PART I – FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

DIRTT Environmental Solutions Ltd.

Interim Condensed Consolidated Balance Sheet

(Unaudited – Stated in thousands of U.S. dollars)


	As at March 31,			As at December 31,
	2025			2024
ASSETS
Current Assets
Cash and cash equivalents		28,443			29,288
Restricted cash		243			243
Trade and accrued receivables, net of expected credit losses of $0.1 million at March 31, 2025 and December 31, 2024		16,203			19,494
Other receivables		669			416
Inventory		14,474			15,109
Prepaids and other current assets		2,659			2,609
Total Current Assets		62,691			67,159
Property, plant and equipment, net		19,232			20,199
Capitalized software, net		2,753			2,548
Operating lease right-of-use assets, net		24,404			25,369
Other assets		2,787			2,945
Total Assets		111,867			118,220
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities		14,480			16,352
Other liabilities		3,434			3,217
Customer deposits and deferred revenue		3,656			4,028
Current portion of long-term debt and accrued interest		11,740			359
Current portion of lease liabilities		5,537			5,619
Total Current Liabilities		38,847			29,575
Long-term debt		10,601			21,993
Long-term lease liabilities		23,218			24,062
Total Liabilities		72,666			75,630
SHAREHOLDERS’ EQUITY
Common shares, unlimited authorized without par value, 189,746,419 issued and outstanding at March 31, 2025 and 193,605,237 issued and outstanding at December 31, 2024		214,661			219,023
Additional paid-in capital		9,773			8,206
Accumulated other comprehensive loss		(18,474	)		(18,541	)
Accumulated deficit		(166,759	)		(166,098	)
Total Shareholders’ Equity		39,201			42,590
Total Liabilities and Shareholders’ Equity		111,867			118,220

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

DIRTT Environmental Solutions Ltd.

Interim Condensed Consolidated Statement of Operations

(Unaudited - Stated in thousands of U.S. dollars)


	For the Three Months Ended March 31,
	2025			2024
Product revenue		40,346			39,039
Service revenue		949			1,808
Total revenue		41,295			40,847

Product cost of sales		26,356			24,992
Service cost of sales		397			1,207
Total cost of sales		26,753			26,199
Gross profit		14,542			14,648

Expenses
Sales and marketing		5,177			5,920
General and administrative		5,480			4,566
Operations support		2,030			1,775
Technology and development		1,228			1,251
Stock-based compensation		739			675
Reorganization		210			138
Impairment charge on Rock Hill Facility		-			530
Total operating expenses		14,864			14,855

Operating loss		(322	)		(207	)
Gain on extinguishment of convertible debt		7			2,931
Foreign exchange (loss) gain		(112	)		919
Interest income		262			489
Interest expense		(451	)		(1,054	)
		(294	)		3,285
Net (loss) income before tax		(616	)		3,078
Income taxes
Current and deferred income tax expense		45			33
Net (loss) income after tax		(661	)		3,045

Net (loss) income per share
Net (loss) income per share − basic		(0.00	)		0.02
Net (loss) income per share − diluted		(0.00	)		0.01

Weighted average number of shares outstanding (in thousands)
Basic		191,580			183,668
Diluted		191,580			288,479

Interim Condensed Consolidated Statement of Comprehensive (Loss) Income


	For the Three Months Ended March 31,
	2025			2024
Net (loss) income after tax for the period		(661	)		3,045
Exchange differences on translation of foreign operations		67			(297	)
Comprehensive (loss) income for the period		(594	)		2,748

Interest expense for the three months ended March 31, 2025 includes $nil earned by a related party ($0.4 million for the three months ended March 31, 2024). Refer to Note 16.

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

DIRTT Environmental Solutions Ltd.

Interim Condensed Consolidated Statement of Changes in Shareholders’ Equity

(Unaudited – Stated in thousands of U.S. dollars, except for share data)


										Accumulated
	Number of						Additional			other						Total
	Common			Common			paid-in			comprehensive			Accumulated			shareholders’
	shares			shares			capital			loss			deficit			equity
As at December 31, 2023		105,377,667			196,128			7,954			(16,125	)		(180,856	)		7,101
Stock-based compensation		-			-			248			-			-			248
Issued on vesting of RSUs		521,253			771			(771	)		-			-			-
Issued on Rights Offering (as defined in Note 14)		85,714,285			21,273			-			-			-			21,273
Issued for employee share purchase plan		267,021			122			-			-			-			122
RSUs withheld to settle employee tax obligations		-			-			(76	)		-			-			(76	)
Foreign currency translation adjustment		-			-			-			(297	)		-			(297	)
Net income for the period		-			-			-			-			3,045			3,045
As at March 31, 2024		191,880,226			218,294			7,355			(16,422	)		(177,811	)		31,416
As at December 31, 2024		193,605,237			219,023			8,206			(18,541	)		(166,098	)		42,590
Stock-based compensation		-			-			566			-			-			566
Issued on vesting of RSUs		343,455			366			(366	)		-			-			-
RSUs withheld to settle employee tax obligations		-			-			(1	)		-			-			(1	)
Issued for employee share purchase plan		236,834			152			-			-			-			152
Cancelled from Shares NCIB and Share Repurchase (each as defined in Note 9)		(4,439,107	)		(4,880	)		1,368			-			-			(3,512	)
Foreign currency translation adjustment		-			-			-			67			-			67
Net loss for the period		-			-			-			-			(661	)		(661	)
As at March 31, 2025		189,746,419			214,661			9,773			(18,474	)		(166,759	)		39,201

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

DIRTT Environmental Solutions Ltd.

Interim Condensed Consolidated Statement of Cash Flows

(Unaudited – Stated in thousands of U.S. dollars)


	For the Three Months Ended March 31,
	2025			2024
Cash flows from operating activities:
Net (loss) income for the period		(661	)		3,045
Adjustments:
Depreciation and amortization		1,480			1,534
Impairment charge on Rock Hill Facility		-			530
Stock-based compensation		739			675
Foreign exchange loss (gain)		256			(978	)
Gain on extinguishment of convertible debt		(7	)		(2,931	)
Accretion of convertible debentures		84			180
Loss on disposal		115			-
Changes in operating assets and liabilities:
Trade and accrued receivables		3,293			(34	)
Other receivables		(247	)		(3	)
Inventory		651			597
Prepaid and other assets, current and long term		17			1,437
Accounts payable and accrued liabilities		(1,694	)		(4,072	)
Customer deposits and deferred revenue		(371	)		(2,202	)
Current portion of long-term debt and accrued interest		(10	)		(152	)
Lease liabilities		39			331
Net cash flows provided by (used in) operating activities		3,684			(2,043	)
Cash flows from investing activities:
Purchase of property, plant and equipment, net of accounts payable changes		(298	)		(344	)
Capitalized software development expenditures		(479	)		(442	)
Other asset expenditures		(6	)		(79	)
Recovery of software development expenditures		54			121
Proceeds on sale of assets held for sale		-			1,025
Net cash flows (used in) provided by investing activities		(729	)		281
Cash flows from financing activities:
Common share repurchases		(3,512	)		-
Repayment of long-term debt		(96	)		(5,074	)
Net proceeds received from Rights Offering		-			21,273
Employee tax payments on vesting of RSUs		(1	)		(76	)
Net cash flows (used in) provided by financing activities		(3,609	)		16,123
Effect of foreign exchange on cash, cash equivalents and restricted cash		(191	)		(230	)
Net (decrease) increase in cash, cash equivalents and restricted cash		(845	)		14,131
Cash, cash equivalents and restricted cash, beginning of period		29,531			25,099
Cash, cash equivalents and restricted cash, end of period		28,686			39,230
Supplemental disclosure of cash flow information:
Interest paid		(358	)		(1,005	)
Income taxes paid		(5	)		-

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within
the consolidated balance sheet.	As at March 31,
	2025			2024
Cash and cash equivalents		28,443			38,989
Restricted cash		243			241
Total cash, cash equivalents and restricted cash		28,686			39,230

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

DIRTT Environmental Solutions Ltd.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

(Amounts in thousands of U.S. dollars unless otherwise stated)

1. GENERAL INFORMATION

DIRTT Environmental Solutions Ltd. and its subsidiary (“DIRTT”, the “Company”, “we” or “our”) is a leader in industrialized construction. DIRTT’s system of physical products and digital tools empowers organizations, together with construction and design leaders, to build high-performing, adaptable, interior environments. Operating in the workplace, healthcare, education, and public sector markets, DIRTT’s system provides total design freedom, and greater certainty in cost, schedule, and outcomes.

DIRTT’s proprietary design integration software, ICE® (“ICE” or “ICE software”), translates the vision of architects and designers into a 3D model that also acts as manufacturing information. ICE is also licensed to unrelated companies and construction partners of the Company (“Construction Partners”), including Armstrong World Industries, Inc. (“AWI”), which owns a 50% interest in the rights, title and interests in certain intellectual property rights in a portion of the ICE software that is used by AWI.

DIRTT is incorporated under the laws of the province of Alberta, Canada. Its headquarters is located at 7303 – 30th Street S.E., Calgary, AB, Canada T2C 1N6 and its registered office is located at 4500, 855 – 2nd Street S.W., Calgary, AB, Canada T2P 4K7. DIRTT’s common shares trade on the Toronto Stock Exchange under the symbol “DRT” and are quoted on the OTC Markets on the “OTC Pink Tier” under the symbol “DRTTF.”

2. BASIS OF PRESENTATION

The accompanying unaudited interim condensed consolidated financial statements (the “Financial Statements”) have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X and, accordingly, the Financial Statements do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of the Company, the Financial Statements contain all adjustments necessary, consisting of only normal recurring adjustments, for a fair statement of its financial position as of March 31, 2025, and its results of operations and cash flows for the three months ended March 31, 2025 and 2024. The condensed balance sheet at December 31, 2024, was derived from audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements. These Financial Statements should be read in conjunction with the audited consolidated financial statements as of December 31, 2024 and 2023 and for each of the three years in the period ended December 31, 2024 included in the Annual Report on Form 10-K of the Company as filed with the SEC and applicable securities commission or similar regulatory authorities in Canada.

In these Financial Statements, unless otherwise indicated, all dollar amounts are expressed in United States (“U.S.”) dollars. DIRTT’s financial results are consolidated in Canadian dollars, the Company’s functional currency, and the Company has adopted the U.S. dollar as its reporting currency. All references to US$ or $ are to U.S. dollars and references to C$ are to Canadian dollars.

Principles of consolidation

The Financial Statements include the accounts of DIRTT Environmental Solutions Ltd. and its subsidiary. All intercompany balances, income and expenses, unrealized gains and losses and dividends resulting from intercompany transactions have been eliminated on consolidation.

Basis of measurement

These Financial Statements have been prepared on the historical cost convention except for certain financial instruments, assets held for sale and certain components of stock-based compensation that are measured at fair value. Historical cost is generally based on the fair value of the consideration given in exchange for assets. The Company’s quarterly tax provision is based upon an estimated annual effective tax rate.

Seasonality

Sales of the Company’s products are driven by consumer and industrial demand for interior construction solutions. The timing of customers’ construction projects can be influenced by a number of factors including the prevailing economic climate and weather.

3. ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS

On December 14, 2023, the FASB issued Accounting Standards Update No. 2023-09, “Improvements to Income Tax Disclosures” (“ASU-2023-09”) further disaggregated information on an entity’s tax rate reconciliation and income taxes paid. The amendments in ASU-2023-09 are effective for fiscal years beginning after December 15, 2024, on a prospective basis with an option of retrospective application. The Company is evaluating the impact of the adoption of this standard and expects the impact to be limited to disclosures.

On November 5, 2024, the FASB issued Accounting Standards Update No. 2024-03, “Disaggregation of Income Statement Expenses” (“ASU-2024-03”) which requires further disaggregated information on an entity’s types of expenses presented to better understand the components of an entity’s expense captions. The amendments within ASU-2024-03 are effective for annual reporting periods starting December 15, 2026, and interim periods beginning after December 15, 2027, on a prospective basis with an option of retrospective application. The Company is evaluating the impact of the adoption of this standard and expects the impact to be limited to disclosures.

On November 27, 2024, the FASB issued Accounting Standards Update No. 2024-04, “Induced Conversions of Convertible Debt Instruments” (“ASU-2024-04”) which requires discussing an entity’s assessment of induced conversion and debt extinguishment of convertible debt instruments. The amendments in ASU-2024-04 are effective for fiscal years beginning after December 15, 2025, on a prospective basis with an option of retrospective application. The Company is evaluating the impact of the adoption of this standard.

Although there are several other new accounting standards issued or proposed by the FASB, which the Company has adopted or will adopt, as applicable, the Company does not believe any of these accounting pronouncements has had or will have a material impact on its Financial Statements.

4. GAIN ON EXTINGUISHMENT OF CONVERTIBLE DEBENTURES

On February 15, 2024, the Company commenced a substantial issuer bid and tender offer (the “Issuer Bid”) pursuant to which the Company offered to repurchase for cancellation: (i) up to C$6.0 million principal amount of its issued and outstanding January Debentures (as defined in Note 7) at a purchase price of C$720 per C$1,000 principal amount of January Debentures, and (ii) up to C$9.0 million principal amount of its issued and outstanding December Debentures (as defined in Note 7 and together with the January Debentures, the “Debentures”), at a purchase price of C$600 per C$1,000 principal amount of December Debentures.

C$4.7 million ($3.5 million) aggregate principal amount of the January Debentures and C$5.8 million ($4.3 million) aggregate principal amount of December Debentures were validly deposited and not withdrawn at the expiration of the Issuer Bid on March 22, 2024, representing approximately 11.66% of the January Debentures and 16.50% of the December Debentures issued and outstanding at that time. The Company took up all the Debentures (as defined in Note 7) tendered pursuant to the Issuer Bid for aggregate consideration of C$7.0 million ($5.2 million) (comprised of C$6.9 million ($5.1 million) repayment on principal and interest of C$0.1 million ($0.1 million)).

On August 28, 2024, the Company commenced a normal course issuer bid (the “Debentures NCIB”) for the Debentures which will terminate no later than August 27, 2025. Under the Debentures NCIB, DIRTT is permitted to acquire up to C$1,664,200 principal amount of the January Debentures and C$1,558,700 principal amount of the December Debentures. For the three months ended March 31, 2025, C$0.1 million ($0.1 million) and C$0.03 million ($0.02 million) principal amounts of the December Debentures and January Debentures, respectively, had been acquired through the Debentures NCIB ($nil for the three months ended March 31, 2024).

In accordance with GAAP, it was determined that the C$0.1 million ($0.1 million) repayment on convertible debt through the Debentures NCIB in the three months ended March 31, 2025 and the C$6.9 million ($5.1 million)

repayment of convertible debt through the Issuer Bid in the three months ended March 31, 2024, triggered an extinguishment of C$0.1 million ($0.1 million) (C$10.5 million ($7.8 million) for the three months ended March 31, 2024) of principal amount of debt. The gain on extinguishment of C$0.01 million ($0.01 million) and C$3.9 million ($2.9 million) for the three months ended March 31, 2025 and March 31, 2024, respectively, was calculated as the difference between the repayment and the net carrying value of the extinguished principal less unamortized issuance costs (refer to Note 7).

5. TRADE AND ACCRUED RECEIVABLES

Accounts receivable are recorded at the invoiced amount, do not require collateral and typically do not bear interest. The Company estimates an allowance for credit losses using the lifetime expected credit loss at each measurement date, taking into account historical credit loss experience as well as forward-looking information, in order to establish rates for each class of financial receivable with similar risk characteristics. Adjustments to this estimate are recognized in the consolidated statement of operations.

In order to manage and assess our risk, management maintains credit policies that include regular review of credit limits of individual receivables and systematic monitoring of aging of trade receivables and the financial well-being of our customers. In addition, we acquired trade credit insurance effective April 1, 2020. At March 31, 2025, approximately 75% of our trade accounts receivable are insured, relating to accounts receivable from counterparties deemed creditworthy by the insurer and excluding accounts receivable from government entities.

Our trade balances are spread over a broad Construction Partner base, which is geographically dispersed. For the three months ended March 31, 2025, one Construction Partner accounted for 9% of revenue (one Construction Partner for the three months ended March 31, 2024). In addition, and where possible, we collect a 50% deposit on sales, excluding the government and certain other clients.

The Company’s aged receivables were as follows:


	As at
	March 31, 2025			December 31, 2024
Current		13,617			16,677
Overdue		2,685			2,916
		16,302			19,593
Less: expected credit losses		(99	)		(99	)
Trade and accrued receivables, net of expected credit losses		16,203			19,494

No adjustment to our expected credit losses of $0.1 million was required for the three months ended March 31, 2025. Receivables are generally considered to be past due when over 60 days old, unless there is a separate payment arrangement in place for the collection of the receivable.

6. OTHER LIABILITIES


	As at
	March 31, 2025		December 31, 2024
Warranty provisions (1)		849		849
DSU liability		2,203		2,028
Income taxes payable		44		-
Sublease deposits		206		206
Other provisions and other liabilities		132		134
Other liabilities		3,434		3,217

(1)

The following table presents a reconciliation of the warranty provision balance:


	As at
	March 31, 2025			December 31, 2024
As at January 1,		849			873
Additions to warranty provision		178			640
Payments related to warranties		(178	)		(664	)
		849			849

7. LONG-TERM DEBT


	Revolving Credit Facility		Leasing Facilities			Convertible Debentures			Total Debt
Balance at January 1, 2024		-		484			55,624			56,108
Accretion of issue costs		-		-			1,491			1,491
Accrued interest		-		35			2,402			2,437
Interest payments		-		(35	)		(2,839	)		(2,874	)
Principal repayments		-		(78	)		(21,408	)		(21,486	)
Gain on extinguishment		-		-			(10,426	)		(10,426	)
Exchange differences				(33	)		(2,865	)		(2,898	)
Balance at December 31, 2024		-		373			21,979			22,352
Current portion of long-term debt and accrued interest		-		78			281			359
Long-term debt		-		295			21,698			21,993

Balance at January 1, 2025		-		373			21,979			22,352
Accretion of issue costs		-		-			84			84
Accrued interest		-		7			341			348
Interest payments		-		(7	)		(351	)		(358	)
Principal repayments		-		(21	)		(75	)		(96	)
Gain on extinguishment		-		-			(7	)		(7	)
Exchange differences		-		2			16			18
Balance at March 31, 2025		-		354			21,987			22,341
Current portion of long-term debt and accrued interest		-		80			11,660			11,740
Long-term debt		-		274			10,327			10,601

Revolving Credit Facility

On February 12, 2021, the Company entered into a loan agreement governing a C$25.0 million senior secured revolving credit facility with the Royal Bank of Canada (“RBC”), as lender (the “RBC Facility”). Under the RBC Facility, the Company was able to borrow up to a maximum of 90% of investment grade or insured accounts receivable plus 85% of eligible accounts receivable plus the lesser of (i) 75% of the book value of eligible inventory and (ii) 85% of the net orderly liquidation value of eligible inventory less any reserves for potential prior ranking claims (the “Borrowing Base”). Interest was calculated at the Canadian or U.S. prime rate plus 30 basis points or at the Canadian Dollar Offered Rate or LIBOR plus 155 basis points. Under the RBC Facility, if the “Aggregate Excess Availability” (defined as the Borrowing Base less any loan advances or letters of credit or guarantee and if undrawn including unrestricted cash), was less than C$5.0 million, the Company is subject to a fixed charge coverage ratio (“FCCR”) covenant of 1.10:1 on a trailing twelve-month basis. Additionally, if the FCCR had been below 1.10:1 for the three immediately preceding months, the Company was required to maintain a reserve account equal to the aggregate of one year of payments on outstanding loans on the Canada Leasing Facility and a leasing facility in the United States that is no longer available (together, the “Leasing Facilities”). Should an event of default have occurred or the Aggregate Excess Availability been less than C$6.25 million for five consecutive business days, the Company would have entered a cash dominion period whereby the Company’s bank accounts would have been blocked by RBC and daily balances would have offset any borrowings and any remaining amounts made available to the Company.

On February 9, 2023, the Company extended the RBC Facility (the “Extended RBC Facility”). The Extended RBC Facility had a borrowing base of C$15.0 million and a one-year term. Interest was calculated as at the Canadian or U.S. prime rate plus 75 basis points or the Canadian Dollar Offered Rate or Term Secured Overnight Financing

Rate (“Term SOFR”) plus 200 basis points plus the Term SOFR Adjustment (as defined in the amended loan agreement governing the Extended RBC Facility). Under the Extended RBC Facility, if the trailing twelve-month FCCR was not above 1.25 for three consecutive months, a cash balance equivalent to one-year’s worth of Leasing Facilities payments was required to be maintained. Effective October 2023, inventory was scoped out of the Borrowing Base.

On February 9, 2024, the Company extended the Extended RBC Facility (the “Second Extended RBC Facility”). The Second Extended RBC Facility is subject to the borrowing base calculation to a maximum of C$15.0 million and a one-year term. Interest is calculated at the Canadian or U.S. prime rate plus 75 basis points or at the Canadian Dollar Offered Rate or Adjusted Term CORRA or Term SOFR plus the Term SOFR Adjustment, in each case plus 200 basis points. The Second Extended RBC Facility removed the three-month FCCR covenant, which resulted in the release of $0.1 million of restricted cash during the first quarter of 2024. On February 11, 2025, the Company extended the Second Extended RBC Facility (the “Third Extended RBC Facility”) for a period of two weeks up to February 25, 2025 whilst the Company and RBC completed negotiations.

On February 20, 2025, the Company extended the Third Extended RBC Facility (the “Fourth Extended RBC Facility”). The Fourth Extended RBC Facility is subject to the borrowing base calculation based on accounts receivable balances to a maximum of C$25.0 million and matures on November 30, 2025. Interest is calculated as the Canadian or U.S. prime rate plus 50 basis points or at the Term CORRA Rate as adjusted by the Term CORRA Adjustment or Term SOFR plus the Term SOFR Adjustment, in each case plus 175 basis points. At March 31, 2025, available borrowings are C$10.9 million ($7.6 million) (December 31, 2024 – C$14.4 million ($10.0 million) of available borrowings), calculated in the same manner as the RBC Facility described above, of which no amounts have been drawn. The Fourth Extended RBC Facility also includes a new letter of credit facility guaranteed by the Export Development of Canada of C$5.0 million. The Company has also entered into a bonding facility with Great Midwest Insurance Company, and any other company that is part of or added to Skyward Specialty Insurance Group, Inc. (“Skyward”), which allows access to a $15.0 million bonding facility subject to an individual maximum of $5.0 million. Under the terms of the facility with Skyward, any bonds issued will be secured through Letters of Credit issued pursuant to the Fourth Extended RBC Facility. At March 31, 2025, no bonds have been issued through such bonding facility.

Leasing Facilities

The Company has a C$5.0 million equipment leasing facility in Canada (the “Canada Leasing Facility”) of which C$4.4 million ($3.1 million) has been drawn and C$3.9 million ($2.9 million) has been repaid. The Canada Leasing Facility has a seven-year term and bears interest at 4.25%.

The Company did not make any draws on the Canada Leasing Facility during the three months ended March 31, 2025 (2024 – $nil). The associated financial liabilities are shown on the consolidated balance sheet in the current portion of long-term debt and accrued interest and long-term debt.

Convertible Debentures

On January 25, 2021, the Company completed a C$35.0 million ($27.5 million) bought-deal financing of convertible unsecured subordinated debentures (the “January Debentures”) with a syndicate of underwriters. On January 29, 2021, the Company issued a further C$5.25 million ($4.1 million) of the January Debentures under the terms of an overallotment option granted to the underwriters. The January Debentures will mature and be repayable on January 31, 2026 (the “January Debentures Maturity Date”) and accrue interest at the rate of 6.00% per annum payable semi-annually in arrears on the last day of January and July of each year commencing on July 31, 2021 until the January Debentures Maturity Date. Interest and principal are payable in cash or shares at the option of the Company. The January Debentures will be convertible into common shares of DIRTT, at the option of the holder, at any time prior to the close of business on the business day prior to the earlier of the January Debentures Maturity Date and the date specified by the Company for redemption of the January Debentures. Costs of the transaction were approximately C$2.7 million, including the underwriters’ commission. As a result of the Rights Offering (as defined herein) (refer to Note 14), the conversion price of the January Debentures was adjusted to C$4.03 per common share representing a conversion rate of 248.1390 common shares per C$1,000 principal amount. On March 22, 2024, the Company completed the Issuer Bid in which the Company repurchased for cancellation C$4.7 million ($3.5 million) of the principal balance of the January Debentures, and paid C$0.04 million ($0.03 million) of the interest payable on

such January Debentures (refer to Note 4). On August 2, 2024, the Company purchased C$18,915,000 principal amount of the January Debentures for cancellation held by 22NW Fund, LP (“22NW”) (together with the purchase of C$13,638,000 principal amount of the December Debentures for cancellation held by 22NW) (the “Debenture Repurchase”). On August 26, 2024, the Company announced the Debentures NCIB, which commenced on August 28, 2024. During the first quarter of 2025, the Company repurchased for cancellation C$0.03 million ($0.02 million) principal amount of January Debentures as part of the Debentures NCIB. As at March 31, 2025, C$16.6 million ($11.5 million) principal amount of the January Debentures was outstanding.

On December 1, 2021, the Company completed a C$35.0 million ($27.4 million) bought-deal financing of convertible unsecured subordinated debentures (the “December Debentures”) with a syndicate of underwriters. The December Debentures will mature and be repayable on December 31, 2026 (the “December Debentures Maturity Date”) and accrue interest at the rate of 6.25% per annum payable semi-annually in arrears on the last day of June and December of each year commencing on June 30, 2022 until the December Debentures Maturity Date. Interest and principal are payable in cash or shares at the option of the Company. The December Debentures will be convertible into common shares of DIRTT, at the option of the holder, at any time prior to the close of business on the business day prior to the earlier of the December Debentures Maturity Date and the date specified by the Company for redemption of the December Debentures. Costs of the transaction were approximately C$2.3 million, including the underwriters’ commission. As a result of the Rights Offering (refer to Note 14), the conversion price of the December Debentures was adjusted to C$3.64 per common share representing a conversion rate of 274.7253 common shares per C$1,000 principal amount. On March 22, 2024, the Company completed the Issuer Bid in which the Company repurchased for cancellation C$5.8 million ($4.3 million) of the principal balance of the December Debentures and paid C$0.08 million ($0.06 million) of the interest payable on such December Debentures (refer to Note 4). On August 2, 2024, the Company repurchased for cancellation C$13.6 million ($10.1 million) principal amount of December Debentures held by 22NW. On August 26, 2024, the Company announced the Debentures NCIB which commenced on August 28, 2024. During the first quarter of 2025, the Company repurchased for cancellation C$0.1 million ($0.1 million) principal amount of the December Debentures as part of the Debentures NCIB. As at March 31, 2025, C$15.2 million ($10.5 million) principal amount of the December Debentures was outstanding.

8. STOCK-BASED COMPENSATION

In May 2020, shareholders approved the DIRTT Environmental Solutions Long Term Incentive Plan (the “2020 LTIP”). The 2020 LTIP replaced the predecessor incentive plans, being the Performance Share Unit Plan (“PSU Plan”) and the Amended and Restated Stock Option Plan (“Stock Option Plan”). Following the approval of the 2020 LTIP, no further awards will be made under either the Stock Option Plan or the PSU Plan, but both remain in place to govern the terms of any awards that were granted pursuant to such plans and remain outstanding.

In May 2023, shareholders approved the DIRTT Environmental Solutions Ltd. Amended and Restated Long-Term Incentive Plan (the “2023 LTIP”) at the annual and special meeting of shareholders. The 2023 LTIP gives the Company the ability to award options, share appreciation rights, restricted share units, deferred share units, restricted shares, dividend equivalent rights, and other share-based awards and cash awards to eligible employees, officers, consultants and directors of the Company and its affiliates. In accordance with the 2023 LTIP, the sum of (i) 12,350,000 common shares plus (ii) the number of common shares subject to stock options previously granted under the Stock Option Plan that, following May 22, 2020, expire or are cancelled or terminated without having been exercised in full, have been reserved for issuance under the 2023 LTIP. Upon vesting of certain LTIP awards, the Company may withhold and sell shares as a means of meeting DIRTT’s tax withholding requirements in respect of the withholding tax remittances required in respect of award holders. To the extent the fair value of the withheld shares upon vesting exceeds the grant date fair value of the instrument, the excess amount is credited to retained earnings or deficit.

In May 2024, shareholders approved the DIRTT Environmental Solutions Ltd. Second Amended and Restated Long-Term Incentive Plan (the “2024 LTIP”) at the annual and special meeting of shareholders. The effective date of the 2024 LTIP is May 9, 2024. The 2024 LTIP gives the Company the ability to award options, share appreciation rights, restricted share units, deferred share units, restricted shares, dividend equivalent rights, and other share-based awards and cash awards to eligible employees, officers, consultants and directors of the Company and its affiliates. In accordance with the 2024 LTIP, the sum of (i) 27,350,000 common shares plus (ii) the number of common shares subject to stock options previously granted under the Stock Option Plan that, following May 22, 2020, expire or are cancelled or terminated without having been exercised in full, have been reserved for issuance under the 2024 LTIP.

Upon vesting of certain LTIP awards, the Company may withhold and sell shares as a means of meeting DIRTT’s tax withholding requirements in respect of the withholding tax remittances required in respect of award holders. To the extent the fair value of the withheld shares upon vesting exceeds the grant date fair value of the instrument, the excess amount is credited to retained earnings or deficit.

Deferred share units (“DSUs”) have historically been granted to non-employee directors under the Deferred Share Unit Plan for Non-Employee Directors (as amended and restated, the “DSU Plan”) and settleable only in cash. The 2024 LTIP gives the Company the ability to settle DSUs in either cash or common shares, while consolidating future share-based awards under a single plan. The terms of the DSU Plan are otherwise materially unchanged as incorporated into the 2024 LTIP. Effective May 30, 2023, no new awards will be made under the DSU Plan, but awards previously granted under the DSU Plan will continue to be governed by the DSU Plan. DSUs are settled following cessation of services with the Company.

Stock-based compensation expense


	For the Three Months Ended March 31,
	2025		2024
Equity-settled awards		739		493
Cash-settled awards		-		182
		739		675

The following summarizes RSUs, PRSUs, PSUs (each as defined herein) and DSUs activity during the periods:


	RSU Time-			RSU Performance-
	Based			Based			PSU		DSU
	Number of			Number of			Number of		Number of
	units			units			units		units
Outstanding at December 31, 2023		3,530,564			64,029			1,845,608		3,086,172
Granted		350,000			-			-		496,095
Vested or settled		(508,679	)		(12,574	)		-		-
Withheld to settle employee tax obligations		(146,343	)		-			-		-
Forfeited or expired		(29,214	)		(6,278	)		-		-
Outstanding at March 31, 2024		3,196,328			45,177			1,845,608		3,582,267
Outstanding at December 31, 2024		10,260,791			45,177			1,845,608		4,033,894
Granted		-			-			-		247,277
Vested or settled		(343,455	)		-			-		-
Withheld to settle employee tax obligations		(952	)		-			-		-
Forfeited or expired		(73,235	)		(45,177	)		-		-
Outstanding at March 31, 2025		9,843,149			-			1,845,608		4,281,171

Restricted share units (time-based vesting)

Except as noted below, outstanding restricted share units (“RSUs”) that vest based on time have an aggregate time-based vesting period of three years and generally one-third of the RSUs vest every year over a three-year period from the date of grant. At the end of a three-year term, the RSUs will be settled by way of the provision of cash or shares to employees (or a combination thereof), at the discretion of the Company. The weighted average fair value of the RSUs granted in the three months ended March 31, 2024 was C$0.50 which was determined using the closing price of the Company’s common shares on their respective grant dates. There were no RSUs granted in the three months ended March 31, 2025.

During the third quarter of 2024, certain of the Company’s executives were issued (i) 5 million RSUs which will cliff vest on August 14, 2026 and (ii) 975,000 RSUs, one-third of which will vest every year over a three-year period from the date of grant, in each case such vesting is generally subject to continued employment. Once vested, the RSUs will be settled by way of the provision of cash or shares to employees (or a combination thereof), at the discretion of the Company. The weighted average fair value of the RSUs granted was C$0.75, which was determined using the closing price of the Company’s common shares on the grant date.

Restricted share units (performance-based vesting)

During 2022 and 2021, restricted share units were granted to executives with service and performance-based conditions for vesting based on the Company’s share price performance (the “PRSUs”). Based on share price performance since the date of grant, 66.7% of the 2021 PRSUs vested on March 1, 2024, but none of the 2022 PRSUs vested upon completion of the three-year service period. As at March 31, 2024, the Company had 45,177 PRSUs outstanding. All PRSUs were expired as of March 31, 2025.

Performance share units

During the second quarter of 2023, certain executives were issued a strategic equity grant through performance share units (“PSUs”). The performance period of the PSUs is from January 1, 2023 to December 31, 2026 with a cliff vesting term for December 31, 2026. 2,584,161 PSUs were granted and depending on the level of performance, the PSUs will vest 100%, 160% or 190% up to a maximum of 4,909,907 PSUs. Settlement will be made in the form of shares issued from treasury. The performance measures are a combination of Revenue and Earnings Before Interest, Taxes, Depreciation and Amortization and both targets have to be achieved. As of March 31, 2025, the fair value of these PSUs have been deemed to be $nil based on the likelihood of achieving the targets compared to current results. During the third quarter of 2023, 738,553 PSUs with a $nil value were forfeited as a result of an executive departure and 1,845,608 PSUs with a $nil value are outstanding at March 31, 2025.

Deferred share units

Granted under the DSU Plan

The fair value of the DSU liability and the corresponding expense is charged to profit or loss at the grant date. Subsequently, at each reporting date between the grant date and settlement date, the fair value of the liability is remeasured with any changes in fair value recognized in profit or loss for the period. DSUs outstanding at March 31, 2025 had a fair value of $0.7 million which is included in other liabilities on the balance sheet (December 31, 2024 – $0.7 million).

Granted under the 2023 and 2024 LTIP

DSUs granted after May 30, 2023 (the “New DSUs”) will be settled by way of the provision of cash or shares (or a combination thereof) to the Directors, at the discretion of the Company. The Company intends to settle these DSUs through issuances of common shares. The weighted average fair value of the DSUs granted in the first quarter of 2024 and 2025 was C$0.67 ($0.49) and C$1.04 ($0.73), respectively, which was determined using the closing price of the Company’s common shares on the grant date. New DSUs outstanding at March 31, 2025 had a fair value of $1.5 million which is included in other liabilities on the balance sheet (December 31, 2024 – $1.3 million).

Options

As at March 31, 2024, the Company had 208,409 options outstanding. No options were exercised during the three months ended March 31, 2024. All options were expired as of December 31, 2024.

Dilutive Instruments

For the three months ended March 31, 2025, 6.6 million RSUs, 3.0 million New DSUs, 1.8 million PSUs and 31.4 million shares which would have been issued if the principal amount of the Debentures was settled in common shares at the quarter-end price were excluded from the diluted weighted average number of common shares, as their effect would have been anti-dilutive to the net loss per share.

For the three months ended March 31, 2024, 3.8 million RSUs (including PRSUs), 2.3 million New DSUs, 1.8 million PSUs, 0.2 million options, and 96.7 million shares which would be issued if the principal amount of the Debentures was settled in our common shares at the quarter-end price were included in the diluted weighted average number of common shares calculation. See Note 10 for the dilutive impact on net income per share.

9. SHARE REPURCHASES

On December 18, 2024, the Company announced a normal course issuer bid for common shares (the “Shares NCIB”), which commenced on December 20, 2024 and terminates on December 19, 2025, and which permits DIRTT

to acquire up to 7,515,233 common shares. All repurchases under the Shares NCIB will be made on the open market through the facilities of the Toronto Stock Exchange (“TSX”) at the market price of common shares at the time of acquisition. Any common shares acquired through the Shares NCIB will be immediately cancelled.

On February 13, 2025, the Company entered into a share repurchase agreement (the “Repurchase Agreement”) with NGEN III, LP (“NGEN”), pursuant to which the Company purchased for cancellation 3,920,844 common shares held by NGEN at a purchase price of $0.80 per share (the “Share Repurchase”). Pursuant to the terms of the Repurchase Agreement, the purchase price of $0.80 per share was a 1% discount to the closing price of the common shares on the TSX on January 27, 2025 (converted into U.S. Dollars using the February 13, 2025 closing exchange rate published by the Bank of Canada). Upon completion of the Share Repurchase on February 14, 2025, there were 189,643,903 common shares outstanding. The common shares repurchased under the Share Repurchase count against the maximum number of shares that may be repurchased pursuant to the Shares NCIB, being 7,515,233 shares.

In addition to the Share Repurchase, DIRTT acquired and cancelled 518,263 common shares during the three months ended March 31, 2025 under the Shares NCIB (58,478 common shares for the year ended December 31, 2024).

The following table summarizes the common shares repurchased and cancelled during the period:


Period	Total number of shares purchased		Average price paid per share		Total number of shares purchased as part of publicly announced programs		Maximum number of shares that may yet be purchased under the program
January 1, 2025 - January 31, 2025		109,556	$	0.77		109,556		7,347,199
February 1, 2025 - February 28, 2025	4,074,200(1)		$	0.80		153,356		3,272,999
March 1, 2025 - March 31, 2025		255,351	$	0.69		255,351		3,017,648
Total		4,439,107				518,263		3,017,648

(1) Includes 3,920,844 common shares that were repurchased from NGEN under the Share Repurchase at a purchase price of $0.80 per share. The Share Repurchase was completed on February 14, 2025. The Share Repurchase was counted against the NCIB limit.

10. EARNINGS (LOSS) PER SHARE


	For the Three Months Ended March 31,
	2025			2024
Net (loss) income per share – basic
Net (loss) income (thousands of U.S. dollars)	$	(661	)	$	3,045
Weighted average number of shares outstanding (thousands of shares)		191,580			183,668
Net (loss) income per share (U.S. dollars) − basic	$	(0.00	)	$	0.02

Net (loss) income per share − diluted
Net (loss) income (thousands of U.S. dollars)	$	(661	)	$	3,045
Interest on convertible debentures	NA				843
	$	(661	)	$	3,888
Weighted average number of shares outstanding (thousands of shares)		191,580			183,668
Dilutive debentures on convertible debt (thousands of shares) (1)		-			96,690
Dilutive RSUs and PRSUs (thousands of shares) (2)		-			3,775
Dilutive New DSUs (thousands of shares) (2)		-			2,292
Dilutive PSUs (thousands of shares) (2)		-			1,846
Dilutive options (thousands of shares) (2)		-			208
Weighted average number of shares outstanding (thousands of shares)		191,580			288,479
Net (loss) income per share (U.S .dollars) − diluted	$	(0.00	)	$	0.01

(1) For the three months ended March 31, 2024, the Net income per share - diluted includes the effect of 96.7 million shares that would be issued if the principal amount of the Debentures was settled in our common shares at the quarter end price as they would have the potential to dilute

basic income per share. For the three months ended March 31, 2025, the Net loss per share − diluted excludes the effect of 31.4 million shares related to the Debentures as they would be anti-dilutive.

(2) For the three months ended March 31, 2024, the Net income per share − diluted includes the effect of 3.8 million RSUs and PRSUs, 2.3 million New DSUs, 1.8 million PSUs and 0.2 million options as they would have the potential to dilute basic income per share. For the three months ended March 31, 2025, the Net loss per share − diluted excludes the effect of 6.6 million RSUs, 3.0 million New DSUs, and 1.8 million PSUs as they would be anti-dilutive.

11. REVENUE

In the following table, revenue is disaggregated by performance obligation and timing of revenue recognition. All revenue comes from contracts with customers. See Note 12 for the disaggregation of revenue by geographic region.


	For the Three Months Ended March 31,
	2025		2024
Product		36,224		34,876
Transportation		3,938		3,955
License fees from Construction Partners		184		208
Total product revenue		40,346		39,039
Installation and other services		949		1,808
		41,295		40,847

DIRTT sells its products and services pursuant to fixed-price contracts which generally have a term of one year or less. The transaction price used in determining the amount of revenue to recognize from fixed-price contracts is based upon agreed contractual terms with each customer and is not subject to variability.


	For the Three Months Ended March 31,
	2025		2024
At a point in time		40,162		38,831
Over time		1,133		2,016
		41,295		40,847

Revenue recognized at a point in time represents the majority of the Company’s sales. Revenue is recognized when a customer obtains legal title to the product, which is when ownership of the product is transferred to, or services are delivered to, the customer. Revenue recognized over time is limited to installation and ongoing maintenance contracts with customers and is recorded as performance obligations which are satisfied over the term of the contract.

Contract Liabilities


	As at
	March 31, 2025		December 31, 2024		December 31, 2023
Customer deposits		3,110		4,028		5,290
Deferred revenue		546		-		-
Contract liabilities		3,656		4,028		5,290

Contract liabilities primarily relate to deposits received from customers and maintenance revenue from license subscriptions. The balance of contract liabilities was lower as at March 31, 2025 compared to December 31, 2024 mainly due to the timing of orders and payments. Contract liabilities as at December 31, 2024 and 2023 totaling $4.0 million and $5.3 million, respectively, were recognized as revenue during the three months ended March 31, 2025 and 2024, respectively.

Sales by Industry

The Company periodically reviews the growth of product and transportation revenue by vertical market to evaluate the success of industry-specific sales initiatives. The nature of products sold to the various industries is consistent and therefore review is focused on sales performance.


	For the Three Months Ended March 31,
	2025		2024
Commercial		28,098		30,179
Healthcare		7,204		3,049
Government		2,649		3,475
Education		2,211		2,128
License fees from Construction Partners		184		208
Total product and transportation revenue		40,346		39,039
Installation and other services		949		1,808
		41,295		40,847

12. SEGMENT REPORTING

The Company has one reportable and operating segment and operates in two principal geographic locations – Canada and the United States. Revenue continues to be derived almost exclusively from projects in North America and predominantly from the United States. The Company’s revenue from operations from external customers, based on location of operations, and information about its non-current assets, is detailed below.

Revenue from external customers


	For the Three Months Ended March 31,
	2025		2024
Canada		6,878		3,069
U.S.		34,417		37,778
		41,295		40,847

Non-current assets


	As at March 31,		As at December 31,
	2025		2024
Canada		25,160		25,924
U.S.		24,016		25,137
		49,176		51,061

DIRTT has one reportable segment: solutions. The DIRTT solutions segment derives revenues from customers by providing physical products and digital tools through our ICE software to create interior spaces for our customers across the commercial, healthcare, education and government industries. The solutions segment provides digital tools (access to ICE software) and physical products to create modular interior construction spaces for our customers.

DIRTT’s chief operating decision maker is the executive leadership team that includes the president and chief operating officer, chief financial officer, and the chief executive officer. The chief operating decision maker assesses performance for the solutions segment and decides how to allocate resources based on gross profit and net income (loss) that also is reported on the Consolidated Statement of Operations and Comprehensive (Loss) Income as consolidated gross profit and net income (loss). The measure of segment assets is reported on the balance sheet as total consolidated assets. The chief operating decision maker uses net income to evaluate income generated from segment assets (return on assets) in deciding whether to reinvest profits into the solutions segment or into other parts of the entity, such as to repay long-term debt.

Net income (loss) are used to monitor budget versus actual results. The chief operating decision maker also uses net income (loss) in competitive analysis by benchmarking to DIRTT’s competitors. The competitive analysis along

with the monitoring of budgeted versus actual results are used in assessing performance of the segment and in establishing management’s compensation.

DIRTT derives revenue primarily in North America and manages the business activities on a consolidated basis. The technology used in the customer arrangements is based on a single software platform that is deployed to, and implemented by, customers in a similar manner.

Segment profit and loss reconciliation to Net (loss) income after tax


	For the Three Months Ended March 31,
	2025			2024
	($ in thousands)
Revenue		41,295			40,847
Operating expenses (1)		14,864			14,855
Operating loss		(322	)		(207	)
Other income/(expenses) and gains/(losses) (2)		(339	)		3,252
Net (loss) income after tax		(661	)		3,045

Reconciliation of profit or loss
Adjustments and reconciling items		-			-
Net (loss) income after tax		(661	)		3,045

(1) Includes Sales and marketing, General and administrative, Operations support, Technology and development, Stock-based compensation, Reorganization costs and Impairment charges.

(2) Includes Tax expenses, non-recurring gains and losses, foreign exchange gains (losses), interest income and interest expenses.

13. INCOME TAXES

As at March 31, 2025, the Company had a valuation allowance of $29.4 million against deferred tax assets as the Company has experienced cumulative losses in recent years (December 31, 2024 – $30.0 million).

14. RIGHTS OFFERING

On November 21, 2023, the Company announced that the Board of Directors had approved a rights offering (the “Rights Offering”) to its common shareholders for aggregate gross proceeds of C$30.0 million ($22.4 million).

In connection with the Rights Offering, the Company entered into a standby purchase agreement, dated November 20, 2023 (the “Standby Purchase Agreement”) with 22NW and 726 BC LLC and 726 BF LLC (together, “726”), or their permitted assigns (collectively and including WWT Opportunity #1 LLC, to which 726 transferred all of their common shares to on December 1, 2023, the “Standby Purchasers”). Subject to the terms and conditions of the Standby Purchase Agreement, each Standby Purchaser agreed to exercise its Basic Subscription Privilege (as defined below) in full and to collectively purchase from the Company, at the subscription price, all common shares not subscribed for by holders of Rights (as defined below) under the Basic Subscription Privilege or Additional Subscription Privilege (as defined below), up to a maximum of C$15.0 million each, so that the maximum number of common shares that could be issued in connection with the Rights Offering would be issued and the Company would receive aggregate gross proceeds of C$30.0 million ($22.4 million). As described below, no standby fee was paid to the Standby Purchasers in connection with the Rights Offering; however, DIRTT reimbursed the Standby Purchasers for their reasonable expenses in the amount of $0.03 million each.

On January 9, 2024, the Company announced the completion of the Rights Offering to its common shareholders and the issuance of 85,714,285 common shares at a price of C$0.35 ($0.26) per whole common share for aggregate gross proceeds of C$30.0 million ($22.4 million) and aggregate net proceeds of $21.3 million ($1.1 million of costs associated with the Rights Offering). Each right distributed under the Rights Offering (each, a “Right”) entitled eligible holders to subscribe for 0.81790023 common shares, exercisable for whole common shares only, meaning 1.22264301 Rights were required to purchase one common share (the “Basic Subscription Privilege”). In accordance with applicable law, the Rights Offering included an additional subscription privilege (the “Additional Subscription Privilege”) under which eligible holders of Rights who fully exercised the Rights issued to them under their Basic Subscription Privilege, were entitled to subscribe for additional common shares, on a pro rata basis, that were not otherwise subscribed for under the Basic Subscription Privilege.

DIRTT issued an aggregate of 67,379,471 common shares pursuant to the Basic Subscription Privilege and 18,334,814 common shares pursuant to the Additional Subscription Privilege. As a result of the common shares issued under the Basic Subscription Privilege and Additional Subscription Privilege, no common shares were available for issuance pursuant to the Standby Purchase Agreement.

15. COMMITMENTS

As at March 31, 2025, the Company had outstanding purchase obligations of approximately $2.7 million related to inventory and property, plant and equipment purchases (December 31, 2024 – $4.2 million). As at March 31, 2025, the Company had undiscounted operating lease liabilities of $38.1 million (December 31, 2024 – $39.5 million).

16. RELATED PARTY TRANSACTIONS

As at March 31, 2025, there were no Debentures held by a related party (March 31, 2024 - C$18.9 million and C$13.6 million of the January Debentures and December Debentures, respectively). Interest earned on such Debentures for the three months ended March 31, 2025 and March 31, 2024 is $nil and $0.4 million, respectively. Interest is earned on terms applicable to all Debenture holders.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited interim condensed consolidated financial statements and related notes and other financial information appearing in this Quarterly Report. This discussion contains forward-looking statements reflecting our current expectations and estimates and assumptions concerning events and financial trends that may affect our future operating results or financial position. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those described under the headings “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” appearing elsewhere in this Quarterly Report.

Summary of Financial Results

DIRTT Environmental Solutions Ltd. and its subsidiary (“DIRTT”, the “Company”, “we” or “our”) is a leader in industrialized construction for interior spaces. DIRTT’s system of physical products and digital tools empowers organizations, together with construction and design leaders, to build high-performing, adaptable, interior environments. Operating in the workplace, healthcare, education, and public sector markets, DIRTT’s system provides total design freedom, and greater certainty in cost, schedule, and outcomes.

DIRTT’s proprietary design integration software, ICE® (“ICE” or “ICE software”), translates the vision of architects and designers into a 3D model that also acts as manufacturing information. ICE is also licensed to our Construction Partners and certain third parties, including Armstrong World Industries, Inc. (“AWI”) which owns a 50% interest in the rights, title and interests in certain intellectual property rights in a portion of the ICE software that is used by AWI.

Key First Quarter Highlights and Other Recent Developments

•

Revenue for the quarter ended March 31, 2025 was $41.3 million, an increase of $0.4 million or 1%, from $40.8 million for the same period of 2024. The increase in revenue, as compared to the same period of 2024, was primarily the result of a higher volume of large education and healthcare projects, offset by smaller commercial and government projects in the first quarter of 2025.

•

Gross profit and gross profit margin for the quarter ended March 31, 2025 were $14.5 million or 35.2% of revenue compared to $14.6 million or 35.9% of revenue for the quarter ended March 31, 2024. Adjusted Gross Profit (see “– Non-GAAP Financial Measures”) for the three months ended March 31, 2025 was $15.5 million, consistent with the $15.5 million Adjusted Gross Profit for the first quarter of 2024. Adjusted Gross Profit Margin (see “– Non-GAAP Financial Measures”) was 37.5% for the first quarter of 2025, a decrease from 37.9% in the comparative period of 2024. Gross profit and Adjusted Gross Profit for the quarter ended March 31, 2025 were negatively impacted by the tariffs implemented in 2025.

•

During the first quarter of 2025, various tariffs have been levied by the U.S. and Canadian governments. We incurred $0.6 million (1.4% of revenue) in tariffs and costs related to tariff mitigation actions. DIRTT is most impacted by the 25% tariff levied on Canadian aluminum exports to the United States. Subsequent to quarter end, the U.S. also levied tariffs of 145% on imports from China which increases the cost of Chinese sourced hardware used in DIRTT’s products.

•

Net loss after tax and net loss margin for the first quarter of 2025 was $0.7 million and 1.6%, respectively, compared to $3.0 million net income after tax and net income margin of 7.5% for the same period of 2024. The decrease in net income is primarily the result of a $2.9 million decrease in gain on extinguishment of debt (relating to the Issuer Bid (as defined herein) that was completed in February 2024 and not repeated in 2025), a $1.0 million decrease in foreign exchange gain, a $0.2 million decrease in interest income and a $0.1 million decrease in gross profit, offset by a decrease of $0.6 million in interest expense.

•

Adjusted EBITDA (see “– Non-GAAP Financial Measures”) for the first quarter of 2025 was $2.1 million, or 5.1% of revenue, a decrease of $0.6 million from $2.7 million, or 6.5% of revenue, for the first quarter of 2024. Lower Adjusted EBITDA was mainly driven by a $0.9 million increase in professional services costs as a result of higher litigation costs offset by incremental decreases in other operating expenses.

•

Cash on hand decreased by $0.8 million in the first quarter of 2025 to $28.4 million, compared to a $14.1 million increase in cash in the first quarter of 2024. The decrease in cash in the first quarter of 2025 was driven by $3.5 million of common share repurchases under the Shares NCIB and the Share Repurchase (each as defined herein), $0.8 million in capital expenditures and a $0.2 million foreign exchange loss offset by $3.7 million of cash flows from operations. The increase in cash for the first quarter of 2024 was mainly due to net proceeds of $21.3 million from the Rights Offering (as defined herein) offset by a $5.2 million debt repayment under the Issuer Bid.

•

On February 5, 2025, the U.S. District Court for the Northern District of Utah dismissed and redirected DIRTT’s lawsuit against Falkbuilt Ltd. (“Falkbuilt”) in Utah on procedural grounds to Canada. In DIRTT’s similar lawsuit against Falkbuilt in Canada, the Court of King’s Bench of Alberta has scheduled an eight-week trial to commence February 2, 2026. With the Canadian trial commencing less than a year away, DIRTT is pursuing damages and losses it suffered in Canada, the United States, and abroad in the Court of King’s Bench of Alberta.

•

On February 13, 2025, the Company entered into a share repurchase agreement with NGEN III, LP (“NGEN”) pursuant to which the Company purchased for cancellation 3,920,844 common shares of DIRTT held by NGEN at a purchase price of $0.80 per common share (the “Share Repurchase”). The purchase price of $0.80 per share was a 1% discount to the closing price of the common shares on the TSX on January 27, 2025 (converted into U.S. Dollars using the February 13, 2025 closing exchange rate published by the Bank of Canada).

Pipeline

The table below presents our qualified leads and twelve-month forward pipeline as at April 1, 2025, January 1, 2025 and April 1, 2024. We define qualified leads as the quantity of projects being pursued as of the date presented, and define our pipeline as the estimated potential revenue from qualified leads where a client has engaged DIRTT and is assessing DIRTT as a potential provider of prefabricated interior solutions. We believe these metrics are helpful to estimate near-term performance, particularly given the macroeconomic factors that affect our operating environment, including labor availability, interest rate changes, and potential recessionary impacts on construction projects.

As of April 1, 2025, our twelve-month forward pipeline increased by 8% year-over-year and by 5% from January 1, 2025, illustrated in the table below.


	As at
	April 1, 2025		January 1, 2025		% Change			April 1, 2024		% Change
Twelve-Month Forward Pipeline ($ 000s)
Commercial		163,579		147,609		11			175,203		(7	)
Healthcare		61,171		51,214		19			45,658		34
Government		44,861		55,203		(19	)		33,017		36
Education		21,947		24,292		(10	)		16,505		33
		291,558		278,318		5			270,383		8
Leads (#)		1,490		1,012		47			1,184		26

Outlook

During the first quarter of 2025 we saw increasing levels of business uncertainty stemming from deteriorating macroeconomic conditions. The ongoing risk around the timing and size of tariffs in North America has forced many businesses, including DIRTT, to evaluate their capital planning, operating expenses and supply chains. In response, DIRTT has been preparing for tariffs and has started implementing mitigation strategies, such as leveraging our Savannah manufacturing facility and increasing our sourcing of materials within the U.S.

In the first quarter of 2025, we observed a softening in leading indicators relating to our revenue pipeline, specifically above-trend scheduling delays and below-trend signed awards driven by macroeconomic conditions that we believe are unrelated to DIRTT. The nature of the uncertainty is currently most pronounced in near-term decision making, and we have not yet seen a meaningful increase in project cancellations or losses. Due to the wide-ranging delays, we believe it is prudent to withdraw our full-year revenue and Adjusted EBITDA guidance. Despite this near-term softening, our twelve-month forward-looking pipeline is up 8% year-over-year. We remain confident in DIRTT’s strategic priorities, and expect to generate positive Adjusted EBITDA in 2025 due to DIRTT’s cost controls, business process improvements and manufacturing efficiencies.

We will continue to work to support our partners, grow our business, and transform how the world builds. DIRTT’s balance sheet is strong, including $36.0 million of liquidity (comprising of unrestricted cash and available borrowings). We will continue making key investments with DIRTT’s long-term growth in mind.

Non-GAAP Financial Measures

Note Regarding Use of Non-GAAP Financial Measures

Our interim condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These GAAP financial statements include non-cash charges and other charges and benefits that we believe are unusual or infrequent in nature or that we believe may make comparisons to our prior or future performance difficult.

As a result, we also provide financial information in this Quarterly Report that is not prepared in accordance with GAAP and should not be considered as an alternative to the information prepared in accordance with GAAP. Management uses these non-GAAP financial measures in its review and evaluation of the financial performance of the Company. We believe that these non-GAAP financial measures also provide additional insight to investors and securities analysts as supplemental information to our GAAP results and as a basis to compare our financial performance period-over-period and to compare our financial performance with that of other companies. We believe that these non-GAAP financial measures facilitate comparisons of our core operating results from period to period and to other companies by removing the effects of our capital structure (net interest income on cash deposits, interest expense on outstanding debt and debt facilities, or foreign exchange movements), asset base (depreciation and amortization), tax consequences, reorganization expense, unusual or infrequent charges or gains (such as gain on extinguishment of debt, and impairment charges), stock-based compensation, related party expense, and government subsidies. We remove the impact of foreign exchange gain (loss) from Adjusted EBITDA. Foreign exchange gains and losses can vary significantly period-to-period due to the impact of changes in the U.S. and Canadian dollar exchange rates on foreign currency denominated monetary items on the balance sheet and are not reflective of the underlying operations of the Company. In periods where production levels are abnormally low, unallocated overheads are recognized as an expense in the period in which they are incurred. In addition, management bases certain forward-looking estimates and budgets on non-GAAP financial measures, primarily Adjusted EBITDA. We have not reconciled forward-looking non-GAAP measures, including Adjusted EBITDA guidance, to its corresponding GAAP measures due to the high variability and difficulty in making accurate forecasts and projections, particularly with respect to non-operating income and expenditures, which are difficult to predict and subject to change.

Government subsidies, depreciation and amortization, stock-based compensation expense, reorganization expense, foreign exchange gains and losses, gain on extinguishment of debt, impairment charges, net interest income on cash deposits, interest expense on outstanding debt and debt facilities, tax expense, and related party expense are excluded from our non-GAAP financial measures because management considers them to be outside of the Company’s core operating results, even though some of those receipts and expenses may recur, and because management believes that each of these items can distort the trends associated with the Company’s ongoing performance. We believe that excluding these receipts and expenses provides investors and management with greater visibility to the underlying performance of the business operations, enhances consistency and comparativeness with results in prior periods that do not, or future periods that may not, include such items, and facilitates comparison with the results of other companies in our industry.

The following non-GAAP financial measures are presented in this Quarterly Report, and a description of the calculation for each measure is included.


Adjusted Gross Profit	Gross profit before deductions for depreciation and amortization

Adjusted Gross Profit Margin	Adjusted Gross Profit divided by revenue

EBITDA	Net income before interest, taxes, depreciation and amortization

Adjusted EBITDA	EBITDA adjusted to remove foreign exchange gains or losses; impairment charges; reorganization expenses; stock-based compensation expense; unusual or infrequent charges (such as gain on extinguishment of debt); and any other non-core gains or losses

Adjusted EBITDA Margin	Adjusted EBITDA divided by revenue

You should carefully evaluate these non-GAAP financial measures, the adjustments included in them, and the reasons we consider them appropriate for analysis supplemental to our GAAP information. Each of these non-GAAP financial measures has important limitations as an analytical tool due to exclusion of some but not all items that affect the most directly comparable GAAP financial measures. You should not consider any of these non-GAAP financial measures in isolation or as substitutes for an analysis of our results as reported under GAAP. You should also be aware that we may recognize income or incur expenses in the future that are the same as, or similar to, some of the adjustments in these non-GAAP financial measures. Because these non-GAAP financial measures may be defined differently by other companies in our industry, our definitions of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

Results of Operations

Three Months Ended March 31, 2025, Compared to the Three Months Ended March 31, 2024


	For the Three Months Ended March 31,
	2025			2024			% Change
	($ in thousands)
Revenue		41,295			40,847			1
Gross Profit		14,542			14,648			(1	)
Gross Profit Margin		35.2	%		35.9	%
Operating expenses
Sales and marketing		5,177			5,920			(13	)
General and administrative		5,480			4,566			20
Operations support		2,030			1,775			14
Technology and development		1,228			1,251			(2	)
Stock-based compensation		739			675			9
Reorganization		210			138			52
Impairment charge on Rock Hill Facility		-			530			(100	)
Total operating expenses		14,864			14,855			0
Operating loss		(322	)		(207	)		(56	)
Operating margin		(0.8	)%		(0.5	)%
Gain on extinguishment of convertible debt		7			2,931			(100	)
Foreign exchange (loss) gain		(112	)		919			(112	)
Interest income		262			489			(46	)
Interest expense		(451	)		(1,054	)		(57	)
		(294	)		3,285			(109	)
Net (loss) income before tax		(616	)		3,078			(120	)
Current and deferred income tax expense		45			33			36
Net (loss) income after tax		(661	)		3,045			(122	)

Revenue

Revenue mainly reflects sales to our construction partners (“Construction Partners”) for resale to their clients and, in limited circumstances, our direct sales to clients. Our revenue is generally affected by the timing of when orders are executed, particularly large orders, which can add variability to our financial results and shift revenue between quarters.

The following table sets forth the contribution to revenue of our DIRTT product and service offerings:


	For the Three Months Ended March 31,
	2025		2024		% Change
	($ in thousands)
Product		36,224		34,876		4
Transportation		3,938		3,955		(0	)
License fees from Construction Partners		184		208		(12	)
Total product revenue		40,346		39,039		3
Installation and other services		949		1,808		(48	)
		41,295		40,847		1

Revenue for the three months ended March 31, 2025 was $41.3 million, an increase of $0.4 million compared to $40.8 million in the comparative period of 2024, primarily due to a higher volume of large education and healthcare projects, offset by lower value commercial and government projects in the first quarter of 2025.

Installation and other services revenue was $0.9 million for the quarter ended March 31, 2025 compared to $1.8 million in the quarter ended March 31, 2024. This revenue primarily reflects services performed by our ICE design teams for third parties. Except in limited circumstances, our Construction Partners, rather than the Company, perform installation services.

Our success is partly dependent on our ability to profitably develop our Construction Partner network to expand our market penetration and ensure best practices are shared across local markets. At March 31, 2025, we had 69 Construction Partners (March 31, 2024: 74; December 31, 2024: 71) servicing multiple locations.

The following tables present our product and transportation revenue by vertical market:


	For the Three Months Ended March 31,
	2025		2024		% Change
	($ in thousands)
Commercial		28,098		30,179		(7	)
Healthcare		7,204		3,049		136
Government		2,649		3,475		(24	)
Education		2,211		2,128		4
License fees from Construction Partners		184		208		(12	)
Total product revenue		40,346		39,039		3
Service revenue		949		1,808		(48	)
		41,295		40,847		1


	For the Three Months Ended March 31,
	2025		2024
	(in %)
Commercial		70		78
Healthcare		18		8
Government		7		9
Education		5		5
Total Product Revenue(1)		100		100

(1) Excludes license fees from Construction Partners.

Commercial sales decreased by 7% for the first quarter of 2025 from the first quarter of 2024. The quarter ended March 31, 2025 included fewer large commercial projects compared to the quarter ended March 31, 2024. Healthcare revenues increased by 136% in the first quarter of 2025 from the same period of 2024, primarily due to four key projects shipping in the first quarter of 2025 and a higher volume of larger projects. Sales in the healthcare sector tend to be larger individual projects and are subject to timing due to a typically longer sales cycle, resulting in variability in sales levels. We have made several investments in new product solutions (such as COVE™ and Applied Headwalls) and additions to the business development team to increase product placement in future construction projects. This had led to multiple project commitments set to commence in 2025. Those investments continue in 2025 and are expected to expand into life sciences. Government sales in the first quarter of 2025 decreased by 24% from the first quarter of 2024 due to lower volume and lower value projects. Education sales in the first quarter of 2025 increased by 4% from the same period of 2024.

Revenue continues to be derived almost exclusively from projects in North America and predominantly from the United States. The following table presents our revenue dispersion by geography:


	For the Three Months Ended March 31,
	2025		2024		% Change
	($ in thousands)
Canada		6,878		3,069		124
U.S.		34,417		37,778		(9	)
		41,295		40,847		1

For the three months ended March 31, 2025, 17% of revenue was from Canada, as compared to 8% for the three months ended March 31, 2024. Historically, approximately 11-15% and 85-89% of revenues are derived from sales to Canada and the United States, respectively. The first quarter of 2025 had a large Canadian project which is expected to be ongoing throughout 2025; apart from that, we expect the historical split to continue.

Sales and marketing expenses

Sales and marketing expenses decreased by $0.7 million to $5.2 million for the three months ended March 31, 2025 from $5.9 million for the three months ended March 31, 2024. The decrease was driven by a $0.3 million decrease in termination benefits, a $0.2 million decrease in salaries and benefits costs, a $0.2 million decrease in commissions and pass through charges, a $0.1 million decrease in professional services costs, a $0.1 million decrease in depreciation expense and a $0.1 million decrease in building and communications costs. The decrease was offset by a $0.1 million increase in travel, meals and entertainment costs, and a $0.1 million increase in marketing and tradeshow expenses.

General and administrative expenses

General and administrative expenses increased by $0.9 million to $5.5 million for the three months ended March 31, 2025, from $4.6 million for the three months ended March 31, 2024. The increase was primarily related to a $0.9 million increase in professional services costs as a result of costs associated with the Share Repurchase from NGEN and an increase in litigation costs as we prepare for the Falkbuilt trial, a $0.2 million increase in salaries and benefits costs, a $0.1 million increase in termination benefits, a $0.1 million loss on disposal of equipment and a $0.1 million increase in board fees, offset by a $0.3 million decrease in building and infrastructure costs, a $0.1 million decrease in depreciation expense and a $0.1 million decrease in office and communication costs.

Operations support expenses

Operations support expenses increased by $0.3 million for the three months ended March 31, 2025 to $2.0 million, from $1.8 million for the comparative period of 2024. The increase was primarily related to a $0.1 million increase in termination benefits, a $0.1 million increase in tradeshow expenses, and a $0.1 million increase in other discretionary expenses.

Technology and development expenses

Technology and development expenses relate to non-capitalizable costs associated with our product and software development teams, and are primarily comprised of salaries and benefits of technical staff.

Technology and development expenses decreased slightly to $1.2 million for the three months ended March 31, 2025 from $1.3 million for the three months ended March 31, 2024. This decrease was related to a $0.1 million decrease in salaries and benefits costs, offset by a $0.1 million increase in professional services costs.

Stock-based compensation

Stock-based compensation expense for the three months ended March 31, 2025 was $0.7 million, consistent with $0.7 million for the three months ended March 31, 2024. Stock-based compensation expense is dependent on share price in a period for fair value adjustments made on cash-settled DSU awards and grants, exercises, expirations or forfeitures made on other awards.

Impairment charge on Rock Hill Facility

On September 27, 2023, the Company decided to permanently close the Rock Hill Facility in South Carolina. Certain assets, including manufacturing equipment, which met held-for-sale criteria at that time were reclassified from property, plant and equipment. At March 31, 2024, we determined that the assets held for sale balance of $0.5 million was to be reduced to $nil resulting in a $0.5 million impairment charge for such quarter.

The Company had $nil impairment charges in the first quarter of 2025.

Gain on extinguishment of debt

The gain on extinguishment of debt of $0.01 million for the three months ended March 31, 2025, relates to the Debentures NCIB and was calculated as the difference between the repayment and the net carrying value of the extinguished principal less unamortized issuance costs of C$0.1 million ($0.1 million) (refer to Note 4 of our Interim Condensed Consolidated Financial Statements for additional information). During the first three months of 2024, an aggregate of C$10.5 million ($7.8 million) in principal amount of Debentures was repurchased for cancellation through the Issuer Bid, which triggered an extinguishment of debt of C$3.9 million ($2.9 million).

Foreign exchange gain (loss)

Foreign exchange gain or loss decreased $1.0 million from a gain of $0.9 million for the three months ended March 31, 2024 to a loss of $0.1 million for the same period in 2025. The decrease is primarily related to the strengthening of the Canadian dollar relative to the U.S. dollar over the three months ended March 31, 2025.

Interest income

Interest income for the three months ended March 31, 2025 was $0.3 million compared to $0.5 million for the comparative period of 2024. The decreased interest income is due to lower interest earned on the Company’s lower cash equivalents during the three months ended March 31, 2025 compared to the same period of 2024.

Interest expense

Interest expense decreased by $0.6 million from $1.1 million in the quarter ended March 31, 2024, to $0.5 million in the quarter ended March 31, 2025. This decrease is largely due to repayment of debt throughout the year ended December 31, 2024 and during the first quarter of 2025, reducing the interest payable on current and long-term debt.

Income tax

Income tax expense for the three months ended March 31, 2025 increased to $0.04 million, from $0.03 million in the same period of 2024. The current tax expense represents the income tax provision after the utilization of non-capital loss carry forwards against current period taxable income. The provision for income taxes comprises U.S. and Canadian federal, state and provincial taxes based on pre-tax income. Despite positive indications of future profitability, including the current period profit and strength of our pipeline, the Company has determined that it is unlikely that a deferred tax asset will be recognized. Given the recent history of losses, the Company plans to maintain a valuation allowance against the deferred tax asset. As at March 31, 2025, the Company had a valuation allowance of $29.4 million (December 31, 2024: $30.0 million) against deferred tax assets. The Company plans to continue to evaluate indicators on whether a valuation allowance continues to be needed. For the quarter ended March 31, 2025, the Company utilized a balance of its non-capital loss carry-forwards in Canada and the United States. As at March 31, 2025, we had C$86.1 million of non-capital loss carry-forwards in Canada and $51.3 million of non-capital loss carry-forwards in the United States. These loss carry-forwards will begin to expire in 2037.

Net (loss) income after tax

Net loss after tax was $0.7 million or $0.00 basic and diluted net loss per share in the three months ended March 31, 2025, a decrease of $3.7 million from net income after tax of $3.0 million or $0.02 and $0.01 net income per share, basic and diluted, respectively, for the three months ended March 31, 2024. The decrease in net income is primarily the result of a $2.9 million decrease in gain on extinguishment of debt (relating to the Issuer Bid that was completed in February 2024 and not repeated in 2025), a $1.0 million decrease in foreign exchange gain, a $0.2 million decrease in interest income and a $0.1 million decrease in gross profit, offset by a decrease of $0.6 million in interest expense.

Adjusted Gross Profit and Adjusted Gross Profit Margin for the three months ended March 31, 2025 and 2024

The following table presents a reconciliation for the three months ended March 31, 2025 and 2024 of Adjusted Gross Profit to our gross profit and Adjusted Gross Profit Margin to gross profit margin, which are the most directly comparable GAAP measures for the periods presented:


	For the Three Months Ended March 31,
	2025			2024
	($ in thousands)
Gross profit		14,542			14,648
Gross profit margin		35.2	%		35.9	%
Add: Depreciation and amortization expense		957			844
Adjusted Gross Profit		15,499			15,492
Adjusted Gross Profit Margin		37.5	%		37.9	%

For the quarter ended March 31, 2025, gross profit margin decreased to 35.2%, from 35.9% for the same period of 2024. Adjusted Gross Profit Margin was 37.5% for the first quarter of 2025, a decrease from 37.9% in the comparative period of 2024. Adjusted Gross Profit for the quarter ended March 31, 2025 was negatively impacted by the tariffs implemented in 2025.

Adjusted Gross Profit Margin in the first quarter of 2025 was consistent with the first quarter of 2024 as a result of an increase in revenue of $0.4 million and a decrease in indirect technical support costs resulting from operational efficiencies offset by $0.6 million of costs (1.4% of revenue) in tariffs and costs related to tariff mitigation actions.

EBITDA and Adjusted EBITDA for the three months ended March 31, 2025 and 2024

The following table presents a reconciliation for the results of the three months ended March 31, 2025 and 2024 of EBITDA and Adjusted EBITDA to our net (loss) income after tax, and of Adjusted EBITDA Margin to net (loss) income margin, which are the most directly comparable GAAP measures for the periods presented:


	For the Three Months Ended March 31,
	2025			2024
	($ in thousands)
Net (loss) income after tax for the period		(661	)		3,045
Add back (deduct):
Interest expense		451			1,054
Interest income		(262	)		(489	)
Income tax expense		45			33
Depreciation and amortization		1,480			1,534
EBITDA		1,053			5,177
Foreign exchange loss (gain)		112			(919	)
Stock-based compensation		739			675
Reorganization expense(2)		210			138
Gain on extinguishment of convertible debt(2)		(7	)		(2,931	)
Impairment charge on Rock Hill Facility (2)		-			530
Adjusted EBITDA		2,107			2,670
Net (Loss) Income Margin(1)		(1.6	)%		7.5	%
Adjusted EBITDA Margin		5.1	%		6.5	%

(1) Net (loss) income after tax divided by revenue.

(2) Reorganization expenses, the gain on extinguishment of convertible debt (refer to Note 4 of the interim condensed consolidated financial statements) and the impairment charge on the Rock Hill Facility are not core to our business and are therefore excluded from the Adjusted EBITDA calculation.

For the three months ended March 31, 2025, Adjusted EBITDA and Adjusted EBITDA Margin decreased by $0.6 million to $2.1 million and 5.1%, respectively, from $2.7 million and 6.5% for the same period of 2024. This reflects a $0.9 million increase in professional services costs as a result of costs associated with higher litigation costs related to the Falkbuilt Litigation and the Share Repurchase from NGEN, a $0.2 million increase in marketing and tradeshow costs, a $0.2 million increase in costs for travel, meals and entertainment, offset by a $0.4 million decrease in salaries and benefits costs, a $0.2 million decrease in commissions and pass through charges and a $0.3 million decrease in building and infrastructure costs.

Liquidity and Capital Resources

As at March 31, 2025, the Company had $28.4 million of cash on hand and C$10.9 million ($7.6 million) of available borrowings, compared to $29.3 million of cash on hand and C$14.4 million ($10.0 million) of available borrowings as at December 31, 2024. Through the first three months of 2025, the Company used $0.8 million of cash. The Company generated $3.7 million of cash flows from operations during the first three months of 2025. During the same period, the Company paid $3.5 million to repurchase common shares under the Shares NCIB and Share Repurchase and used $0.8 million for capital expenditures. The Company incurred $0.2 million in foreign exchange loss resulting in a net decrease of $0.8 million of cash for the quarter.

We have assessed the Company’s liquidity as at March 31, 2025, taking into account our sales outlook for the next twelve months, our budget and expected cash outflows and our existing cash balances and available credit facilities. Based upon this analysis, we believe the Company has sufficient liquidity to remain a going concern for at least the next twelve months. We note that the January Debentures amounting to C$16.6 million ($11.5 million) as of March 31, 2025 are due on January 25, 2026 and have therefore been classified as current on our balance sheet. We are evaluating whether we will settle or refinance this debt.

To the extent that existing cash and cash equivalents and available facilities are not sufficient to fund future activities, we may seek to raise additional funds through equity or debt financings. If additional funds are raised through the incurrence of indebtedness, such indebtedness may have rights that are senior to holders of our Debentures and our equity securities or contain instruments that may be dilutive to our existing shareholders. Any additional equity or debt financing may be dilutive to our existing shareholders. While we believe we can access capital markets when needed or under acceptable terms, there can be no assurance that we will be able to do so, particularly in light of recent market conditions.

We note that as of the date of this report, the imposition of trade barriers, including tariffs, quotas, embargoes, safeguards, and customs restrictions between Canada and the U.S., may increase the cost or reduce the supply of materials and products available to us, increase shipping times, affect our customers’ construction needs or budgets, affect the demand for our products or our product mix or require us to modify our supply chain organization, manufacturing facilities, or other current business practices, any of which could harm our business, financial condition, and results of operations.

Price Increases and Impact of Tariffs

On February 11, 2025, we announced a price increase of 5% on all orders placed after March 18, 2025, and price adjustments on certain products in response to market feedback and to mitigate the impact of rising raw material costs.

Commencing in February 2025, the U.S. Government proposed and enacted various tariffs. Refer to “Outlook” and “Risk Factors” for further discussion on these tariffs. As of the date of this report, the following tariffs are currently in effect that materially affect DIRTT:

•

On March 12, 2025, a 25% tariff was levied on aluminum imports from Canada into the United States. As disclosed in our Annual Report on Form 10-K, DIRTT manufactures aluminum components, which are machined and processed in Calgary, Alberta as well as Savannah, Georgia. Aluminum forms 10% of our product costs. This tariff impacts aluminum exports from our Calgary plants to our U.S. customers. To date, we have not passed the impact of this tariff on to our customers and are managing the costs through internal efficiencies.

•

On March 13, 2025, Canada responded to the U.S. tariffs by announcing reciprocal tariffs. As disclosed in our Annual Report on Form 10-K, approximately 92% of DIRTT’s raw materials are sourced in North America and certain products are imported from the U.S. to Canada. We incurred costs on these reciprocal tariffs but note that the Canadian government has put a six month pause on these tariffs, effective April 15, 2025. If these tariffs are maintained, we will look into seeking exemptions or alternative suppliers to mitigate this tariff impact.

•

On April 9, 2025, tariffs of 145% were levied on imports from China into the United States. The Company imports certain raw materials from China (6% of total raw material). In response, we will be increasing the price of certain hardware by 10%, effective June 5, 2025.

Equity and Debt Issuances and Buyback Programs

During the past two years, we have executed various debt and share buyback programs. The Issuer Bid, Debenture Repurchase, Debentures NCIB, Shares NCIB and the Share Repurchase (each as defined herein) were initiated after careful consideration of cash flow, and the Company continues to evaluate uses of cash on hand. As discussed in the “Part II, Item 1A. Risk Factors” section and elsewhere of this Quarterly Report, proposed and implemented tariffs on Canadian exports into the United States, and vice versa, may have a material impact on future cash flows and liquidity, which the Company will continue to monitor.

On November 21, 2023, the Company announced a rights offering, which closed on January 9, 2024, for aggregate gross proceeds of C$30.0 million (net proceeds of $21.3 million)(the “Rights Offering”).

In January 2021, we issued C$40.3 million of convertible unsecured subordinated debentures (the “January Debentures”) for net proceeds after costs of C$37.6 million ($29.5 million). The January Debentures accrue interest at a rate of 6.00% per annum and are convertible into common shares of DIRTT at an exercise price of C$4.65 per common share, or if not converted will mature and be repayable on January 31, 2026. As a result of the Rights Offering, the conversion price was adjusted to C$4.03 per common share. Interest and principal are payable in cash or shares at the option of the Company.

On December 1, 2021, we issued C$35.0 million of convertible unsecured subordinated debentures (the “December Debentures”, and collectively with the January Debentures, the “Debentures”) for net proceeds after costs of C$32.7 million ($25.6 million). The December Debentures accrue interest at a rate of 6.25% per annum and are convertible into common shares of DIRTT at an exercise price of C$4.20 per common share, or if not converted, will mature and be repayable on December 31, 2026. As a result of the Rights Offering, the conversion price was adjusted to C$3.64 per common share. Interest and principal are payable in cash or shares at the option of the Company.

On February 15, 2024, the Company announced a substantial issuer bid and tender offer (the “Issuer Bid”), under which the Company offered to repurchase for cancellation: (i) up to C$6,000,000 principal amount of the January Debentures at a purchase price of C$720 per C$1,000 principal amount of January Debentures; and (ii) up to C$9,000,000 principal amount of the December Debentures at a purchase price of C$600 per C$1,000 principal amount of December Debentures. Holders of Debentures who validly tendered and did not withdraw their Debentures received the applicable purchase price, plus a cash payment for all accrued and unpaid interest up to, but excluding, the date on which such Debentures were taken up by the Company. The applicable purchase price was denominated in Canadian dollars and payments of amounts owed to holders of deposited Debentures, including for interest, were made in Canadian dollars. The Issuer Bid expired on March 22, 2024 and DIRTT purchased C$4.7 million ($3.5 million) aggregate principal amount of the January Debentures and C$5.8 million ($4.3 million) aggregate principal amount of the December Debentures, representing approximately 11.66% of the January Debentures and 16.50% of the December Debentures issued and outstanding at that time. The Company took up all the Debentures tendered pursuant to the Issuer Bid for aggregate consideration of C$7.0 million ($5.2 million) (comprised of C$6.9 million ($5.1 million) repayment on principal and interest of C$0.1 million ($0.1 million)).

On August 2, 2024, the Company entered into an agreement with 22NW Fund LP (“22NW”), to purchase for cancellation an aggregate of C$18,915,000 principal amount of the January Debentures at a purchase price of C$684.58 per C$1,000 principal amount of January Debentures and C$13,638,000 principal amount of the December Debentures at a purchase price of C$665.64 per C$1,000 principal amount of December Debentures, for an aggregate purchase price of C$22,104,591.45, inclusive of a cash payment for all accrued and unpaid interest up to, but excluding, the date on which such Debentures were purchased by the Company the Debenture Repurchase. The purchase price of each series of Debentures (excluding the cash payment for accrued and unpaid interest) represented a discount of approximately 4% to the average trading price of the applicable series of Debentures on the TSX for the 20 trading days preceding August 2, 2024. Following the Debenture Repurchase, 22NW no longer holds any Debentures.

On August 28, 2024, the Company commenced the Debentures normal course issuer bid (the “Debentures NCIB”) which will terminate no later than August 27, 2025. Under the Debentures NCIB, DIRTT is permitted to acquire up to C$1,664,200 principal amount of the January Debentures and C$1,558,700 principal amount of the December Debentures. As at March 31, 2025, C$0.4 million ($0.3 million) and C$0.05 million ($0.03 million) principal amounts of the December Debentures and January Debentures had been acquired through the Debentures NCIB, respectively. As at March 31, 2025, C$16.6 million ($11.5 million) principal amount of the January Debentures and C$15.2 million ($10.5 million) principal amount of the December Debentures were outstanding.

On December 20, 2024, the Company commenced a normal course issuer bid for common shares (the “Shares NCIB”) which will terminate no later than December 19, 2025. Under the Shares NCIB, DIRTT is permitted to acquire up to 7,515,233 common shares. All purchases will be made on the open market at the market price of common shares at the time of acquisition. Any common shares acquired through the Shares NCIB will be immediately cancelled.

On February 13, 2025, the Company entered into the Share Repurchase with NGEN to purchase for cancellation 3,920,844 common shares held by NGEN (the “NGEN Shares”) at a purchase price of $0.80 per NGEN Share. Following the Share Repurchase, there were 189,643,903 common shares outstanding. The NGEN Shares repurchased under the Share Repurchase were counted against the maximum number of shares that may be repurchased pursuant to the Shares NCIB being 7,515,233 shares. As at March 31, 2025, 4,439,107 common shares had been repurchased and cancelled for proceeds of C$5.0 million ($3.5 million) through the Shares NCIB and the Share Repurchase.

As explained above, initiating the debt and share buybacks was done after careful consideration of cash flow and with consideration to the risk of proposed and implemented tariffs.

Facilities

On February 12, 2021, the Company entered into a loan agreement governing a C$25.0 million senior secured revolving credit facility with the Royal Bank of Canada (“RBC”), as lender (the “RBC Facility”). Under the RBC Facility, the Borrowing Base is up to a maximum of 90% of investment grade or insured accounts receivable plus 85% of eligible accounts receivable plus the lesser of 75% of the book value of eligible inventory and 85% of the net orderly liquidation value of eligible inventory less any reserves for potential prior ranking claims. Interest is calculated at the Canadian or U.S. prime rate plus 30 basis points or at the Canadian Dollar Offered Rate or LIBOR plus 155 basis points. Under the RBC Facility, if the “Aggregate Excess Availability”, defined as the Borrowing Base less any loan advances or letters of credit or guarantee and if undrawn including unrestricted cash is less than C$5.0 million, the Company is subject to a fixed charge coverage ratio (“FCCR”) covenant of 1.10:1 on a trailing twelve-month basis. Additionally, if the FCCR has been below 1.10:1 for the three immediately preceding months, the Company is required to maintain a reserve account equal to the aggregate of one year of payments on outstanding loans on the Canada Leasing Facility and a leasing facility in the United States that is no longer available (together, the “Leasing Facilities”). Should an event of default occur or the Aggregate Excess Availability be less than C$6.25 million for five consecutive business days, the Company would enter a cash dominion period whereby the Company’s bank accounts would be blocked by RBC and daily balances will set-off any borrowings and any remaining amounts made available to the Company.

On February 9, 2023, the Company extended the RBC Facility (the “Extended RBC Facility”). The Extended RBC Facility has a maximum borrowing base of C$15.0 million and a one-year term. Interest is calculated as at the Canadian or U.S. prime rate plus 75 basis points or at the Canadian Dollar Offered Rate or LIBOR plus 200 basis points. Under the Extended RBC Facility, until such time that the trailing twelve-month FCCR is above 1.25 for three consecutive months, a cash balance equivalent to one-year’s worth of Leasing Facilities payments must be maintained.

On February 9, 2024, the Company extended the Extended RBC Facility (the “Second Extended RBC Facility”). The maximum availability under the Second Extended RBC Facility is subject to the borrowing base calculation to a maximum of C$15.0 million and a one-year term. Interest is calculated as at the Canadian or U.S. prime rate plus 75 basis points or at the Canadian Dollar Offered Rate or Adjusted Term CORRA or Term SOFR plus the Term SOFR Adjustment, in each case, plus 200 basis points. The Second Extended RBC Facility removed the three-month FCCR covenant, which resulted in the release of $0.1 million of restricted cash during the first quarter of 2024 (the Company had $0.4 million restricted cash as at December 31, 2023). On February 11, 2025, the Company extended the Second Extended RBC Facility (the “Third Extended RBC Facility”) for a period of two weeks up to February 25, 2025 whilst the Company and RBC completed negotiations.

On February 20, 2025, the Company extended the Third Extended RBC Facility (the “Fourth Extended RBC Facility”). The Fourth Extended RBC Facility is subject to the borrowing base calculation based on accounts receivable balances to a maximum of C$25.0 million and matures on November 30, 2025. Interest is calculated as the Canadian or U.S. prime rate plus 50 basis points or at the Term CORRA Rate as adjusted by the Term CORRA Adjustment or Term SOFR plus the Term SOFR Adjustment, in each case plus 175 basis points. At March 31, 2025, available borrowings were C$10.9 million ($7.6 million) (December 31, 2024 – C$14.4 million ($10.0 million) of available borrowings), calculated in the same manner as the RBC Facility described above, of which no amounts have been drawn. The Fourth Extended RBC Facility also includes a new letter of credit facility guaranteed by the Export Development of Canada of C$5 million. The Company has also entered into a bonding facility with Great Midwest Insurance Company, and any other company that is part of or added to Skyward Specialty Insurance Group, Inc. (“Skyward”), which allows access to a $15.0 million bonding facility subject to an individual maximum of $5 million. Under the terms of the facility with Skyward, any bonds issued will be secured through Letters of Credit issued pursuant to the Fourth Extended RBC Facility.

The Company has a C$5.0 million equipment leasing facility in Canada (the “Canada Leasing Facility”) of which, as of March 31, 2025, C$4.4 million ($3.1 million) has been drawn and C$3.9 million ($2.9 million) has been repaid. The Canada Leasing Facility has a seven-year term and bears interest at 4.25%. The Company did not make any draws on the Canada Leasing Facility during the years ended March 31, 2025 and 2024.

We are restricted from paying dividends unless Payment Conditions (as defined in the Fourth Extended RBC Facility) are met, including having a net borrowing availability of at least C$5.0 million over the proceeding 30-day period, and having a trailing twelve-month fixed charge coverage ratio above 1.10:1 and certain other conditions. The Fourth Extended RBC Facility is currently secured by substantially all of our real and personal property located in Canada and the United States.

Analysis of Cash Flow Changes Between the Three Months Ended March 31, 2025 and 2024

The following table summarizes our consolidated cash flows for the periods indicated:


	For the Three Months Ended March 31,
	2025			2024
	($ in thousands)
Net cash flows provided by (used in) operating activities		3,684			(2,043	)
Net cash flows (used in) provided by investing activities		(729	)		281
Net cash flows (used in) provided by financing activities		(3,609	)		16,123
Effect of foreign exchange on cash, cash equivalents and restricted cash		(191	)		(230	)
Net (decrease) increase in cash, cash equivalents and restricted cash		(845	)		14,131
Cash, cash equivalents and restricted cash, beginning of period		29,531			25,099
Cash, cash equivalents and restricted cash, end of period		28,686			39,230

Operating Activities

For the three months ended March 31, 2025, net cash flows provided by operating activities were $3.7 million compared to $2.0 million used in the same period of 2024. The increase in cash flows provided by operations in the first quarter of 2025 is due to better working capital management against the first quarter of 2024 (positive $1.7 million in working capital changes for the three months ended March 31, 2025 compared to negative $(4.1) million for the three months ended March 31, 2024).

Investing Activities

We invested $0.8 million in capital expenditures during the three months ended March 31, 2025, compared to $0.9 million in the three months ended March 31, 2024. The capital expenditures in the first quarter of 2025 consisted of $0.5 million on software development, $0.1 million on manufacturing upgrades, $0.1 million on tradeshow booths and $0.1 million on other facility and leasehold improvements.

Financing Activities

We used $3.6 million of cash in financing activities for the three months ended March 31, 2025, compared to $16.1 million provided by financing activities for the same period of 2024. Cash used in the three months ended March 31, 2025 was mainly driven by the $3.5 million spent in common share repurchases through the Shares NCIB and the Share Repurchase. The three months ended March 31, 2024 included $21.3 million of net proceeds received from the Rights Offering offset by a $5.1 million repayment of Debentures as a result of the Issuer Bid.

Contractual Obligations

There have been no material changes in our contractual obligations during the three months ended March 31, 2025, as compared to those disclosed in the “Management’s Discussion and Analysis of Financial Condition and results of Operations - Contractual Obligations” in our Annual Report on Form 10-K.

See Note 15, “Commitments” to our interim condensed consolidated financial statements in this Quarterly Report for additional information.

Significant Accounting Policies and Estimates

There have been no material changes in our significant accounting policies during the three months ended March 31, 2025, as compared to those disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Significant Accounting Policies and Estimates” in our Annual Report on Form 10-K. For information regarding significant accounting policies and estimates, please refer to Item 7 and Item 8 in our Annual Report on Form 10-K. As disclosed in Note 3, “Adoption of New and Revised Accounting Standards” to our interim condensed consolidated financial statements appearing in this Quarterly Report, we adopted Accounting Standards Update No. 2023-09, “Improvements to Income Tax Disclosures” (“ASU-2023-09”) which further disaggregated information on an entity’s tax rate reconciliation and income taxes paid. The amendments in ASU-2023-09 are


Alberta, Canada (State or other jurisdiction of incorporation or organization)		N/A (IRS Employer Identification No.)

7303 30th Street S.E. Calgary, Alberta, Canada (Address of principal executive offices)		T2C 1N6 (Zip code)


Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

		Emerging growth company	☐


Exhibit No.		Description

3.1		Restated Articles of Amalgamation of DIRTT Environmental Solutions Ltd. (incorporated by reference to Exhibit 3.1 to the Registrant’s Registration Statement on Form 10, File No. 001-39061, filed on September 20, 2019).
3.2		Amended and Restated Bylaw No. 1 of DIRTT Environmental Solutions Ltd. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, File No. 001-39061, filed on May 22, 2020).
4.1		Base Indenture, dated January 25, 2021, by and among DIRTT Environmental Solutions Ltd., Computershare Trust Company of Canada and Computershare Trust Company, National Association as Trustees (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, File No. 001-39061, filed on January 29, 2021).
4.2		Supplemental Indenture, dated January 25, 2021, by and among the Company, Computershare Trust Company of Canada and Computershare Trust Company, National Association as Trustees (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, File No. 001-39061, filed on January 29, 2021).
4.3		Second Supplemental Indenture, dated December 1, 2021, by and among the Company, Computershare Trust Company of Canada and Computershare Trust Company, National Association as Trustees (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, File No. 001-39061, filed on December 1, 2021).
10.1		Triparty Agreement dated February 20, 2025, by and among Royal Bank of Canada, Great Midwest Insurance Company and any other company that is part of or added to Skyward Specialty Insurance Group, Inc. for which surety business is underwritten by the Skyward Specialty surety division and DIRTT Environmental Solutions Ltd. and DIRTT Environmental Solutions, Inc. (incorporated by reference to Exhibit 10.43 to the Registrant’s Form 10-K, File No. 001-39061, filed on February 26, 2025).
10.2		Fourth Amendment to Loan Agreement, dated February 12, 2025, by and among DIRTT Environmental Solutions Ltd., DIRTT Environmental Solutions, Inc. and Royal Bank of Canada (incorporated by reference to Exhibit 10.44 to the Registrant’s Form 10-K, File No. 001-39061, filed on February 26, 2025).
10.3		Fifth Amendment to Loan Agreement, dated February 20, 2025, by and among DIRTT Environmental Solutions Ltd., DIRTT Environmental Solutions, Inc. and Royal Bank of Canada (incorporated by reference to Exhibit 10.45 to the Registrant’s Form 10-K, File No. 001-39061, filed on February 26, 2025).
10.4		Executive Employment Agreement Addendum by and between DIRTT Environmental Solutions Ltd. and Benjamin Urban, effective March 3, 2025 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, File No. 001-39061, filed on April 24, 2025).
10.5		Executive Employment Agreement Addendum by and between DIRTT Environmental Solutions Ltd. and Fareeha Khan, effective March 3, 2025 (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, File No. 001-39061, filed on April 24, 2025).
10.6		Amended and Restated Executive Employment Agreement by and between DIRTT Environmental Solutions Ltd. and Richard Hunter, executed April 15, 2025 (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K, File No. 001-39061, filed on April 24, 2025).
10.7		Form of Restricted Stock Unit Agreement Amendment for Executives, effective April 23, 2025 (incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K, File No. 001-39061, filed on April 24, 2025).
31.1*		Certification of the Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of the Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certification of the Principal Executive Officer required by 18 U.S.C. 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**		Certification of the Principal Financial Officer required by 18 U.S.C. 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*		Inline XBRL Instance Document
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document


101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
*		Filed herewith
**		Furnished herewith


	DIRTT ENVIRONMENTAL SOLUTIONS LTD.

	By:	/s/ Fareeha Khan
		Fareeha Khan
		Chief Financial Officer (Duly Authorized Officer, Principal Financial Officer and Principal Accounting Officer)

Date: May 7, 2025


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


		Page
Cautionary Statement Regarding Forward-Looking Statements		ii
PART I – FINANCIAL INFORMATION		4
Item 1. Financial Statements (Unaudited)		4
Interim Condensed Consolidated Balance Sheet		4
Interim Condensed Consolidated Statement of Operations and Comprehensive (Loss) Income		5
Interim Condensed Consolidated Statement of Changes in Shareholders’ Equity		7
Interim Condensed Consolidated Statement of Cash Flows		8
Notes to the Unaudited Interim Condensed Consolidated Financial Statements		9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		22
Item 3. Quantitative and Qualitative Disclosures About Market Risk		37
Item 4. Controls and Procedures		37

PART II – OTHER INFORMATION		38

Item 1. Legal Proceedings		38
Item 1A. Risk Factors		38
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		39
Item 3. Defaults Upon Senior Securities		39
Item 4. Mine Safety Disclosures		39
Item 5. Other Information		39
Item 6. Exhibits		40

Cautionary Statement Regarding Forward-Looking Statements

PART I – FINANCIAL INFORMATION

PART II – OTHER INFORMATION