DIRTT Reports Fourth Quarter and Year-End 2013 Results

CALGARY, ALBERTA--(Marketwired - March 17, 2014) - DIRTT Environmental Solutions ("DIRTT" or the "Company") (TSX:DRT), a leading technology-enabled designer, manufacturer and installer of fully customized, prefabricated interiors, today announced its financial results for the three- and 12-month periods ended December 31, 2013.

The following financial information should be read in conjunction with the Company's financial statements and management's discussion and analysis for the three- and 12-month periods ended December 31, 2013, which will be available at www.sedar.com and http://ir.dirtt.net/financial-reports/.

This news release contains references to Canadian dollars and United States dollars. Canadian dollars are referred to as "$" and United States dollars are referred to as "US$".

Selected Highlights

In the fourth quarter of 2013 the Company:

• Completed an initial public offering (the "IPO") for gross proceeds of $45.0 million ($39.8 million net of fees) and issued 15.0 million of its Common Shares (the "Common Shares");
• Converted its Class A preferred shares (the "Preferred Shares") and its convertible notes issued in June 2012 (the "June 2012 Notes") to Common Shares; and
• Repaid 50% of the US$20.0 million of convertible notes issued in December 2012 (the "December 2012 Notes"), which reduced exposure to the fluctuations in the US dollar against the Canadian dollar.

In addition to the highlights reported in the fourth quarter of 2013, during calendar 2013 the Company:

• Successfully completed the largest project in the Company's history in early 2013;
• Strengthened its Distribution Partner ("DP") network by providing more training to existing DPs. This was supported by further investment on the part of selected DPs in their own Green Learning Centers ("GLCs") and DIRTT-dedicated staff; and
• Launched the new i-Cube software in June 2013 adding fully customizable millwork (shelves, cabinets, etc.) to its proprietary 3D design, configuration and manufacturing software ("ICE" or the "ICE Software").

Subsequent to year-end the Company:

• Announced receipt of letters of intent and contracts from five companies totalling $12 million with three of the projects scheduled to be delivered in the first half of 2014.

"In the fourth quarter of 2013 we completed our initial public offering which allowed us to tidy up our balance sheet and provided us with the capital to fund an array of growth initiatives that include new product development, targeting additional opportunities in markets and verticals where we do business today, as well as regions and sectors outside of our current operational base," said Scott Jenkins, President of DIRTT. "Our Distribution Partners share our commitment to growth and together we intend to further invest in training, staff and Green Learning Centers in 2014 with an eye to showcasing the high value our customized solutions bring to the interior construction industry."

"Our solid results in the fourth quarter were supported by higher than normal activity levels through the holiday season, which we saw extend into the early part of 2014," said Mogens Smed, CEO of DIRTT. "In the first quarter we announced a series of five agreements totalling some $12 million, well in excess of our average job value, that we expect will contribute revenue both in the first half of the year and beyond as the solutions are delivered."

Summary Financial Results
	Three months  ended				Twelve months ended		Fifteen months ended		Twelve months ended
($ thousands, except per share amounts)	December 31, 2013 $		December 31, 2012 $		December 31, 2013 $		December 31, 2012 $		September 30, 2011 $
Revenue	34,202		34,661		139,795		173,566		114,823
Gross profit	12,603		12,525		53,296		60,701		41,312
Gross profit %	36.8	%	36.1	%	38.1	%	35.0	%	36.0	%
Adjusted Gross profit % (1)	38.4	%	37.8	%	39.5	%	36.6	%	37.4	%
Selling, general and administrative	14,724		13,288		56,727		65,070		41,931
IPO transaction costs	836		-		836		-		-
Operating loss	(2,957	)	(763	)	(4,267	)	(4,369	)	(619	)
Debt settlement expense	4,560		-		4,560		-		-
Finance costs	1,133		882		5,224		4,037		2,958
Adjusted EBITDA (1)	82		1,833		5,525		6,980		6,376
Net loss	(10,151	)	(419	)	(16,495	)	(7,144	)	(4,813	)
Net loss attributable to common shareholders -basic and diluted share:	(0.25	)	(0.01	)	(0.42	)	(0.21	)	(0.12	)

Note:
	1.	See "Non-IFRS Measures"

Financial Results

Revenue

Revenue decreased by $0.5 million or 1.3% in the three months ended December 31, 2013 compared with the same period in 2012. Revenue decreased by $33.8 million or 19.5% in the 12 months ended December 31, 2013 compared to the 15 months ended December 31, 2012, primarily due to a 12-month reporting period versus a 15-month reporting period along with the substantial completion of a large project for a Fortune 500 company in 2012 (12 months ended December 31, 2013 - $0.5 million, 15 months ended December 31, 2012 - $12.6 million). The decrease was partially offset by higher demand from energy, healthcare and financial services clients as well as the strengthening of the US dollar during 2013.

Growth in energy, healthcare and financial services is due in large part to the continued efforts to strengthen the network of DPs. As existing DPs are developed and reassessed, and new DPs are added, DIRTT's exposure and success in new and growing markets increases. Additional or stronger DPs translate into greater resources in the sales territories promoting DIRTT and generating sales opportunities for future periods. On average, new DPs require up to two years to establish themselves in their market. At December 31, 2013, DIRTT had 98 DPs compared with 100 at December 31, 2012; and 91 at September 30, 2011. As at December 31, 2013, DIRTT increased its DP locations to 172, selling in eight countries.

Gross Profit / Adjusted Gross Profit

Gross profit as a percentage of revenue increased by 0.7% in the three months ended December 31, 2013 when compared to the same period in 2012. The increase was due to improved efficiencies on transportation costs, and an increase in higher margin software revenue. Gross profit as a percentage of revenue increased by 3.1% in the 12 months ended December 31, 2013 compared to the 15 months ended December 31, 2012. Due to the significant size of the project substantially completed for a Fortune 500 company in 2012, a discount was provided during the period, which contributed to the overall lower gross profit percentage in the 15 months ended December 31, 2012 compared to the 12 months ended December 31, 2013. In addition, there were some final positive adjustments at the conclusion of this project that contributed to the higher gross profit percentage in the 12 months ended December 31, 2013.

Adjusted gross profit as a percentage of revenue increased by 0.6% in the three months ended December 31, 2013 when compared to the same period in 2012 and by 2.9% in the 12 months ended December 31, 2013 compared to the 15 months ended December 31, 2012 for the same reasons noted above.

Selling, General and Administrative ("SG&A") Expenses

SG&A expenses increased by $1.4 million or 10.8% in the three months ended December 31, 2013 when compared to the same period in 2012. The change was the result of increases in salaries and benefits of $1.5 million and commission expense of $0.3 million, and was partially offset by decreases in travel and marketing costs of $0.2 million, stock-based compensation expense of $0.1 million, and $0.1 million in other miscellaneous items. Salary cost increases reflect personnel additions focused on generating and supporting higher business volumes.

SG&A expenses decreased by $8.3 million or 12.8% in the 12 months ended December 31, 2013 compared to the 15 months ended December 31, 2012. Of the $8.3 million overall decrease, $12.1 million was related to the additional three months of operations being reported in 2012, partially offset by a $3.8 million increase in 2013. The majority of the increase for the 12 months ended December 31, 2013 was the result of hiring additional sales and support personnel as DIRTT continues to grow in North America and pursue clients in new geographic markets outside of North America, which increased salaries and benefits by $3.5 million; a revised commission plan which increased commissions by $1.0 million; and higher rent costs of $0.7 million, primarily due to the sale and leaseback of the Company's Calgary office building in October 2012. This was partially offset by a reduction in travel and marketing expenses of $0.7 million, a decrease in professional services fees of $0.4 million, and a reduction in miscellaneous office expenses of $0.3 million.

IPO Transaction Costs

Upon completion of the IPO on November 28, 2013, the Company issued 15,000,000 Common Shares at $3.00 per share for gross proceeds of $45.0 million. Total transaction costs incurred on the IPO were $5.2 million, of which $4.4 million (incremental costs directly attributable to issuing new shares) was recognized as a reduction in equity as at December 31, 2013 and $0.8 million (costs that relate to the listing of existing shares) was recognized as IPO transaction costs for the three and 12 months ended December 31, 2013.

Transaction costs consisted of underwriters' commission and fees, plus audit, legal, filing, printing, translation and miscellaneous fees. Transaction costs that relate to both new share issuance and listing of existing shares were allocated between those functions based on the number of shares involved.

Debt Settlement Expense

During the 12 months ended December 31, 2013, DIRTT incurred debt settlement expense of $4.6 million in connection with the 50% repayment of the original US$20.0 million December 2012 Notes. As per the terms of the first and second amendment agreements to the Note purchase agreement dated October 21, 2013, DIRTT exercised its option to repay US$10.0 million ($10.5 million) of the December 2012 Notes from the proceeds of the IPO in November 2013. As a result of the $10.5 million prepayment, the Company incurred a prepayment premium of US$3.5 million ($3.8 million), as well as a non-cash charge of $0.8 million upon the derecognition of the liability since the carrying value at time of payment was $9.7 million. The non-cash charge of $0.8 million represents the un-accreted interest expense associated with the $10.5 million in principal, which had not yet been accreted up to face value at the time of prepayment.

Finance Costs

Finance costs increased by $0.2 million in the three months ended December 31, 2013 compared to the same period in 2012. Finance costs for the three months ended December 31, 2013 were comprised of $0.7 million non-cash and $0.4 million cash as compared to $0.4 million and $0.5 million for the same period in 2012, respectively. The higher non-cash interest expense in the 2013 period reflects three months of accretion expense associated with the December 2012 notes compared to one month of accretion expense in the 2012 period, partially offset by a reduction in accretion expense related to the debt component of the Preferred Shares as a result of conversion to Common Shares in November 2013. 

Finance costs increased by $1.2 million for the 12 months ended December 31, 2013 when compared to the 15 months ended December 31, 2012. Finance costs for the 12 months ended December 31, 2013 were comprised of $3.2 million non-cash and $2.0 million cash compared to $2.0 million and $2.0 million for the 15 months ended December 31, 2012, respectively. The increase in non-cash interest in the 2013 period was mainly due to 12 months of accreted interest attributed to the December 2012 Notes compared to one month of accretion expense in the 2012 period, partially offset by the repurchase of the debentures in June 2012 and a reduction in the accretion expense from the debt component of the Preferred Shares as result of conversion to Common Shares in November 2013.

Adjusted EBITDA

Adjusted EBITDA decreased by $1.8 million in the three months ended December 31, 2013 compared with the same period in 2012. The decrease was mainly due to a reduction in revenue of $0.5 million, an increase in SG&A costs of $1.4 million, and was partially offset by improved adjusted gross profit percentage from 37.8% to 38.4%.

Adjusted EBITDA decreased by $1.5 million in the 12 months ended December 31, 2013 compared to the 15 months ended December 31, 2012. The decrease was mainly due to a reduction in revenue of $33.8 million resulting from a 12-month reporting period versus a 15-month reporting period, and partially offset by a decrease in SG&A of $8.3 million and improved adjusted gross profit percentage from 36.6% to 39.5%.

Outlook

Construction is a major global industry and consists of building new structures, making additions and modifications to existing structures, as well as conducting maintenance, repair and leasehold improvements on existing structures. As an example, the total US construction market was US$899 billion in 2013, of which US$562 billion was attributable to non-residential building (Source: US Census Bureau). This includes both new building and renovation projects. Total US non-residential construction spending is forecast to grow to US$714 billion in 2017 (Source: FMI US Markets Construction Overview 2014). DIRTT believes conventional construction activities are fraught with challenges including cost overruns, quality issues and time delays and increasingly organizations are looking for a better way to build out their interior spaces, whether for new buildings or renovations. DIRTT's growing roster of repeat clients is a strong testament to the benefits of technology enabled prefabricated solutions.

DIRTT's growth strategy consists of five key pillars: (1) increase penetration of existing markets by providing continued support and increased investment to existing DPs throughout North America; (2) continue to invest in ICE and new innovative interior construction solutions; (3) capitalize on recent and continued investment in new industry verticals such as healthcare; (4) capitalize on recent and continued investment alongside new international DPs such as those in the Middle East; and (5) penetrate new industries such as the hospitality and residential sectors.

Management believes DIRTT Solutions, including DIRTT Walls, DIRTT Power, DIRTT Networks, DIRTT Millwork and DIRTT Floors, are a superior alternative to conventional construction in all sectors of the construction industry, and that a continued increase in construction activity can be expected to result in an ongoing improvement in Company revenues. DIRTT plans to invest additional resources, including the further development of ICE and the development of new DIRTT Solutions and test projects, in order to pursue existing opportunities in healthcare, education and government, and new opportunities in the hospitality and residential sectors of the construction industry. The Company's product development team has been, and will continue to be, expanded to address industry specific challenges and opportunities.

Liquidity and Capital Resources

At December 31, 2013, DIRTT had $34.4 million in cash and cash equivalents as compared to $8.8 million in cash and restricted cash as at December 31, 2012. Upon completion of the IPO on November 28, 2013, DIRTT received net proceeds of $39.8 million, of which $30.0 million was held in short-term, liquid deposits at December 31, 2013. In November 2013, the Company used a portion of the proceeds to repay US$10.0 million ($10.5 million) of the December 2012 Notes as well as US$3.5 million ($3.8 million) prepayment penalty in accordance with the terms of the December 2012 Notes. 

As at December 31, 2013, DIRTT had drawn $4.9 million from its US$5.0 million capital financing facility, had fully drawn its US$2.5 million term facility, and had drawn $nil from its US$18.0 million revolving operating facility. DIRTT currently has sufficient productive capacity to satisfy near-term growth.

Looking forward to 2014, management expects to make continued investments in product and software development to further expand the Company product offerings, as well as in certain manufacturing equipment to support this development. Management also expects to further invest in its existing GLCs to ensure that each location is showcasing the latest DIRTT Solutions. DIRTT is also investing in a new GLC in Toronto, Ontario, to better serve and support the significant market in Central Canada.

Non-IFRS Measures

Adjusted gross profit and adjusted gross profit %, EBITDA and Adjusted EBITDA are non-IFRS measures used by management to assess DIRTT's performance and financial condition. Consequently, they do not have a standard meaning as prescribed by IFRS, and are therefore unlikely to be comparable to similar measures presented and calculated by other companies. Management believes that the non-IFRS measures are useful supplemental measures that may assist investors in assessing the financial performance and the cash anticipated to be generated by DIRTT's business. The non-IFRS measures should not be considered as the sole measure of the Company's performance and should not be considered in isolation from, or as a substitute for, analysis of the Company's financial statements.

Adjusted gross profit and adjusted gross profit %

Adjusted gross profit is defined as gross profit before the deduction of the depreciation of equipment and tooling for manufacturing-related assets that is included in cost of goods sold. Adjusted gross profit % is calculated as adjusted gross profit divided by revenue. DIRTT uses this measure as an indicator of cash generated from the production of goods and services that it sells.

The following table reconciles adjusted gross profit to the audited consolidated statements of comprehensive loss.

	Three months ended				Twelve months ended		Fifteen months ended
($ in thousands, except %)	December 31, 2013 $		December 31, 2012 $		December 31, 2013 $		December 31, 2012 $
Revenues	34,202		34,661		139,795		173,566
Cost of goods sold	21,599		22,136		86,499		112,865
Gross profit	12,603		12,525		53,296		60,701
Gross profit %	36.8	%	36.1	%	38.1	%	35.0	%
Add back:
Depreciation included in cost of goods sold	520		582		1,936		2,770
Adjusted gross profit	13,123		13,107		55,232		63,471
Adjusted gross profit %	38.4	%	37.8	%	39.5	%	36.6	%

EBITDA and Adjusted EBITDA

EBITDA represents an indication of the entity's capacity to generate income from operations before taking into account management's financing decisions and costs of consuming tangible and intangible capital assets, which vary according to their vintage, technological currency, and management's estimate of their useful life. Accordingly, EBITDA is earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is EBITDA plus non-cash foreign exchange gains or losses on debt revaluation; gains or losses on disposal of property, plant and equipment and intangible assets; write-off of property, plant and equipment and intangible assets; stock-based compensation expense; transaction costs; and any other non-recurring gains or losses. Management uses these measures to assess the Company's ability to generate cash flows, service debt, pay current taxes, and fund capital expenditures. Readers are cautioned that EBITDA should not be considered as an alternative to profit as determined in accordance with IFRS.

The following table reconciles EBITDA and Adjusted EBITDA to the audited consolidated statements of comprehensive loss.

	Three months ended				Twelve months ended		Fifteen months ended
($ thousands)	December 31, 2013 $		December 31, 2012 $		December 31, 2013 $		December 31, 2012 $
Net loss for the period	(10,151	)	(419	)	(16,495	)	(7,144	)
Add back (deduct):
Finance costs	1,133		882		5,224		4,037
Current tax (recovery) expense	(106	)	(136	)	455		(761	)
Deferred tax expense (recovery)	1,069		(697	)	841		(417	)
Depreciation included in cost of goods sold	520		582		1,936		2,770
Depreciation and amortization included in selling, general and administrative	1,708		1,624		6,322		7,899
EBITDA	(5,827	)	1,836		(1,717	)	6,384
IPO transaction costs	836		-		836		-
Debt settlement expense	4,560		-		4,560		-
Stock-based compensation	54		177		395		681
Non-cash foreign exchange loss on debt revaluation	459		-		1,259		-
Write-off of property, plant and equipment	-		-		192		-
Gain on sale of property, plant and equipment	-		(180	)	-		(85	)
Adjusted EBITDA	82		1,833		5,525		6,980

Conference Call Details

DIRTT will host a conference call and webcast on Monday, March 17, 2014 at 7 a.m. MT (9 a.m. ET) to discuss its fourth quarter and year-end results in greater detail. President Scott Jenkins and CFO Derek Payne will participate.

To access the conference call by telephone dial 647.427.7450 (Toronto and international callers) or 1.888.231.8191 (toll-free in North America). Please call 10 minutes prior to the start of the call. In addition, a live webcast (listen only mode) of the conference call will be available at: http://www.newswire.ca/en/webcast/detail/1317551/1455071

Investors are invited to submit questions by email before and during the conference call. Please send them to ir@dirtt.net.

A replay of the conference call will be available at 416.849.0833 or 1.855.859.2056, passcode 9755754, from noon (ET) Monday, March 17, 2104 to midnight (ET) Monday, March 24, 2014 or through the webcast archives at http://www.newswire.ca or on DIRTT's website at http://ir.dirtt.net/.

Financial Statements

DIRTT Environmental Solutions Ltd.
Consolidated Statements of Loss and Comprehensive Loss
(Stated in thousands of Canadian dollars, except per share amounts)
	For the twelve months ended		For the fifteen months ended
	December 31, 2013 $		December 31, 2012 $
Revenues	139,795		173,566
Cost of goods sold	86,499		112,865
Gross profit	53,296		60,701
Selling, general and administrative	56,727		65,070
IPO transaction costs	836		-
Operating loss	(4,267	)	(4,369	)
Foreign exchange loss	1,148		1
Gain on sale of property, plant and equipment	-		(85	)
Debt settlement expense	4,560		-
Finance costs	5,224		4,037
Loss before tax	(15,199	)	(8,322	)
Current tax expense (recovery)	455		(761	)
Deferred tax expense (recovery)	841		(417	)
Net loss for the period	(16,495	)	(7,144	)
Other comprehensive income (loss)
Exchange differences on translation of foreign operations, net of tax of $nil (2012 - $nil)	1,611		(1,281	)
Total comprehensive loss for the period	(14,884	)	(8,425	)
Net loss for the period attributable to:
Equity holders of the Company	(16,495	)	(7,480	)
Non-controlling interest	-		336
	(16,495	)	(7,144	)
Total comprehensive loss for the period attributable to:
Equity holders of the Company	(14,884	)	(8,771	)
Non-controlling interest	-		346
	(14,884	)	(8,425	)
Loss per share
Basic and diluted	(0.42	)	(0.21	)

DIRTT Environmental Solutions Ltd.
Consolidated Statements of Financial Position
(Stated in thousands of Canadian dollars)
As at December 31	2013 $		2012 $
ASSETS
Current assets
Cash and cash equivalents	34,373		7,826
Restricted cash	-		1,000
Trade and other receivables	17,166		18,601
Inventory	11,376		8,062
Prepaids and other current assets	1,058		985
	63,973		36,474
Non-current assets
Long-term deposits	522		540
Property, plant and equipment	29,986		31,498
Intangible assets	10,112		8,909
Notes receivable	486		494
Deferred tax assets	1,967		2,920
Goodwill	1,845		1,845
	44,918		46,206
Total Assets	108,891		82,680
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Trade accounts payable and accrued liabilities	12,550		12,638
Customer deposits	8,370		8,604
Current portion of long-term debt	2,419		784
Provisions	469		346
Current tax liabilities	314		227
	24,122		22,599
Non-current liabilities
Deferred tax liabilities	592		744
Long-term debt	5,673		2,074
Convertible notes	9,904		16,279
Debt component of preferred shares	-		14,253
	16,169		33,350
Shareholders' Equity
Common share capital	123,127		54,268
Preferred share capital	-		8,604
Warrants	1,101		1,101
Equity component of convertible notes	57		4,003
Contributed surplus	6,192		5,748
Accumulated other comprehensive income (loss)	1,293		(318	)
Accumulated deficit	(63,170	)	(46,675	)
	68,600		26,731
Total Liabilities and Shareholders' Equity	108,891		82,680

DIRTT Environmental Solutions Ltd.
Consolidated Statements of Cash Flows
(Stated in thousands of Canadian dollars)
	For the twelve months ended		For the fifteen months ended
	December 31, 2013 $		December 31, 2012 $
Cash flows from operating activities:
Net loss for the period	(16,495	)	(7,144	)
Items not affecting cash:
Depreciation included in cost of goods sold	1,936		2,770
Depreciation and amortization included in selling, general and administrative	6,322		7,899
Stock-based compensation	395		681
Write-off of property, plant and equipment	192		-
Gain on sale of property, plant and equipment	-		(85	)
Loss on derecognition of liability	832		-
Non-cash issue of warrants	-		37
Non-cash deferred tax adjustment	841		(601	)
Non-cash foreign exchange loss on debt revaluation	1,259		-
Non-cash foreign exchange loss (gain)	439		(387	)
	(4,279	)	3,170
Net change in non-cash working capital relating to operating activities	(1,623	)	6,221
Interest accretion	3,180		2,045
Net cash flows (used in) from operating activities	(2,722	)	11,436
Cash flows from investing activities:
Purchase of property, plant and equipment	(3,066	)	(6,695	)
Proceeds from sale of property, plant and equipment	9		8,500
Capital expenditures on internally generated intangible assets	(3,953	)	(4,742	)
Repayment (issue) of notes receivable	8		(4	)
Net cash flows used in investing activities	(7,002	)	(2,941	)
Cash flows from financing activities:
Decrease in bank indebtedness	-		(3,775	)
Issuance of share capital on IPO	45,000		-
Share capital issuance costs	(4,448	)	-
Issuance of share capital on exercise of stock options	18		22
Proceeds (repayment) of long-term debt, net	5,152		(8,402	)
Retirement of convertible debentures	-		(9,670	)
(Repayment) proceeds of convertible notes	(10,451	)	21,951
Net cash flows from financing activities	35,271		126
Net increase in cash and cash equivalents and restricted cash	25,547		8,621
Cash and cash equivalents and restricted cash, beginning of period	8,826		205
Cash and cash equivalents and restricted cash, end of period	34,373		8,826
Cash and cash equivalents and restricted cash consists of:
Cash	4,372		7,826
Temporary investments	30,001		-
Restricted cash	-		1,000
	34,373		8,826

About DIRTT

DIRTT Environmental Solutions (Doing It Right This Time) uses its proprietary 3D software to design, manufacture and install fully customized prefab interiors. DIRTT's customers in the corporate, government, education and healthcare sectors benefit from the Company's precise design and costing; rapid lead times with the highest levels of customization and flexibility; and faster, cleaner construction.

To find out more about DIRTT (TSX:DRT) please visit our website www.dirtt.net or contact us at ir@dirtt.net.

Forward-Looking Statements

This news release contains forward-looking statements about expected future events and financial and operating performance of DIRTT. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words or phrases such as "will likely result", "are expected to", "will continue", "is anticipated", "believes", "estimated", "intends", "plans", "projection" and "outlook"), are not historical facts and may be forward-looking. Actual results or outcomes may differ materially from those expressed in the forward-looking information contained herein as a result of various factors. There can be no assurance that forward-looking information will prove to be accurate, and readers should not place undue reliance on the forward-looking information.

With respect to forward-looking information contained in this new release, assumptions have been made regarding, among other things:

• DIRTT's ability to manage its growth;
• competition in the Company's industry;
• the Company's ability to enhance current products and develop and introduce new products;
• the Company's ability to obtain components and products from suppliers on a timely basis and on favourable terms;
• the Company's ability to obtain qualified staff and equipment in a timely and cost-efficient manner;
• the regulatory framework governing taxes in Canada and the United States and any other jurisdictions in which DIRTT may conduct its business in the future;
• future development plans for the Company's assets unfolding as currently envisioned;
• future capital expenditures to be made by the Company;
• future sources of funding for the Company's capital program;
• the intentions of the board of directors of DIRTT with respect to the compensation plans;
• the impact of increasing competition on the Company; and
• the Company's success in identifying other risks to its business.

Readers are cautioned that the foregoing lists of factors are not exhaustive. Further, forward-looking information is made as of the date hereof, and DIRTT undertakes no obligation to update forward-looking information to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events, except as required by law. New factors emerge from time to time, and it is not possible for management to predict all of these factors and to assess in advance the impact of each such factor on the Company's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in forward-looking information.

For a detailed description of the risks and uncertainties facing the Company and its business and affairs, readers should refer to the Company's annual financial statements and management's discussion and analysis for the 12 months ended December 31, 2013, both of which are available at www.sedar.com.