DRT DIRTT Environmental Solutions Ltd

DIRTT Environmental Solutions Ltd. (“DIRTT” or the “Company”) (TSX: DRT; OTC: DRTTF), a leader in industrialized construction, announced today that its board of directors has approved a rights offering to its common shareholders for aggregate gross proceeds of C$30,000,000 (the “Rights Offering”).

Under the Rights Offering, each holder of the Company’s common shares (the “Common Shares”) of record at the close of business on December 12, 2023 (the "Record Date") will receive one right (a “Right”) for each Common Share held. Each Right will entitle the holder to subscribe for 0.81790023 Common Shares at a subscription price (the “Subscription Price”) of C$0.35 per whole Common Share, exercisable for whole Common Shares only, meaning 1.22264301 Rights will be needed to purchase one Common Share (the "Basic Subscription Privilege"). The Subscription Price represents a discount of 25% to the 5-day volume weighted average trading price of the Common Shares on the Toronto Stock Exchange (the “TSX”) prior to the date hereof. The Record Date is subject to the Company receiving applicable regulatory approvals, including that of the U.S. Securities and Exchange Commission (the “SEC”). The Rights are expected to expire at 5:00 p.m. (Eastern Time) on January 5, 2024.

In accordance with applicable law, the Rights Offering will include an additional subscription privilege (the "Additional Subscription Privilege") under which eligible holders of Rights who fully exercise the Rights issued to them under their Basic Subscription Privilege will be entitled to subscribe for additional Common Shares on a pro rata basis, that are not otherwise subscribed for under the Basic Subscription Privilege, subject to certain limitations that will be set out in the rights offering notice and circular prepared in connection with the Rights Offering (the "Rights Offering Documents") and in the prospectus contained in the Company’s registration statement on Form S-1 (File No. 333-275172) (as may be amended from time to time, the “Registration Statement”) . The Company expects to use the proceeds of the Rights Offering for general corporate purposes, which may include investments in its business, funding potential future cash needs or operating losses, funding working capital or capital expenditure needs, or reductions to its outstanding indebtedness.

The Rights Offering will be made to all eligible holders of Common Shares as of the Record Date who are resident in Canada and in certain states in the U.S. Accordingly, and subject to the terms set out in the Rights Offering Documents and in the Registration Statement, Rights will not be delivered to, nor will they be exercisable by, persons resident outside of Canada and the U.S. or in certain U.S. states to be identified in the Registration Statement. Full details of the Rights Offering will be set out in the Rights Offering Documents, which are expected to be made available on the Company’s profile on SEDAR+ at www.sedarplus.ca as soon as practicable and in the final prospectus contained in the Registration Statement, which is expected to be made available on EDGAR at www.sec.gov prior to the Record Date.

In connection with the Rights Offering, the Company has also entered into a standby purchase agreement (the “Standby Agreement”) with 22NW Fund, LP (“22NW”) and 726 BC LLC and 726 BF LLC (collectively “726” and together with 22NW, the “Standby Purchasers”). Subject to the terms and conditions of the Standby Agreement, each Standby Purchaser has agreed to exercise its Basic Subscription Privilege in full and to collectively purchase from the Company, at the Subscription Price, all Common Shares not subscribed for by holders of Rights under the Basic Subscription Privilege or Additional Subscription Privilege, up to a maximum of C$15,000,000 each, so that the maximum number of Common Shares that may be issued in connection with the Rights Offering will be issued and the Company will receive aggregate gross proceeds of C$30,000,000. No standby fee will be paid to the Standby Purchasers in connection with the Rights Offering; however, DIRTT will reimburse the Standby Purchasers for their reasonable expenses in connection with the Standby Agreement up to a maximum of C$30,000. The foregoing description of the Standby Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Standby Agreement, which will be filed on the Company’s profile on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov, as soon as practicable.

The Rights are expected to be listed for trading on the TSX under the symbol “DRT.RT”. Subject to the Company receiving applicable regulatory approvals, the Rights are expected to begin trading on the TSX one trading day prior to the Record Date, being December 11, 2023 and cease trading at 12:00 p.m. (Toronto time) on the expiry date of the Rights Offering, being January 5, 2024.

Subject to the Standby Agreement, the Company reserves the right to modify any terms of the contemplated Rights Offering, or to postpone or cancel the Rights Offering, at any time prior to the listing of the Rights on the TSX.

The Registration Statement relating to the proposed Rights Offering has been filed with the SEC but has not yet become effective. The securities may not be sold nor may offers to buy be accepted prior to the time the Registration Statement becomes effective. This press release shall not constitute an offer to sell, or the solicitation of an offer to buy, any securities, nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state. Any offering of the securities under the Registration Statement related to the Rights Offering will only be made by means of a prospectus.

We have applied to have the Rights and the Rights Shares registered for sale, or we are relying on exemptions from registration, in the District of Columbia, Puerto Rico and all 50 states in the United States, except for the state of Arizona. In states that require registration, we will not distribute the Rights or sell the Rights Shares until such registration is effective in each of these states. As of the date hereof, such registration is not effective in California, Illinois, New York and Ohio; there can be no assurances that such registration will become effective in any of such states prior to the commencement of the Rights Offering or at any point prior to the expiration of the Rights Offering. We will not distribute the Rights or sell the Rights Shares in the state of Arizona. In order to comply with certain states’ securities laws, if applicable, the Rights and Rights Shares will be sold in such jurisdictions only through registered or licensed brokers or dealers.

ABOUT DIRTTDIRTT 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 interior construction solutions are designed to be highly flexible and adaptable, enabling organizations to easily reconfigure their spaces as their needs evolve. Headquartered in Calgary, AB Canada, DIRTT trades on the Toronto Stock Exchange under the symbol “DRT”.

FOR FURTHER INFORMATION, PLEASE CONTACT

DIRTT Investor Relations at ir@dirtt.com

FORWARD-LOOKING STATEMENTS

Certain statements contained in this news release are “forward-looking statements” within the meaning of “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934 and “forward-looking information” within the meaning of applicable Canadian securities laws. All statements, other than statements of historical fact included in this news release are forward-looking statements. When used in this news release, the words “anticipate,” “expect,” “intend,” “may,” “will,” “should,” “would,” “could,” “can,” the negatives thereof, variations thereon and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. In particular and without limitation, this news release contains forward-looking information pertaining to the Rights Offering, the proceeds realized thereunder and the use thereof; the terms and timing of the Rights Offering; the Record Date; regulatory approvals in connection with the Rights Offering; the contents and filing of the offering documents in connection with the Rights Offering; the Standby Purchase Agreement and the obligations of the parties thereunder; the anticipated expiry date of the Rights Offering; and the listing of the Rights on the TSX and the timing thereof.

Forward-looking statements are based on certain estimates, beliefs, expectations, and assumptions made in light of management’s experience and perception of historical trends, current conditions and expected future developments, as well as other factors that may be appropriate. Forward-looking statements necessarily involve unknown risks and uncertainties, which could cause actual results or outcomes to differ materially from those expressed or implied in such statements. Due to the risks, uncertainties, and assumptions inherent in forward-looking information, you should not place undue reliance on forward-looking statements. Factors that could have a material adverse effect on our business, financial condition, results of operations and growth prospects include, but are not limited to, risks described under the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC and applicable securities commissions or similar regulatory authorities in Canada on February 22, 2023, as supplemented by our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2023, June 30, 2023 and September 30, 2023 filed with the SEC and applicable securities commissions or similar regulatory authorities in Canada. Our past results of operations are not necessarily indicative of our future results. You should not rely on any forward-looking statements, which represent our beliefs, assumptions and estimates only as of the dates on which they were made, as predictions of future events. We undertake no obligation to update these forward-looking statements, even though circumstances may change in the future, except as required under applicable securities laws. We qualify all of our forward-looking statements by these cautionary statements.