies.

Prior to joining the government in 2001, he founded and served as President and Chief Executive Officer of Live Wire Capital, a business process outsourcing firm, backed by The Blackstone Group and Thomas H. Lee Partners. Mr. Price was formerly the President and Chief Executive Officer of PriCellular Corporation, a publicly traded cellular telephone operator which was sold in June 1998. Prior thereto, he served as Special Assistant to the U.S. Ambassador to the START talks.

Mr. Price graduated magna cum laude, Phi Beta Kappa from Brown University and has a J.D. from Columbia University School of Law. He serves as Adjunct Professor of Media and Marketing at Columbia Business School and on the Board of Trustees (emeritus) of Brown University.

Reed Rayman

Reed Rayman is a Principal at Apollo, having joined in 2010. Mr. Rayman previously was employed by Goldman, Sachs & Co. in both its Industrials Investment Banking and Principal Strategies groups from 2008 to 2010. Mr. Rayman serves on the board of directors of ADT, CareerBuilder, Coinstar, EcoATM, Mood Media, and Redbox. Mr. Rayman graduated cum laude from Harvard with an A.B. in Economics.

David Sambur

David Sambur is a Senior Partner at Apollo Private Equity having joined in 2004. Prior to that time, Mr. Sambur was a member of the Investment Banking division of Salomon Smith Barney Inc. Mr. Sambur serves on the Board of Directors of AGS, Caesars Entertainment Corporation, CareerBuilder, Coinstar LLC, ClubCorp, Diamond Resorts International, EcoATM, LLC, Mood Media, Rackspace Inc., and Redbox Automated Retail LLC. Mr. Sambur previously served on the Boards of Directors of Hexion Holdings, LLC, Momentive Performance Materials, Inc. and Verso Paper Corporation. Mr. Sambur is also a member of the Mount Sinai Department of Medicine Advisory Board and Emory College Dean’s Advisory Counsel. Mr. Sambur graduated summa cum laude and Phi Beta Kappa from Emory University with a BA in Economics.

Lee Solomon

Lee Solomon is a Partner at Apollo, having joined in 2009. Previously, he was an executive in the media industry, and prior to that, he served as a Principal at Grosvenor Park, which was a joint venture with Fortress Investment Group. Before that time, Mr. Solomon was the Executive Vice President of Business Affairs for Helkon Media. He serves on the board of directors of ADT, Coinstar, EcoATM, Endemol Shine Group, Mood Media, New Outerwall and Redbox. Mr. Solomon received his MBA from The Stern School of Business at New York University and graduated from the University of Rochester with a BA in economics and political science.

Lee Stewart

Lee Stewart was Vice President at Union Carbide Corporation from 1996 to 2001, responsible for various treasury and finance functions. Prior to this, he had a more than 20 year career as an investment banker at Bear Stearns & Co., Midland Bank PLC and Chase Manhattan Bank N.A. Mr. Stewart was a director of ITC Holdings Corp., a NYSE- listed electricity transmission company, from 2005 through 2016 when ITC was acquired by Fortis. Mr. Stewart also served as a director of AEP Industries, Inc., a NASDAQ-listed chemical company from 1996 until it was sold in 2017. Mr. Stewart served as a director of Marsulex, Inc., a chemical company listed on the Toronto Stock Exchange, from 2000 until its sale in 2011, and Momentive Performance Materials Inc., a specialty chemical company in silicone and advanced materials, from May 2013 through its successful emergence from bankruptcy in October 2014. Mr. Stewart serves on the board of directors of Aqua America, Inc., Hexion Holdings, LLC, Mood Media and P.H. Glatfelter Co..

Mr. Stewart has a Bachelor of Arts in Economics from the University of Pennsylvania and a Masters of International Management from American Graduate School.

David Weiser

David Weiser has over 15 years of investment and advisory experience in both private and public companies across the capital structure. David currently serves as senior vice president in the investment management group of FS Investments, and has presided in such role since October 2015. Prior to joining FS Investments, Mr. Weiser served as a research analyst at Towerview LLC, a long-biased public equities fund, from January 2007 to July 2015, where Mr. Weiser originated and executed investments in companies involved in mergers, restructurings and deep value situations. Prior to that role, Mr. Weiser was an associate at Golub Capital, where he executed middle market debt and equity investments. Before joining Golub Capital, Mr. Weiser was an analyst in the leveraged finance investment banking group at Lehman Brothers. Mr. Weiser earned a Bachelor of Science in economics (magna cum laude) from the Wharton School at the University of Pennsylvania.

Mr. Weiser currently serves on the boards of Mood Media, Aspect Software, a provider of call center software solutions, ASG Technologies Group, a provider of mission-critical enterprise IT software, and American Southern Homes, a regional homebuilder in the Southeast United States. He is also a former board member of A.T. Cross, a consumer products company.

David Hoodis

David Hoodis is the Chief Executive Officer of Mood. Prior to joining Mood Media, Mr. Hoodis was President of Retail at Information Resources Inc., a leading provider of big data, predictive analytics and forward-looking insights. From 2012 to 2015, he served as Vice President and Global General Manager at NCR Retail and Smart Retail Consulting while also founding and serving as Chief Executive Officer of Snackbox LLC. From 2009 to 2012, he served as Chief Operating Officer and President of Modell’s Sporting Goods, and from 2001 to 2009 he held various positions at Walmart Stores, Inc., his last role as Vice President Innovation. Mr. Hoodis holds a Masters of Business Administration from the University of Houston and a B.A. in Government & Psychology from the University of Texas at Austin.

Stephen Duggan

Stephen Duggan is Executive Vice President and Chief Financial Officer of Mood. Mr. Duggan spent the six years prior to joining Mood at Viacom and served in various positions, most recently as the Worldwide General Manager of Global Business Services. While at Viacom, he rolled out enterprise systems and best practices for the company globally and built and transitioned the business to a collection of shared services, sites and processes across multiple offices. Mr. Duggan began his career at Arthur Andersen. He moved on to become the Chief Operating & Financial Officer of Publishing Group of America, the CEO of Alpha Media Group, and the President & CEO of Athlon Sports Communications prior to joining Viacom in 2012.

Ken Eissing

As President of Mood Media, Ken Eissing leads the growth and development of Mood’s industry-leading global in store media business.

Prior to Mood Media, Mr. Eissing held a division President level role for a portfolio of 6 credit and financial services related businesses as the Senior Vice President and General Manager, Commercial Services for NCO Group, a $1.4 Billion+ BPO business. Before this position, he served as the Senior Vice President and General Manager of Transworld Systems, Inc. Mr. Eissing began his career at AT&T and held a variety of marketing, sales, and operational leadership roles with escalating responsibility during his 12 year tenure culminating with a General Manager role.

Mr. Eissing holds a Masters of Business Administration from the Stern School of Business at New York University and a B.S. in Finance & Economics from the State University of New York at Albany and has completed executive education programs at Thunderbird, the University of Southern California, and the Center for Creative Leadership. He is an active member of the Austin chapter of Young Presidents Organization (YPO – Austin) and is an alumnus of AT&T’s exclusive Executive Development Program.

Randal J. Rudniski

Randal J. Rudniski is Executive Vice President, Investor Relations and Global Business Development for Mood. Mr. Rudniski is a finance professional with nearly 25 years of experience in the finance and Wall Street analyst sectors focused on media and telecommunications. Prior to joining Mood Media in September 2012, Mr. Rudniski founded RJR Communications Insights Inc. where he conducted proprietary research on the economic drivers that impact the Canadian broadcast and telecom sectors for a broad range of clients. Before founding RJR Communications Insights, he served as Director of Equity Research for Media and Telecommunications at Credit Suisse Securities Canada for more than ten years. Before joining Credit Suisse Securities Canada, Mr. Rudniski was a member of the media, cable and telecommunications analyst team at Scotia Capital Markets. Mr. Rudniski is a Chartered Financial Analyst (CFA) and received a Bachelor of Commerce, Finance Orientation degree from McMaster University.

Michael F. Zendan II

Michael F. Zendan II is Executive Vice President, General Counsel and Chief Administrative Officer of the Company. Mike joined the Company in July 2015 as a seasoned executive who has contributed significantly to three successful business transformations over his 24 year in house legal and business career.

From 2009 to 2015, Mr. Zendan was part of a small and committed team at Horizon Lines, a publicly listed shipping line, that was responsible for a series of out of court, financial restructurings that spanned over 12 months, addressing debt obligations in excess of $700 million, and leading to the successful merger and sale of the company. During his decade as the General Counsel at Muzak LLC spanning from to 1999 to 2009, Mike spearheaded strategic change including the transformation of a two person-licensing department focused solely on reporting and compliance into a department of six specialists focused on aggressive content acquisition, cost efficiencies, and relationship development while managing a P&L that equaled $18.9 million. At Coltec Industries from 1992 to 1999, Mr. Zendan was part of a team that helped successfully position Coltec as a desirable, strategic acquisition that was eventually purchased by Goodrich, Inc.

Mr. Zendan is admitted to the state bars of Connecticut, the District of Columbia, and North Carolina and received his J.D., cum laude, from the State University of New York at Buffalo and his B.S., with distinction, from Cornell University.

Summary of Quarterly Results

The following table presents a summary of the Company’s unaudited operating results on a quarterly basis. The financial information is presented in accordance with IFRS.

Income (loss) for the period attributable to owners of

Revenue the parent Basic and diluted EPS Continuing Continuing Discontinued Continuing Discontinued Period Total operations operations operations operations operations Q4 – 20181,8 $95,319 ($15,898) $- ($15,898) ($0.12) $0.00 Q3 – 20181,7 87,802 (13,417) $- (13,417) (0.10) 0.00 Q2 – 20181,6 92,274 (29,691) - (29,691) (0.23) 0.00 Q1 – 20181,5 93,732 (8,004) - (8,004) (0.06) 0.00 Q4 – 20174 103,793 (635) - (635) 0.00 0.00 Q3 – 20173 98,165 (4,754) - (4,754) (0.04) 0.00 Q2 – 20172 98,860 53,434 (1,815) 51,619 0.29 (0.01) Q1 – 2017 96,247 (9,770) 305 (9,465) (0.05) 0.00

1. The Company has elected to revise previously reported figures, which management believes the impact of these revisions to be immaterial, individually and in the aggregate, to the previously issued unaudited interim condensed consolidated financial statements. The revisions are not attributed to an error in the amounts recognized, but to the timing of when certain costs were recognized during 2018. Management believes the revised figures better reflect the timing of when costs were incurred or changes in estimates were made during the first, second and third quarter of 2018. As a result, the Company is revising its previously issued unaudited interim condensed consolidated financial statements for the three months ended March 31, 2018, three and six months ended June 30, 2018, and three and nine months ended September 30, 2018 to reflect these changes.

The following table reflects the impact on the quarterly summary of unaudited operating results a s a result of revising previously issued unaudited interim condensed consolidated financial statements for the three months ended March 31, 2018, three and six months ended June 30, 2018, and three and nine months ended September 30, 2018:

(Loss) income for the period attributable to owners

Revenue of the parent Basic and diluted EPS Continuing Continuing Discontinued Continuing Discontinued Period Total operations operations operations operations operations As revised Q3 – 2018 $87,802 ($13,417) $- ($13,417) ($0.10) $0.00 Q2 – 2018 92,274 (29,691) - (29,691) (0.23) 0.00 Q1 – 2018 93,732 (8,004) - (8,004) (0.06) 0.00

As previously reported Q3 – 2018 87,802 (17,329) - (17,329) (0.13) 0.00 Q2 – 2018 92,274 (27,293) - (27,293) (0.21) 0.00 Q1 – 2018 93,732 (4,941) - (4,941) (0.04) 0.00

Impact of revision Q3 – 2018 - 3,912 - 3,912 0.03 0.00 Q2 – 2018 - (2,398) - (2,398) (0.02) 0.00 Q1 – 2018 - (3,063) - (3,063) (0.02) 0.00

2. The significant gain in the second quarter of 2017 was primarily driven by the gain of $55,728 recognized on settlement of the debt and credit facilities pursuant to the Arrangement in addition to a larger gain recognized on financing transactions caused by a greater strengthening of the Euro spot rate compared to the first quarter as it affected USD-based debt and intercompany debt owed by foreign subsidiaries.

3. The loss for the third quarter compared to the second quarter of 2017 was due to the second quarter’s gain on the Arrangement noted above, as well as a reduction in the gain recognized on financing transactions, which was caused by the strengthening of the Euro vs. the U.S. dollar spot rate to a lesser extent when compared to the second quarter.

4. The reduction in the loss for the fourth quarter of 2017 compared to the third quarter of 2017 is primarily from the tax credit recognized in the fourth quarter for the partial release of deferred tax liabilities resulting from the reduction on the Company’s future tax rate attributed to the changes in U.S. tax reform. The credit is slightly offset by a decrease in the foreign exchange gain recognized on financing transactions experienced in the fourth quarter when compared to the third quarter.

5. The higher loss for the first quarter of 2018 compared to the fourth quarter of 2017 was due to the fourth quarter of 2017’s positive impact of the adjustments related to U.S. tax reform and a $5,761 reduction in gross margin dollars. Approximately $3,600 of the $5,761 reduction in gross margin dollars is driven by the cost re-alignment done at the beginning of 2018 in the Company’s In-Store Media International segment to reclass certain costs from operating expenses to cost of sales consistent with In-Store Media North America reporting segment. The remaining reduction in gross margin dollars is the result of lower revenues in the first quarter of 2018 compared to the fourth quarter of 2017. This was offset by (i) a higher foreign exchange gain on financing transactions caused by the strengthening of the Euro spot rate vs. the U.S. dollar and (ii) increased other expenses due to the timing of strategic expenses incurred and changes in estimates for settlements and resolutions that were reclassed from subsequent quarters in 2018 as part of management’s process discussed in note 1 above to revise previously reported figures.

6. The increase in the loss for the second quarter compared to first quarter of 2018 is due to (i) a foreign exchange loss of $10,790 on USD-based debt and intercompany debt held by foreign subsidiaries caused by the weakening of the Euro spot rate during the second quarter of 2018, as opposed to a $5,712 gain in the first quarter, (ii) lower revenues in the second quarter compared to the first quarter of 2018, (iii) higher other expenses as a result of the Company recording a $3,000 charge in the second quarter of 2018 for a dispute over the interpretation of certain payment obligations and (iv) a tax credit recognized in the first quarter of 2018 due to international tax reform that did not recur in the second quarter of 2018.

7. The decrease in the loss in the third quarter compared to the second quarter of 2018 is mainly due to (i) a reduction in the foreign exchange loss on USD-based intercompany debt held by foreign subsidiaries as a result of the strengthening of the Euro spot rate from the second quarter of 2018 as well as (ii) lower other expenses due to the timing of strategic expenses incurred and changes in estimates for settlements and resolutions that were reclassed to prior quarters in 2018 as part of management’s process discussed in note 1 above to revise previously reported figures.

8. The increase in the loss for the fourth quarter compared to the third quarter of 2018 was due to (i) higher finance costs, net due to a gain of $1,639 from the Amendment in the third quarter of 2018 in which the HPS Term Loan was accounted for as a debt modification that did not reoccur in the fourth quarter of 2018 and (ii) a foreign exchange loss of $3,073 primarily on USD-based debt and intercompany debt held by foreign subsidiaries caused by the greater weakening of the Euro spot rate during the fourth quarter 2018, as opposed to a $1,361 loss in the previous quarter. The increase in the loss for the fourth quarter of 2018 is partially offset by $1,105 more in gross margin dollars from higher revenues in the fourth quarter compared to the third quarter of 2018.

Selected Financial Information Mood Media Corporation

CONSOLIDATED STATEMENTS OF (LOSS) INCOME

For the three months and the year ended December 31, 2018 In thousands of U.S. dollars unless otherwise stated

Year ended 2018 2017 2016 2015 2014 Continuing Operations

Revenue $369,127 $397,065 $407,033 $475,116 $494,060 Expenses Cost of sales 180,392 183,354 187,088 229,946 227,888 Operating expenses 106,840 128,656 130,655 146,783 163,575 Depreciation and amortization 54,854 57,088 61,568 66,648 72,263 Impairment of goodwill - - 3,575 25,000 - Share-based compensation 1,900 743 478 1,264 1,392 Other expenses 21,917 14,046 12,249 10,305 28,229 Foreign exchange loss (gain) on financing transactions 9,512 (23,498) 10,975 20,356 17,097 Finance costs, net 63,851 2,938 57,757 57,216 70,057 (Loss) income for the year before income taxes (70,139) 33,738 (57,312) (82,402) (86,441)

Income tax (recovery) charge (3,272) (4,636) 1,774 (2,439) (4,067) (Loss) income for the year (66,867) 38,374 (59,086) (79,963) (82,374)

Discontinued Operations

(Loss) income after taxes from discontinued operations - (1,510) 1,405 - - (Loss) income for the year (66,867) 36,864 (57,681) (79,963) (82,374)

(Loss) income attributable to: Owners of the parent (67,010) 36,765 (57,786) (80,022) (82,442) Non-controlling interests 143 99 105 59 68 ($66,867) $36,864 ($57,681) ($79,963) ($82,374)

(Loss) earnings per share attributable to shareholders ("EPS") EPS - basic ($0.52) $0.24 ($0.31) ($0.44) ($0.46) EPS - diluted (0.52) 0.23 (0.31) (0.44) (0.46) EPS from continuing operations - basic (0.52) 0.25 (0.32) (0.44) (0.46) EPS from continuing operations - diluted (0.52) 0.24 (0.32) (0.44) (0.46) EPS from discontinued operations - basic 0.00 (0.01) 0.01 0.00 0.00 EPS from discontinued operations - diluted 0.00 (0.01) 0.01 0.00 0.00

Total assets $521,715 $542,927 $593,673 $654,516 $740,367 Total non-current liabilities 514,769 466,719 641,571 645,073 612,430

Operating Results

We report our continuing operations in three reportable segments, ‘‘In-Store Media North America’’ and “In-Store Media International” based on the significant business activity of the Company and its subsidiaries and “Other” for the purposes of reconciliation to the Company’s consolidated financial statements. See note 24 to the Company’s Consolidated Financial Statements for the year ended December 31, 2018.

Three months ended December 31, 2018 compared with the three months ended December 31, 2017

Revenue for the three months ended December 31, 2018 and December 31, 2017 were as follows:

Three months ended December 31, 2018 December 31, 2017 Variance % Change In-Store Media North America $63,796 $66,552 ($2,756) (4.1)% In-Store Media International 22,905 27,591 (4,686) (17.0)% Other 8,618 9,650 (1,032) (10.7)% Total Consolidated Group $95,319 $103,793 ($8,474) (8.2)%

Revenue on a constant dollar basis (a): Three months ended December 31, 2018 December 31, 2017 Variance % Change In-Store Media North America $63,796 $66,552 ($2,756) (4.1)% In-Store Media International 22,905 26,564 (3,659) (13.8)% Other 8,618 9,650 (1,032) (10.7)% Total Consolidated Group $95,319 $102,766 ($7,447) (7.2)%

(a) Revenue on a constant dollar basis is a non-IFRS financial measure. It is calculated by translating the comparative prior period figures denominated in foreign currency at the exchange rate in place in the current period.

In-Store Media North America revenue for the three months ended December 31, 2018 decreased as compared to the three months ended December 31, 2017. The decrease was primarily attributable to a reduction of approximately $2,181 in recurring revenues driven in significant part by the loss of a recurring contract with a satellite television partner. Additionally, installation and service and other revenues were lower by $338 and equipment revenues were lower compared to prior year by $237.

In-Store Media International revenue for the fourth quarter of 2018 decreased compared to the prior year 2017 comparative period. On a constant currency basis, the In-Store Media International revenues for the three months ended December 31, 2018 decreased $3,659 compared to the three months ended December 31, 2017. This was primarily due to lower equipment, installation and service revenues of $1,810, recurring revenues of $1,116, and other revenues of $733.

The revenue from the Other segment for the three months ended December 31, 2018 decreased primarily as a result of lower Technomedia equipment revenues related to lower project activity in their large jobs business compared to the same period in 2017.

Three months ended December 31, 2018 December 31, 2017 Change

Revenue $95,319 100.0% $103,793 100.0% ($8,474) Cost of sales (a) 47,673 50.0% 47,510 45.8% 163 Operating expenses (a) 26,159 27.4% 33,163 32.0% (7,004) Depreciation and amortization 14,421 15.1% 13,382 12.9% 1,039 Share-based compensation 382 0.4% - 0.0% 382 Other expenses 4,314 4.5% 5,047 4.9% (733) Foreign exchange loss (gain) on financing transactions 3,073 3.2% (2,309) (2.2)% 5,382 Finance costs, net 17,524 18.4% 14,976 14.4% 2,548 Loss for the period before income taxes (18,227) (19.1)% (7,976) (7.7)% (10,251)

Income tax recovery (2,375) (2.5)% (7,378) (7.1)% 5,003 Loss for the period (15,852) (16.6)% (598) (0.6)% (15,254)

Loss attributable to: Owners of the parent (15,898) (16.6)% (635) (0.6)% (15,263) Non-controlling interests 46 0.0% 37 0.0% 9 ($15,852) (16.6)% ($598) (0.6)% ($15,254)

(a) Cost re-alignment changes - Beginning in 2018, In-Store Media International affected a reporting change in the mapping of certain costs, primarily related to transponder fees and certain other employee costs, from operating expenses to cost of sales. This re-alignment is consistent with the treatment for these costs in In-store Media North America and will enhance margin comparability between reportable segments. For the three months ended December 31, 2018, these costs were approximately $2,700. The impact of this cost re-alignment is an increase to cost of sales with a direct reduction offsetting operating expenses.

Cost of sales for the three months ended December 31, 2018 as a percentage of revenue increased by 4.2% compared to the three months ended December 31, 2017 mainly due to a reduction of gross margin rate on International of 11.8% driven by the cost re-alignment from operating expenses to cost of goods sold. Excluding the impact of the re-mapping in 2018, the total gross margin rate would have decreased by 0.2% for International and 1.4% on a consolidated basis as compared to the three months ended December 31, 2017.

Operating expenses for the fourth quarter of 2018 decreased as compared to the fourth quarter of 2017. Excluding the impact of the cost re-alignment in 2018, operating expenses would have decreased $4,337 compared to the three months ended December 31, 2017, mainly due to (i) lower sales commissions from lower commissionable revenue and additional capitalizable compensation costs as a result of refining our capitalizable cost pool, (ii) lower salary expense from restructuring initiatives, and (iii) lower rent expense from further consolidating the Company’s real estate footprint.

Depreciation and amortization for the three months ended December 31, 2018 increased as compared to the three months ended December 31, 2017 primarily due to a larger average depreciable base for the three months ended December 31, 2018 compared to the same period last year.

Share-based compensation expense for the fourth quarter of 2018 increased due to the Company adopting a new Equity Incentive Plan for its employees, directors and consultants in 2018 compared to no plan in the comparative period in 2017.

Other expenses for the three months ended December 31, 2018 have decreased $733 as compared to the three months ended December 31, 2017 primarily due to (i) lower integration costs for Arrangement remuneration and real estate consolidation initiatives included in the 2017 comparative period that did not repeat in the fourth quarter of 2018, partially offset by (ii) higher legal and professional fees in the fourth quarter of 2018 and (ii) higher transaction costs in the fourth quarter of 2018 associated with the Focus Four acquisition.

Foreign exchange loss (gain) on financing transactions reflects a loss in the three months ended December 31, 2018 on intercompany debt held by foreign subsidiaries, which was caused by the weakening of the Euro spot rate in the fourth quarter of 2018 compared to a gain in the same period in 2017 due to a strengthening of the Euro spot rate in the 2017 comparative period.

Financing costs, net expenses for the fourth quarter of 2018 increased $2,548 compared to the fourth quarter of 2017 due to additional interest from increased balances in the HPS First Lien Credit Facilities and the Second Lien Senior Secured PIK Notes.

Income taxes for the three months ended December 31, 2018 was a credit of $2,375 compared to a credit of $7,378 in the 2017 comparative period primarily as a result of the adjustment to deferred taxes from U.S. Tax Reform reducing the tax rate in the 2017 comparative period.

Liquidity and Capital Resources Three months ended

December 31, December 31, 2018 2017 Change Total cash provided by (used in): Operating activities $25,007 $24,294 $713 Investing activities (7,973) (6,770) (1,203) Financing activities (6,816) (19,308) 12,492 Effect of exchange rates on cash (51) 157 (208) Increase (decrease) in cash equivalents $10,167 ($1,627) $11,794

The increase in cash generated from operating activities was driven by the change in the following components:

Three months ended

December 31, December 31, 2018 2017 Higher/(Lower) Operating cash flows before working capital adjustments (a) $17,049 $18,118 ($1,069) Working capital reductions 8,339 8,187 152 Cash taxes paid (388) (2,022) 1,634 Interest received 7 11 (4) Increase in cash from operating activities $25,007 $24,294 $713

(a) Operating cash flows before working capital adjustments is a non-IFRS financial measure and is calculated by adding back to pre-tax loss: depreciation, amortization, impairment, finance costs and other non-cash charges, essentially all line item amounts on the statement of cash flows within the operating activities section prior to working capital adjustments.

The increase in cash used in investing activities for the three months ended December 31, 2018 compared to the three months ended December 31, 2017 is due to higher capital expenditures in the fourth quarter of 2018 partially offset by net proceeds from the sale of assets related to a foreign joint venture also in the fourth quarter of 2018.

The decrease in cash used in financing activities for the fourth quarter of 2018 compared to the fourth quarter of 2017 was primarily due to (i) a $4,500 drawdown on the HPS Revolving Credit Facility (compared to a $3,500 repayment on the HPS Revolving Credit Facility in 2017) and (ii) $7,794 in interest paid in the three month ended December 31, 2018 period (compared to $13,230 in 2017) partially offset by (iii) a $1,046 repayment of the ABL Facility (compared to nil in the 2017 prior year comparative).

Three months ended December 31, 2017 compared with the three months ended December 31, 2016

Revenue from continuing operations for the three months ended December 31, 2017 and December 31, 2016 were as follows:

Three months ended December 31, 2017 December 31, 2016 Variance % Change In-Store Media North America $66,552 $65,647 $905 1.4% In-Store Media International 27,591 26,743 848 3.2% Other 9,650 10,499 (849) (8.1)% Total Consolidated Group $103,793 $102,889 $904 0.9%

Revenue on a constant dollar basis (a): Three months ended December 31, 2017 December 31, 2016 Variance % Change In-Store Media North America $66,552 $65,647 $905 1.4% In-Store Media International 27,591 28,733 (1,142) (4.0)% Other 9,650 10,499 (849) (8.1)% Total Consolidated Group $103,793 $104,879 $(1,086) (1.1)%

In-Store Media North America revenue in the fourth quarter of 2017 increased as compared to the fourth quarter of 2016. The increase was primarily attributable to an increase of approximately $1,339 in equipment revenues and $922 in installation and service revenues, offset by decreases of $959 in recurring and $397 in other revenues.

In-Store Media International revenue in the fourth quarter of 2017 increased compared to the fourth quarter of 2016. On a constant currency basis, the In-Store Media International revenues for the fourth quarter of 2017 decreased $1,142 compared to the fourth quarter of 2016. This was primarily due to lower equipment revenues of $1,514 and recurring revenues of $379 offset by higher installation and service revenues of $482 and other revenues of $269.

The revenue from the Other segment for the three months ended December 31, 2017 decreased as a result of lower Technomedia equipment revenues related to lower project activity in their large jobs business compared to the comparative prior year period.

Three months ended December 31, 2017 December 31, 2016 Change Continuing Operations

Revenue $103,793 100.0% $102,889 100.0% $904 Cost of sales 47,510 45.8% 46,4760,172 45.2% 1,034 Operating expenses 33,163 32.0% 33,664 32.7% (501) Depreciation and amortization 13,382 12.9% 14,880 14.5% (1,498) Impairment of goodwill - 0.0% 3,575 3.5% (3,575) Share-based compensation - 0.0% 156 0.2% (156) Other expenses 5,047 4.9% 3,852 3.7% 1,195 Foreign exchange (gain)/loss on financing transactions (2,309) (2.2)% 13,342 13.0% (15,651) Finance costs, net 14,976 14.4% 13,681 13.3% 1,295 Loss for the period before income taxes (7,976) (7.7)% (26,737) (26.0)% 18,761

Income tax (recovery) charge (7,378) (7.1)% 2,828 (2.7)% (10,206) Loss for the period from continuing operations (598) (0.6)% (29,565) (28.7)% 28,967

Discontinued Operations

Income after taxes from discontinued operations - 0.0% 669 0.7% (669) Loss for the period (598) (0.6)% (28,896) (28.1)% 28,298

Loss attributable to: Owners of the parent (635) (0.6)% (28,931) (28.1)% 28,296 Non-controlling interests 37 0.0% 35 0.0% 2 $(598) (0.6)% $(28,896) (28.1)% $28,298

Cost of sales from continuing operations as a percentage of revenue for the three months ended December 31, 2017 increased by 60 basis points compared to the prior year comparative mainly due to a reduction of gross margin rate on North America recurring revenues of 50 bps and related to revenue mix.

Operating expenses from continuing operations for the fourth quarter of 2017 have decreased as compared to the fourth quarter of 2016 primarily due to reductions in employee sales commissions from lower commissionable revenue and salaries and benefits from the reduction of board compensation.

Depreciation and amortization from continuing operations for the three months ended December 31, 2017 decreased as compared to the three months ended December 31, 2016 primarily due to a smaller average depreciable base for the fourth quarter of 2017 compared to the same period last year.

Impairment of goodwill the fourth quarter of 2017 decreased compared to the prior year period due to the recognition of an impairment charge in 2016 of $3,575 on the goodwill allocated to Technomedia.

Share-based compensation expense from continuing operations for the three months ended December 31, 2017 decreased as compared to the three months ended December 31, 2016 due to the Transaction in which the Company paid all outstanding deferred share units (“DSUs”), share options and Company shares prior to the closing of the Transaction and all Company DSUs, shares and options as well as the DSU plan and option plan were effectively cancelled immediately after their payment in the second quarter of 2017.

Other expenses from continuing operations for the fourth quarter of 2017 have increased $1,195 as compared to the fourth quarter of 2016 primarily due to $998 in additional severance, $2,181 in integration costs incurred after the Arrangement for professional fees and Arrangement remuneration, and $1,297 in charges recognized for additional real estate consolidation initiatives. This increase for the fourth quarter of 2017 is partially offset by $2,827 lower settlement and resolution related expenses for the settlement of discussions with various counterparties over certain operational business interpretations in the prior year comparative that did not recur in the 2017 period.

Foreign exchange (gain)/loss on financing transactions from continuing operations reflects a gain in the three months ended December 31, 2017 on intercompany debt held by foreign subsidiaries, which was caused by the strengthening of the Euro spot rate in the fourth quarter of 2017 compared to a charge in the same period in the prior year caused by the weakening of the Euro spot rate in the period.

Financing costs, net from continuing operations for the three months ended December 31, 2017 increased primarily driven by changes in the fair value of financial instruments. The Company no longer has the 2014 Interest Rate Floor as this embedded derivative was extinguished in the second quarter of 2017 as part of the Transaction. In the prior period 2016 comparative, a gain of $821 was recognized in connection with the 2014 Interest Rate Floor, which did not occur in the 2017 period.

Income tax from continuing operations for the three months ended December 31, 2017 was a credit of $7,378 compared to a charge of $2,828 in the prior year comparative period primarily as a result of the adjustment to deferred taxes as the result of U.S. Tax Reform reducing the tax rate.

Income after tax from discontinued operations for the three months ended December 31, 2017 was nil compared to income of $669 in the prior year comparative period as BIS was sold on June 1, 2017.

Liquidity and Capital Resources

Three months ended December 31, December 31, 2017 2016 Change Total cash provided by (used in): Operating activities $24,294 $28,966 $(4,672) Investing activities (6,769) (6,664) (105) Financing activities (19,308) (26,005) 6,697 Effect of exchange rates on cash 157 (620) 777 (Decrease) increase in cash equivalents $(1,626) $(4,323) $2,697

The decrease in cash provided by operating activities was driven by the change in the following components:

Three months ended December 31, December 31, 2017 2016 Higher / (Lower) Operating cash flows before working capital adjustments (a) $18,118 $20,310 $(2,192) Working capital reductions (additions) 8,187 8,725 (538) Cash taxes paid (2,022) (76) (1,946) Interest received 11 7 4 Decrease in cash provided by operating activities $24,294 $28,966 $(4,672)

The increase in cash used for investing activities for the three months ended December 31, 2017 compared to the three months ended December 31, 2016 is due to lower proceeds from the disposal of fixed assets.

The decrease in cash used by financing activities for the fourth quarter of 2017 compared to the fourth quarter of 2016 of $6,697 was primarily due to lower interest payments of $10,062 on the Company’s outstanding debt along with $2,033 financing costs paid in 2016 for the Amendment to the 2014 First Lien Credit Facilities that did not repeat in 2017. These decreases in uses of funds from financing activities for the fourth quarter of 2017 were offset by $3,500 used for the repayment of outstanding borrowings under the HPS Revolving Credit Facility and $1,608 additional principal debt repayments in the fourth quarter of 2017 compared to the same period in 2016.

Year ended December 31, 2018 compared with the year ended December 31, 2017

Revenue from continuing operations for the year ended December 31, 2018 and December 31, 2017 were as follows:

Year ended December 31, 2018 December 31, 2017 Variance % Change In-Store Media North America $242,381 $253,347 ($10,966) (4.3)% In-Store Media International 92,833 101,082 (8,249) (8.2)% Other 33,913 42,636 (8,723) (20.5)% Total Consolidated Group $369,127 $397,065 ($27,938) (7.0)%

Revenue on a constant dollar basis (a): Year ended December 31, 2018 December 31, 2017 Variance % Change In-Store Media North America $242,381 $253,347 ($10,966) (4.3)% In-Store Media International 92,833 104,472 (11,639) (11.1)% Other 33,913 42,636 (8,723) (20.5)% Total Consolidated Group $369,127 $400,455 ($31,328) (7.9)%

In-Store Media North America revenue for the year ended December 31, 2018 decreased as compared to the year ended December 31, 2017. The reduction in 2018 was due to a decrease of approximately $8,543 in recurring revenues driven primarily by the loss of a recurring contract with a satellite television partner in addition to decreases in equipment of $1,535, installation and service revenues of $781, and other revenues of $107.

In-Store Media International revenue in 2018 decreased compared to the year ended 2017. On a like for like currency basis, the In-Store Media International revenues for the year ended December 31, 2018 decreased $11,639 compared to the year ended December 31, 2017. This was primarily driven by reductions of $4,627 in installation and service revenues, $3,774 in recurring revenues, $2,103 in equipment revenues, and $1,135 in other revenues.

The revenue from the Other segment in 2018 decreased as compared to the year ended 2017 mainly due to lower Technomedia equipment and installation and service revenues related to significantly lower project activity in their large jobs business.

Year ended December 31, 2018 December 31, 2017 Change Continuing operations

Revenue $369,127 100.0% $397,065 100.0% ($27,938) Cost of sales (a) 180,392 48.9% 183,354 46.2% (2,962) Operating expenses (a) 106,840 28.9% 128,656 32.4% (21,816) Depreciation and amortization 54,854 14.9% 57,088 14.4% (2,234) Share-based compensation 1,900 0.5% 743 0.2% 1,157 Other expenses 21,917 5.9% 14,046 3.5% 7,871 Foreign exchange loss (gain) on financing transactions 9,512 2.6% (23,498) (5.9)% 33,010 Finance costs, net 63,851 17.3% 2,938 0.7% 60,913 (Loss) income for the year before income taxes (70,139) (19.0)% 33,738 8.5% (103,877)

Income tax recovery (3,272) (0.9)% (4,636) (1.2)% 1,364 (Loss) income for the year from continuing operations (66,867) (18.1)% 38,374 9.7% (105,241)

Discontinued operations

Loss after income taxes from discontinued operations - 0.0% (1,510) (0.4)% 1,510 (Loss) income for the year (66,867) (18.1)% 36,864 9.3% (103,731)

Loss (income) attributable to: Owners of the parent (67,010) (18.1)% 36,765 9.3% (103,775) Non-controlling interests 143 0.0% 99 0.0% 44 ($66,867) (18.1)% $36,864 9.3% ($103,731)

(a) Cost re-alignment changes - Beginning in 2018, In-Store Media International affected a reporting change in the mapping of certain costs, primarily related to transponder fees and certain other employee costs, from operating expenses to cost of sales. This re-alignment is consistent with the treatment for these costs in In-store Media North America and will enhance margin comparability between reportable segments. For the year ended December 31, 2018, these costs were approximately $12,300. The impact of this cost re-alignment is an increase to cost of sales with a direct reduction offsetting operating expenses.

Cost of sales from continuing operations in 2018 as a percentage of revenue increased as compared to 2018 by 270 basis points due to a reduction of gross margin rate on International of 10.6% driven by the cost re-alignment from operating expenses to cost of goods sold. Excluding the impact of the re-mapping in 2018, the total gross margin rate would have increased by 2.7% for International and 0.7% on a consolidated basis as compared to 2017.

Operating expenses from continuing operations for 2018 decreased compared to 2017. Excluding the impact of the cost re-alignment in 2018, operating expenses would have decreased $9,472 compared to 2017, mainly due to (i) lower sales commissions from lower commissionable revenue and additional capitalizable compensation costs as a result of refining our capitalizable cost pool, (ii) lower salary expense from restructuring initiatives, and (iii) lower rent expense from further consolidating the Company’s real estate footprint.

Depreciation and amortization from continuing operations for the year ended 2018 decreased as compared to the year ended 2017 primarily due to a smaller average depreciable base for 2018 compared 2017.

Share-based compensation expense from continuing operations in 2018 increased as compared to 2017 due to the Company adopting a new Equity Incentive Plan for its employees, directors and consultants in 2018 compared to no plan in the comparative 2017 period. Additionally, the Company issued a total of 1,055,435 common shares to employees and directors as compensation for their past services in 2018.

Other expenses from continuing operations for 2018 increased $7,871 compared to 2017 due to (i) a $3,000 charge the Company recorded during the second quarter in 2018, which represents management’s best estimate for a settlement of a dispute over the interpretation of certain payment obligations and (ii) a credit of approximately $1,500 in prior year 2017 related to a release of an onerous lease provision release after a negotiated lease buyout that did not reoccur in 2018 (iii) higher legal and professional fees and other integration costs of $4,238, iv) higher transaction costs of $1,396 in 2018 associated with the Focus Four acquisition and v) $749 higher severance in 2018. The increases in 2018 are partially offset by $3,618 lower arrangement remuneration costs for the Transaction that occurred in 2017.

Foreign exchange loss (gain) on financing transactions from continuing operations reflects a loss in the year ended December 31, 2018 due to the revaluation of USD-based intercompany debt held by foreign subsidiaries caused by a weakening of the Euro spot rate in the year ended 2018 compared to a gain in the same period in 2017 due to a strengthening of the Euro spot rate in the 2017 comparative period.

Financing costs, net from continuing operations expenses in 2018 increased $60,913 compared to 2017 due to the gain on the Arrangement in 2017 and related transactions that did not occur in 2018.

Income taxes from continuing operations for the year ended December 31, 2018 was a recovery of $3,272 compared to a recovery of $4,636 in the 2017 comparative year primarily as a result of U.S. Tax Reform having a more significant effect to deferred taxes in 2017 than the adjustment to deferred taxes due to international tax reform reducing the tax rate in 2018.

Loss after income taxes from discontinued operations for the year ended December 31, 2018 was nil compared to a loss of $1,510 in the 2017 comparative period as BIS was sold on June 1, 2017.

December 31, 2018 December 31, 2017 Change Total assets $521,715 $542,927 ($21,212) Total non-current liabilities 514,769 466,719 48,050

Total assets for the 2018 year decreased year over year primarily due to the scheduled amortization of intangible assets more than offsetting the impact of $8,430 in intangible additions from the acquisition of Focus Four, the reduction in trade and other receivables, as a result of overall increased collections from year end invoicing and lower invoicing from lower revenues compared to 2017, and the decrease of prepayments and other assets primarily due to the timing of receipt and orders of profusion devices as well as timing of prepaid royalties. The decrease in 2018 is offset by the increase in cash and an increase in goodwill due to the acquisition of Focus Four.

Total non-current liabilities in 2018 increased mainly due to the Company’s long term debt in relation to the new debt incurred under the 2018 Incremental Borrowings as well as classifying the $15,000 outstanding HPS Revolving Credit Facility as long term from short term debt. Adding to this increase in 2018 was the regular accrued PIK interest and accreted deferred financing costs partially offset by the scheduled amortization payments on the principal of the HPS First Lien term loans and lower deferred tax liabilities resulting from the reduction on the Company’s future tax rate attributed to the changes in U.S. and International tax reform.

Liquidity and Capital Resources

Year ended December 31, December 31, Change 2018 2017 Total cash provided by (used in): Operating activities $64,097 $64,834 ($737) Investing activities (44,386) (7,735) (36,651) Financing activities (10,163) (66,534) 56,371 Effect of exchange rates on cash (172) 1,377 (1,549) Increase (decrease) in cash equivalents $9,376 ($8,058) $17,434

The decrease in cash generated from operating activities was driven by the change in the following components:

Year ended December 31, December 31, Higher/(Lower) 2018 2017 Operating cash flows before working capital adjustments (a) $59,731 $72,213 ($12,482) Working capital (additions) reductions 4,894 (5,062) 9,956 Cash taxes paid (557) (2,384) 1,827 Interest received 29 67 (38) Increase (decrease) in cash from operating activities $64,097 $64,834 ($737)

The increase in cash used in investing activities in 2018 compared to 2017 is due to the acquisition of Focus Four for $14,530 and additional capital expenditures that occurred in the 2018 as well as net proceeds of $19,047 from the sale of BIS that occurred in June 2017 that exceeded net proceeds of $715 from the sale of assets related to a foreign joint venture in 2018.

The decrease in cash used in financing activities of $56,371 in 2018 is primarily due to (i) the repayment of the Company’s outstanding debt and credit facilities and accrued interest in connection with the Arrangement and the Amendment of $45,415 in 2018 (compared to $343,960 in 2017 for the Arrangement), (ii) financing costs of $1,992 in 2018 in connection with the 2018 Incremental Borrowings and ABL Facility (compared to $40,432 related to the Arrangement in 2017), and, (iii) $19,758 in Share Acquisitions in 2017 that did not repeat in 2018. This decrease in 2018 was partially offset by $29,856 in proceeds received in 2018 from the 2018 Incremental Borrowings (compared to proceeds from the new HPS First Lien Credit Facilities received of $292,574 and contributed capital issued of $40,000 pursuant to the comprehensive Transaction in the comparative 2017 year). Additionally, the Company had net proceeds of $8,000 from the drawdown on the HPS Revolving Credit Facility in 2018 (compared to $7,000 from the drawdown on the HPS Revolving Credit Facility).

Year ended December 31, 2017 compared with the year ended December 31, 2016

Revenue from continuing operations for the year ended December 31, 2017 and December 31, 2016 were as follows:

Year ended December 31, 2017 December 31, 2016 Variance % Change In-Store Media North America $253,347 $257,693 $(4,346) (1.7)% In-Store Media International 101,082 110,205 (9,123) (8.3)% Other 42,636 39,135 3,501 8.9% Total Consolidated Group $397,065 $407,033 $(9,968) (2.4)%

Revenue on a constant dollar basis (a):

Year ended December 31, 2017 December 31, 2016 Variance % Change In-Store Media North America $253,347 $257,693 $(4,346) (1.7)% In-Store Media International 101,082 108,560 (7,478) (6.9)% Other 42,636 39,135 3,501 8.9% Total Consolidated Group $397,065 $405,388 $(8,323) (2.0)%

In-Store Media North America revenue for the year ended 2017 decreased as compared to the year ended 2016. The reduction in 2017 was due to a decrease of approximately $5,743 in recurring revenues driven primarily by a reduction of average revenue per site, in addition to a $386 decrease in other revenues. The reduction was partially offset by increases of $980 in equipment and $803 in installation and service revenues.

In-Store Media International revenue in 2017 decreased compared to 2016. On a constant currency basis and excluding $956 of revenues related to the French speaker business, the In-Store Media International revenues for the year ended December 31, 2017 decreased $7,478 compared to the year ended December 31, 2016. This was primarily driven by $5,146 in lower equipment revenues and $1,262 in lower installation and service revenues due to large projects in 2016 that did not repeat or generate the same level of revenues in 2017, and a decrease in recurring revenues of $1,440, offset by an increase of $370 in other revenues.

The revenue from the Other segment for the 2017 year increased as compared to 2016 due to higher Technomedia equipment revenues related to significantly higher project activity in their large jobs business in 2017.

Year ended December 31, 2017 December 31, 2016 Change Continuing Operations

Revenue $397,065 100.0% $407,033 100.0% $(9,968) Cost of sales 183,354 46.2% 187,088 46.0% (3,734) Operating expenses 128,656 32.4%.% 130,655 32.1% (1,999) Depreciation and amortization 57,088 14.4% 61,568 15.1% (4,480) Impairment of goodwill - 0.0% 3,575 0.9% (3,575) Share-based compensation 743 0.2% 478 0.1% 265 Other expenses 14,046 3.5% 12,249 3.0% 1,797641 Foreign exchange (gain)/loss on financing transactions (23,498) (5.9)% 10,975 2.7% (34,473) Finance costs, net 2,938 (0.7)% 57,757 14.2% (54,819) Income (loss) for the year before income taxes 33,738 8.5% (57,312) (14.1)% 91,050

Income tax (recovery) charge (4,636) (1.2)% 1,774 (0.4)% (6,410) Income (loss) for the year from continuing operations 38,374 9.7% (59,086) (14.5)% 97,460

Discontinued Operations

(Loss) income after taxes from discontinued operations (1,510) (0.4)% 1,405 0.3% (2,915) Income (loss) for the year 36,864 9.3% (57,681) (14.2)% 94,545

Income (loss) attributable to: Owners of the parent 36,765 9.3% (57,786) (14.2)% 94,551 Non-controlling interests 99 0.0% 105 0.0% (6) $36,864 9.3 % $(57,681) (14.2)% $94,545

Cost of sales from continuing operations as a percentage of revenue in 2017 increased as compared to 2016 by 20 basis points due to changes in the revenue mix driven by slightly increased revenues from equipment of $755 and installation and service of $989, which have lower gross margins, and a decrease in the Company’s recurring revenue, which have higher gross margins.

Operating expenses from continuing operations for the year ended 2017 decreased compared to 2016. On a constant dollar basis and excluding a $458 operating expense impact for the sale of the French speaker business operating expenses decreased $1,128 mainly due to lower sales commissions in North America from lower commissionable revenue and salaries and benefits from the reduction of board compensation.

Depreciation and amortization from continuing operations in 2017 decreased when compared to the same period in 2016 primarily due to a smaller average depreciable base for the year ended December 31, 2017 compared to 2016.

Impairment of goodwill for the year ended December 31, 2017 decreased compared to the prior year 2016 comparative due to the recognition of an impairment charge in 2016 of $3,575 on the goodwill allocated to Technomedia.

Share-based compensation expense from continuing operations increased in 2017 as compared to 2016 due to accelerating the vesting period for all the Company’s outstanding share options and DSUs in connection with the Transaction in 2017 in which substantially all of the Company’s outstanding debt was refinanced or redeemed and the outstanding shares acquired.

Other expenses from continuing operations for the year ended 2017 increased $1,797 compared to 2016 primarily due to an increase of $6,371 for change in control, accrued retention, and other bonuses in connection with the Arrangement in 2017 offset by a reduction of $3,708 as a result of recording a loss on the sale of the French speaker business in 2016 that did not repeat in 2017 and $1,515 in lower settlement and resolution related expenses in 2017.

Foreign exchange (gain) loss on financing transactions from continuing operations recognized a gain in the year ended December 31, 2017 on intercompany debt held by foreign subsidiaries, which was caused by the strengthening of the Euro spot rate in 2017 compared to a charge in 2016 caused by the weakening of the Euro spot rate in the period.

Financing costs, net from continuing operations decreased in 2017 primarily driven primarily by the gain of $55,728 on the settlement of the Company’s debt and credit facilities in connection with the Transaction in 2017.

Income tax (recovery) charge from continuing operations for the year ended December 31, 2017 was a credit of $4,636 compared to a charge of $1,774 in the comparative period as a result of the adjustment to deferred taxes as the result of U.S. Tax Reform reducing the tax rate.

(Loss) income after tax from discontinued operations reflected a loss 2017 of $1,510 compared to income of $1,405 in 2016 as a result of the recognition of the loss on sale of BIS of $1,836 on June 1, 2017.

December 31, 2017 December 31, 2016 Change Total assets $542,927 $593,673 $(50,746) Total non-current liabilities 466,719 641,571 (174,852)

Total assets for the 2017 year decreased compared to 2016 primarily due to the scheduled amortization of intangible assets and depreciation on property plant and equipment and the reduction in trade and other receivables, inventory, goodwill and intangible assets as a result of the sale of BIS in 2017.

Total non-current liabilities decreased for the year ended 2018 when compared 2016 mainly due to the redemption and refinancing of the Company’s debt and credit facilities in connection with the Transaction in 2017 as further described in the Recent Developments and Related Party Transactions section as well as the reduction in deferred tax liabilities resulting from U.S. Tax Reform lowering tax rates in 2017.

Liquidity and Capital Resources

Year ended December 31, December 31, 2017 2016 Change Total cash provided by (used in): Operating activities $64,834 $87,104 $(22,270) Investing activities (7,734) (26,650) 18,916 Financing activities (66,534) (60,472)(34,467 (6,062) Effect of exchange rates on cash 1,377 (330)0 1,707930

Decrease in cash equivalents $(8,057) $(348) $(7,709)0 0

The decrease in cash provided by operating activities was driven by the change in the following components:

Year ended December 31, December 31, Higher / 2017 2016 (Lower) Operating cash flows before working capital adjustments (a) $72,213 $84,470 $(12,257) Working capital (additions ) reductions (5,062) 4,407 (9,469) Cash taxes paid (2,384) (1,800) (584) Interest received 67 27 40 Decrease in cash provided by operating activities $64,834 $87,104 $(22,270)

The increase in cash from investing activities in 2017 was primarily due to the net proceeds of $19,047 from the sale of BIS in the year ended December 31, 2017.

The increase in cash used in financing activities of $6,062 for the year ended 2017 was primarily due to; (i) the repayment of the Company’s outstanding debt and credit facilities and accrued interest of $343,960 during 2017 (compared to $57,591 during 2016), (ii) costs of $40,432 to settle the Arrangement in 2017, and, (iii) $19,758 in Share Acquisitions in 2017. This increase in 2017 was partially offset by proceeds from the HPS First Lien Credit Facilities received of $299,574 and contributed capital issued of $40,000 pursuant to the comprehensive Transaction described in the Recent Developments and Related Party Transactions section during the year ended 2017.

Key Performance Indicators

During the three months ended December 31, 2018, the number of total Company-owned sites decreased by 341 relative to the prior quarter with the number of sites increasing in North America and decreasing in International. The acquisition of Focus Four in July 2018 added 11,851 sites to the Company’s site base in the third quarter of 2018. In the fourth quarter, the Company revised downward the number of Focus Four sites by 1,388 as it harmonized Focus Four’s site count methodology with that of the Company. Excluding that adjustment, the number of total Company-owned sites would have increased by 1,047 relative to prior quarter. Relative to prior quarter, the total number of visual sites increased in both North America and International and the number of audio sites increased in North America and decreased in International.

In the three months ended December 31, 2018, the number of total gross site additions reached 15,328, an increase of 32% compared to 11,648 for the three months ended December 31, 2017.

Monthly churn was 1.2% in the three months ended December 31, 2018 compared to the 0.9% in the prior quarter and 0.9% in the comparative quarter of 2017; audio churn was 1.2% and visual churn was 0.6%. Churn in North America was 1.1% in the three months ended December 31, 2018 compared with 0.7% in the three months ended December 31, 2017.The International business unit churn was 1.5% compared with 1.4% in the prior year’s fourth quarter.

For the three months ended December 31, 2018 blended ARPU declined by 3.6% against the comparative quarter of 2017, of which 0.8% is related to the decline in value of the Euro relative to the U.S. dollar and 2.9% is the underlying change.

Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Audio sites 398,440 401,576 396,842 395,417 392,866 389,066 399,539 398,169 2018 Visual sites 16,560 17,386 17,725 19,381 20,276 21,246 23,026 24,055 Total sites 415,000 418,962 414,567 414,798 413,142 410,312 422,565 422,224

Audio ARPU $38.81 $38.60 $38.54 $38.32 $38.53 $38.10 $37.36 $36.71 Visual ARPU $71.57 $72.15 $74.47 $72.91 $72.28 $70.12 $69.51 $67.19 Blended ARPU $40.15 $39.97 $40.06 $39.87 $40.14 $39.72 $39.09 $38.44

Audio gross additions 15,247 14,499 10,272 9,718 8,207 8,514 10,076 14,233 Visual gross additions 1,156 1,206 866 1,930 1,367 1,263 1,407 1,095 Total gross additions 16,403 15,705 11,138 11,648 9,574 9,777 11,483 15,328

Audio monthly churn 1.2% 1.0% 1.2% 0.9% 0.9% 1.0% 0.9% 1.2% Visual monthly churn 1.2% 0.8% 1.0% 0.5% 0.8% 0.5% 0.9% 0.6% Total monthly churn 1.2% 0.9% 1.2% 0.9% 0.9% 1.0% 0.9% 1.2%

These key performance indicators represent non-IFRS measures that management evaluates and monitors when assessing the performance of the Company. A site is an individual location where a Mood service is provided. ARPU represents the monthly average revenue per site and is calculated by taking total quarterly subscription revenue and dividing it by the average number of sites in the quarter and dividing by three, for each month in the quarter. Churn represents the rate of monthly site disconnects and is calculated by taking the total number of disconnected sites in the quarter divided by the opening balance of sites in the quarter and dividing by three for each month in the quarter.

Contractual obligations

The following chart outlines the Company’s contractual obligations as at December 31, 2018:

Less than one Years two and Years four Beyond Description Total year three and five five years HPS First Lien Credit Facilities $309,359 $9,164 $18,328 $281,867 $ - HPS First Lien Credit Facilities interest 95,526 28,421 54,232 12,873 - Second Lien Senior Secured PIK Notes 207,269 - - 128,984 78,285 Second Lien Senior Secured PIK Notes - PIK interest 236,848 - - - 236,848 Second Lien Senior Secured PIK Notes - cash interest 129,450 19,525 48,118 49,356 12,451 ABL Facility 323 323 - - - Operating leases 35,799 11,302 13,680 5,636 5,181 Finance leases 2,785 1,482 1,303 - - Trade and other payables 85,810 85,810 - - - Total $1,103,169 $156,027 $135,661 $478,716 $332,765

Bank debt and Note Issuances

HPS First Lien Credit Second Lien Senior Loans and borrowings terms: Facilities ABL Facility Secured PIK Notes Closing date June 28, 2017 May 21, 2018 June 28, 2017 Maturity date June 28, 2022 May 21, 2020 July 1, 2024 Interest rate 3-month LIBOR + 7.25% 1-month LIBOR + 2.25%(1) 6-month LIBOR + 14% Effective interest rate 11.68% 12.57% 16.62%

(1) The interest coverage ratio requirement does not apply as long as MUK maintains a $500 balance or less, however the interest rate spread increases from 2.25% to 4.25% during the time the interest coverage ratio is not met.

Trade and other payables

Trade and other payables arise in the normal course of business and are to be settled within one year of the end of the reporting period.

Lease commitments

Operating and finance leases are entered into primarily for the rental of premises and vehicles used for business activities.

Capitalization

Total managed capital was as follows:

2018 2017 Equity ($102,503) ($43,386) HPS First Lien Credit Facilities 309,359 295,185 Second Lien Senior Secured PIK Notes 207,269 175,000 ABL Facility 323 - Finance leases 2,785 1,638 Total contractual principal of debt 519,736 471,823 Total Capital $417,233 $428,437

The following table provides additional share information:

Outstanding as at March 26, 2019 Common shares 130,240,479 HPS Warrants 2,635,432

The Company’s common shares are not listed or quoted on a national securities exchange. As of March 26, 2019, there were 66 holders of record of the Company’s common shares.

Management of foreign currency, interest rate, liquidity and credit risk

We are exposed to a variety of financial risks including market risk (encompassing currency risk and interest rate risk), liquidity risk and credit risk. Our overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company's financial performance.

Currency risk

We operate in the U.S. and internationally. The functional currency of the parent Company is the U.S. dollar. Currency risk arises because the amount of the local currency revenue, expenses, cash flows, receivables and payables for transactions denominated in foreign currencies may vary due to changes in exchange rates and because the non-U.S. denominated financial statements of the Company’s subsidiaries may vary on consolidation into U.S. dollars ("translation exposures").

4 Sensitivity Analysis / Comments Segment profit (loss)(a) of A $0.05 change in the USD/Euro exchange rate would impact the three months and year In-Store Media ended December 31, 2018 segment profit by approximately +/- $200 and +/- 500, respectively, International assuming all other variables remain the same.

A 1% movement in the USD/Euro exchange rate applied to balance outstanding as at USD denominated December 31, 2018 would, all else being equal, result in a change to the foreign exchange gain intercompany loan (loss) on intercompany financing transactions of approximately +/- $2,300.

(a) Segment profit (loss) is a non-IFRS financial measure; a reconciliation of segment profit to income (loss) before income taxes is presented in the Segment information footnote in the consolidated financial statements.

The following are tables of forward contracts entered into in 2017 and 2016 and settled in 2017. The contracts were not designated as hedges for accounting purposes; they were measured at fair value at each reporting date by reference to prices provided by counterparties. Factors used in the determination of fair value include the spot rate, forward rates, and estimates of volatility, present value factor, strike prices, credit risk of the Company and credit risk of counterparties. Fair value estimates are subjective in nature, often involve uncertainties and the exercise of significant judgment, they are made at a specific point in time using available information about the financial instrument and may not reflect fair value in the future. The estimated fair value amounts may be materially affected by the use of different assumptions or methodologies. The changes in fair value and settled gains or losses due to foreign currency instruments are included within finance costs, net. For the three months and year ended December 31, 2018, the amount reflected in finance costs, net was nil (for the three months and year ended December 31, 2017 – nil and a net loss of $321, respectively).

2017 currency contract 2016 currency contracts Forward date June 28, 2017 Forward date April 25, 2017 October 25, 2017 Reference currency CAD Reference USD USD Notional $19,499 Notionalcurrency $2,500 $2,500 Forward rate 1.3214 Forward rate 1.0604 1.0649

Interest rate risk

The majority of the Company’s interest rate risk arises on amounts outstanding under the HPS First Lien Credit Facilities and the Second Lien Senior Secured PIK Notes which bear interest at floating rates. The HPS First Lien Credit Facilities and the Second Lien Senior Secured PIK Notes both carry an interest rate floor which currently is below three-month and six-month LIBOR, respectively. An increase or decrease of 50 basis points in the interest calculation period to the three-month and six-month LIBOR rate for the HPS First Lien Credit Facilities and Second Lien Senior Secured PIK Notes, respectively, would result in a credit or charge to finance costs, net of approximately $700 and $2,500 for the three months and year ended December 31, 2018, respectively (three months and year ended December 31, 2017 – $600 and $1,100, respectively, for half the year while the debt was outstanding).

Liquidity risk

Liquidity risk arises when cash resources become insufficient to meet cash demands. The Company’s objective in managing liquidity risk is to manage its capital and maintain sufficient readily available reserves in order to meet its liquidity requirements at any point in time.

As at December 31, 2018, the Company had cash of $18,296 and $nil available under the HPS First Lien Credit Facility. While management believes that the Company has sufficient liquidity in the form of its current cash balances, the cash generating capacity of its businesses, ongoing opportunities to divest non-core assets and access to capital markets, in the form of debt or private equity participation, to meet its capital expenditure and other funding requirements for the forthcoming year, the Company’s liquidity position can be negatively impacted by the Company’s existing leverage or negative developments related to the Company’s other risk factors. If the Company failed to generate or maintain sufficient liquidity, it could cause a material adverse effect to the Company’s financial position.

On an ongoing basis management evaluates the sufficiency of its current liquidity, borrowing capacity, and capital structure, including compliance with its relevant debt covenants, to assure its capital structure is optimally poised to meet the needs of its operating plans. On June 28, 2017, the Company completed a comprehensive Transaction as described in the Recent Developments and Related Party Transactions section, which resulted in the Company’s redemption and refinancing of substantially all of its debt obligations thereby reducing the Company’s total indebtedness and improving its consolidated statement of financial position. Additionally, on July 2, 2018, the Company entered into the Amendment to finance the asset purchase of Focus Four, to permit incremental funding, and to obtain greater flexibility under its financial covenants. The Amendment increased the HPS First Lien Credit Facilities contractual balance owed by $15,144 in exchange for $12,500 in cash after an amendment fee of $2,257 and an original issue discount of $386 for amended covenants, maintaining substantially identical terms to those of the existing HPS First Lien Credit Facilities.

As part of the financing of the Focus Four acquisition and permitted incremental funding within the above amendment, the Company issued $12,872 of additional Second Lien Senior Secured PIK Notes to the Sponsors in exchange for $12,500 in cash. Additionally, the Company entered into an investment agreement with the Sponsors pursuant to which the Sponsors agreed to reinvest their cash interest received of LIBOR + 6% in respect of the Second Lien Senior Secured PIK Notes on each semi-annual interest payment date in exchange for Reinvestment PIK Notes or common shares of the Company at the discretion of the Sponsor. On July 3, 2018, the Company issued $4,996 of Reinvestment PIK Notes, including an original issue discount of $144. The form and terms of the new notes issued under the investment agreement are identical to those of the Company's existing Second Lien Senior Secured PIK Notes and are issued under the existing Second Lien Senior Secured PIK Notes indenture.

Credit risk

Credit risk is the risk of suffering financial loss, should any of the Company’s banks and or customers fail to fulfill their contractual obligations to the Company. Credit risk arises from cash held with banks and credit exposure to customers on outstanding trade receivable balances. The maximum exposure to credit risk is equal to the carrying value of the financial assets. The objective of managing counterparty credit risk is to prevent losses in financial assets. The Company’s credit risk is limited due to the fact that the cash held in the Company’s banks is held with high-credited banks and no one customer represents a material concentration of the Company’s trade receivables. Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. One customer’s credit risk will not exceed more than 1% of the Company’s current assets at any time during the year.

The Company assesses the credit quality of the customer, taking into account their financial position, general economic conditions, past experience as well as the future prospects of the customer and the industries in which they operate. Management also monitors payment performance and the utilization of credit limits of customers. The carrying amount of accounts receivable is reduced through the use of a loss allowance and the amount of the loss is recognized in the consolidated statements of (loss) income and comprehensive (loss) income in operating expenses. With the adoption of IFRS 9 on January 1, 2018, the Company began measuring the loss allowance at an amount equal to lifetime expected credit loss (“ECL”). The ECLs on trade receivables are estimated using a provision matrix by reference to past default experience of customers, general economic conditions of the industry in which they operate as well as forward looking information by way of trended loss patterns in industries and customer geographies, forecasts of adverse changes in business, financial or economic conditions that are expected to cause a significant decrease in the customer’s ability to meet its debt obligation, and predictions of significant deterioration in the operating results of the customer.

Critical Accounting Estimates

Described below are the key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. We based our assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond our control. Such changes are reflected in the assumptions when they occur.

Goodwill and indefinite-lived intangible assets

The Company performs asset impairment assessments for indefinite-lived intangible assets and goodwill on an annual basis or on a more frequent basis when circumstances indicate impairment may have occurred. Under IFRS, the Company selected December 31 as the date when it performs its annual impairment analysis. Goodwill is allocated to a cash generating unit (“CGU”) or group of CGUs for the purposes of impairment testing based on the level at which senior management monitors it, which is not larger than an operating segment. The testing for impairment of either an intangible asset or goodwill is to compare the recoverable amount of the asset, CGU or group of CGUs to the carrying amount. The recoverable amount is determined for an individual asset, unless the asset does not generate cash flows that are largely independent of those from other assets, in which case the asset is assessed as part of the CGU or group of CGUs to which it belongs. The recoverable amount calculations use a discounted cash flow model derived from a five-year forecast. The recoverable amount is sensitive to the discount rate used for the model as well as the expected future cash flows and the growth rate used for extrapolation purposes. Changes in certain assumptions could result in an impairment loss being charged in future periods. The key assumptions used to determine the recoverable amount for the different CGUs or groups of CGUs are disclosed and further explained in note 15 of the Company’s annual financial statements.

Impairment of long-lived assets

Long-lived assets primarily include property and equipment and intangible assets. An impairment loss is recognized when the carrying value of the CGU, which is defined as the smallest identifiable group of assets that generates cash flows that are largely independent of the cash flows from other assets or groups, exceeds the CGU’s recoverable amount, which is determined using a discounted cash flow method. The Company tests the recoverability of its long-lived assets when events or circumstances indicate that the carrying values may not be recoverable. While the Company believes that no impairment is required, management must make certain estimates regarding the Company’s cash flow projections that include assumptions about growth rates and other future events. Changes in certain assumptions could result in an impairment loss being charged in future periods.

Property and equipment

The Company has estimated the useful lives of the components of all of its property and equipment based on past experience and expected useful life, and is depreciating these assets over their estimated useful lives. Management assesses these estimates at least at each financial year-end and, if there is a significant change in the expected pattern of consumption of the future economic benefits embodied in the asset, the useful life is changed to reflect the changed pattern. Such a change is accounted for as a change in an accounting estimate in accordance with International Accounting Standard (“IAS”) 8, Accounting Policies, Changes in Accounting Estimates and Errors. Rental equipment installed at customer premises includes costs directly attributable to the installation process. Judgment is required in determining which costs are considered directly attributable to the installation process and the percentage capitalized is estimated based on work order hours for the year.

Fair value of share-based compensation

The Company measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date on which they are granted. Estimating fair value for share-based compensation transactions requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determining the most appropriate inputs to the valuation model including the expected life of the share option, volatility, dividend yield and forfeiture rates and making assumptions about them. The assumptions and models used for estimating fair value for share-based compensation transactions are disclosed in note 20 of the Company’s annual financial statements.

Fair value of financial instruments

When the fair value of financial assets and financial liabilities recorded in the consolidated statements of financial position cannot be derived from active markets, the fair value is determined using valuation techniques including the discounted cash flow model. The inputs to these models are taken from observable markets where possible. Where this is not feasible, a degree of judgment is required in establishing fair values. The judgments include consideration of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.

Contingencies

Contingencies, by their nature, are subject to measurement uncertainty as the financial impact will only be confirmed by the outcome of a future event. The assessment of contingencies involves a significant amount of judgment including assessing whether a present obligation exists and providing a reliable estimate of the amount of cash outflow required in settling the obligation. The uncertainty involved with the timing and amount at which a contingency will be settled may have a material impact on the consolidated financial statements of future periods to the extent that the amount provided for differs from the actual outcome.

Fair value measurement of contingent consideration liability

Contingent consideration resulting from business combinations is valued at fair value at the acquisition date as part of the business combination. When the contingent consideration is considered a financial liability, it is subsequently remeasured to fair value at each reporting date. The determination of the fair value is based on discounted cash flows. The key assumptions take into consideration the probability of meeting each performance target and the discount factor. Throughout the year, the Company updated the assumptions on the contingent consideration payable to the former owners of Technomedia in note 17 of the Company’s annual financial statements. The Technomedia contingent consideration was extinguished via final contractual payment in June 2018.

Income taxes

Tax regulations and legislation and the interpretations thereof in the various jurisdictions in which the Company operates are subject to change. As such, income taxes are subject to measurement uncertainty. Deferred tax assets are recognized to the extent that it is probable that the deductible temporary differences or tax losses will be recoverable in future periods. The recoverability assessment involves a significant amount of estimation including an evaluation of when the temporary differences will reverse, an analysis of the amount of future taxable earnings and the application of tax laws. To the extent that the assumptions used in the recoverability assessment change, there may be a significant impact on the consolidated financial statements of future periods.

Revenue and contract costs

With the implementation of IFRS 15, Revenue from Contracts with Customers (“IFRS 15”) on January 1, 2018, the Company makes certain estimates, judgments and assumptions. Based on such, revenue related to multiple performance obligations requires allocation of revenue to each performance obligation based on its relative standalone selling price (“SSP”). The Company determines SSP either based on the prices charged to customers or by applying judgment to the SSP based on expected cost plus margin. Assumptions to develop our expected margins are based on management’s sales performance expectations, sales commission plans, market data, and historical results.

Revenue for long-term media solution projects is recognized over time using the percentage-of-completion method whereby the percentage-of-completion is determined based on the costs incurred to date compared to the total estimated costs. The determination of the percentage-of-completion takes actual costs incurred and adjusts for any costs incurred that do not contribute to or are not proportionate to the progress in satisfying the performance obligation. The Company also applies judgment on the estimated costs to complete.

The Company incurs direct and incremental costs in connection with obtaining and fulfilling contracts. As the Company obtains recurring contracts from new customers, costs such as sales commissions and costs directly related to proprietary equipment are capitalized as part of deferred costs and commissions. Deferred costs are amortized as a component of cost of sales while deferred commissions are amortized as a component of operating expenses over the term of the related contract. Significant judgment is required in identifying the sales commissions which are incremental to the contract and in the costs related to the proprietary equipment as to whether the criteria for capitalization have been met, the amounts to be capitalized, and the estimated average contract length to amortize the costs over.

Recently Issued Accounting Pronouncements

On January 1, 2018, the Company adopted (i) IFRS 9, Financial Instruments: Classification and Measurement, (ii) IFRS 15, Revenue from Contracts with Customers, and (iii) International Financial Reporting Interpretations Committee (“IFRIC”) 22, Foreign Currency Transactions and Advance Consideration. The impacts of these standards and interpretation on the Company are discussed in detail within note 4 of the audited consolidated financial statements for the year ended December 31, 2018.

Standards and interpretations issued but not yet effective

Standards and interpretations issued but not yet effective up to the date of issuance of the Company’s consolidated financial statements are listed below. This listing of standards and interpretations issued are those that the Company reasonably expects to have an impact on disclosures, financial position or performance when applied at a future date.

The Company intends to adopt the following standard and interpretation when it becomes effective.

IFRS 16, Leases (“IFRS 16”)

On January 13, 2016, the IASB issued IFRS 16, which outlines requirements for lessees to recognize assets and liabilities for most leases. Lessees are required to recognize the lease liability for the obligations to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term. Lease liability is measured at the present value of lease payments to be made over the term of the lease. The right- of-use asset is initially measured at the amount of the lease liability and adjusted for prepayments, direct costs and incentives received. Lessor accounting under IFRS 16 is substantially unchanged from current accounting under IAS 17, Leases. Lessors will continue to classify all leases using the same classification principles. Generally, the adoption of IFRS 16 results in a decrease in operating expenses, an increase in financial expense (due to the accretion of the lease liability) and an increase in depreciation (due to the depreciation of the right-of-use asset) on the consolidated statements of profit or loss.

The new standard will be effective for annual reporting periods beginning on or after January 1, 2019. The Company is currently assessing the impact of adopting IFRS 16 but at this stage in the implementation process it is not possible to make reasonable quantitative estimates of the effects of the new standard.

IFRIC 23, Uncertainty over Income Tax Treatments (“IFRIC 23”)

IFRIC 23 clarifies how to apply the recognition and measurement requirements in IAS 12, Income Taxes, when there is uncertainty over income tax treatments. In such circumstances, the Company shall recognize its current or deferred tax asset or liability applying the requirements in IAS 12 based on taxable profits (tax loss), tax bases, unused tax losses, unused tax credits and tax rates determined applying this Interpretation. This Interpretation is effective for annual periods beginning on or after January 1, 2019. The Company has evaluated the tax positions and does not have a material uncertainty about worldwide tax treatments that would be required to be measured within current and deferred tax.

Disclosure Controls and Internal Controls over Financial Reporting

The CEO and CFO have designed, or have caused to be designed, disclosure controls and procedures and internal controls over financial reporting. These controls were evaluated using the framework established in “Internal Control – Integrated Framework” (2013) published by The Committee of Sponsoring Organizations of the Treadway Commission (COSO Framework) and it has been determined that their design and operation provide reasonable assurance as to their adequacy and effectiveness as at December 31, 2018.

In designing such controls, it should be recognized that due to inherent limitations in any control system, no evaluation of controls can provide absolute assurance that all control issues, including instances of fraud, if any, have been detected. Projections of any evaluations of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Additionally, management is required to use judgment in evaluating controls and procedures.

Risk Factors

If the Company is unable to generate demand for managed media services, its financial results may suffer

The Company’s current business plan contemplates deriving revenue from customers that value professional media services that are available for broadcast in-store. The Company’s ability to generate such revenues depends on the market demand for its media content and its ability to provide a robust service that delivers a return on investment.

The Company depends on a large portion of its revenues being derived from the continued spending by its clients on in-store media services. The Company’s top clients for such services typically have lengthy tenures. However, should clients decide to stop using or to reduce their expenditures on the Company’s in-store media or decide to terminate their agreements with the Company and use one of its competitors, the Company would lose subscription revenue, which may have an adverse effect on its financial position and results of operations.

The Company is subject to legal proceedings which could have a material adverse effect.

In 2015, SoundExchange filed suit against Muzak LLC, a wholly owned subsidiary of Mood (“Muzak”), in the U.S. District Court for the District of Columbia (the “District Court”) alleging that Muzak underpaid royalties for certain of its consumer residential music channels for satellite and cable television subscribers. In 2016, the District Court granted Muzak’s motion to dismiss the case. SoundExchange appealed, and in 2017, the U.S. Court of Appeals for the District of Columbia Circuit reversed the District Court’s ruling and held that certain transmissions by Muzak may be ineligible for such lower royalty rate. SoundExchange has claimed damages against Muzak corresponding to the amount of the underpayment of royalties and late fees and could seek an amount in excess of $20,000. The case is proceeding in the District Court after SoundExchange’s motion for summary judgment was granted in part and denied in part on August 22, 2018.

The outcome of the SoundExchange litigation and any other legal proceedings that the Company may be subject to in the future is inherently uncertain. Regardless of the merit of particular claims, litigation may be expensive, time- consuming, disruptive to the Company’s operations, and distracting to management. If the SoundExchange matter is determined adversely to the Company, its results of operations and financial condition may be materially and adversely affected and its solvency may be impaired.

The Company faces intense competition from its competitors that could negatively affect its results of operations

The Company has different competitors in its local geographies but few that operate across international markets. Some of these local competitors offer services at a lower price than what the Company offers in order to promote their services and gain market share. If these competitors are able to leverage such price advantages, it could harm the Company’s ability to compete effectively in the marketplace. Furthermore, there is a threat of new entrants to the competitive landscape from traditional advertisers, media providers as well as start-up companies. The growth of social media could facilitate other forms of new entries that will compete with the Company.

The Company also competes with companies that are not principally focused on providing business music services. Such competitors include consumer services, webcasters, traditional radio broadcasters that encourage workplace listening, video services that provide business establishments with music videos or television programming, and performing rights societies that license business establishments to play sources such as streaming music, CDs, MP3 files and satellite, terrestrial and internet radio.

The Company competes on the basis of service, the quality and variety of its music programs, the ability to provide copyright-compliant content, and price. Management believes that the Company can compete effectively due to the breadth of its in-store media offerings. While management believes that the Company competes effectively, the Company’s competitors are continually seeking new ways to expand their client bases and revenue streams. As a result, competition may negatively impact the Company’s ability to attract new clients and retain existing clients.

The Company’s success will depend, in part, on its ability to develop and sell new products and services

The Company’s success depends in part on the ability of its personnel to develop leading-edge media products and services and the ability to cross-sell audio, visual, mobile, social and scent marketing to existing clients. The Company’s business and operating results will be harmed if it fails to cross-sell its services and/or fails to develop products and services that achieve widespread market acceptance or that fail to generate significant revenues or gross profits to offset development and operating costs. The Company may not successfully identify, develop and market new products and service opportunities in a timely manner. The Company also may not be able to add new content or services as quickly or as efficiently as its competitors, or at all. If the Company introduces new products and services, it may not attain broad market acceptance or contribute meaningfully to its revenues or profitability. Competitive or technological developments may require the Company to make substantial, unanticipated investments in new products and technologies, and the Company may not have sufficient resources to make these investments.

The Company’s success will depend, in part, on its ability to attract and retain human capital

Although the Company has been successful in recruiting and retaining qualified employees to date, there can be no assurances that it will continue to attract and retain the human capital needed for its business. Competition for human capital remains robust, and meeting the salary expectations of recruits and existing employees can be challenging. The Company’s ability to offer meaningful wage increases and long term incentives is currently constrained and could adversely impact both recruiting and retention efforts.

The Company’s IT infrastructure can be challenged by its unique operating requirements and evolving business processes

The Company continues to update and refine its information technology systems throughout the organization. The implementation of information technology solutions involves process changes which carry the risk of business disruption, errors, failure to achieve expected business benefits and ineffective design and operation of the Company’s internal control over financial reporting. Any disruption to these systems or the failure of these systems to operate as expected would, depending on the magnitude of the problem, adversely impact the Company’s results of operation by disrupting the Company’s ability to effectively monitor and control operations.

The Company’s use of open source and third party software could impose unanticipated conditions or restrictions on its ability to commercialize its solutions

While the Company has developed its own proprietary software and hardware for the delivery of its media solutions, it may be restricted under existing or future agreements from utilizing certain licensed technology in all of the jurisdictions and/or industry sectors in which it operates. Failure to comply with such restrictions may leave the Company open to proceedings by third parties and such restrictions may, if alternative technology is not available, affect the Company’s ability to deliver services in such jurisdictions, thereby resulting in an adverse effect on the Company’s financial position.

The Company’s suppliers may choose to terminate their relationship with the Company, which could have a material adverse effect on the Company’s financial condition and results of operations

The Company has licensing arrangements with suppliers of satellite services that are used in the delivery of content to its customers. If such licensing arrangements were terminated and alternative arrangements were not available, this would affect the Company’s ability to deliver services resulting in a material adverse effect on its financial position.

The Company depends upon suppliers for the manufacture of its proprietary media players, and the termination of its arrangements with these suppliers could materially affect its business

The Company relies on suppliers to manufacture its proprietary media players. In the event these agreements are terminated, management believes that they will be able to find alternative suppliers. If the Company is unable to obtain alternative suppliers on a timely basis, or at all, or if the Company experiences significant delays in supplier shipments, the Company may be forced to suspend or cancel delivery of products and services to new accounts, which may have a material adverse effect upon its business. If the Company is unable to obtain an adequate supply of components meeting the Company’s standards of reliability, accuracy and performance, the Company may be materially and adversely affected.

Failure to continue to generate sufficient cash revenues could materially adversely affect the Company’s business

The Company’s ability to be profitable and to have positive cash flow is dependent upon its ability to maintain and locate new customers who will purchase the Company’s products and use its services, and its ability to continue to generate sufficient cash revenues. The Company presently generates the majority of its revenue in the United States and Europe, and its customers can be affected by economic cycles as well as macro trends regarding consumer preferences. The Company’s revenues could also be affected by bankruptcies or rationalization of a portion of its existing client base. A material reduction in revenue would negatively impact its financial position.

If the Company’s revenue grows slower than anticipated, or if its operating expenses are higher than expected, the Company may not be able to sustain or increase profitability, in which case the Company’s financial condition may suffer and its value could decline. Failure to continue to generate sufficient cash revenues could also cause the Company to go out of business.

If the Company is unable to access additional equity or debt financing at a reasonable cost, it could affect its performance

Given the sensitivity of capital markets worldwide, there is a risk that the Company may not be able to obtain additional equity or debt financing that it may require for capital deployment or to refinance its debt when it is due. If the realization of various risk factors results in poor financial performance, capital markets might be more difficult to access or might be completely closed to the Company for debt and equity financing, and, as a result, the Company could go out of business.

Changes to reference rates could materially adversely affect the Company’s results of operation

Certain of our variable rate debt, including our HPS First Lien Credit Facilities, Second Lien Senior Secured PIK Notes and ABL Facility, currently uses the London interbank offered rate (“LIBOR") as a benchmark for establishing the interest rate. LIBOR is the subject of recent proposals for reform. As a result of these reforms and other pressures, LIBOR has been set to expire at the end of fiscal year 2021. Until such time, regulators are advancing their efforts to establish alternative benchmarks to the LIBOR. At this time, it is not possible to predict the effect that these developments may have on the markets, the Company, its access to funding, or its current floating rate debt instruments. Furthermore, the use of alternative reference rates or other reforms could cause the interest payable on the Company’s outstanding floating rate debt instruments to be materially different, and potentially higher, than expected.

The Company is highly leveraged and is reliant on maintaining its debt facilities

The Company has debt and owes money to creditors including HPS Investment Partners LLC, Bank of America, N.A., other investment management firms, and holders of certain notes. The Company’s HPS First Lien Credit Facilities are secured against the Company’s assets or guaranteed by certain of the Company’s subsidiaries. The Company’s ABL Facility with Bank of America, N.A. is secured by the Company’s wholly owned British subsidiary Mood Media Limited’s receivables. In addition, Mood Media UK Holdings Limited, the parent company of Mood Media Limited, also another wholly owned British subsidiary, has guaranteed the ABL Facility.

The Company is subject to continued compliance with various covenants for both the HPS First Lien Credit Facilities and ABL Facility. These covenants could reduce the Company’s flexibility in conducting its operations and may create a risk of default on its debt if the Company cannot satisfy or continue to satisfy these covenants. Should the Company fail to satisfy or continue to satisfy its covenants and if its debt is accelerated or required to be redeemed, the Company will need to find new sources of financing or otherwise cede ownership of some or all of its assets, which may have a material adverse effect on the business and financial position of the Company. The Company’s debt bears interest at floating interest rates and, therefore, is subject to fluctuations in interest rates. Interest rate fluctuations are beyond the Company’s control and there can be no assurance that interest rates will not have a material adverse effect on the Company’s financial performance. The Company may also issue common shares to refinance some of its indebtedness. Issuances of a substantial number of additional common shares may adversely affect prevailing market prices for the common shares, may cause investors to experience dilution of their voting power and may cause dilution in the Company’s earnings per common share.

Liquidity risk

Liquidity risk arises when cash resources become insufficient to meet cash demands. The Company’s objective in managing liquidity risk is to maintain sufficient readily available reserves in order to meet its liquidity requirements at any point in time.

While management believes that the Company has sufficient liquidity in the form of its current cash balances, the cash generating capacity of its businesses, access to debt markets and ongoing opportunities to divest non-core assets to meet its working capital, debt servicing, capital expenditure and other funding requirements for the forthcoming year, the Company’s liquidity position may be negatively impacted by the Company’s existing leverage or negative developments related to the Company’s other risk factors. If the Company fails to generate or maintain sufficient liquidity, it could cause a material adverse effect on the Company’s financial position and the Company could go out of business.

Credit risk

Credit risk arises from cash held with banks and credit exposure to customers with outstanding accounts receivable balances. The maximum exposure to credit risk is equal to the carrying value of the financial assets. The objective of managing counterparty credit risk is to prevent losses in financial assets. If customers with outstanding accounts receivable balances do not pay us, or do not pay us in a timely fashion, it could cause a material adverse effect on the Company’s financial position, and the Company could go out of business.

Integration risks

Failure to properly integrate any acquisitions made by the Company or failure to continue integration cost saving initiatives will leave the Company less able to operate as a consolidated whole and may lead to depressed revenue and margin performance. Integration of assets requires dedication and substantial management effort, time and resources which may divert management’s focus and resources from other strategic opportunities and from operational matters during this process. The integration process may result in loss of key employees and the disruption of the ongoing business, customer and employee relationships that may adversely affect the Company’s ability to achieve the anticipated benefits. Furthermore, the operating results and financial condition of the Company could be materially adversely impacted by the focus on any integration.

Currency risk

The Company operates in the Americas and internationally. The functional currency of the Company is U.S. dollars and a significant number of its transactions are recorded in U.S. dollars and Euros. Currency risk arises because the amount of the local currency revenues, expenses, cash flows, receivables and payables for transactions denominated in foreign currencies may vary due to changes in exchange rates and because the non-U.S. denominated financial statements of the Company’s subsidiaries may vary on consolidation into U.S. dollars.

The most significant translation exposure arises from the Euro currency. The Company is required to revalue the Euro denominated net assets of the European subsidiaries at the end of each period with the foreign currency translation gain or loss recorded in other comprehensive income (loss). The Company also has currency exposure to the extent to which its foreign currency denominated revenues and expenses are translated at fluctuating exchange rates. This affects reported results in the Company’s U.S. dollar denominated consolidated statements of income (loss) and comprehensive income (loss), its consolidated statements of cash flows, as well as its calculation of compliance with various covenants which incorporate the operating results of the Company’s foreign subsidiaries into period covenant calculations.

The Company does not expect to pay dividends and there are potential adverse tax consequences from the payment of dividends on the common shares

The Company has not paid any cash dividends with respect to its common shares, and it is unlikely that it will pay any dividends on the common shares in the foreseeable future. However, dividends received by holders of common shares could be subject to applicable withholding taxes and the Company recommends that such holders of common shares seek the appropriate professional advice in this regard.

The Company may not have the financial or technological resources to adapt to changes in available technology and its clients’ preferences, which may have a negative effect on the Company’s revenue and financial position

The Company’s product and service offerings compete in a market characterized by rapidly changing technologies, frequent innovations and evolving industry standards. There are numerous methods by which existing and future competitors can deliver programming, including various forms of streaming media, recorded media, direct broadcast satellite services, wireless cable, fiber optic cable, digital compression over existing telephone lines, advanced television broadcast channels, digital audio radio service and the internet. Competitors may use different forms of delivery for the services that the Company offers, and clients may prefer these alternative delivery methods. The Company may not have the financial or technological resources to adapt to changes in available technology and its clients’ preferences, which may have a negative effect on the Company’s revenue and financial position.

The Company cannot provide assurance that the Company will be able to use, or compete effectively with competitors that adopt, new delivery methods and technologies, or keep up its pace with discoveries or improvements in the communications, media and entertainment industries. The Company also cannot provide assurance that the technology it currently relies upon will not become obsolete.

The Company pays royalties to license music rights and may be materially adversely affected if such royalties are increased

The Company pays performance royalties to songwriters and publishers through contracts negotiated with performing rights societies such as The American Society of Composers Authors and Publishers, Broadcast Music, Inc., SESAC LLC, Global Music Rights, LLC and publishing or mechanical royalties to publishers and collectives that represent their interests, such as The Harry Fox Agency - a collective that represents publishers and collects royalties on their behalf. If performance or mechanical royalty rates for music are increased, there can be no assurance that the Company will be able to pass through such increased rates to its customers. As a result, the Company’s results of operations and financial condition may be materially adversely affected.

The Company also secures rights to music directly from songwriters and record labels. There is no assurance that it will be able to secure such rights, licenses and content in the future on commercially reasonable terms, if at all. Limitations on the availability of certain musical works and sound recordings may result in the discontinuance of certain programs, and as a result, may lead to increased client churn.

The market for acquiring rights and access to content from content owners is competitive. Furthermore, not all content is publicly available for sale. The Company faces competition and obstacles in its pursuit to acquire additional content, which may reduce the amount of music and video content that it is able to acquire or license and may lead to client satisfaction issues or higher acquisition prices. The Company’s competitors may, from time to time, offer better terms of acquisition to content owners. Increased competition for the acquisition of rights to music recordings may result in a reduction in operating margins and may reduce the Company’s ability to distinguish itself from its competitors by virtue of its music library.

In the event of a material change in the commercial landscapes related to public performance, mechanical rights and/or label rights, including the introduction of new rights organizations, there is no assurance that the Company will be able to secure or modify such rights, licenses and content in the future on commercially reasonable terms, if at all. Such material change may result in increased costs or reduced access to content, which may also result in a material adverse effect on the Company’s results of operations and financial condition. Further, the Company’s results may be adversely affected if there is reform in the United States or European copyright laws or music industry practices.

Audits by music licensors and performing rights organizations

The Company is subject to routine audits by licensors of music and performing rights organizations. Should the outcomes of such reviews identify differing interpretations of regulatory or contractual language that, in turn, result in significant payments, such payments could have a material adverse effect on the Company’s operations and liquidity.

Costly and protracted litigation may be necessary to defend usage of intellectual property

The Company may become subject to legal proceedings, claims and audits in relation to its business. In particular, while management believes that it has the rights to distribute the musical works and sound recordings used in connection with the Company’s business, it may be subject to copyright infringement lawsuits for selling, performing or distributing musical works and sound recordings if a copyright owner takes the position that it does not have the rights to do so. Alternatively, the Company may be subject to audits or other claims for unpaid or underpaid royalties. Results of audits and legal proceedings cannot be predicted with certainty. Regardless of the merits of such claims or the Company's efforts to defend, litigate, arbitrate, and/or mediate such claims, these matters may be time-consuming and disruptive to Company's operations and cause significant expense and diversion of management attention.

If the current owners with which the Company contracts do not have legal title to the rights they grant the Company, the Company’s business may be materially adversely affected

The Company’s acquisition, distribution and license agreements with content owners contain representations, warranties and indemnities with respect to the rights granted to them. If the Company were to acquire and sell, perform or distribute musical works and sound recordings from a person or entity that did not actually own such rights and the Company was unable to enforce the representations, warranties and indemnities made by such person or entity, the Company’s business and financial position may be materially adversely affected.

The Company must be capable of responding to an evolving music industry

The Company sells digital music on a subscription basis based on the quality and quantity of its music selections, its ability to efficiently distribute the Company’s content, its ability to provide copyright compliant solutions, its ability to meet the branding requirements of the Company’s customers and in the context of the pricing of the Company’s competitors in the industry. The Company has limited ability to influence the pricing models of the commercial music industry. There is no assurance that publishers, record labels or other rights holders will not attempt to change the pricing structure in the future that could result in lower pricing or tiered pricing that could reduce the amount of revenue the Company receives or result in higher costs to the Company that it may not be able to pass through to its customers. In addition, consumer streaming companies offer substantial music libraries and features to retail consumers and have begun to look to ways to monetize their brands by offering copyright compliant music to commercial enterprises. The rising ubiquity of IP connectivity and improvements in streaming technologies also present the risk that new competition could arise within the Company’s industry thereby altering the competitive landscape and presenting risks to the Company’s pricing.

Piracy is likely to continue to negatively impact the potential revenue of the Company

The music industry continues to be subject to unauthorized distribution and/or copying or sharing of content without an economic return to any parties in the industry. Global piracy is a significant threat to the entertainment industry generally and to the Company. Unauthorized copies and piracy have contributed to the decrease in the volume of legitimate sales of music and video content and services and have put pressure on the price of products sold through legitimate sales channels. This may result in a reduction in the Company’s revenue.

Possible infringement by third parties of intellectual property rights could have a material adverse effect on the Company’s business, financial condition and results of operations

The Company distributes music content to business music consumers via proprietary media players. The Company cannot be certain that the steps it has taken to protect its intellectual property rights will be adequate or that third parties will not infringe or misappropriate its proprietary rights. To protect the Company’s proprietary rights, the Company depends on a combination of patent, trademark, copyright and trade secret laws, confidentiality agreements with its employees and third parties and protective contractual provisions. These efforts to protect its intellectual property rights may not be effective in preventing misappropriation of its technology. These efforts may also not prevent the development and design by others of products or technologies similar to, competitive with or superior to those developed by the Company. Any of these results could reduce the value of the Company’s intellectual property. In addition, any infringement or misappropriation by third parties could have a material adverse effect on the Company’s business, financial condition and results of operations.

The Company may be liable if third parties misappropriate its users’ and customers’ personal information

Third parties may be able to hack into or otherwise compromise the Company’s network security or otherwise misappropriate its users’ personal information or credit card information. Further, personally identifiable information related to the Company’s employees may also be vulnerable. If the Company’s network security is compromised, it could be subject to liability arising from claims related to, among other things, unauthorized purchases with credit card information, impersonation or other similar fraud claims or other misuse of personal information, such as claims for unauthorized marketing purposes. In such circumstances, the Company also could be liable for failing to provide timely notice of a data security breach affecting certain types of personal information and take other required steps in accordance with the growing number of notification statutes including the General Data Protection Regulation (“GDPR”). Consumer protection privacy regulations could impair the Company’s ability to obtain information about its users, which could result in decreased advertising revenues.

The Company’s network and offerings may also use tracking technologies such as “cookies” to track user behavior and preferences. A cookie is information keyed to a specific server, file pathway or directory location that is stored on a user’s hard drive or browser, possibly without the user’s knowledge, but is generally removable by the user. The Company uses information gathered from cookies to tailor content or messaging to users of its network. GDPR may affect the Company’s ability to use cookies in some countries and a number of internet commentators, advocates and governmental bodies in the United States and elsewhere have urged the passage of laws directly or indirectly limiting or abolishing the use of cookies. Other tracking technologies, such as so-called “pixel tags” or “clear GIFs”, are also coming under increasing scrutiny by legislators, regulators and consumers, imposing potential liability risks on the Company’s business. In addition, legal restrictions on cookies, pixel tags and other tracking technologies may make it more difficult for the Company to tailor content or messaging, making the Company’s offerings less attractive to customers. Similarly, the unavailability of cookies, pixel tags and other tracking technologies may restrict the use of targeted advertising, making the Company’s network and offerings less attractive to customers.

Government regulation of the internet and e-commerce is evolving and unfavorable changes could harm the Company’s business

The Company is subject to general business regulations and laws, as well as regulations and laws specifically governing the internet and e-commerce. Existing and future laws and regulations may impede the growth of the internet or online services. These regulations and laws may cover taxation, privacy, data protection, pricing, content, copyrights, distribution, electronic contracts and other communications, consumer protection, and the characteristics and quality of products and services. It is not clear how existing laws governing issues such as property ownership, libel, and personal privacy apply to the internet and e-commerce. Unfavorable regulations and laws could diminish the demand for the Company’s products and services and increase its cost of doing business.

The locations of the Company’s users expose it to foreign privacy and data security laws and may increase the Company’s liability, subject it to non-uniform standards and require it to modify its practices

The Company’s users are located in the United States and around the world. As a result, the Company collects and processes the personal data of individuals who live in many different countries. Privacy regulators in certain of those countries have publicly stated that foreign entities (including entities based in the United States) may render themselves subject to those countries’ privacy laws and the jurisdiction of such regulators by collecting or processing the personal data of those countries’ residents, even if such entities have no physical or legal presence there. Consequently, the Company may be obligated to comply with the privacy and data security laws of certain foreign countries.

The Company’s exposure to European and other foreign countries’ privacy and data security laws impacts the Company’s ability to collect and use personal data of users and employees, and increases its legal compliance costs and may expose the Company to liability. As such laws proliferate, there may be uncertainty regarding their application or interpretation, which consequently increases the Company’s potential liability. Even if a claim of non-compliance against the Company does not ultimately result in liability, investigating or responding to a claim may present a significant cost. Future legislation may also require ongoing changes in the Company’s data collection practices which may be expensive to implement.

Litigation Risks

The Company is currently defending itself against a number of legal claims. While the Company believes these claims to be without merit, and is vigorously defending itself, it cannot guarantee that it will be successful or that it will reach commercially reasonable settlement terms. A negative judgment or the costs of a protracted defense could materially adversely affect the Company’s earnings.

If legal proceedings are determined adversely to the Company and the Company has not recorded sufficient reserves, additional charges could have a material adverse effect.

Litigation is inherently uncertain and it is not possible to accurately predict what the final outcome will be of any legal proceeding. The Company must make certain assumptions and rely on estimates regarding potential outcomes of legal proceedings in order to determine an appropriate charge to its results of operations and contingent liabilities, which are inherently subject to risks and uncertainties. For example, in the second quarter of 2018, the Company recorded a $3.0 million charge, which represents management’s best estimate for a settlement of a dispute over the interpretation of certain payment obligations. The Company could incur additional charges in connection with this matter or other future litigation. If these reserves are not sufficient to cover payment obligations, additional charges could have a material adverse effect on the Company’s results of operations and financial condition.

International trade laws and regulations

Various governments and supranational organizations, including the United States and those in the European Union, maintain statutes and regulations that set out economic sanction measures that include restrictions in respect of a number of countries, persons and entities. In some cases, a sanction may, absent an exemption or permit, amount to an absolute prohibition on dealings with or involving the sanctions target, for persons required to comply with such measures and regulations. In other cases, there may be, for example, prohibitions in respect of specific goods. The Company may have, directly or indirectly, sales into jurisdictions subject to some forms of economic sanction measures. Further measures and regulations could be imposed in the future. The Company will seek to comply with all such applicable legislation, measures and regulations and may cease or may not pursue certain business if such business would be in violation of the measures and regulations of any jurisdiction with which the Company is required to comply. If the Company is considered to be in violation of any applicable measure or regulation, whether due to ongoing business or business conducted in the past, the Company could be subject to governmental proceedings that could lead to civil or criminal penalties, including fines that could also damage the Company’s reputation. All of the foregoing could have a material adverse effect on the Company’s business, results of operations and financial condition.