DRTT Dirtt Environmental Solutions Ltd

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

 

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

 

For the quarterly period ended March 31, 2024

or

 

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

 

For the transition period from to

Commission file number 001-39061

DIRTT ENVIRONMENTAL SOLUTIONS LTD.

(Exact name of registrant as specified in its charter)

 

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)

 

(Registrant’s telephone number, including area code): (403) 723-5000

 

Securities registered pursuant to Section 12(b) of the Exchange Act: None

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer		☐	Accelerated filer		☐
Non-accelerated filer		☒	Smaller reporting company		☒
			Emerging growth company		☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

The registrant had 191,880,226 common shares outstanding as of April 30, 2024.

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DIRTT ENVIRONMENTAL SOLUTIONS LTD.

FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2024

TABLE OF CONTENTS

 

		Page
Cautionary Statement Regarding Forward-Looking Statements		ii
PART I – FINANCIAL INFORMATION		4
Item 1. Financial Statements (Unaudited)		4
Interim Condensed Consolidated Balance Sheets		4
Interim Condensed Consolidated Statement of Operations and Comprehensive Loss		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		23
Item 3. Quantitative and Qualitative Disclosures About Market Risk		36
Item 4. Controls and Procedures		36
PART II – OTHER INFORMATION		37
Item 1. Legal Proceedings		37
Item 1A. Risk Factors		38
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		38
Item 3. Defaults Upon Senior Securities		38
Item 4. Mine Safety Disclosures		38
Item 5. Other Information		38
Item 6. Exhibits		39

 

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Cautionary Statement Regarding Forward-Looking Statements

Certain statements contained in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 (this “Quarterly Report”) 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, as amended (the “Exchange Act”) and “forward-looking information” within the meaning of applicable Canadian securities laws. All statements, other than statements of historical fact included in this Quarterly Report, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this Quarterly Report, the words “anticipate,” “believe,” “expect,” “estimate,” “intend,” “plan,” “project,” “outlook,” “may,” “will,” “should,” “would,” “could,” “can,” “continue,” 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. 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 contained in, or expressed or implied by 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 can be found in the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the U.S. Securities and Exchange Commission (the “SEC”) and applicable securities commissions or similar regulatory authorities in Canada on February 21, 2024 (the “Annual Report on Form 10-K”), and in this Quarterly Report under “Part II, Item 1A. Risk Factors.” These factors include, but are not limited to, the following:

 

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These risks are not exhaustive. Because of these risks and other uncertainties, our actual results, performance or achievement, or industry results, may be materially different from the anticipated or estimated results discussed in the forward-looking statements in this Quarterly Report. New risk factors emerge from time to time, and it is not possible for our management to predict all risk factors nor can we assess the effects of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in, or expressed or implied by, any forward-looking statements. Our past results of operations are not necessarily indicative of our future results. You should not place undue reliance 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.

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

DIRTT Environmental Solutions Ltd.

Interim Condensed Consolidated Balance Sheets

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

		As at March 31,				As at December 31,
		2024				2023
ASSETS
Current Assets
Cash and cash equivalents			38,989				24,744
Restricted cash			241				355
Trade and accrued receivables, net of expected credit losses of    $0.1 million at March 31, 2024 and at December 31, 2023			15,782				15,787
Other receivables			476				484
Inventory			15,669				16,577
Prepaids and other current assets			2,426				4,023
Assets held for sale			-				1,555
Total Current Assets			73,583				63,525
Property, plant and equipment, net			23,801				25,077
Capitalized software, net			2,700				2,450
Operating lease right-of-use assets, net			28,442				29,813
Other assets			3,442				3,452
Total Assets			131,968				124,317
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities			15,360				19,880
Other liabilities			2,906				2,482
Customer deposits and deferred revenue			3,080				5,290
Current portion of long-term debt and accrued interest			675				841
Current portion of lease liabilities			5,449				5,255
Total Current Liabilities			27,470				33,748
Long-term debt			46,125				55,267
Long-term lease liabilities			26,957				28,201
Total Liabilities			100,552				117,216
SHAREHOLDERS’ EQUITY
Common shares, unlimited authorized without par value, 191,880,226 issued and outstanding at March 31, 2024 and 105,377,667 issued and outstanding at December 31, 2023			218,294				196,128
Additional paid-in capital			7,355				7,954
Accumulated other comprehensive loss			(16,422	)			(16,125	)
Accumulated deficit			(177,811	)			(180,856	)
Total Shareholders’ Equity			31,416				7,101
Total Liabilities and Shareholders’ Equity			131,968				124,317

 

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

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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,
		2024				2023
Product revenue			39,039				35,476
Service revenue			1,808				1,232
Total revenue			40,847				36,708
Product cost of sales			24,992				27,423
Service cost of sales			1,207				603
Total cost of sales			26,199				28,026
Gross profit			14,648				8,682
Expenses
Sales and marketing			5,920				5,515
General and administrative			4,566				5,833
Operations support			1,775				1,990
Technology and development			1,251				1,539
Stock-based compensation			675				796
Reorganization			138				1,071
Impairment charge on Rock Hill Facility			530				-
Related party expense			-				2,056
Total operating expenses			14,855				18,800
Operating loss			(207	)			(10,118	)
Government subsidies			-				148
Gain on extinguishment of convertible debt			2,931				-
Foreign exchange gain (loss)			919				(261	)
Interest income			489				4
Interest expense			(1,054	)			(1,207	)
			3,285				(1,316	)
Net income (loss) before tax			3,078				(11,434	)
Income taxes
Current and deferred income tax expense			33				-
			33				-
Net income (loss) after tax			3,045				(11,434	)
Net income (loss) per share
Net income (loss) per share - basic			0.02				(0.10	)
Net income (loss) per share - diluted			0.01				(0.10	)
Weighted average number of shares outstanding (in thousands)
Basic			183,668				111,702
Diluted			288,479				111,702

 

Interim Condensed Consolidated Statement of Comprehensive Income (Loss)

 

		For the Three Months Ended March 31,
		2024				2023
Net income (loss) for the period			3,045				(11,434	)
Exchange differences on translation of foreign operations			(297	)			273
Comprehensive income (loss) for the period			2,748				(11,161	)

 

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Total revenue for the three months ended March 31, 2024 includes $nil revenue earned from related parties and $nil related party expenses ($0.3 million and $2.1 million for the three months ended March 31, 2023, respectively). Refer to Note 16.

 

Interest expense for the three months ended March 31, 2024 includes $0.4 million earned by a related party ($nil for the three months ended March 31, 2023). Refer to Note 16.

 

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

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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, 2022		97,882,844				191,347				9,023				(16,106	)			(166,272	)			17,992
Stock-based compensation		-				-				452				-				-				452
Issued on vesting of RSUs and Share Awards		659,473				1,256				(1,256	)			-				-				-
RSUs and Share Awards withheld to settle employee tax obligations		-				-				(26	)			-				-				(26	)
Issued for employee share purchase plan		322,408				128				-				-				-				128
Foreign currency translation adjustment		-				-				-				273				-				273
Net loss for the period		-				-				-				-				(11,434	)			(11,434	)
As at March 31, 2023		98,864,725				192,731				8,193				(15,833	)			(177,706	)			7,385
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 and Share Awards		521,253				771				(771	)			-				-				-
Issued on Rights Offering		85,714,285				21,273				-				-				-				21,273
Issued for employee share purchase plan		267,021				122				-				-				-				122
RSUs and Share Awards 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

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

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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,
		2024				2023
Cash flows from operating activities:
Net income (loss) for the period			3,045				(11,434	)
Adjustments:
Depreciation and amortization			1,534				2,675
Impairment charge on Rock Hill Facility			530				-
Stock-based compensation			675				796
Foreign exchange loss (gain)			(978	)			346
Gain on extinguishment of convertible debt			(2,931	)			-
Accretion of convertible debentures			180				164
Changes in operating assets and liabilities:
Trade and accrued receivables			(34	)			2,111
Other receivables			(3	)			4,732
Inventory			597				1,299
Prepaid and other assets, current and long term			1,437				391
Accounts payable and accrued liabilities			(4,072	)			(3,299	)
Other liabilities			-				2,056
Customer deposits and deferred revenue			(2,202	)			(1,020	)
Current portion of long-term debt and accrued interest			(152	)			(56	)
Lease liabilities			331				251
Net cash flows used in operating activities			(2,043	)			(988	)
Cash flows from investing activities:
Purchase of property, plant and equipment, net of accounts     payable changes			(344	)			(371	)
Capitalized software development expenditures			(442	)			(532	)
Other asset expenditures			(79	)			(106	)
Recovery of software development expenditures			121				26
Proceeds on sale of assets held for sale			1,025				-
Net cash flows provided by (used in) investing activities			281				(983	)
Cash flows from financing activities:
Repayment of long-term debt			(5,074	)			(642	)
Net proceeds received from rights offering			21,273				-
Employee tax payments on vesting of RSUs			(76	)			(26	)
Net cash flows provided by (used in) financing activities			16,123				(668	)
Effect of foreign exchange on cash, cash equivalents and     restricted cash			(230	)			(36	)
Net increase (decrease) in cash, cash equivalents and     restricted cash			14,131				(2,675	)
Cash, cash equivalents and restricted cash, beginning of year			25,099				14,239
Cash, cash equivalents and restricted cash, end of period			39,230				11,564
Supplemental disclosure of cash flow information:
Interest paid			(1,005	)			(1,072	)
Income taxes received			-				5
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets.
		As At March 31,
		2024				2023
Cash and cash equivalents			38,989				8,146
Restricted cash			241				3,418
Total cash, cash equivalents and restricted cash			39,230				11,564

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

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DIRTT Environmental Solutions Ltd.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

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

 

 

 

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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. 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, including 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

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Pipeline

Qualified leads, defined as quantity of projects being pursued, and our pipeline, defined as working with an engaged client on assessment of DIRTT as a prefabricated interior solution provider are disclosed below. We use these to measure expected near term performance given that our operating environment has been prone to change due to macroeconomic factors such as worksite labor availability, interest rate changes, and potential recessionary impacts on construction projects.

As of April 1, 2024, our twelve-month forward pipeline grew by 7% year-over-year and marginally from January 1, 2024, illustrated in the table below.

		As at
		April 1, 2024				January 1, 2024				% Change				April 1, 2023				% Change
Twelve Month Forward Pipeline ($ 000s)
Commercial			175,203				176,789				(1	)			160,636				9
Healthcare			45,658				41,221				11				45,900				(1	)
Government			33,017				34,813				(5	)			30,676				8
Education			16,505				17,117				(4	)			14,987				10
			270,383				269,940				1				252,199				7
Leads (#)			1,184				861				38				969				22

 

DIRTT continues to experience pipeline growth as the U.S. economy saw above-trend quarterly GDP growth in the third and fourth quarters of 2023. Our internal and external economic indicators imply continued growth for the twelve-month forward pipeline and the U.S. economy. Our healthcare segment has returned to growth due to several 2025 projects entering our twelve-month view of the pipeline. Due to the inherently long sales cycle in our healthcare segment, this pipeline tends to experience more volatility than our other segments.

We are highly cognizant of two risks facing our business in the year ahead; continued uncertainty in the commercial real estate markets and the possibility of re-inflation in U.S. headline CPI. We are closely monitoring economic data tied to their performance. To mitigate these risks, we are growing the pipeline and implementing strict cost controls to preserve our margins.

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Outlook

As we continue into 2024, internal indicators and external economic indicators show a positive trajectory for the U.S. economy. Real GDP Growth in the third and fourth quarters of 2023 was above trend. Consumer spending, employment, and construction activity continue to improve from the post-COVID period.

However, we are highly cognizant of two risks facing our business in the year ahead. Firstly, the commercial office market has yet to bottom or return to expansionary activity. As a business with a small overall market penetration, we are focused on cost control and process efficiencies to position ourselves to gain market share. Secondly, we are closely monitoring our input costs amid the likelihood that the U.S. Federal Reserve will not return headline CPI to a 2% annualized rate. Additionally, a recent proposal by President Biden to triple tariffs on Chinese aluminum to 22.5% as well as to sanction Russian aluminum on the London Metal Exchange have created price inflation in our primary material input. If the increase in aluminum prices persists, we will have to consider the effect on our business, including consideration of increasing prices in response.

Even as we face these risks, we have positioned DIRTT over the past year to better withstand adverse economic conditions. Our gross profit margin in the first quarter of 2024 compared to the first quarter of 2023 improved from 23.7% to 35.9%. Our Adjusted Gross Profit Margins have improved from 28.5% to 37.9% year-over-year. Furthermore, our operating expenses decreased by 21% compared to the first quarter of 2023. All these efforts yielded Adjusted EBITDA Margin of 6.5% in the first quarter of 2024 compared to (9.6)% in the first quarter of 2023.

With the Rights Offering completed in the first quarter of 2024, we have improved our cash balance from $8.1 million at March 31, 2023 to $39.0 million as of March 31, 2024. We have also deleveraged our balance sheet through the Issuer Bid, pursuant to which we repurchased C$10.5 million ($7.8 million) principal amount of our Debentures in March 2024.

As we continue to ramp up into our seasonally stronger quarters, we are preparing to preserve our Adjusted Gross Profit Margins and delivering on-time and in-full to our valued customers. We will continue to invest in our commercial business and pursue opportunities and partnerships to support our revenue growth.

Non-GAAP Financial Measures

Note Regarding Use of Non-GAAP Financial Measures

Our condensed consolidated interim financial statements are prepared in accordance with 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, one-time non-recurring charges or gains (such as gain on extinguishment of debt), and stock-based compensation. 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.

Government subsidies, depreciation and amortization, stock-based compensation expense, reorganization expense, foreign exchange gains and losses and impairment charges 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.

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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 costs of 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; government subsidies; one-time, non-recurring charges and gains; 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, 2024, Compared to the Three Months Ended March 31, 2023

 

		For the Three Months Ended March 31,
		2024				2023				% Change
		($ in thousands)
Revenue			40,847				36,708				11
Gross Profit			14,648				8,682				69
Gross Profit Margin			35.9	%			23.7	%
Operating expenses
Sales and marketing			5,920				5,515				7
General and administrative			4,566				5,833				(22	)
Operations support			1,775				1,990				(11	)
Technology and development			1,251				1,539				(19	)
Stock-based compensation			675				796				(15	)
Reorganization			138				1,071				(87	)
Impairment charge on Rock Hill Facility			530				-				100
Related party expense			-				2,056				(100	)
Total operating expenses			14,855				18,800				(21	)
Operating income (loss)			(207	)			(10,118	)			98
Operating margin			(0.5	)%			(27.6	)%
Government subsidies			-				148				(100	)
Gain on extinguishment of convertible debt			2,931				-				100
Foreign exchange gain (loss)			919				(261	)			452
Interest income			489				4				12,125
Interest expense			(1,054	)			(1,207	)			13
			3,285				(1,316	)			350
Net profit (loss) before tax			3,078				(11,434	)			127
Current and deferred income tax expense			33				-				100
			33				-				100
Net income (loss) after tax			3,045				(11,434	)			127

 

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Revenue

Revenue reflects sales to our 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,
		2024				2023				% Change
		($ in thousands)
Product			34,876				31,481				11
Transportation			3,955				3,788				4
License fees from Construction Partners			208				207				0
Total product revenue			39,039				35,476				10
Installation and other services			1,808				1,232				47
			40,847				36,708				11

Revenue for the three months ended March 31, 2024, was $40.8 million, an increase of $4.1 million compared to $36.7 million in the comparative period of 2023 as the first quarter of 2024 included a higher volume of larger projects than the first quarter of 2023 in the commercial sector, particularly in the retail and finance industries, as well as the government sector.

Installation and other services revenue was $1.8 million for the quarter ended March 31, 2024 compared to $1.2 million in the quarter ended March 31, 2023. This revenue primarily reflects services performed by our ICE and design teams for third parties. Except in limited circumstances, our Construction Partners, rather than the Company, perform installation services; accordingly, we are not anticipating significant growth in this revenue stream.

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, 2024, we had 74 Construction Partners (March 31, 2023: 67; December 31, 2023: 72) servicing multiple locations.

We periodically analyze our revenue growth by vertical markets in the defined markets of commercial, healthcare, government and education. While all sectors have been challenged by the macroeconomic factors discussed previously, we are seeing increased growth in our commercial sector. We believe that an increase in new construction starts and the heightened need for adaptability and flexibility in the years after the COVID-19 pandemic have increased the demand for our products. We continue to see growth opportunities in the healthcare and education sectors and have restructured our sales leadership function, prioritizing oversight of these verticals.

The following table presents our product and transportation revenue by vertical market:

		For the Three Months Ended March 31,
		2024				2023				% Change
		($ in thousands)
Commercial			30,179				24,504				23
Healthcare			3,049				6,171				(51	)
Government			3,475				2,707				28
Education			2,128				1,887				13
License fees from Construction Partners			208				207				0
Total product revenue			39,039				35,476				10
Service revenue			1,808				1,232				47
			40,847				36,708				11

 

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		For the Three Months Ended March 31,
		2024				2023
		(in %)
Commercial			78				70
Healthcare			8				17
Government			9				8
Education			5				5
Total Product Revenue(1)			100				100

 

(1) Excludes license fees from Construction Partners.

Commercial revenues increased by 23% from the prior year period. Healthcare revenues decreased by 51% in the first quarter of 2024 from the same period of 2023. The quarter ended March 31, 2023 included a higher volume of large healthcare projects compared to the quarter ended March 31, 2024. Such sales tend to be larger individual projects and are subject to timing due to a typically longer sales cycle, resulting in variability in sales levels. Government revenues in the first quarter of 2024 increased by 28% from the prior year period. Similar to healthcare, government revenues tend to be larger individual projects. Education sales in the first quarter of 2024 increased 13% from the same period of 2023. The education sector included a higher magnitude of smaller projects in the first quarter of 2024 than in the first quarter of 2023.

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,
		2024				2023				% Change
		($ in thousands)
Canada			3,069				4,912				(38	)
U.S.			37,778				31,796				19
			40,847				36,708				11

 

The first quarter of 2024 included a higher proportion of sales to customers in the United States than to those in Canada, 8% of sales for the period were in Canada, with the rest occurring in the United States, compared to 13% of sales to Canada in the first quarter of 2023. Historically, approximately 11-15% and 85-89% of DIRTT’s revenues have been derived from sales to Canada and the United States, respectively.

Sales and Marketing Expenses

Sales and marketing expenses increased by $0.4 million to $5.9 million for the three months ended March 31, 2024 from $5.5 million for the three months ended March 31, 2023. The increase was driven by a $0.5 million increase in salaries and benefits, a $0.2 million increase in commissions costs and a $0.1 million increase in professional services costs associated with recruiting efforts, offset by a $0.4 million decrease in building and office expenses.

General and Administrative Expenses

General and administrative expenses decreased by $1.3 million to $4.6 million for the three months ended March 31, 2024 from $5.8 million for the three months ended March 31, 2023. The decrease was primarily related to a $0.4 million decrease in professional services costs (which included a $0.8 million insurance recovery and $0.5 million costs associated with the Issuer Bid), a $0.4 million decrease in salaries and benefits costs, a $0.3 million decrease in office costs and communications costs, a $0.2 million decrease in public company costs and Board of Directors fees, and a $0.1 million decrease in travel and entertainment costs. These decreases were offset by $0.2 million higher operating costs in our leased office space.

Operations Support Expenses

Operations support is comprised primarily of project managers, order entry and other professionals that facilitate the integration of our Construction Partner project execution and our manufacturing operations. Operations support expenses decreased by $0.2 million from $2.0 million for the three months ended March 31, 2023 to $1.8 million for the three months ended March 31, 2024. The decrease was primarily related to a $0.1 million decrease in salaries and benefits costs and a $0.1 million decrease in professional service costs.

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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 by $0.2 million to $1.3 million for the three months ended March 31, 2024, compared to $1.5 million for the three months ended March 31, 2023, primarily related to a $0.2 million decrease in salaries and benefits costs.

Stock-Based Compensation

Stock-based compensation expense for the three months ended March 31, 2024 was $0.7 million compared to $0.8 million in the same period of 2023. The decrease in this expense was largely due to a higher number of RSUs compared to the prior year’s period. The decrease in RSU expense was offset by a higher DSU expense as a result of a higher share price during the first quarter of 2024.

Reorganization

Reorganization expenses for the quarter of $0.1 million decreased from $1.1 million in the prior period. Current quarter costs relate primarily to movement of inventory from the Rock Hill Facility, while the reorganization costs in the first quarter of 2023 were largely made up of termination costs associated with actions taken to streamline our back office and operational support functions. No new reorganization initiatives were undertaken in the first quarter of 2024.

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 the quarter. While we will continue to pursue a sale of the assets, we were not able to determine the likelihood of recoverability based on the current market interest in the equipment.

Gain on Extinguishment of Debt

The Company recognized a gain on extinguishment of debt of C$3.9 million ($2.9 million) following the Issuer Bid. At the expiration of the Issuer Bid, 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, 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)). In accordance with GAAP, it was determined that the C$6.9 million ($5.1 million) repayment on principal triggered an extinguishment of debt. The gain on extinguishment of C$3.9 million ($2.9 million) of debt was calculated as the difference between the repayment and the net carrying value of the extinguished principal less unamortized issuance costs of C$0.4 million ($0.2 million).

Related Party Expense

On March 15, 2023, the Company entered into a Debt Settlement Agreement (the "Debt Settlement Agreement") with 22NW Fund, LP ("22NW") and Aron English, 22NW's principal and a director of DIRTT, (together, the "22NW Group") who, collectively, beneficially owned approximately 19.5% of the Company’s issued and outstanding common shares at such time. Pursuant to the Debt Settlement Agreement, the Company agreed to reimburse the 22NW Group for the costs incurred by the 22NW Group in connection with the contested director election at the annual and special meeting of shareholders of the Company held on April 26, 2022, being $1.6 million (the “Debt”).

Pursuant to the Debt Settlement Agreement, the Company agreed to repay the Debt by either, or a combination of (i) a payment in cash by the Company to the 22NW Group, and/or (ii) the issuance of equity securities of the Company to the 22NW Group.

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In connection with the Debt Settlement Agreement, on March 15, 2023, the Company entered into a share issuance agreement with the 22NW Group, pursuant to which the Company agreed to repay the Debt with the issuance to the 22NW Group of 3,899,745 common shares at a deemed price of $0.40 per common share, subject to approval by shareholders.

At the annual general and special meeting of shareholders held on May 30, 2023 shareholders voted to approve the issuance of common shares, and on June 2, 2023, the Company issued 3,899,745 common shares to 22NW Group as repayment for the Debt. Upon settlement, the debt was revalued at the higher of the deemed price of $0.40 per common share and the May 30, 2023 market price of $0.38 per common share resulting in a recovery from the balance recorded at March 31, 2023 which had been valued at a price of $0.53 per common share.

Government Subsidies

The Company was not eligible for, and did not receive, any new government subsidies in the quarter ended March 31, 2024. Comparatively, the Company received $0.1 million of interest with the collection of the Emergency Retention Credit during the three months ended March 31, 2023.

Interest Expense

Interest expense decreased by $0.1 million from $1.2 million in the quarter ended March 31, 2023, to $1.1 million in the quarter ended March 31, 2024, due to foreign exchange impacts of a weakening Canadian dollar and the decrease in equipment lease balances caused by early settlement of the U.S. Leasing Facility (as defined herein) in the fourth quarter of 2023.

Income Tax

The provision for income taxes comprises U.S. and Canadian federal, state and provincial taxes based on pre-tax income. As at March 31, 2024, the Company had a valuation allowance of $33.9 million (December 31, 2023: $34.5 million) against deferred tax assets due to ongoing near term uncertainties on the business caused by the COVID-19 pandemic and the related decline in business activity which impacted our ability to generate sufficient taxable income in Canada and the United States to fully deduct historical losses. The Company will continue to evaluate indicators on whether a valuation allowance continues to be needed. For the quarter ended March 31, 2024, the Company utilized a balance of its non-capital loss carry-forwards in Canada and the United States. As at March 31, 2024, we had C$107.6 million of non-capital loss carry-forwards in Canada and $55.0 million in the United States. These loss carry-forwards will begin to expire in 2035.

Net Income After Tax

Net income after tax increased to $3.0 million or $0.02 basic and $0.01 diluted net income per share, respectively, in the three months ended March 31, 2024, from a net loss after tax of $11.4 million or a $0.10 basic and diluted net loss per share for the three months ended March 31, 2023. The increase in net income is primarily the result of a $6.0 million higher gross profit, a $3.9 million decrease in operating expenses, which includes a $0.9 million decrease in reorganization expenses offset by a $0.5 million impairment charge related to the Rock Hill Facility closure, a $2.9 million gain on extinguishment of debt, a $1.2 million increase in foreign exchange gain, a $0.5 million increase in interest income, and a $0.1 million decrease in interest expense. These were offset by a $0.1 million decrease in government subsidies.

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EBITDA and Adjusted EBITDA for the Three Months Ended March 31, 2024 and 2023

The following table presents a reconciliation for the results of the three months ended March 31, 2024 and 2023 of EBITDA and Adjusted EBITDA to our net income (loss), which is the most directly comparable GAAP measure for the periods presented:

		For the Three Months Ended March 31,
		2024				2023
		($ in thousands)
Net income (loss) after tax for the period			3,045				(11,434	)
Add back (deduct):
Interest expense			1,054				1,207
Interest income			(489	)			(4	)
Income tax expense			33				-
Depreciation and amortization			1,534				2,675
EBITDA			5,177				(7,556	)
Foreign exchange (gain) loss			(919	)			261
Stock-based compensation			675				796
Government subsidies			-				(148	)
Related party expense(2)			-				2,056
Reorganization expense(3)			138				1,071
Gain on extinguishment of convertible debt(3)			(2,931	)			-
Impairment charge on Rock Hill Facility (3)			530				-
Adjusted EBITDA			2,670				(3,520	)
Net Income (Loss) Margin(1)			7.5	%			(31.1	)%
Adjusted EBITDA Margin			6.5	%			(9.6	)%

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

(2) The related party transaction is a non-recurring transaction that is not core to our business and is excluded from the Adjusted EBITDA calculation (Refer to Note 16 of the consolidated interim financial statements).

(3) Reorganization expenses, the gain on extinguishment of convertible debt and the impairment charge on the Rock Hill Facility are not core to our business and are therefore excluded from the Adjusted EBITDA calculation (Refer to Note 4 and Note 5 of the consolidated interim financial statements).

For the three months ended March 31, 2024, Adjusted EBITDA and Adjusted EBITDA Margin increased by $6.2 million to $2.7 million and 6.5%, respectively, from a $3.5 million loss and (9.6)% in the same period of 2023. This primarily reflects a $5.0 million increase in Adjusted Gross Profit, a $0.4 million decrease in professional services costs, a $0.6 million decrease in office, building and communication costs and a $0.2 million decrease in other discretionary operating expenses.

Adjusted Gross Profit and Adjusted Gross Profit Margin for the Three Months Ended March 31, 2024 and 2023

The following table presents a reconciliation for the three months ended March 31, 2024 and 2023 of Adjusted Gross Profit to our gross profit, which is the most directly comparable GAAP measure for the periods presented:

 

		For the Three Months Ended March 31,
		2024				2023
		($ in thousands)
Gross profit			14,648				8,682
Gross profit margin			35.9	%			23.7	%
Add: Depreciation and amortization expense			844				1,783
Adjusted Gross Profit			15,492				10,465
Adjusted Gross Profit Margin			37.9	%			28.5	%

 

For the quarter ended March 31, 2024, gross profit and gross profit margin increased to $14.6 million and 35.9%, respectively, from $8.7 million and 23.7% for the same period of 2023. Adjusted Gross Profit and Adjusted Gross Profit Margin increased to $15.5 million and 37.9% for the three months ended March 31, 2024, from $10.5 million and 28.5% for the three months ended March 31, 2023.

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The improvement in Adjusted Gross Profit was a result of improved product mix, a reduction in fixed costs, and management of labor hours throughout the period to offset the inflationary impacts on material costs. Fixed costs decreased $0.6 million for the quarter ended March 31, 2024 as we aligned overhead costs and support with current operations after having finalized the decision to close the Rock Hill Facility in the third quarter of 2023. Idle facility costs incurred at the Rock Hill Facility were $0.5 million for the three months ended March 31, 2024 (2023 – $0.4 million). We continue to evaluate options to sublease the Rock Hill Facility to recover the costs of the facility.

Liquidity and Capital Resources

As at March 31, 2024, the Company had $39.0 million of cash on hand and C$10.1 million ($8.5 million) of available borrowings, compared to $24.7 million of cash on hand and C$13.6 million ($10.3 million) of available borrowings as at December 31, 2023. Through the first three months of fiscal 2024, the Company generated $14.1 million of cash flow compared to a cash usage of $2.7 million in the first three months of fiscal 2023. Cash generated included cash flows from the Rights Offering of $21.3 million and improved operational results, offset by a decrease in working capital of $10.6 million (mainly due to timing of payables and $5.2 million repayment of debt under the Issuer Bid).

We have implemented multiple price increases to mitigate the impact of inflation on raw materials and improve liquidity during the past two years. These actions have resulted in a meaningful improvement in our gross profit margins and higher net profit and have served to stabilize our cash usage to operate the business. Gross profit for the three months ended March 31, 2024 was $14.6 million, or 35.9%. The same period of 2023 generated gross profit of $8.7 million, or 23.7%.

Over the same period, we have executed upon several initiatives to improve liquidity. First, in May 2023, we entered into an agreement with AWI resulting in the receipt of $12.8 million of cash throughout 2023. Second, in March 2023, we entered into an agreement to sublease our Dallas “DXC” to one of our Construction Partners in that region. Under the sublease agreement, the subtenant has assumed responsibility for the monthly rent, utilities, maintenance, taxes and other costs as of April 1, 2023, through December 31, 2024, providing us annualized savings of approximately $1 million. We are continuing to evaluate other properties for sale and leaseback or sublease opportunities, including our Rock Hill Facility, and expect these initiatives to result in positive cash inflows in 2024. Third, we completed a private placement of 8,667,449 common shares in November 2022 for aggregate gross proceeds of $2.8 million (the “Private Placement”), with certain significant shareholders and directors and officers of the Company to bridge cash requirements before the completion and closing of the noted strategic transactions. The Company entered into irrevocable subscription agreements with its two largest shareholders, 22NW and 726 BC LLC and 726 BF LLC (together “726” (which subsequently transferred its holdings to WWT Opportunity #1) and all the directors and officers of the Company on November 14, 2022, to issue 8.7 million shares for gross consideration of $2.8 million. The Private Placement closed on November 30, 2022.

On November 21, 2023, the Company announced the Rights Offering, which closed on January 9, 2024, for aggregate gross proceeds of C$30.0 million and net proceeds of $21.3 million.

On February 4, 2024, the Company entered into a Litigation Funding Agreement with a third party for the funding of up to $4.0 million of litigation costs in respect of specific claims against Falkbuilt, Inc., Falkbuilt Ltd. and Henderson. In return, the Company has agreed to pay from any proceeds received from the settlement of such claims, a reimbursement of funded amounts plus diligence and underwriting costs, plus a multiple of such funded amount based on certain milestones. As part of this agreement, the Company is subject to a general security arrangement over its assets.

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

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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 Offer 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)).

While we are encouraged by the improved profitability and cash flow, we have continued to evaluate our fixed cost structure and overhead in light of recent macroeconomic uncertainty. We have implemented multiple restructuring initiatives designed to align our cost structure with current expected levels of demand. In addition, the Company has reduced headcount by approximately 16% from January 2022 through March 2024.

In January 2021, we issued C$40.3 million of 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. Interest and principal are payable in cash or shares at the option of the Company. As a result of the Rights Offering, 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. As at March 31, 2024, C$18.9 million ($13.9 million) principal amount of the January Debentures are held by a related party, 22NW. Aron English, manager of 22NW Fund GP, LLC, the general partner of 22NW, is a director of the Company.

On December 1, 2021, we issued C$35.0 million of the December 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. Interest and principal are payable in cash or shares at the option of the Company. As a result of the Rights Offering, 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. As at March 31, 2024, C$13.6 million ($10.0 million) principal amount of the December Debentures are held by a related party, 22NW.

In February 2021, we 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”). On February 9, 2023, the Company extended the RBC Facility (the “Extended RBC Facility”). The Extended RBC Facility has a borrowing base of C$15 million and a one-year term. 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 million and a one-year term. Refer to discussion in “Credit Facility” herein for additional information.

The Company has a C$5.0 million equipment leasing facility in Canada (the “Canada Leasing Facility”) with RBC of which C$4.4 million ($3.4 million) has been drawn and C$3.8 million ($2.9 million) has been repaid. The Canada Leasing Facility has a seven-year term and bears interest at 4.25%. During 2023, the Company had a $14.0 million equipment leasing facility, with RBC and one of its affiliates, in the United States, of which $13.3 million was drawn and repaid (the “U.S. Leasing Facility” and, together with the Canada Leasing Facility, the “Leasing Facilities”). In connection with the Company’s decision to close the Rock Hill Facility, we settled the liability related to the U.S. Leasing Facility ($7.8 million). The U.S. Leasing Facility is no longer available to be drawn on. With the settlement of this liability, we released $2.6 million of restricted cash during 2023.

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

				For The Three Months Ended March 31,
				2024				2023
				($ in thousands)
Net cash flows used in operating activities					(2,043	)			(988	)
Net cash flows provided by (used in) investing activities					281				(983	)
Net cash flows provided by (used in) financing activities					16,123				(668	)
Effect of foreign exchange on cash, cash equivalents and restricted cash					(230	)			(36	)
Net increase (decrease) in cash, cash equivalents and restricted cash					14,131				(2,675	)
Cash, cash equivalents and restricted cash, beginning of year					25,099				14,239
Cash, cash equivalents and restricted cash, end of period					39,230				11,564

Operating Activities

Net cash flows used in operating activities were $2.0 million for the three months ended March 31, 2024 compared to $1.0 million in the same period of 2023. The increase in cash flows used in operations is largely due to a $10.6 million decrease in working capital compared to the first quarter of 2023, offset by the $6.2 million increase in Adjusted EBITDA and a $0.9 million decrease in reorganization expenses. Working capital in the first quarter of 2023 benefited from the receipt of $4.8 million related to the Employee Retention Credit and the elimination of the quick pay discount for our customers during the third quarter of 2023. First quarter 2024 working capital was impacted by the timing of payables relative to period end.

Investing Activities

We invested $0.3 million in property, plant and equipment during the three months ended March 31, 2024, compared to $0.4 million in the three months ended March 31, 2023. This expenditure consisted of $0.1 million of information technology and $0.2 million of manufacturing upgrades in the first quarter of 2024. We invested $0.4 million on capitalized software during the three months ended March 31, 2024, compared to $0.5 million for the three months ended March 31, 2023. During the first quarter of 2024, we sold $1.0 million of assets classified as held for sale as a result of the closure of the Rock Hill Facility, for proceeds of $1.0 million.

Financing Activities

For the three months ended March 31, 2024, $16.1 million of cash was provided by financing activities compared to $0.7 million of cash used for the same period of the prior year. The cash provided comprised mainly of $21.3 million of net proceeds received from the Rights Offering offset by $5.1 million repayment of Debentures as a result of the Issuer Bid and scheduled payments under the Leasing Facilities. During the three months ended March 31, 2024, we incurred $0.1 million of spend on employee tax payments on vesting of RSUs, compared to $0.03 million in the same period of 2023.

Credit Facility

On February 12, 2021, the Company entered into 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 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 is less than C$5.0 million, the Company was subject to a fixed charge coverage ratio (“FCCR”) covenant of 1.10:1 on a trailing twelve-month basis. Additionally, if the FCCR was 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 Leasing Facilities. Had an event of default 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 be blocked by RBC and daily balances would set-off any borrowings and any remaining amounts made available to the Company.

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On February 9, 2023, the Company extended the RBC Facility (the “Extended RBC Facility”). The Extended RBC Facility had a maximum borrowing base of C$15 million and a one-year term. Interest was 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 was above 1.25 for three consecutive months, a cash balance equivalent to one-year’s worth of Leasing Facilities payments would 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 maximum availability under the Second Extended RBC Facility is subject to the borrowing base calculation to a maximum of C$15 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. At March 31, 2024, available borrowings are C$10.1 million ($8.5 million) (December 31, 2023 – C$13.6 million ($10.3 million) of available borrowings), calculated in the same manner as the RBC Facility described above, of which no amounts have been drawn. 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).

The Company has a C$5.0 million equipment leasing facility in Canada (the “Canada Leasing Facility”) of which C$4.4 million ($3.4 million) has been drawn and C$3.8 million ($2.9 million) has been repaid, and a $14.0 million equipment leasing facility in the United States of which $13.3 million has been drawn and repaid (the “U.S. Leasing Facility” and, together with the Canada Leasing Facility, the “Leasing Facilities”) with RBC. The Canada Leasing Facility has a seven-year term and bears interest at 4.25%.

As part of the decision to close the Rock Hill Facility, the Company fully settled the liability related to the U.S. Leasing Facility of $7.8 million in the fourth quarter of 2023. The U.S. Leasing Facility is no longer available to be drawn on. With the settlement of this liability, $2.6 million was released from restricted cash during 2023.

The Company did not make any draws on the Canadian Leasing Facilities during the first quarter of 2024 and the year ended December 31, 2023 under the Canada Leasing Facility.

We are restricted from paying dividends unless Payment Conditions (as defined in the Second Extended RBC Facility) are met, including having a net borrowing availability of at least C$10 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 Second Extended RBC Facility is currently secured by substantially all of our real property located in Canada and the United States.

Contractual Obligations

Since our disclosure in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Contractual Obligations” in our Annual Report on Form 10-K, the following material contractual changes have occurred:

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, 2024, 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 condensed consolidated interim financial statements appearing in this Quarterly Report.

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Recent Accounting Pronouncements

For information regarding recent accounting pronouncements, please refer to Note 3, “Adoption of New and Revised Accounting Standards,” to our condensed consolidated interim financial statements and “–Significant Accounting Policies and Estimates” appearing in this Quarterly Report.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to our market risk exposures since our disclosures in our Annual Report on Form 10-K. For information regarding our exposure to certain market risks, please refer to Item 7A. “Quantitative and Qualitative Disclosures about Market Risk” in our Annual Report on Form 10-K. The Company’s cash and cash equivalents are predominantly all with one AA rated financial institution.

 

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our principal executive officers and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

As required by Rule 13a-15 under the Exchange Act, our principal executive officers and principal financial officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2024. Based upon their evaluation, our principal executive officers and principal financial officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the quarter ended March 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

DIRTT is pursuing multiple lawsuits against its founders, Mogens Smed and Barrie Loberg, as well as Falkbuilt Ltd. and Falkbuilt, Inc. (collectively, “Falkbuilt”) and related individuals and corporations. DIRTT alleges breaches of fiduciary duties and non-competition and non-solicitation covenants, and the misappropriation of its confidential and proprietary information (in violation of numerous U.S. state and federal laws pertaining to the protection of trade secrets and proprietary information and the prevention of false advertising and deceptive trade practices). Except as described below, there have been no material developments in the legal proceedings previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.

DIRTT’s litigation against Falkbuilt, Messrs. Smed and Loberg, and their associates is comprised of three main lawsuits: (i) an action in the Alberta Court of King’s Bench commenced on May 9, 2019 against Falkbuilt, Messrs. Smed and Loberg, and several other former DIRTT employees alleging breaches of restrictive covenants, fiduciary duties, and duties of loyalty, fidelity and confidentiality, and the misappropriation of DIRTT’s confidential information (the “Canadian Non-Compete Case”); (ii) an action in the U.S. District Court for the Northern District of Utah instituted on December 11, 2019 against Falkbuilt, Smed, and other individual and corporate defendants alleging misappropriation of DIRTT’s confidential information, trade secrets, business intelligence and customer information (the “Utah Misappropriation Case”); and (iii) an action in the U.S. District Court for the Northern District of Texas instituted on June 24, 2021 alleging that Falkbuilt has unlawfully used DIRTT’s confidential information in the United States and intentionally caused confusion in the United States in an attempt to steal customers, opportunities, and business intelligence, with the aim of establishing a competing business in the United States market (the “Texas Unfair Competition Case”). DIRTT intends to pursue the cases vigorously.

We recently requested the Court of King’s Bench of Alberta to schedule the summary judgment application for our Canadian litigation. The court has proposed three potential dates in September 2025 and we expect to have the date finalized in the next several weeks. In the Canadian Non-Compete Case, on February 14, 2023, the Court of King’s Bench of Alberta granted DIRTT’s application to schedule the hearing of its summary judgment application and dismissed Falkbuilt’s cross-application to strike the summary judgment application. DIRTT’s. The is aggressively pursuing its summary judgment application has been scheduled for September 22-26, 2025.

In the Utah Misappropriation Case, on April 11, 2023, the United States Court of Appeals for the Tenth Circuit reversed the U.S. District Court for the Northern District of Utah’s decision that Utah was an inconvenient forum for DIRTT’s claims against Falkbuilt and others for the misappropriation of confidential information, trade secrets, business intelligence and customer information. The Utah Court had previously, and erroneously, found that DIRTT’s United States-based claims should be litigated in Canada. The Court of Appeals remanded the matter back to the Utah District Court. Falkbuilt filed motions to stay the Tenth Circuit decision pending its petition for a Writ of Certiorari to the Supreme Court of the United States. The Court of Appeals promptly denied the motion to stay. A similar motion subsequently filed with the Supreme Court of the United States on the same basis was also promptly denied. Fallkbuilt also petitioned the Supreme Court to accept review, even after losing the stay motion, that petition was also denied in early October.

The Texas Unfair Competition Case was dismissed, without prejudice, in reliance upon the now-reversed decision in the Utah Misappropriation Case, described above. DIRTT appealed that decision, and the United States Court of Appeals for the Fifth Circuit stayed the appeal pending the Tenth Circuit ruling at Falkbuilt's request. After prevailing in the Tenth Circuit, DIRTT asked Falkbuilt if it would, consistent with its prior representations, agree to remand the appeal to the Texas Court for disposition to Utah. Falkbuilt refused and DIRTT filed a Motion to Remand. The Court denied the Motion for Remand without prejudice and asked for full briefing. Prior to the argument, DIRTT sought leave to amend the Utah claims to include the Texas claims and notified the Fifth Circuit Court of Appeals of the proposed amendment in Utah. Falkbuilt did not object to the amendment, but answered the Complaint and reserved the right to dismiss the Amended Complaint on grounds of inconvenient forum or international comity. The Amended Complaint not only presents the Texas claims in Utah but also updates DIRTT’s allegations as to events and damages incurred during the time the parties were participating in the appellate process. Argument proceeded on December 7, 2023 in New Orleans. The Tenth Circuit ultimately denied Falkbuilt’s appeal to have the Texas claims joined in Canada and those claims are in Utah. Notwithstanding all the prior litigation, Falkbuilt has again moved to stay the Utah case and move it, including the Texas claims, to Canada. DIRTT has vigorously opposed these motions and commenced discovery. Falkbuilt’s response to pending discovery are due shortly. Briefing on Falkbuilt’s motion to stay the case and renewed motion to move it to Canada will be fully briefed shortly. DIRTT is proceeding as though the Motions will be denied.

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On April 25, 2024, DIRTT filed a Statement of Claim at the Court of the King’s Bench of Alberta against McMillan LLP, one of their partners and several former Directors of DIRTT for negligence and breach of fiduciary duties. The Claim explains that as a result DIRTT has suffered loss and damages and seeks compensation for damages of approximately C$30 million.

Item 1A. Risk Factors

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors and other cautionary statements described under the heading “Risk Factors” included in our Annual Report on Form 10-K, which could materially affect our businesses, financial condition, or results of operations. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and results of operations.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

Not Applicable.

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Item 6. Exhibits

EXHIBIT INDEX

 

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).
4.4		Shareholder Rights Plan Agreement, dated as of March 22, 2024, by and between DIRTT Environmental Solutions Ltd. and Computershare Trust Company of Canada, as rights agent (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, File No. 001-39061, filed March 25, 2024).
10.1*†		Indemnity Agreement, dated March 4, 2024, between DIRTT Environmental Solutions Ltd and Shalima Pannikode.
10.2		Third Amendment to Loan Agreement, dated February 9, 2024, by and among DIRTT Environmental Solutions Ltd., DIRTT Environmental Solutions, Inc. and Royal Bank of Canada (incorporated by reference to Exhibit 10.39 to the Registrant's Form 10-K, File No. 001-39061, filed on February 21, 2024).
10.3		Term Sheet, dated as of March 17, 2024, by and between DIRTT Environmental Solutions Ltd. and 22NW Fund, LP (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, File No. 001-39061, filed March 25, 2024).
10.4		Support and Standstill Agreement, dated as of March 22, 2024, by and between DIRTT Environmental Solutions Ltd. and 22NW Fund, LP (incorporated by reference to Exhibit 10.2 to the Registrant's Form 8-K, File No. 001-39061, filed on March 25, 2024).
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

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

	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 8, 2024

 

 

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Exhibit 10.1

 

INDEMNITY AGREEMENT

 

THIS INDEMNITY AGREEMENT is made as of this 4th day of March, 2024

BETWEEN:

 

DIRTT ENVIRONMENTAL SOLUTIONS LTD., a corporation

governed by the laws of the Province of Alberta (the “Corporation”)

 

-and-

 

Shalima Pannikode, an individual residing in Mclean, Virginia (the “Indemnified Party”)

 

RECITALS:

 

 

 

 

NOW THEREFORE, IN CONSIDERATION OF the promises and mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and the Indemnified Party acting as a director or officer of the Corporation or, at the Corporation’s request, as a director, officer or similar capacity of an Entity, the Corporation and the Indemnified Party do hereby covenant and agree as follows:

 

ARTICLE 1

 

DEFINITIONS AND PRINCIPLES OF INTERPRETATION

 

 

Whenever used in this Agreement, the following words and terms shall have the meanings set out below:

 

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incidental and consequential damages), fees (including any legal, professional or advisory fees, retainers, charges or disbursements and including costs of services of any experts), claims, awards, statutory obligations, amounts paid to settle or dispose of any Claim or satisfy any judgment, fines, penalties or liabilities (including all interest, assessments and other charges paid or payable in connection with or in respect of such losses, damages, fees, claims, awards, statutory obligations, amounts paid to settle or dispose of any Claim or satisfy any judgment, fines, penalties or liabilities), without limitation, and whether incurred alone or jointly with others, including any amounts which the Indemnified Party may reasonably suffer, sustain, incur or be required to pay in respect of the investigation, defence, settlement or appeal of or preparation for any Claim or with any action to establish a right to indemnification under this Agreement, and for greater certainty, includes all Taxes, interest, penalties and related outlays of the Indemnified Party arising from any indemnification of the Indemnified Party by the Corporation pursuant to this Agreement;

 

means any one of them;

 

 

 

 

In this Agreement:

 

 

 

 

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as to such jurisdiction, be ineffective only to the extent of such restriction, prohibition or unenforceability without invalidating the remaining provisions of this Agreement and without affecting the validity or enforceability of such provision in any other jurisdiction or without affecting its application to other Parties or circumstances.

 

 

ARTICLE 2 OBLIGATIONS

 

 

 

 

 

 

The Indemnified Party shall be presumed to have fulfilled the foregoing conditions unless it is determined by the Court that the Indemnified Party has not (and the burden of proof shall be on the Corporation to rebut such presumption).

 

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Indemnified Party harmless, and advance moneys under Section 2.1(k) to the Indemnified Party, in respect of a Claim by or on behalf of the Corporation or other entity to procure a judgment in the Corporation’s favour to which the Indemnified Party is made a party by reason of being or having been a director or officer of the Corporation or director, officer or in similar capacity of an Entity at the Corporation’s request. The Corporation will advance or reimburse, as applicable, all Losses incurred by the Indemnified Party in connection with the Indemnified Party’s participation in such Claim as provided in this Section 2.1(c). The Corporation shall pay to the Indemnified Party, if applicable, a reasonable per diem amount for time spent in connection with a Claim under this Section 2.1(c) as provided in Section 2.1(l).

 

 

 

 

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whether federal, provincial, state, regional or municipal, or which in any way involve the business or affairs of the Corporation or an Entity for which the Indemnified Party acted as a director, officer or similar capacity at the Corporation’s request, provided that the indemnity provided for in this Section 2.1(g) will be available unless it is determined by the Court that the Indemnified Party has not fulfilled the conditions in Section 2.1(b) above.

 

 

 

 

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of a court of competent jurisdiction or final arbitration award of an applicable arbitration proceeding that has become non-appealable that the Indemnified Party did not fulfill the conditions in Section 2.1(b) or that the Indemnified Party was not entitled to be fully so indemnified, such advance, or the appropriate portion thereof, upon written notice of such determination being given by the Corporation to the Indemnified Party detailing the basis for such determination, shall be repayable on demand without interest. The Indemnified Party shall not be required to provide collateral or otherwise secure the Indemnified Party’s agreement to repay described in the prior sentence. If and to the extent the Indemnified Party makes any such repayment to the Corporation, the obligation of the Corporation to indemnify the Indemnified Party will continue in accordance with the terms of this Agreement.

 

 

 

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representatives) any information that it has turned over to any third parties in connection therewith.

 

 

 

 

 

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Promptly after receiving written notice from the Indemnified Party of any Claim or threatened Claim (other than a Claim by or on behalf of the Corporation to procure a judgment in its favour against the Indemnified Party), the Corporation may by notice in writing to the Indemnified Party, and upon the written request of the Indemnified Party the Corporation shall, in a timely manner assume conduct of the defence thereof and retain counsel on behalf of the Indemnified Party who is reasonably satisfactory to the Indemnified Party, to represent the Indemnified Party in respect of the Claim. On delivery of such notice by the Corporation, other than pursuant to Section 2.4, the Corporation shall not be liable to the Indemnified Party under this Agreement for any fees and disbursements of counsel the Indemnified Party may subsequently incur with respect to the same matter. If the Corporation assumes conduct of the defence on behalf of the Indemnified Party, the Indemnified Party hereby consents to the conduct thereof and of any action taken by the Corporation, in good faith, in connection therewith, and the Indemnified Party shall fully cooperate in such defence including the provision of documents, attending examinations for discovery, making affidavits, meeting with counsel, testifying and divulging to the Corporation all information reasonably required to defend or prosecute the Claim.

 

 

In connection with any Claim or other matter for which the Indemnified Party may be entitled to indemnity under this Agreement, the Indemnified Party shall have the right to employ separate counsel and consultants of the Indemnified Party’s choosing and to participate in and approve any settlement by the Corporation of any Claim involving or affecting in any manner whatsoever the Indemnified Party, and provided that:

(a) the employment of such counsel and consultants of the Indemnified Party’s choosing have been previously approved by the Corporation, acting reasonably; or (b) the Indemnified Party has reasonably concluded that there may be a conflict of interest between the Corporation and the Indemnified Party in defending such Claim; then all fees, expenses and disbursements of such counsel and consultants shall be at the Corporation’s expense and shall be paid within ten (10) days of invoices being submitted to the Corporation.

 

 

 

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shall be entitled to such indemnification, absent a prohibition of such indemnification under applicable law.

 

 

 

 

 

 

For greater certainty, no admission of liability and no settlement of any Claim in a manner adverse to the Indemnified Party shall be made without the consent of the Indemnified Party, acting reasonably. No admission of liability shall be made by the Indemnified Party without the consent of the Corporation and the Corporation shall not be liable for any settlement of any Claim made without its consent, acting reasonably.

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The indemnification and advance payment provided in this Agreement shall not derogate from or exclude any other rights to which the Indemnified Party may be entitled under any provision of the Act or otherwise at law, the articles or by-laws of the Corporation, any applicable policy of insurance, guarantee or third-party indemnity, any vote of shareholders of the Corporation, or otherwise, both as to matters arising out of the Indemnified Party’s capacity as a director or officer of the Corporation or as to matters arising out of any other capacity in which the Indemnified Party may act for or on behalf of the Corporation.

 

 

Any other provision herein to the contrary notwithstanding, the Corporation shall not be obligated pursuant to the terms of this Agreement:

 

 

 

 

 

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The Corporation agrees that the articles and by-laws of the Corporation in effect on the date hereof shall not be amended to reduce, limit, hinder or delay: (a) the rights of the Indemnified Party granted hereunder; or (b) the ability of the Corporation to indemnify the Indemnified Party as required hereunder. The Corporation further agrees that it shall exercise the powers granted to it under the articles and by- laws of the Corporation and applicable law to indemnify the Indemnified Party to the fullest extent possible as required by this Agreement.

 

ARTICLE 3 INSURANCE

 

 

The Corporation shall purchase and maintain, or cause to be purchased and maintained, while the Indemnified Party remains a director or officer of the Corporation or director, officer or a similar capacity of an Entity at the Corporation’s request, and in accordance with Section 3.6, for a period of six (6) years after the Indemnified Party ceases to be a director or officer of the Corporation, a Policy including Side “A” difference in conditions coverage, for the benefit of the Indemnified Party containing such customary terms and conditions and in such amounts as are available to the Corporation on reasonable commercial terms, having regard to the nature and size of the business and operations of the Corporation and its subsidiaries from time to time. In all such Policies, the Indemnified Party, by reference to the Indemnified Party’s position or otherwise, shall be named as an insured. The Corporation shall thereafter take all necessary or desirable action to cause its insurer to pay, on behalf of the Indemnified Party, all amounts payable as a result of such Claims in accordance with the terms of such policies.

 

 

So long as the Indemnified Party is a director or officer of the Corporation or director, officer or similar capacity of an Entity at the Corporation’s request, and, in accordance with Section 3.6, for a period of six

(6) years thereafter, the Corporation shall not seek to amend or discontinue the Policy or allow the Policy to lapse.

 

 

If the Policy is discontinued for any reason, the Corporation shall purchase, maintain and administer, or cause to be purchased, maintained and administered for a period of six (6) years after such discontinuance, insurance for the benefit of the Indemnified Party (the “Run-Off Coverage”), on such terms as the Corporation then maintains in existence for its directors and officers, to the extent permitted by law and provided such Run-Off Coverage is available on commercially acceptable terms and premiums (as determined by the Corporation’s board of directors acting reasonably). The Run-Off Coverage shall provide coverage only in respect of events occurring prior to the discontinuance of the Policy.

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If an insurable event occurs, the Corporation shall indemnify the Indemnified Party as agreed hereto regardless of whether the Corporation receives the insurance proceeds. The Indemnified Party is entitled to full indemnification as agreed hereto notwithstanding any deductible amounts or policy limits contained in any such insurance policy.

 

 

Notwithstanding any other provision in this Agreement to the contrary, the Corporation shall not be obligated to indemnify the Indemnified Party under this Agreement for any Losses which have been paid to, by or on behalf of, the Indemnified Party under the Policy or any other applicable policy of insurance maintained by the Corporation.

 

 

Following the Indemnified Party ceasing to be a director or officer of the Corporation or director, officer or similar capacity of an Entity at the Corporation’s request, for any reason whatsoever, the Corporation shall continue to purchase and maintain directors’ and officers’ liability insurance, for the benefit of the Indemnified Party for a minimum of six (6) years, such that the Indemnified Party’s insurance coverage is, during that time, the same as any insurance coverage the Corporation purchases and maintains for the benefit of its then current directors and officers, from time to time. Notwithstanding the foregoing, if: (a) liability insurance coverage for former directors and officers is no longer available; or (b) it is no longer industry practice among responsible companies to procure liability insurance for former directors and officers and the cost to the Corporation to do so would be commercially unreasonable (as determined by the board of directors acting reasonably), the Corporation shall be relieved of its obligation to procure liability insurance coverage for former directors and officers; provided that the Corporation procures such level of insurance coverage, if any, as is available for former directors and officers at a commercially reasonable rate and adopts comparable measures to protect its former directors and officers in the circumstances as are adopted by other responsible companies. The onus is on the Corporation to establish that the circumstances described in the previous sentence exist.

 

 

If for any reason whatsoever, any directors’ and officers’ liability insurer asserts that the Indemnified Party is subject to a deductible under any existing or future Policy purchased and maintained by the Corporation for the benefit of the Indemnified Party, the Corporation shall pay the deductible for and on behalf of the Indemnified Party.

 

 

The Corporation agrees to provide notice of any material changes in the insurance coverage referred to in Article 3 during the period in which the Indemnified Party serves as director or officer of the Corporation or a director, officer or similar capacity of an Entity at the Corporation’s request and for a period of six (6) years thereafter.

 

 

The Corporation agrees that if the Corporation enters into any indemnity agreement or similar arrangement with any person who is, or becomes, a director or officer of the Corporation or a director, officer or

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similar capacity of an Entity at the Corporation’s request, and such agreement or arrangement contains any provision which is more favourable to the other party to such agreement than the provisions of this Agreement are to the Indemnified Party then, and in each such case, the Corporation shall provide written notice of such provision to the Indemnified Party (which shall include a copy of such provision). Upon such notice, unless the Indemnified Party elects otherwise within five (5) days of receipt of such notice, this Agreement shall be deemed to be amended to conform the provisions of this Agreement to such more favourable provision.

 

ARTICLE 4 MISCELLANEOUS

 

 

The Corporation and the Indemnified Party shall, from time to time, provide such information and cooperate with the other, as the other may reasonably request, in respect of all matters under this Agreement.

 

 

This Agreement shall be deemed to have effect as and from the first date that the Indemnified Party became a director or officer of the Corporation or a director, officer or similar capacity of an Entity at the Corporation’s request.

 

 

The liability of the Corporation under this Agreement shall not be affected, discharged, impaired, mitigated or released by reason of the discharge or release of the Indemnified Party in any bankruptcy, insolvency, receivership or other similar proceeding of creditors.

 

 

No action or proceeding brought or instituted under this Agreement and no recovery pursuant thereto shall be a bar or defence to any further action or proceeding which may be brought under this Agreement.

 

 

 

 

 

To the extent permitted by applicable law, no legal action shall be brought and no course of action shall be asserted by or on behalf of the Corporation against the Indemnified Party after the expiration of two years from the date of the Indemnified Party’s ceasing to act as a director or officer of the Corporation or a director, officer or similar capacity of an Entity at the Corporation’s request and the Corporation agrees that any claim or cause of action of the Corporation shall be extinguished and the Indemnified Party be

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deemed released therefrom absolutely unless asserted by the commencement of legal action in a court of

competent jurisdiction within such two yearperiod.

 

ARTICLE 5 CONTRIBUTION

 

 

 

 

 

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settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Claim in order to reflect (i) the relative benefits received by the Corporation and the Indemnified Party as a result of the event(s) and/or transaction(s) giving cause to such Claim; and/or (ii) the relative fault of the Corporation (and its directors, officers, employees and agents) and the Indemnified Party in connection with such event(s) and/or transaction(s).

 

5.2 Relative Fault

 

The relative fault of the Indemnified Party, on the one hand, and of the Corporation and any and all other parties (including officers and directors of the Corporation other than the Indemnified Party) who may be at fault with respect to such matter shall be determined (i) by reference to the relative fault of the Indemnified Party as determined by the court or other governmental agency assessing the contribution amounts or (ii) to the extent such court or other governmental agency does not apportion relative fault, by independent counsel agreed to by both the Corporation and the Indemnified Party after giving effect to, among other things, the degree of which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary, the degree to which their conduct is active or passive, the degree of the knowledge, access to information, and opportunity to prevent or correct the subject matter of the Claim and other relevant equitable considerations of each party. The Corporation and the Indemnified Party agree that it would not be just and equitable if contribution pursuant to this Section 5.2 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 5.2.

 

ARTICLE 6 GENERAL

 

 

This Agreement shall continue after the Indemnified Party ceases to serve as a director or officer of the Corporation or a director, officer or similar capacity of an Entity at the Corporation’s request and shall survive indefinitely.

 

 

The Indemnified Party shall be deemed to have acted or be acting at the specific request of the Corporation upon the Indemnified Party’s being appointed or elected as a director or officer of the Corporation or a director, officer or similar capacity of an Entity at the Corporation’s request.

 

 

Neither Party may assign this Agreement or any rights or obligations under this Agreement without the prior written consent of the other Party. This Agreement shall enure to the benefit of and be binding upon the Parties and the heirs, executors and administrators and other legal representatives of the Indemnified Party and the successors and permitted assigns of the Corporation (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Corporation).

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No supplement, modification, amendment or waiver or termination of this Agreement and, unless otherwise specified, no consent or approval by any Party, shall be binding unless executed in writing by the Party to be bound thereby. For greater certainty, the rights of the Indemnified Party under this Agreement shall not be prejudiced or impaired by permitting or consenting to any assignment in bankruptcy, receivership, insolvency or any other creditor’s proceedings of or against the Corporation or by the winding-up or dissolution of the Corporation.

 

 

Any notice, consent or approval required or permitted to be given in connection with this Agreement (in this Section referred to as a “Notice”) shall be in writing and shall be sufficiently given if delivered (whether in person, by courier service or other personal method of delivery), or if transmitted by facsimile or e-mail:

 

 

Facsimile:

e-mail:

 

Attn: CFO / CEO

7303 30th Street S.E. Calgary, Alberta T2C 1N6 Facsimile:

e-mail:

 

Any Notice delivered or transmitted to a Party as provided above shall be deemed to have been given and received on the day it is delivered or transmitted, provided that it is delivered or transmitted on a business day prior to 5:00 p.m. local time in the place of delivery or receipt. However, if the Notice is delivered or transmitted after 5:00 p.m. local time or if such day is not a business day then the Notice shall be deemed to have been given and received on the next business day.

 

Any Party may, from time to time, change its address for Notice set out in this Section 6.5 by giving Notice to the other Party in accordance with the provisions of this Section.

 

 

The Corporation and the Indemnified Party shall, with reasonable diligence, do all such further acts, deeds or things and execute and deliver all such further documents as may be necessary or advisable for the purpose of assuring and conferring on the Indemnified Party the rights hereby created or intended, and of giving effect to and carrying out the intention or facilitating the performance of the terms of this Agreement or to evidence any advance made pursuant to Section 2.1(k).

---

 

The Indemnified Party acknowledges that the Indemnified Party has been advised to obtain independent legal advice with respect to entering into this Agreement, that it has obtained such independent legal advice or has expressly determined not to seek such advice, and that the Indemnified Party is entering into this Agreement with full knowledge of the contents hereof, of the Indemnified Party’s own free will and with full capacity and authority to do so.

 

 

This Agreement may be executed by the Parties in counterparts and may be executed and delivered by facsimile or other form of electronic transmission, and all such counterparts and facsimiles or forms of electronic transmission together shall be deemed to be an original and shall constitute one and the same agreement.

[Signature Page Follows]

---

IN WITNESS OF WHICH the Parties have duly executed this Agreement.

 

 

 

DIRTT ENVIRONMENTAL SOLUTIONS LTD.

Per:  /s/ Fareeha Khan

Name: Fareeha Khan

Title: Chief Financial Officer

 

 

 

 

 

SIGNED, SEALED AND DELIVERED In the presence of:     /s/ Douglas Edwards /s/ Shalima Pannikode
Witness – Douglas Edwards	Shalima Pannikode

 

---

Exhibit 31.1

CERTIFICATION

PURSUANT TO EXCHANGE ACT RULE 13A-14(a) OR RULE 15D-14(a)

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Benjamin Urban, certify that:

 

Dated: May 8, 2024	By:		/s/ Benjamin Urban
			Benjamin Urban
			Chief Executive Officer
			(Principal Executive Officer)

 

---

Exhibit 31.2

CERTIFICATION

PURSUANT TO EXCHANGE ACT RULE 13A-14(a) OR RULE 15D-14(a)

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Fareeha Khan, certify that:

 

Dated: May 8, 2024	By:		/s/ Fareeha Khan
			Fareeha Khan
			Chief Financial Officer
			(Principal Financial Officer)

 

---

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. § 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of DIRTT Environmental Solutions Ltd. (the “Company”) for the quarter ended March 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Benjamin Urban, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

Dated: May 8, 2024	By:		/s/ Benjamin Urban
			Benjamin Urban
			Chief Executive Officer
			(Principal Executive Officer)

 

---

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. § 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of DIRTT Environmental Solutions Ltd. (the “Company”) for the quarter ended March 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Fareeha Khan, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

Dated: May 8, 2024	By:		/s/ Fareeha Khan
			Fareeha Khan
			Chief Financial Officer
			(Principal Financial Officer)

 

---

v3.24.1.u1

Cover Page - shares	3 Months Ended
	Mar. 31, 2024	Apr. 30, 2024
Document Cover Page [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Mar. 31, 2024
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2024
Entity Registrant Name	DIRTT ENVIRONMENTAL SOLUTIONS LTD
Entity Central Index Key	0001340476
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Shell Company	false
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
Entity File Number	001-39061
Entity Tax Identification Number	00-0000000
Entity Address, Address Line One	7303 30th Street S.E.
Entity Address, City or Town	Calgary
Entity Address, State or Province	AB
Entity Interactive Data Current	Yes
Entity Address, Postal Zip Code	T2C 1N6
City Area Code	403
Local Phone Number	723-5000
Entity Incorporation, State or Country Code	Z4
Entity Common Stock, Shares Outstanding		191,880,226

v3.24.1.u1

Interim Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Current Assets
Cash and cash equivalents	$ 38,989	$ 24,744
Restricted cash	241	355
Trade and accrued receivables, net of expected credit losses of $0.1 million at March 31, 2024 and at December 31, 2023	15,782	15,787
Other receivables	476	484
Inventory	15,669	16,577
Prepaids and other current assets	2,426	4,023
Assets held for sale	0	1,555
Total Current Assets	73,583	63,525
Property, plant and equipment, net	23,801	25,077
Capitalized software, net	2,700	2,450
Operating lease right-of-use assets, net	28,442	29,813
Other assets	3,442	3,452
Total Assets	131,968	124,317
Current Liabilities
Accounts payable and accrued liabilities	15,360	19,880
Other liabilities	2,906	2,482
Customer deposits and deferred revenue	3,080	5,290
Current portion of long-term debt and accrued interest	675	841
Current portion of lease liabilities	5,449	5,255
Total Current Liabilities	27,470	33,748
Long-term debt	46,125	55,267
Long-term lease liabilities	26,957	28,201
Total Liabilities	100,552	117,216
SHAREHOLDERS’ EQUITY
Common shares, unlimited authorized without par value, 191,880,226 issued and outstanding at March 31, 2024 and 105,377,667 issued and outstanding at December 31, 2023	218,294	196,128
Additional paid-in capital	7,355	7,954
Accumulated other comprehensive loss	(16,422)	(16,125)
Accumulated deficit	(177,811)	(180,856)
Total Shareholders’ Equity	31,416	7,101
Total Liabilities and Shareholders’ Equity	$ 131,968	$ 124,317

v3.24.1.u1

Interim Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Trade and other receivables, expected credit losses	$ 100	$ 101
Common shares, authorized	Unlimited	Unlimited
Common shares, no par value	$ 0	$ 0
Common shares, shares issued	191,880,226	105,377,667
Common shares, shares outstanding	191,880,226	105,377,667

v3.24.1.u1

Interim Condensed Consolidated Statement of Operations shares in Thousands, $ in Thousands, $ in Millions	3 Months Ended
	Mar. 31, 2024 USD ($) $ / shares shares		Mar. 31, 2023 USD ($) $ / shares shares
Total revenue	$ 40,847		$ 36,708
Total cost of sales	26,199		28,026
Gross profit	14,648		8,682
Expenses
Sales and marketing	5,920		5,515
General and administrative	4,566		5,833
Operations support	1,775		1,990
Technology and development	1,251		1,539
Stock-based compensation	675		796
Reorganization	138		1,071
Impairment charge on Rock Hill Facility	530		0
Related party expenses	0		2,056
Total operating expenses	14,855	[1]	18,800	[1]
Operating loss	(207)		(10,118)
Government subsidies	0		148
Gain on extinguishment of convertible debt	2,931		0
Foreign exchange gain (loss)	919		(261)
Interest income	489		4
Interest expense	(1,054)		(1,207)
Nonoperating Income (Expense)	3,285		(1,316)
Net income (loss) before tax	3,078		(11,434)
Income taxes
Current and deferred income tax expense	33		0
Income tax expense	33		0
Net income (loss) after tax	$ 3,045		$ (11,434)
Net loss per share
Net loss per share - basic | $ / shares	$ 0.02		$ (0.1)
Net loss per share - diluted | $ / shares	$ 0.01		$ (0.1)
Weighted average number of shares outstanding (in thousands)
Basic | shares	183,668		111,702
Diluted | shares	288,479		111,702
Product [Member]
Total revenue	$ 39,039		$ 35,476
Total cost of sales	24,992		27,423
Service [Member]
Total revenue	1,808		1,232
Total cost of sales	$ 1,207		$ 603
[1] Includes Sales and marketing, General and administrative, Operations support, Technology and development, Stock based compensation, Reorganization costs, Related party expenses, and Impairment charges

v3.24.1.u1

Interim Condensed Consolidated Statement of Operations (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Income Statement [Abstract]
Related parties revenue	$ 0	$ 300
Related party expenses	0	2,056
Interest expense related parties	$ 400	$ 0

v3.24.1.u1

Interim Condensed Consolidated Statement of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]
Net income (loss) for the period	$ 3,045	$ (11,434)
Exchange differences on translation of foreign operations	(297)	273
Comprehensive income (loss) for the period	$ 2,748	$ (11,161)

v3.24.1.u1

Interim Condensed Consolidated Statements of Changes in Shareholders' Equity - USD ($) $ in Thousands	Total	Common Shares	Additional paid-in capital	Accumulated other comprehensive loss	Accumulated deficit
Beginning Balance at Dec. 31, 2022	$ 17,992	$ 191,347	$ 9,023	$ (16,106)	$ (166,272)
Beginning Balance (in shares) at Dec. 31, 2022		97,882,844
Stock-based compensation	452		452
Issued on vesting of RSUs and Share Awards		$ 1,256	(1,256)
Issued on vesting of RSUs and Share Awards (in shares)		659,473
RSUs and Share Awards withheld to settle employee tax obligations	(26)		$ (26)
Issued for employee share purchase plan	128	$ 128
Issued for employee share purchase plan (In Shares)		322,408
Foreign currency translation adjustment	273			$ 273
Net income (loss) for the period	$ (11,434)				$ (11,434)
Ending Balance at Mar. 31, 2023		$ 192,731
Ending Balance (in shares) at Mar. 31, 2023	7,385	98,864,725	8,193	(15,833)	(177,706)
Beginning Balance at Dec. 31, 2023	$ 7,101	$ 196,128	$ 7,954	$ (16,125)	$ (180,856)
Beginning Balance (in shares) at Dec. 31, 2023		105,377,667
Stock-based compensation	248		248
Issued on vesting of RSUs and Share Awards		$ 771	(771)
Issued on vesting of RSUs and Share Awards (in shares)		521,253
Issued on Rights Offering	21,273	$ 21,273
Issued on Rights Offering (in shares)		85,714,285
RSUs and Share Awards withheld to settle employee tax obligations	(76)		(76)
Issued for employee share purchase plan	122	$ 122
Issued for employee share purchase plan (In Shares)		267,021
Foreign currency translation adjustment	(297)			(297)
Net income (loss) for the period	3,045				3,045
Ending Balance at Mar. 31, 2024	$ 31,416	$ 218,294	$ 7,355	$ (16,422)	$ (177,811)
Ending Balance (in shares) at Mar. 31, 2024		191,880,226

v3.24.1.u1

Interim Condensed Consolidated Statement of Cash Flows $ in Thousands, $ in Millions	3 Months Ended
	Mar. 31, 2024 USD ($)	Mar. 31, 2023 USD ($)
Cash flows from operating activities:
Net income (loss) for the period	$ 3,045	$ (11,434)
Adjustments:
Depreciation and amortization	1,534	2,675
Impairment charge on Rock Hill Facility	530	0
Stock-based compensation	675	796
Foreign exchange loss (gain)	(978)	346
Gain on extinguishment of convertible debt	(2,931)	0
Accretion of convertible debentures	180	164
Changes in operating assets and liabilities:
Trade and other receivables	(34)	2,111
Other receivables	(3)	4,732
Inventory	597	1,299
Prepaid and other assets, current and long term	1,437	391
Accounts payable and accrued liabilities	(4,072)	(3,299)
Other liabilities	0	2,056
Customer deposits and deferred revenue	(2,202)	(1,020)
Current portion of long-term debt and accrued interest	(152)	(56)
Lease liabilities	331	251
Net cash flows used in operating activities	(2,043)	(988)
Cash flows from investing activities:
Purchase of property, plant and equipment, net of accounts payable changes	(344)	(371)
Capitalized software development expenditures	(442)	(532)
Other asset expenditures	(79)	(106)
Recovery of software development expenditures	121	26
Proceeds on sale of assets held for sale	1,025	0
Net cash flows provided by (used in) investing activities	281	(983)
Cash flows from financing activities:
Repayment of long-term debt	(5,074)	(642)
Net proceeds received from rights offering	21,273	0
Employee tax payments on vesting of RSUs	(76)	(26)
Net cash flows provided by (used in) financing activities	16,123	(668)
Effect of foreign exchange on cash, cash equivalents and restricted cash	(230)	(36)
Net increase (decrease) in cash, cash equivalents and restricted cash	14,131	(2,675)
Cash, cash equivalents and restricted cash, beginning of year	25,099	14,239
Cash, cash equivalents and restricted cash, end of period	39,230	11,564
Supplemental disclosure of cash flow information:
Interest paid	(1,005)	(1,072)
Income taxes received	$ 0	$ 5

v3.24.1.u1

Interim Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2024	Mar. 31, 2023
Statement of Cash Flows [Abstract]
Cash and cash equivalents	$ 38,989	$ 8,146
Restricted cash	241	3,418
Total cash, cash equivalents and restricted cash	$ 39,230	$ 11,564

v3.24.1.u1

GENERAL INFORMATION	3 Months Ended
	Mar. 31, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]
GENERAL INFORMATION	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”. Effective October 12, 2023, DIRTT’s common shares ceased to trade on the Nasdaq Capital Market. DIRTT’s common shares are quoted on the OTC Markets on the “OTC Pink Tier” under the symbol “DRTTF.”

v3.24.1.u1

BASIS OF PRESENTATION	3 Months Ended
	Mar. 31, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]
BASIS OF PRESENTATION	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, 2024, and its results of operations and cash flows for the three months ended March 31, 2024 and 2023. The condensed balance sheet at December 31, 2023, 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, 2023 and 2022 and for each of the three years in the period ended December 31, 2023 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.

v3.24.1.u1

ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS	3 Months Ended
	Mar. 31, 2024
Accounting Standards Update and Change in Accounting Principle [Abstract]
ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS	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. 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.

v3.24.1.u1

EARNINGS PER SHARE	3 Months Ended
	Mar. 31, 2024
Earnings Per Share [Abstract]
Earnings Per Share [Text Block]	10. EARNINGS PER SHARE On November 21, 2023, the Company announced a Rights Offering (refer to Note 14) which distributed to holders of common shares, as of the close of business on December 12, 2023, transferable subscription rights to purchase up to an aggregate of 85,714,285 common shares at a subscription price of C$0.35 per common share (refer to Note 14). On January 9, 2024, the Company announced the completion of the Rights Offering, pursuant to which the Company issued an aggregate of 85,714,285 common shares. A retrospective adjustment is required on the calculation of net income (loss) per share for the three months ended March 31, 2023 to account for the bonus factor that resulted from this event.     For the Three Months Ended March 31,       2024     2023   Net income (loss) per share – basic             Net income (loss) (thousands of U.S. dollars)   $ 3,045     $ (11,434 ) Weighted average number of shares outstanding (thousands of shares as previously calculated)   NA       98,091   Weighted average number of shares outstanding (thousands of shares restated)     183,668       111,702   Net income (loss) per share (U.S. dollars) − basic (as previously calculated, prior to Rights Offering)   NA     $ (0.12 ) Net income (loss) per share (U.S. dollars) − basic (as on the Consolidated Statement of Comprehensive Income)   $ 0.02     $ (0.10 )               Net income (loss) per share − diluted             Net income (loss) (thousands of U.S. dollars)   $ 3,045     $ (11,434 ) Interest on convertible debentures   $ 843     NA     $ 3,888     $ (11,434 ) Weighted average number of shares outstanding (thousands of shares as previously calculated)   NA       98,091   Weighted average number of shares outstanding (thousands of shares restated)     183,668       111,702   Dilutive debentures on convertible debt (thousands of shares) (1)     96,690       -   Dilutive RSUs and PRSUs (thousands of shares) (2)     3,775       -   Dilutive options (thousands of shares) (2)     208       -   Dilutive New DSUs (thousands of shares) (3)     2,292       -   Dilutive PSUs (thousands of shares) (3)     1,846       -   Weighted average number of shares outstanding (thousands of shares as previously calculated)   NA       98,091   Weighted average number of shares outstanding (thousands of shares restated)     288,479       111,702   Net income (loss) per share (U.S. dollars) − diluted (as previously calculated, prior to Rights Offering)   NA     $ (0.12 ) Net income (loss) per share (U.S .dollars) − diluted (as on the Consolidated Statement of Comprehensive Income)   $ 0.01     $ (0.10 )   (1) For the three months ended March 31, 2023, the Net loss per share − diluted excludes the effect of 119.4 million shares that would be issued if the principal amount of the Debentures were settled in our common shares at the quarter end price and are excluded as they would be anti-dilutive. For the three months ended March 31, 2024, the Net income per share − diluted includes the effect of 96.7 million shares related to the Debentures as they would have the potential to dilute basic earnings per share. (2) For the three months ended March 31, 2023, the Net loss per share − diluted excludes the effect of 1.5 million RSUs and PRSUs and 1.1 million options as these would be anti-dilutive. For the three months ended March 31, 2024, the Net income per share − diluted considers the effect of 3.8 million RSUs and PRSUs and 0.2 million options as they would have the potential to dilute basic earnings per share. (3) For the three months ended March 31, 2024, the Net income per share − diluted excludes the effect of 2.3 million New DSUs and 1.8 million PSUs. These would have the potential to dilute basic earnings per share.

v3.24.1.u1

REORGANIZATION AND ASSETS HELD FOR SALE	3 Months Ended
	Mar. 31, 2024
Restructuring and Related Activities [Abstract]
REORGANIZATION	4. REORGANIZATION AND ASSETS HELD FOR SALE   Workforce Reductions During the three months ended March 31, 2023, a review of our costs resulted in the decision to eliminate a number of salaried positions. These actions resulted in the Company incurring certain one-time termination costs. There were no restructuring costs associated with workforce reductions in the three months ended March 31, 2024. Temporary Suspension of Operations and Subsequent Closure at Rock Hill, South Carolina (the “Rock Hill Facility”) On August 23, 2022, we announced the temporary suspension of operations at our Rock Hill Facility, shifting related manufacturing to our Calgary manufacturing facility. Costs associated with this idle facility, included in cost of sales, were $0.5 million for the three month period ended March 31, 2024 (2023 – $0.4 million). On September 27, 2023, the Company decided to permanently close the Rock Hill Facility. Certain assets, including manufacturing equipment, which met held-for-sale criteria at that time were reclassified from property, plant and equipment. During the three months ended March 31, 2024, $1.0 million of the assets held for sale were sold. At March 31, 2024, we determined to reduce the assets held for sale balance from $0.5 million to $nil, resulting in a $0.5 million impairment charge for the quarter. While we will continue to pursue a sale of the assets, we were not able to determine the likelihood of recoverability based on the current market interest in the equipment.     As at March 31,       2024     2023    Assets held for sale, opening     1,555       -    Proceeds from sale of assets held for sale     (1,025 )     -    Impairment charge on reassessment     (530 )     -    Assets held for sale, ending     -       -   For the three months ended March 31, 2024, reorganization costs incurred relate to the above mentioned initiatives:     For the Three Months Ended March 31,       2024     2023    Termination benefits     -       700    Phoenix facility closure     -       43    Rock Hill Facility temporary suspension and closure of operations     126       -    Other costs     12       328    Total reorganization costs     138       1,071      Reorganization costs in accounts payable and accrued liabilities at January 1, 2023     2,277    Reorganization expense     3,009    Reorganization costs paid     (4,690 )  Reorganization costs in accounts payable and accrued liabilities at December 31, 2023     596    Reorganization expense     138    Reorganization costs paid     (438 )  Reorganization costs in accounts payable and accrued liabilities at March 31, 2024     296   Of the $0.3 million reorganization costs in accounts payable and accrued liabilities (December 31, 2023 – $0.6 million), $0.2 million relates to termination benefits (December 31, 2023 – $0.5 million) and $0.1 million relates to other reorganization costs (December 31, 2023 – $0.1 million).

v3.24.1.u1

GAIN ON EXTINGUISHMENT OF CONVERTIBLE DEBENTURES	3 Months Ended
	Mar. 31, 2024
Extinguishment of Debt Disclosures [Abstract]
GAIN ON EXTINGUISHMENT OF CONVERTIBLE DEBENTURES	5. 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 8) 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 8), 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 8) 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)). In accordance with GAAP, it was determined that the C$6.9 million ($5.1 million) repayment on principal triggered an extinguishment of debt. The gain on extinguishment of C$3.9 million ($2.9 million) was calculated as the difference between the repayment and the net carrying value of the extinguished principal less unamortized issuance costs of C$0.4 million ($0.2 million) (refer to Note 8).

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TRADE AND OTHER RECEIVABLES	3 Months Ended
	Mar. 31, 2024
Receivables [Abstract]
TRADE AND OTHER RECEIVABLES	6. 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, 2024, approximately 97% 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, 2024, one Construction Partner accounted for greater than 10% of revenue (one Construction Partner for the three months ended March 31, 2023). In addition, and where possible, we collect a 50% deposit on sales, excluding government and certain other clients. The Company’s aged receivables were as follows:     As at       March 31, 2024     December 31, 2023   Current     13,297       12,070   Overdue     2,585       3,818       15,882       15,888   Less: expected credit losses     (100 )     (101 )     15,782       15,787   No adjustment to our expected credit losses of $0.1 million was required for the three months ended March 31, 2024. 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. On February 4, 2024, the Company entered into a Litigation Funding Agreement with a third party for the funding of up to $4.0 million of litigation costs in respect of specific claims against Falkbuilt, Inc., Falkbuilt Ltd. and Henderson. In return, the Company has agreed to pay from any proceeds received from the settlement of such claims, a reimbursement of funded amounts plus diligence and underwriting costs, plus a multiple of such funded amount based on certain milestones. As part of this agreement, the Company is subject to a general security arrangement over its assets.

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OTHER LIABILITIES	3 Months Ended
	Mar. 31, 2024
Other Liabilities Disclosure [Abstract]
OTHER LIABILITIES	7. OTHER LIABILITIES     As at,       March 31, 2024     December 31, 2023   Warranty provisions (1)     866       873   DSU liability     1,486       1,086   Income taxes payable     321       289   Sublease deposits     183       184   Other provisions     50       50   Other liabilities     2,906       2,482     (1) The following table presents a reconciliation of the warranty provision balance:     As at,       March 31, 2024     December 31, 2023   As at January 1     873       1,278   Additions to warranty provision     205       1,208   Payments related to warranties     (212 )     (1,613 )       866       873

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LONG-TERM DEBT	3 Months Ended
	Mar. 31, 2024
Debt Disclosure [Abstract]
LONG-TERM DEBT	8. LONG-TERM DEBT       Revolving Credit Facility     Leasing Facilities     Convertible Debentures     Total Debt   Balance on January 1, 2023     -       11,812       53,623       65,435   Accretion of issue costs     -       -       698       698   Accrued interest     -       526       3,411       3,937   Interest payments     -       (526 )     (3,451 )     (3,977 ) Principal repayments     -       (11,579 )     -       (11,579 ) Exchange differences     -       251       1,343       1,594   Balance at December 31, 2023     -       484       55,624       56,108   Current portion of long-term debt and accrued interest     -       79       762       841   Long-term debt     -       405       54,862       55,267                             Balance on January 1, 2024     -       484       55,624       56,108   Accretion of issue costs     -       -       180       180   Accrued interest     -       9       843       852   Interest payments     -       (9 )     (996 )     (1,005 ) Principal repayments     -       (19 )     (5,055 )     (5,074 ) Gain on extinguishment     -       -       (2,931 )     (2,931 ) Exchange differences     -       (11 )     (1,319 )     (1,330 ) Balance at March 31, 2024     -       454       46,346       46,800   Current portion of long-term debt and accrued interest     -       78       597       675   Long-term debt     -       376       45,749       46,125     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 Leasing Facilities (defined below). 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 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 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. At March 31, 2024, available borrowings are C$10.1 million ($8.5 million) (December 31, 2023 – C$13.6 million ($10.3 million) of available borrowings), calculated in the same manner as the RBC Facility described above, of which no amounts have been drawn. 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). 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 ($3.4 million) has been drawn and C$3.8 million ($2.9 million) has been repaid, and a $14.0 million equipment leasing facility in the United States (the “U.S. Leasing Facility” and, together with the Canada Leasing Facility, the “Leasing Facilities”) with RBC, of which $13.3 million has been drawn and repaid. The Canada Leasing Facility has a seven-year term and bears interest at 4.25%. Refer to Note 4 on the decision to permanently close the Rock Hill Facility. As part of this decision, the Company fully settled the $7.8 million principal balance of the U.S. Leasing Facility in the fourth quarter of 2023. The U.S. Leasing Facility is no longer available to be drawn on. The Company did not make any draws on the Canadian Leasing Facilities during the first quarter of 2024 (2023 – $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 with a syndicate of underwriters (the “January Debentures”). 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 5). As at March 31, 2024, C$35.6 million ($26.3 million) principal amount of the January Debentures was outstanding of which C$18.9 million ($13.9 million) was held by a related party (refer to Note 16). On December 1, 2021, the Company completed a C$35.0 million ($27.4 million) bought-deal financing of convertible unsecured subordinated debentures with a syndicate of underwriters (the “December Debentures” and, together with the January Debentures, the “Debentures”). These 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 5). As at March 31, 2024, C$29.2 million ($21.5 million) principal amount of the December Debentures was outstanding of which C$13.6 million ($10.0 million) was held by a related party (refer to Note 16).

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STOCK-BASED COMPENSATION	3 Months Ended
	Mar. 31, 2024
Share-Based Payment Arrangement [Abstract]
STOCK-BASED COMPENSATION	9. 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 Company’s Amended and Restated Incentive Stock Option Plan (the “Stock Option Plan”) that, following May 30, 2023, 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. 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 2023 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 2023 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,       2024     2023   Equity-settled awards     493       644   Cash-settled awards     182       152       675       796     The following summarizes RSUs, Share Awards, PSUs, and DSUs activity during the periods:       RSU Time-     RSU Performance-     Share                   Based     Based     Awards     PSU     DSU       Number of     Number of     Number of     Number of     Number of       units     units     units     units     units   Outstanding at December 31, 2022     1,885,337       343,919       -       -       1,165,319   Granted     -       -       36,253       -       434,032   Vested or settled     (590,258 )     (32,962 )     (36,253 )     -       -   Withheld to settle employee tax obligations     (64,230 )     -       -       -       -   Forfeited     (44,081 )     -       -       -       -   Outstanding at March 31, 2023     1,186,768       310,957       -       -       1,599,351   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     (29,214 )     (6,278 )     -       -       -   Outstanding at March 31, 2024     3,196,328       45,177       -       1,845,608       3,582,267       Restricted share units (time-based vesting) Restricted share units 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 (“RSUs”). 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 2024 was C$0.50, which was determined using the closing price of the Company’s common shares on their respective grant dates. 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 (the “PRSUs”). If the Company’s share price increases to certain values for 20 consecutive trading days, as outlined below, a percentage of the PRSUs will vest at the end of the three-year service period. The grant date fair value of the 2022 and 2021 PRSUs were valued using the Monte Carlo valuation method and determined to have a weighted average grant date fair value of C$1.87 and C$3.27, respectively. 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 will vest upon completion of the three-year service period.     % of PRSUs Vesting             33.3 %     66.7 %     100.0 %     150.0 % 2021 and 2022 PRSUs       $ 3.00     $ 4.00     $ 5.00     $ 7.00     Share awards There were no share awards granted or vested during the first quarter of 2024. In the first quarter of 2023, 36,254 Share Awards were issued to a consultant as compensation for services rendered. These Share Awards vested upon grant. The fair value of the Share Awards granted was C$0.49 ($0.34), which was determined using the closing price of the Company’s common shares on the grant date. 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, 2024, 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, 2024. 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, 2024 had a fair value of $0.6 million which is included in other liabilities on the balance sheet (December 31, 2023 – $0.5 million). Granted under the 2023 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 2024 was C$0.67 ($0.49), which was determined using the closing price of the Company’s common shares on the grant date. New DSUs outstanding at March 31, 2024 had a fair value of $0.8 million which is included in other liabilities on the balance sheet (December 31, 2023 – $0.6 million). Options The following summarizes options forfeited and expired during the periods:           Number of     Weighted average           options     exercise price C$   Outstanding at December 31, 2022         1,480,069       7.03   Forfeited or expired         (398,964 )     7.14   Outstanding at March 31, 2023         1,081,105       6.99   Outstanding at December 31, 2023         209,409       7.71   Forfeited         (1,000 )     7.84   Exercisable at March 31, 2024         208,409       7.71     Range of exercise prices outstanding and exercisable at March 31, 2024:       Options outstanding     Options exercisable             Weighted     Weighted           Weighted     Weighted       Number of     average     average           average     average       options     remaining     exercise     Number     remaining     exercise    Range of exercise prices         life     price C$     exercisable     life     price C$   C$6.01 – C$7.00     16,350       0.47     $ 6.12       16,350       0.47     $ 6.12   C$7.01 – C$8.00     192,059       0.13     $ 7.84       192,059       0.13     $ 7.84   Total     208,409                   208,409                 Dilutive Instruments For the three months ended March 31, 2024, 0.2 million options, 3.8 million RSUs and PRSUs, 2.3 million New DSUs, 1.8 million PSUs and 96.7 million shares which would be issued if the principal amount of the Debentures were settled in our common shares at the quarter-end price and were included in the diluted EPS calculation. See Note 10 for the dilutive impact on net income (loss) per share. For the three months ended March 31, 2023, 1.1 million options, 1.5 million RSUs and PRSUs and 119.4 million shares which would have been issued if the principal amount of the Debentures were settled in our common shares at the quarter-end price were excluded in the diluted weighted average number of common shares calculation as their effect would have been anti-dilutive to the net loss per share.

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REVENUE	3 Months Ended
	Mar. 31, 2024
Revenue from Contract with Customer [Abstract]
REVENUE	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,       2024     2023   Product     34,876       31,481   Transportation     3,955       3,788   License fees from Construction Partners     208       207   Total product revenue     39,039       35,476   Installation and other services     1,808       1,232         40,847       36,708   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,       2024     2023   At a point in time     38,831       35,269   Over time     2,016       1,439       40,847       36,708     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, 2024     December 31, 2023     December 31, 2022   Customer deposits     2,533       5,290       4,458   Deferred revenue     547       -       408   Contract liabilities     3,080       5,290       4,866     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, 2024 compared to December 31, 2023 mainly due to the timing of orders and payments. Contract liabilities as at December 31, 2023 and 2022 totaling $5.3 million and $4.5 million, respectively, were recognized as revenue during the three months ended March 31, 2024 and 2023, 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,       2024     2023   Commercial     30,179       24,504   Healthcare     3,049       6,171   Government     3,475       2,707   Education     2,128       1,887   License fees from Construction Partners     208       207   Total product and transportation revenue     39,039       35,476   Installation and other services     1,808       1,232       40,847       36,708

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SEGMENT REPORTING	3 Months Ended
	Mar. 31, 2024
Segment Reporting [Abstract]
SEGMENT REPORTING	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 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,       2024     2023   Canada     3,069       4,912   U.S.     37,778       31,796         40,847       36,708   Non-current assets       As at March 31,     As at December 31,       2024     2023   Canada     28,837       30,033   U.S.     29,548       30,759         58,385       60,792     The DIRTT solution 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 chief operating decision maker assesses performance for the solution 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 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 solution segment or into other parts of the entity, such as to repay long-term debt. Gross profit and 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 has one reportable segment: Solutions. The solutions segment provides digital tools (access to ICE software) and physical products to create modular interior construction spaces for our customers. DIRTT derives revenue 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. DIRTT’s chief operating decision maker is the executive leadership team that includes the chief operating officer, chief financial officer, and the chief executive officer. Segment profit and loss reconciliation to net income (loss) after tax       For the Three Months Ended March 31,       2024     2023       ($ in thousands)   Revenue     40,847       36,708   Gross Profit     14,648       8,682   Gross Profit Margin     35.9 %     23.7 % Operating expenses (1)     14,855       18,800   Operating income (loss)     (207 )     (10,118 ) Other income/(expenses) and gains/(losses) (2)     3,252       (1,316 ) Net income (loss) after tax     3,045       (11,434 )               Reconciliation of profit or loss             Adjustments and reconciling items     -       -   Net income (loss) after tax     3,045       (11,434 ) (1) Includes Sales and marketing, General and administrative, Operations support, Technology and development, Stock based compensation, Reorganization costs, Related party expenses, and Impairment charges (2) Includes Tax expenses, non-recurring gains and losses, government subsidies, foreign exchange gains(losses), interest income, and interest expenses

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INCOME TAXES	3 Months Ended
	Mar. 31, 2024
Income Tax Disclosure [Abstract]
INCOME TAXES	13. INCOME TAXES As at March 31, 2024, the Company had a valuation allowance of $33.9 million against deferred tax assets as the Company has experienced cumulative losses in recent years (December 31, 2023 – $34.5 million).

v3.24.1.u1

RIGHTS OFFERING	3 Months Ended
	Mar. 31, 2024
Disclosure Text Block [Abstract]
RIGHTS OFFERING	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 Fund, LP (“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 will 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.

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COMMITMENTS	3 Months Ended
	Mar. 31, 2024
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS	15. COMMITMENTS As at March 31, 2024, the Company had outstanding purchase obligations of approximately $1.1 million related to inventory and property, plant and equipment purchases (December 31, 2023 – $2.8 million). As at March 31, 2024, the Company had undiscounted operating lease liabilities of $43.4 million (December 31, 2023 – $45.1 million). Subsequent to March 31, 2024, the Company extended the term of the lease agreement for the Calgary headquarters by 3 years, effective April 2024. Undiscounted rent obligations associated with this lease are $1.4 million.

v3.24.1.u1

RELATED PARTY TRANSACTIONS	3 Months Ended
	Mar. 31, 2024
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS	16. RELATED PARTY TRANSACTIONS On March 15, 2023, the Company entered into a Debt Settlement Agreement (the “Debt Settlement Agreement”) with 22NW and Aron English, 22NW’s principal and a director of DIRTT, (together, the “22NW Group”) who, collectively, beneficially owned approximately 19.5% of the Company’s issued and outstanding common shares at such time. Pursuant to the Debt Settlement Agreement, the Company agreed to reimburse the 22NW Group for the costs incurred by the 22NW Group in connection with the contested director election at the annual and special meeting of shareholders of the Company held on April 26, 2022, being approximately $1.6 million (the “Debt”). Pursuant to the Debt Settlement Agreement, the Company agreed to repay the Debt by either, or a combination of (i) a payment in cash by the Company to the 22NW Group, and/or (ii) the issuance of equity securities of the Company to the 22NW Group. The liability as at March 31, 2023 was revalued using the closing common share price at March 31, 2023, and a $2.1 million liability and expense was recorded in the financial statements. In connection with the Debt Settlement Agreement, on March 15, 2023, the Company entered into a share issuance agreement with the 22NW Group, pursuant to which the Company agreed to repay the Debt with the issuance to the 22NW Group of 3,899,745 common shares at a deemed price of $0.40 per common share, subject to approval by the Company’s shareholders which was obtained at the Company’s annual and special shareholder meeting held on May 30, 2023. Other related party transactions for the three months ended March 31, 2024 and March 31, 2023, relate to the sale of DIRTT products and services to the 22NW Group for $nil and $0.3 million, respectively. $Nil and $0.2 million was included in the Trade and accrued receivable balance as at March 31, 2024 and March 31, 2023, respectively. The sale to 22NW Group was based on price lists in force and terms that are available to all employees. As at March 31, 2024, C$18.9 million and C$13.6 million of the January Debentures and December Debentures, respectively, are held by 22NW Group (December 31, 2023 – C$18.9 million and C$13.6 million, respectively). Interest earned on such Debentures for the three months ended March 31, 2024 and March 31, 2023 is $0.4 million and $nil, respectively. Interest is earned on terms applicable to all Debenture holders.

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BASIS OF PRESENTATION (Policies)	3 Months Ended
	Mar. 31, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Principles of consolidation	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	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	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.

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REORGANIZATION AND ASSETS HELD FOR SALE (Tables)	3 Months Ended
	Mar. 31, 2024
Restructuring and Related Activities [Abstract]
Schedule of assets held for sale	As at March 31,       2024     2023    Assets held for sale, opening     1,555       -    Proceeds from sale of assets held for sale     (1,025 )     -    Impairment charge on reassessment     (530 )     -    Assets held for sale, ending     -       -
Restructuring Costs	For the three months ended March 31, 2024, reorganization costs incurred relate to the above mentioned initiatives:     For the Three Months Ended March 31,       2024     2023    Termination benefits     -       700    Phoenix facility closure     -       43    Rock Hill Facility temporary suspension and closure of operations     126       -    Other costs     12       328    Total reorganization costs     138       1,071      Reorganization costs in accounts payable and accrued liabilities at January 1, 2023     2,277    Reorganization expense     3,009    Reorganization costs paid     (4,690 )  Reorganization costs in accounts payable and accrued liabilities at December 31, 2023     596    Reorganization expense     138    Reorganization costs paid     (438 )  Reorganization costs in accounts payable and accrued liabilities at March 31, 2024     296

v3.24.1.u1

TRADE AND OTHER RECEIVABLES (Tables)	3 Months Ended
	Mar. 31, 2024
Receivables [Abstract]
Schedule of accounts, notes, loans and financing receivable	The Company’s aged receivables were as follows:     As at       March 31, 2024     December 31, 2023   Current     13,297       12,070   Overdue     2,585       3,818       15,882       15,888   Less: expected credit losses     (100 )     (101 )     15,782       15,787

v3.24.1.u1

OTHER LIABILITIES (Tables)	3 Months Ended
	Mar. 31, 2024
Other Liabilities Disclosure [Abstract]
Summary of Other Liabilities	As at,       March 31, 2024     December 31, 2023   Warranty provisions (1)     866       873   DSU liability     1,486       1,086   Income taxes payable     321       289   Sublease deposits     183       184   Other provisions     50       50   Other liabilities     2,906       2,482     (1) The following table presents a reconciliation of the warranty provision balance:     As at,       March 31, 2024     December 31, 2023   As at January 1     873       1,278   Additions to warranty provision     205       1,208   Payments related to warranties     (212 )     (1,613 )       866       873

v3.24.1.u1

EARNINGS PER SHARE (Tables)	3 Months Ended
	Mar. 31, 2024
Earnings Per Share [Abstract]
Schedule of Earnings Per Share	For the Three Months Ended March 31,       2024     2023   Net income (loss) per share – basic             Net income (loss) (thousands of U.S. dollars)   $ 3,045     $ (11,434 ) Weighted average number of shares outstanding (thousands of shares as previously calculated)   NA       98,091   Weighted average number of shares outstanding (thousands of shares restated)     183,668       111,702   Net income (loss) per share (U.S. dollars) − basic (as previously calculated, prior to Rights Offering)   NA     $ (0.12 ) Net income (loss) per share (U.S. dollars) − basic (as on the Consolidated Statement of Comprehensive Income)   $ 0.02     $ (0.10 )               Net income (loss) per share − diluted             Net income (loss) (thousands of U.S. dollars)   $ 3,045     $ (11,434 ) Interest on convertible debentures   $ 843     NA     $ 3,888     $ (11,434 ) Weighted average number of shares outstanding (thousands of shares as previously calculated)   NA       98,091   Weighted average number of shares outstanding (thousands of shares restated)     183,668       111,702   Dilutive debentures on convertible debt (thousands of shares) (1)     96,690       -   Dilutive RSUs and PRSUs (thousands of shares) (2)     3,775       -   Dilutive options (thousands of shares) (2)     208       -   Dilutive New DSUs (thousands of shares) (3)     2,292       -   Dilutive PSUs (thousands of shares) (3)     1,846       -   Weighted average number of shares outstanding (thousands of shares as previously calculated)   NA       98,091   Weighted average number of shares outstanding (thousands of shares restated)     288,479       111,702   Net income (loss) per share (U.S. dollars) − diluted (as previously calculated, prior to Rights Offering)   NA     $ (0.12 ) Net income (loss) per share (U.S .dollars) − diluted (as on the Consolidated Statement of Comprehensive Income)   $ 0.01     $ (0.10 )   (1) For the three months ended March 31, 2023, the Net loss per share − diluted excludes the effect of 119.4 million shares that would be issued if the principal amount of the Debentures were settled in our common shares at the quarter end price and are excluded as they would be anti-dilutive. For the three months ended March 31, 2024, the Net income per share − diluted includes the effect of 96.7 million shares related to the Debentures as they would have the potential to dilute basic earnings per share. (2) For the three months ended March 31, 2023, the Net loss per share − diluted excludes the effect of 1.5 million RSUs and PRSUs and 1.1 million options as these would be anti-dilutive. For the three months ended March 31, 2024, the Net income per share − diluted considers the effect of 3.8 million RSUs and PRSUs and 0.2 million options as they would have the potential to dilute basic earnings per share. (3) For the three months ended March 31, 2024, the Net income per share − diluted excludes the effect of 2.3 million New DSUs and 1.8 million PSUs. These would have the potential to dilute basic earnings per share.

v3.24.1.u1

LONG-TERM DEBT (Tables)	3 Months Ended
	Mar. 31, 2024
Debt Disclosure [Abstract]
Summary of Long Term Debt Reconciliation	Revolving Credit Facility     Leasing Facilities     Convertible Debentures     Total Debt   Balance on January 1, 2023     -       11,812       53,623       65,435   Accretion of issue costs     -       -       698       698   Accrued interest     -       526       3,411       3,937   Interest payments     -       (526 )     (3,451 )     (3,977 ) Principal repayments     -       (11,579 )     -       (11,579 ) Exchange differences     -       251       1,343       1,594   Balance at December 31, 2023     -       484       55,624       56,108   Current portion of long-term debt and accrued interest     -       79       762       841   Long-term debt     -       405       54,862       55,267                             Balance on January 1, 2024     -       484       55,624       56,108   Accretion of issue costs     -       -       180       180   Accrued interest     -       9       843       852   Interest payments     -       (9 )     (996 )     (1,005 ) Principal repayments     -       (19 )     (5,055 )     (5,074 ) Gain on extinguishment     -       -       (2,931 )     (2,931 ) Exchange differences     -       (11 )     (1,319 )     (1,330 ) Balance at March 31, 2024     -       454       46,346       46,800   Current portion of long-term debt and accrued interest     -       78       597       675   Long-term debt     -       376       45,749       46,125

v3.24.1.u1

STOCK-BASED COMPENSATION (Tables)	3 Months Ended
	Mar. 31, 2024
Share-Based Payment Arrangement [Abstract]
Summary of stock-based compensation expense	Stock-based compensation expense       For the Three Months Ended March 31,       2024     2023   Equity-settled awards     493       644   Cash-settled awards     182       152       675       796
Summary of RSUs, Share Awards, PSUs, DSUs Activity	The following summarizes RSUs, Share Awards, PSUs, and DSUs activity during the periods:       RSU Time-     RSU Performance-     Share                   Based     Based     Awards     PSU     DSU       Number of     Number of     Number of     Number of     Number of       units     units     units     units     units   Outstanding at December 31, 2022     1,885,337       343,919       -       -       1,165,319   Granted     -       -       36,253       -       434,032   Vested or settled     (590,258 )     (32,962 )     (36,253 )     -       -   Withheld to settle employee tax obligations     (64,230 )     -       -       -       -   Forfeited     (44,081 )     -       -       -       -   Outstanding at March 31, 2023     1,186,768       310,957       -       -       1,599,351   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     (29,214 )     (6,278 )     -       -       -   Outstanding at March 31, 2024     3,196,328       45,177       -       1,845,608       3,582,267
Schedule of Percentage of PRSUs Vest upon Increases of Share Price	% of PRSUs Vesting             33.3 %     66.7 %     100.0 %     150.0 % 2021 and 2022 PRSUs       $ 3.00     $ 4.00     $ 5.00     $ 7.00
Summary of options granted, exercised, surrendered, forfeited and expired	The following summarizes options forfeited and expired during the periods:           Number of     Weighted average           options     exercise price C$   Outstanding at December 31, 2022         1,480,069       7.03   Forfeited or expired         (398,964 )     7.14   Outstanding at March 31, 2023         1,081,105       6.99   Outstanding at December 31, 2023         209,409       7.71   Forfeited         (1,000 )     7.84   Exercisable at March 31, 2024         208,409       7.71
Summary of options outstanding by range of exercise prices	Range of exercise prices outstanding and exercisable at March 31, 2024:       Options outstanding     Options exercisable             Weighted     Weighted           Weighted     Weighted       Number of     average     average           average     average       options     remaining     exercise     Number     remaining     exercise    Range of exercise prices         life     price C$     exercisable     life     price C$   C$6.01 – C$7.00     16,350       0.47     $ 6.12       16,350       0.47     $ 6.12   C$7.01 – C$8.00     192,059       0.13     $ 7.84       192,059       0.13     $ 7.84   Total     208,409                   208,409

v3.24.1.u1

REVENUE (Tables)	3 Months Ended
	Mar. 31, 2024
Revenue from Contract with Customer [Abstract]
Disaggregation of revenue by major products and services lines and timing of revenue recognition	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,       2024     2023   Product     34,876       31,481   Transportation     3,955       3,788   License fees from Construction Partners     208       207   Total product revenue     39,039       35,476   Installation and other services     1,808       1,232         40,847       36,708       For the Three Months Ended March 31,       2024     2023   At a point in time     38,831       35,269   Over time     2,016       1,439       40,847       36,708
Summary of contract liabilities	Contract Liabilities       As at       March 31, 2024     December 31, 2023     December 31, 2022   Customer deposits     2,533       5,290       4,458   Deferred revenue     547       -       408   Contract liabilities     3,080       5,290       4,866
Schedule of sales by industry	For the Three Months Ended March 31,       2024     2023   Commercial     30,179       24,504   Healthcare     3,049       6,171   Government     3,475       2,707   Education     2,128       1,887   License fees from Construction Partners     208       207   Total product and transportation revenue     39,039       35,476   Installation and other services     1,808       1,232       40,847       36,708

v3.24.1.u1

SEGMENT REPORTING (Tables)	3 Months Ended
	Mar. 31, 2024
Segment Reporting [Abstract]
Schedule of revenue from external customers	Revenue from external customers       For the Three Months Ended March 31,       2024     2023   Canada     3,069       4,912   U.S.     37,778       31,796         40,847       36,708
Schedule of non-current assets	Non-current assets       As at March 31,     As at December 31,       2024     2023   Canada     28,837       30,033   U.S.     29,548       30,759         58,385       60,792
Schedule of Segment Profit and loss reconciliation to Net income (loss) After tax	Segment profit and loss reconciliation to net income (loss) after tax       For the Three Months Ended March 31,       2024     2023       ($ in thousands)   Revenue     40,847       36,708   Gross Profit     14,648       8,682   Gross Profit Margin     35.9 %     23.7 % Operating expenses (1)     14,855       18,800   Operating income (loss)     (207 )     (10,118 ) Other income/(expenses) and gains/(losses) (2)     3,252       (1,316 ) Net income (loss) after tax     3,045       (11,434 )               Reconciliation of profit or loss             Adjustments and reconciling items     -       -   Net income (loss) after tax     3,045       (11,434 ) (1) Includes Sales and marketing, General and administrative, Operations support, Technology and development, Stock based compensation, Reorganization costs, Related party expenses, and Impairment charges (2) Includes Tax expenses, non-recurring gains and losses, government subsidies, foreign exchange gains(losses), interest income, and interest expenses

v3.24.1.u1

GENERAL INFORMATION (Additional Information) (Details)	Mar. 31, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Intellectual property ownership percentage	50.00%

v3.24.1.u1

LIQUIDITY (Additional Information) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Gross profit	$ 14,648	$ 8,682

v3.24.1.u1

REORGANIZATION AND ASSETS HELD FOR SALE - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023	Dec. 31, 2022
Restructuring Cost And Reserve [Line Items]
Reorganization costs payable	$ 296		$ 596	$ 2,277
Reorganization	138	$ 1,071	3,009
Assets held for sale	(1,025)	0
Impairment charge	500
Payment for reorganization cost	438		4,690
Maximum [Member]
Restructuring Cost And Reserve [Line Items]
Reduction of assets held for sale balance	500
Minimum [Member]
Restructuring Cost And Reserve [Line Items]
Reduction of assets held for sale balance	0
Cost of Sales [Member]
Restructuring Cost And Reserve [Line Items]
Reorganization	500	400
Termination Benefits [Member]
Restructuring Cost And Reserve [Line Items]
Reorganization costs payable	200		500
Reorganization	0	700
Phoenix Facility closure [Member]
Restructuring Cost And Reserve [Line Items]
Reorganization	0	43
Other Cost [Member]
Restructuring Cost And Reserve [Line Items]
Reorganization	12	$ 328
Further anticipated reorganization costs	$ 100		$ 100

v3.24.1.u1

REORGANIZATION AND ASSETS HELD FOR SALE - Assets Held For Sale (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Restructuring Cost and Reserve [Line Items]
Proceeds from sale of assets held for sale	$ (1,025)	$ 0
Impairment charge on reassessment	(500)
Assets Held For Sale [Member]
Restructuring Cost and Reserve [Line Items]
Assets held for sale, opening	1,555	0
Proceeds from sale of assets held for sale	(1,025)	0
Impairment charge on reassessment	(530)	0
Assets held for sale, ending	$ 0	$ 0

v3.24.1.u1

REORGANIZATION AND ASSETS HELD FOR SALE - Restructuring Costs (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Restructuring Cost and Reserve [Line Items]
Reorganization costs payable, Beginning Balance	$ 596	$ 2,277	$ 2,277
Restructuring charges	138	1,071	3,009
Reorganization costs paid	(438)		(4,690)
Reorganization costs payable, Ending Balance	296		596
Termination Benefits [Member]
Restructuring Cost and Reserve [Line Items]
Reorganization costs payable, Beginning Balance	500
Restructuring charges	0	700
Reorganization costs payable, Ending Balance	200		$ 500
Phoenix Facility closure [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges	0	43
Rock Hill Facility Temporary Suspension and Closur[Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges	126	0
Other Cost [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 12	$ 328

v3.24.1.u1

GAIN ON EXTINGUISHMENT OF CONVERTIBLE DEBENTURES (Additional Information) (Details) $ / shares in Units, $ in Thousands, $ in Millions		3 Months Ended
	Feb. 15, 2024 CAD ($)	Mar. 31, 2024 USD ($)	Mar. 31, 2024 CAD ($)	Mar. 31, 2023 USD ($)	Mar. 31, 2024 CAD ($)	Feb. 15, 2024 $ / shares
Extinguishment of Debt [Line Items]
Issuer Bid, date		Mar. 22, 2024			Mar. 22, 2024
Issuer Bid for aggregate consideration		$ 5,200			$ 7.0
Repayments of Debt		100	$ 0.1
Unamortized issuance costs		200			0.4
Gain on extinguishment of convertible debt		2,931	3.9	$ 0
Issuer Bid for aggregate consideration, Total		5,100			6.9
Convertible Debt [Member]
Extinguishment of Debt [Line Items]
Repayments of Debt		5,100	$ 6.9
January [Member]
Extinguishment of Debt [Line Items]
Debt Instrument, Issued, Principal | $	$ 6.0
Aggregate principal amount		$ 3,500			$ 4.7
Issuer Bid, percentage		11.66%			11.66%
Long-Term Debt, Average Amount Outstanding | $	6.0
Purchase price of debenture, outstanding | $ / shares						$ 1,000
Purchase price of debenture, issued | $ / shares						720
December [Member]
Extinguishment of Debt [Line Items]
Debt Instrument, Issued, Principal | $	9.0
Aggregate principal amount		$ 4,300			$ 5.8
Issuer Bid, percentage		16.50%			16.50%
Long-Term Debt, Average Amount Outstanding | $	$ 9.0
Purchase price of debenture, outstanding | $ / shares						1,000
Purchase price of debenture, issued | $ / shares						$ 600

v3.24.1.u1

TRADE AND OTHER RECEIVABLES (Additional Information) (Detail) - USD ($) $ in Millions		3 Months Ended
	Feb. 04, 2024	Mar. 31, 2024
Percent of trade accounts receivable insured		97.00%
Provision for credit losses		$ 0.1
Litigation Funding Agreement (Member) | Maximum [Member]
litigation costs	$ 4.0
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Significant Customer [Member]
Percentage of Total Account Receivable		10.00%
Sales Revenue [Member] | Customer Concentration Risk [Member] | Significant Customer [Member]
Percentage of Total Account Receivable		50.00%

v3.24.1.u1

TRADE AND OTHER RECEIVABLES - Schedule of accounts, notes, loans and financing receivable (Detail) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Receivables [Abstract]
Current	$ 13,297	$ 12,070
Overdue	2,585	3,818
Total accounts receivable	15,882	15,888
Less: expected credit losses	(100)	(101)
Net accounts receivable	$ 15,782	$ 15,787

v3.24.1.u1

OTHER LIABILITIES - Summary of Other Liabilities (Detail) - USD ($) $ in Thousands	Mar. 31, 2024		Dec. 31, 2023		Dec. 31, 2022
Other Liabilities, Current [Abstract]
Warranty provisions	$ 866	[1]	$ 873	[1]	$ 1,278
DSU liability	1,486		1,086
Income taxes payable	321		289
Sublease deposits	183		184
Other provisions	50		50
Other liabilities	$ 2,906		$ 2,482
[1] The following table presents a reconciliation of the warranty provision balance:     As at,       March 31, 2024     December 31, 2023   As at January 1     873       1,278   Additions to warranty provision     205       1,208   Payments related to warranties     (212 )     (1,613 )       866       873

v3.24.1.u1

OTHER LIABILITIES - Reconciliation of Warranty and Other Provisions Balance (Detail) - USD ($) $ in Thousands		3 Months Ended		12 Months Ended
		Mar. 31, 2024		Dec. 31, 2023
Other Liabilities, Current [Abstract]
Balance		$ 873	[1]	$ 1,278
Additions to warranty provision		205		1,208
Payments related to warranties		(212)		(1,613)
Balance	[1]	$ 866		$ 873
[1] The following table presents a reconciliation of the warranty provision balance:     As at,       March 31, 2024     December 31, 2023   As at January 1     873       1,278   Additions to warranty provision     205       1,208   Payments related to warranties     (212 )     (1,613 )       866       873

v3.24.1.u1

LONG-TERM DEBT - Summary of Long Term Debt Reconciliation (Detail) $ in Thousands, $ in Millions	3 Months Ended			12 Months Ended
	Mar. 31, 2024 USD ($)	Mar. 31, 2024 CAD ($)	Mar. 31, 2023 USD ($)	Dec. 31, 2023 USD ($)
Debt Instrument [Line Items]
Long term debt, Balance Beginning	$ 56,108		$ 65,435	$ 65,435
Accretion of issue costs	180			698
Accrued interest	852			3,937
Interest payments	(1,005)			(3,977)
Repayment of long-term debt	(5,074)		(642)	(11,579)
Gain on extinguishment of convertible debt	(2,931)	$ (3.9)	0
Exchange differences	(1,330)			1,594
Long term debt, Balance Ending	46,800			56,108
Current portion of long-term debt and accrued interest	675			841
Long-term debt	46,125			55,267
Leasing Facilities [Member]
Debt Instrument [Line Items]
Long term debt, Balance Beginning	484		11,812	11,812
Accretion of issue costs	0			0
Accrued interest	9			526
Interest payments	(9)			(526)
Repayment of long-term debt	(19)			(11,579)
Gain on extinguishment of convertible debt	0
Exchange differences	(11)			251
Long term debt, Balance Ending	454			484
Current portion of long-term debt and accrued interest	78			79
Long-term debt	376			405
Convertible Debentures [Member]
Debt Instrument [Line Items]
Long term debt, Balance Beginning	55,624		$ 53,623	53,623
Accretion of issue costs	180			698
Accrued interest	843			3,411
Interest payments	(996)			(3,451)
Repayment of long-term debt	(5,055)			0
Gain on extinguishment of convertible debt	(2,931)
Exchange differences	(1,319)			1,343
Long term debt, Balance Ending	46,346			55,624
Current portion of long-term debt and accrued interest	597			762
Long-term debt	$ 45,749			$ 54,862

v3.24.1.u1

LONG-TERM DEBT - (Additional Information) (Detail) $ / shares in Units, $ in Thousands, $ in Thousands								3 Months Ended		9 Months Ended
	Feb. 09, 2024 CAD ($)	Nov. 15, 2021 USD ($)	Nov. 15, 2021 CAD ($)	Jan. 29, 2021 USD ($)	Jan. 29, 2021 CAD ($)	Jan. 25, 2021 USD ($) shares	Jan. 25, 2021 CAD ($) shares	Mar. 31, 2024 USD ($) Days $ / shares shares	Mar. 31, 2024 CAD ($) shares	Sep. 30, 2023	Mar. 31, 2024 CAD ($) Days	Mar. 22, 2024 USD ($)	Mar. 22, 2024 CAD ($)	Dec. 31, 2023 USD ($)	Dec. 31, 2023 CAD ($)	Feb. 09, 2023 CAD ($) Days	Feb. 12, 2021 CAD ($)	Jan. 25, 2021 $ / shares
Debt Instrument [Line Items]
Revolving credit facility, basis spread on variable rate								4.25%	4.25%
Settlement of related party debt								$ 7,800
Debentures held by related party								10,000			$ 13,600
Restricted cash								$ 241						$ 355
Convertible debentures, conversion price | $ / shares																		$ 4.03
Convertible debentures, common shares issued | shares						248.139	248.139	274.7253	274.7253
January [Member]
Debt Instrument [Line Items]
Paid interest payable												$ 30	$ 40
Repurchased for cancellation of the principal balance												3,500	4,700
Principal amount outstanding								$ 26,300			35,600
December [Member]
Debt Instrument [Line Items]
Paid interest payable												60	80
Repurchased for cancellation of the principal balance												$ 4,300	$ 5,800
Principal amount outstanding								$ 21,500			29,200
Convertible Debentures [Member]
Debt Instrument [Line Items]
Issuance of convertible debentures		$ 27,400	$ 35,000	$ 4,100	$ 5,250	$ 27,500	$ 35,000
Convertible debentures, maturity date		Dec. 31, 2026	Dec. 31, 2026			Jan. 31, 2026	Jan. 31, 2026
Convertible debentures, interest rate		6.25%	6.25%			6.00%	6.00%
Convertible debentures, frequency of interest payment		semi-annually	semi-annually			semi-annually	semi-annually
Convertible debentures, conversion price | $ / shares								$ 3.64
Convertible debentures, principal amount							$ 1,000		$ 1,000
Convertible debentures, transaction cost			$ 2,300				$ 2,700
Canadian Dollar Advances [Member]
Debt Instrument [Line Items]
Revolving credit facility, maximum borrowing capacity											5,000
US Dollar Advances [Member]
Debt Instrument [Line Items]
Revolving credit facility, maximum borrowing capacity								$ 14,000
Related Party Member
Debt Instrument [Line Items]
Convertible debt outstanding								13,900			18,900
RBC Facility [Member]
Debt Instrument [Line Items]
Line of credit available borrowing capacity								8,500			10,100			10,300	$ 13,600
Restricted cash								$ 100						$ 400
Number of consecutive business days | Days																3
RBC Facility [Member] | Prime Rate [Member]
Debt Instrument [Line Items]
Debt instrument, description of variable rate basis	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.							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.	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.
RBC Facility [Member] | LIBOR [Member]
Debt Instrument [Line Items]
Line of credit available borrowing capacity	$ 15,000															$ 15,000
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Revolving credit facility, maximum borrowing capacity																	$ 25,000
Revolving credit facility, maximum borrowing capacity, description										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”).
Revolving credit facility, basis spread on variable rate								155.00%	155.00%
Debt instrument covenant terms								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 Leasing Facilities	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 Leasing Facilities
Revolving credit facility, aggregate excess availability											$ 5,000
Number of consecutive business days | Days								5			5
Revolving Credit Facility [Member] | Canadian Dollar Advances [Member]
Debt Instrument [Line Items]
Leasing facility drawn,								$ 3,400			$ 4,400
Repayments of Lines of Credit								2,900	$ 3,800
Revolving Credit Facility [Member] | US Dollar Advances [Member]
Debt Instrument [Line Items]
Leasing facility drawn,								$ 13,300
Revolving Credit Facility [Member] | Maximum [Member]
Debt Instrument [Line Items]
Revolving credit facility, aggregate excess availability											$ 6,250
Revolving Credit Facility [Member] | Prime Rate [Member]
Debt Instrument [Line Items]
Revolving credit facility, basis spread on variable rate								30.00%	30.00%

v3.24.1.u1

STOCK-BASED COMPENSATION - (Additional Information) (Detail) $ / shares in Units, $ in Millions	3 Months Ended				12 Months Ended
	Mar. 31, 2024 $ / shares $ / shares shares	Mar. 31, 2024 $ / shares shares	Sep. 30, 2023 shares	Mar. 31, 2023 shares	Mar. 01, 2024	Dec. 31, 2022 $ / shares	Dec. 31, 2021 $ / shares	Mar. 31, 2024 USD ($) $ / shares	Dec. 31, 2023 USD ($)	May 31, 2023 shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock reserved for future issuance										12,350,000
Securities excluded from calculation of net income (loss) per share	200,000	200,000		1,100,000
Restricted Stock Units Time Based [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, award requisite service period	3 years	3 years
Weighted average fair value of the RSUs granted | $ / shares								$ 0.5
Performance-Based Restricted Share Units [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, award requisite service period	3 years	3 years
Securities excluded from calculation of net income (loss) per share	3,800,000	3,800,000		1,500,000
Performance-Based Restricted Share Units [Member] | 2022 PRSUs [ Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
% of PRSUs vesting					0.00%
Performance-Based Restricted Share Units [Member] | 2021 PRSUs [ Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
% of PRSUs vesting					66.70%
Performance-Based Restricted Share Units [Member] | Monte Carlo Valuation Method [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share based compensation other than option grant date fair value | $ / shares						$ 1.87	$ 3.27
Share Awards [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share based compensation other than option grant date fair value | (per share)	$ 0.34	$ 0.49
Share Awards were issued to employees				36,254
Deferred Share Units ("DSUs") [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Deferred Compensation Liability, Current and Noncurrent | $								$ 0.6	$ 0.5
Securities excluded from calculation of net income (loss) per share	2,300,000	2,300,000
Deferred Share Units ("DSUs") [Member] | Granted Under The 2023 Litp
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Weighted average fair value of the RSUs granted | (per share)	$ 0.67	$ 0.67						$ 0.49
Deferred Compensation Liability, Current and Noncurrent | $								$ 0.8	$ 0.6
Performance Share Units ("PSUs") [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of options, Forfeited			738,553
Securities excluded from calculation of net income (loss) per share	1,800,000	1,800,000
Vesting Term	Dec. 31, 2026	Dec. 31, 2026
Performance Share Units ("PSUs") [Member] | Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
% of PRSUs vesting	190.00%	190.00%
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Gross	4,909,907	4,909,907
Performance Period Date	Dec. 31, 2026	Dec. 31, 2026
Performance Share Units ("PSUs") [Member] | Median [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
% of PRSUs vesting	160.00%	160.00%
Performance Share Units ("PSUs") [Member] | Minimum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
% of PRSUs vesting	100.00%	100.00%
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Gross	2,584,161	2,584,161
Performance Period Date	Jan. 01, 2023	Jan. 01, 2023
Restricted Share Units ("RSUs") [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Securities excluded from calculation of net income (loss) per share	3,800,000	3,800,000		1,500,000
Convertible Debt Securities [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Securities excluded from calculation of net income (loss) per share				119,400,000
Equity Settled Awards [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Securities excluded from calculation of net income (loss) per share	96,700,000	96,700,000		119,400,000

v3.24.1.u1

STOCK-BASED COMPENSATION - Summary of Stock-Based Compensation Expense (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-Based Payment Arrangement, Expense	$ 675	$ 796
Equity-settled Awards [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-Based Payment Arrangement, Expense	493	644
Cash-settled Awards [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-Based Payment Arrangement, Expense	$ 182	$ 152

v3.24.1.u1

STOCK-BASED COMPENSATION - Summary of RSUs, Share Awards, PSUs, DSUs Activity (Detail) - shares	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Restricted Stock Units Time Based [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of units, Outstanding at the beginning	3,530,564	1,885,337
Granted	350,000
Vested	(508,679)	(590,258)
Withheld to settle employee tax obligations	(146,343)	(64,230)
Forfeited	(29,214)	(44,081)
Number of units, Outstanding at the end	3,196,328	1,186,768
Restricted Share Units ("RSUs") Performance-Based [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of units, Outstanding at the beginning	64,029	343,919
Vested	(12,574)	(32,962)
Forfeited	(6,278)
Number of units, Outstanding at the end	45,177	310,957
Share Awards [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Granted		36,253
Vested		(36,253)
Performance Share Units ("PSUs") [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of units, Outstanding at the beginning	1,845,608
Number of units, Outstanding at the end	1,845,608
Deferred Share Units ("DSUs") [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of units, Outstanding at the beginning	3,086,172	1,165,319
Granted	496,095	434,032
Number of units, Outstanding at the end	3,582,267	1,599,351

v3.24.1.u1

STOCK-BASED COMPENSATION - Schedule of Percentage of PRSUs Vest upon Increases of Share Price (Detail) - 2022 and 2021 PRSUs [Member] - PRSUs [Member]	3 Months Ended
	Mar. 31, 2024 $ / shares
Share-based Payment Arrangement, Tranche One [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
% of PRSUs vesting	33.30%
Weighted average fair value of the RSUs granted	$ 3
Share-based Payment Arrangement, Tranche Two [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
% of PRSUs vesting	66.70%
Weighted average fair value of the RSUs granted	$ 4
Share-based Payment Arrangement, Tranche Three
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
% of PRSUs vesting	100.00%
Weighted average fair value of the RSUs granted	$ 5
Share Based Compensation Award Tranche Four
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
% of PRSUs vesting	150.00%
Weighted average fair value of the RSUs granted	$ 7

v3.24.1.u1

STOCK-BASED COMPENSATION - Summary of Options Granted, Exercised, Surrendered, Forfeited and Expired (Detail) - Employee Stock Option [Member] - $ / shares	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of options, Outstanding at the beginning	209,409	1,480,069
Number of options, Forfeited	(1,000)	(398,964)
Number of options, Outstanding at the end		1,081,105
Number of options, Exercisable	208,409
Weighted average exercise price, Outstanding at the beginning	$ 7.71	$ 7.03
Weighted average exercise price, Forfeited	7.84	7.14
Weighted average exercise price, Outstanding at the end	$ 7.71	$ 6.99

v3.24.1.u1

STOCK-BASED COMPENSATION - Summary of Options Outstanding by Range of Exercise Prices (Detail)	3 Months Ended
	Mar. 31, 2024 $ / shares shares
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Options outstanding, Number | shares	208,409
Options exercisable, Number | shares	208,409
Range Of Exercise Prices For Outstanding Share Options Five [Member]
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Range of exercise prices, Minimum	$ 6.01
Range of exercise prices, Maximum	$ 7
Options outstanding, Number | shares	16,350
Options outstanding, Weighted average remaining life	5 months 19 days
Options outstanding, Weighted average exercise price	$ 6.12
Options outstanding	$ 6.12
Options exercisable, Number | shares	16,350
Options exercisable, Weighted average remaining life	5 months 19 days
Range Of Exercise Prices For Outstanding Share Options Seven [Member]
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Range of exercise prices, Minimum	$ 7.01
Range of exercise prices, Maximum	$ 8
Options outstanding, Number | shares	192,059
Options outstanding, Weighted average remaining life	1 month 17 days
Options outstanding, Weighted average exercise price	$ 7.84
Options outstanding	$ 7.84
Options exercisable, Number | shares	192,059
Options exercisable, Weighted average remaining life	1 month 17 days

v3.24.1.u1

EARNINGS PER SHARE (Additional Information) (Details) - $ / shares	Mar. 31, 2024	Jan. 09, 2024	Dec. 31, 2023	Dec. 12, 2023
Earnings Per Share [Abstract]
Purchase Of Common Shares				85,714,285
Common shares, issued	191,880,226	85,714,285	105,377,667
Subscription Price				$ 0.35

v3.24.1.u1

EARNINGS PER SHARE - Schedule of Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended
		Mar. 31, 2024	Mar. 31, 2023
Earnings Per Share, Basic [Abstract]
Weighted average number of shares outstanding (thousands of shares)		183,668,000	111,702,000
Net income (loss) per share (dollars)		$ 0.02	$ (0.1)
Earnings Per Share, Basic		$ 0.02	$ (0.1)
Weighted Average Number of Shares Outstanding, Basic		183,668,000	111,702,000
Earnings Per Share, Diluted [Abstract]
Interest on Convertible debentures		$ 843
Net income (loss) for the period		$ 3,045	$ (11,434)
Weighted Average Number of Shares Outstanding, Diluted		288,479,000	111,702,000
Earnings Per Share, Diluted		$ 0.01	$ (0.1)
Incremental Common Shares Attributable to Dilutive Effect of Conversion of Debt Securities	[1]	96,690
Dilutive RSUs and PRSU	[2]	3,775
Dilutive Options	[2]	208
Dilutive New DSUs (thousands of shares)	[3]	2,292
Dilutive PSUs (thousands of shares)	[3]	1,846
NetIncome(Loss)IncludingInterest		$ 3,888	$ (11,434)
Consolidated Statement of Comprehensive Income [Member]
Earnings Per Share, Basic [Abstract]
Net income (loss) per share (dollars)		$ 0.02	$ (0.1)
Earnings Per Share, Basic		0.02	(0.1)
Earnings Per Share, Diluted [Abstract]
Earnings Per Share, Diluted		$ 0.01	$ (0.1)
Shares restated [Member]
Earnings Per Share, Basic [Abstract]
Weighted average number of shares outstanding (thousands of shares)		183,668	111,702
Weighted Average Number of Shares Outstanding, Basic		183,668	111,702
Earnings Per Share, Diluted [Abstract]
Weighted Average Number of Shares Outstanding, Diluted		288,479	111,702
Previously Reported [Member]
Earnings Per Share, Basic [Abstract]
Weighted average number of shares outstanding (thousands of shares)			98,091
Net income (loss) per share (dollars)			$ (0.12)
Earnings Per Share, Basic			$ (0.12)
Weighted Average Number of Shares Outstanding, Basic			98,091
Earnings Per Share, Diluted [Abstract]
Weighted Average Number of Shares Outstanding, Diluted			98,091
Earnings Per Share, Diluted			$ (0.12)
[1] For the three months ended March 31, 2023, the Net loss per share − diluted excludes the effect of 119.4 million shares that would be issued if the principal amount of the Debentures were settled in our common shares at the quarter end price and are excluded as they would be anti-dilutive. For the three months ended March 31, 2024, the Net income per share − diluted includes the effect of 96.7 million shares related to the Debentures as they would have the potential to dilute basic earnings per share. [2] For the three months ended March 31, 2023, the Net loss per share − diluted excludes the effect of 1.5 million RSUs and PRSUs and 1.1 million options as these would be anti-dilutive. For the three months ended March 31, 2024, the Net income per share − diluted considers the effect of 3.8 million RSUs and PRSUs and 0.2 million options as they would have the potential to dilute basic earnings per share. [3] For the three months ended March 31, 2024, the Net income per share − diluted excludes the effect of 2.3 million New DSUs and 1.8 million PSUs. These would have the potential to dilute basic earnings per share.

v3.24.1.u1

EARNINGS PER SHARE - Schedule of Earnings Per Share (Parenthetical) (Details) - $ / shares shares in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Earnings Per Share, Basic [Abstract]
Net loss per share - diluted	$ 0.01	$ (0.1)
Securities excluded from calculation of net income (loss) per share	0.2	1.1
Restricted Share Units ("RSUs") [Member]
Earnings Per Share, Basic [Abstract]
Securities excluded from calculation of net income (loss) per share	3.8	1.5
PRSUs [Member]
Earnings Per Share, Basic [Abstract]
Securities excluded from calculation of net income (loss) per share	3.8	1.5
Deferred Share Units ("DSUs") [Member]
Earnings Per Share, Basic [Abstract]
Securities excluded from calculation of net income (loss) per share	2.3
Performance Share Units ("PSUs") [Member]
Earnings Per Share, Basic [Abstract]
Securities excluded from calculation of net income (loss) per share	1.8
Stock Option [Member]
Earnings Per Share, Basic [Abstract]
Securities excluded from calculation of net income (loss) per share	0.2	1.1
Convertible Debt Securities [Member]
Earnings Per Share, Basic [Abstract]
Securities excluded from calculation of net income (loss) per share		119.4
Equity-settled Awards [Member]
Earnings Per Share, Basic [Abstract]
Securities excluded from calculation of net income (loss) per share	96.7	119.4

v3.24.1.u1

REVENUE - Disaggregation of Revenue by Major Products and Services Lines (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Disaggregation Of Revenue [Line Items]
Revenues	$ 40,847	$ 36,708
Product [Member]
Disaggregation Of Revenue [Line Items]
Revenues	34,876	31,481
Transportation [Member]
Disaggregation Of Revenue [Line Items]
Revenues	3,955	3,788
License fees from Distribution Partners [Member]
Disaggregation Of Revenue [Line Items]
Revenues	208	207
Total product revenue [Member]
Disaggregation Of Revenue [Line Items]
Revenues	39,039	35,476
Installation and other services [Member]
Disaggregation Of Revenue [Line Items]
Revenues	$ 1,808	$ 1,232

v3.24.1.u1

REVENUE - Disaggregation of Revenue by Timing of Revenue Recognition (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Disaggregation Of Revenue [Line Items]
Revenues	$ 40,847	$ 36,708
At a point in time [Member]
Disaggregation Of Revenue [Line Items]
Revenues	38,831	35,269
Over time [Member]
Disaggregation Of Revenue [Line Items]
Revenues	$ 2,016	$ 1,439

v3.24.1.u1

REVENUE - Summary of Contract Liabilities (Detail) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023	Dec. 31, 2022
Revenue from Contract with Customer [Abstract]
Customer deposits	$ 2,533	$ 5,290	$ 4,458
Deferred revenue	547	0	408
Contract liabilities	$ 3,080	$ 5,290	$ 4,866

v3.24.1.u1

REVENUE - (Additional Information) (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Revenue from Contract with Customer [Abstract]
Contract liabilities recognized as revenue	$ 4.5	$ 5.3

v3.24.1.u1

REVENUE - Schedule of Sales by Industry (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Disaggregation Of Revenue [Line Items]
Revenues	$ 40,847	$ 36,708
Commercial [Member]
Disaggregation Of Revenue [Line Items]
Revenues	30,179	24,504
Healthcare [Member]
Disaggregation Of Revenue [Line Items]
Revenues	3,049	6,171
Government [Member]
Disaggregation Of Revenue [Line Items]
Revenues	3,475	2,707
Education [Member]
Disaggregation Of Revenue [Line Items]
Revenues	2,128	1,887
License Fees from Distribution Partners [Member]
Disaggregation Of Revenue [Line Items]
Revenues	208	207
Total product and transportation revenue [Member]
Disaggregation Of Revenue [Line Items]
Revenues	39,039	35,476
Installation and other services [Member]
Disaggregation Of Revenue [Line Items]
Revenues	$ 1,808	$ 1,232

v3.24.1.u1

SEGMENT REPORTING - (Additional Information) (Detail)	3 Months Ended
	Mar. 31, 2024 Country Segment	Mar. 31, 2023 Segment
Segment Reporting [Abstract]
Number of reportable segments	1
Number of operating segments		1
Number of principal geographic locations | Country	2

v3.24.1.u1

SEGMENT REPORTING - Schedule of Revenue from External Customers (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	$ 40,847	$ 36,708
Canada [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	3,069	4,912
U.S. [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	$ 37,778	$ 31,796

v3.24.1.u1

SEGMENT REPORTING - Schedule of Non-current Assets (Detail) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Revenues from External Customers and Long-Lived Assets [Line Items]
Non-current assets	$ 58,385	$ 60,792
Canada [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Non-current assets	28,837	30,033
U.S. [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Non-current assets	$ 29,548	$ 30,759

v3.24.1.u1

SEGMENT REPORTING - Segment Profit and loss reconciliation to Net income (loss) After tax (Details) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2024	Mar. 31, 2023
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue		$ 40,847	$ 36,708
Gross Profit		14,648	8,682
Operating Expenses	[1]	14,855	18,800
Operating income (loss)		(207)	(10,118)
Net income (loss) before tax		3,078	(11,434)
Reconciliation of profit or loss
Net income (loss) after tax		3,045	(11,434)
Opreating Segement Member
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue		40,847	36,708
Gross Profit		$ 14,648	$ 8,682
Gross Profit Margin		35.90%	23.70%
Operating income (loss)		$ (207)	$ (10,118)
Other income/(expenses) and gains/(losses)	[2]	3,252	(1,316)
Net income (loss) before tax		3,045	(11,434)
Reconciliation of profit or loss
Adjustments and reconciling items		0	0
Net income (loss) after tax		$ 3,045	$ (11,434)
[1] Includes Sales and marketing, General and administrative, Operations support, Technology and development, Stock based compensation, Reorganization costs, Related party expenses, and Impairment charges [2] Includes Tax expenses, non-recurring gains and losses, government subsidies, foreign exchange gains(losses), interest income, and interest expenses

v3.24.1.u1

INCOME TAXES - (Additional Information) (Detail) - USD ($) $ in Millions	Mar. 31, 2024	Dec. 31, 2023
Schedule Of Income Tax [Line Items]
Valuation allowance against Deferred Tax Assets	$ 33.9	$ 34.5

v3.24.1.u1

RELATED PARTY TRANSACTION (Additional Information) (Details) $ / shares in Units, $ in Thousands, $ in Millions		3 Months Ended
	Mar. 15, 2023 $ / shares shares	Mar. 31, 2024 USD ($)	Mar. 31, 2023 USD ($)	Mar. 31, 2024 CAD ($)	Dec. 31, 2023 USD ($)	Dec. 31, 2023 CAD ($)	Dec. 31, 2022 USD ($)	Apr. 26, 2022 USD ($)
Related Party Transaction [Line Items]
Debentures		$ 46,800			$ 56,108		$ 65,435
Interest on Convertible debentures		843
Trade and other receivables		34	$ (2,111)
Debt Settlement Agreement
Related Party Transaction [Line Items]
Debt Repayment by related party common shares | shares	3,899,745
Deemed Price | $ / shares	$ 0.4
Interest on Convertible debentures		$ 400
Debt Settlement Agreement | January [Member]
Related Party Transaction [Line Items]
Debentures				$ 18.9		$ 18.9
Debt Settlement Agreement | December [Member]
Related Party Transaction [Line Items]
Debentures				$ 13.6		$ 13.6
Twenty Two NW Fund LP [Member]
Related Party Transaction [Line Items]
Other Liabilities			300
Trade and other receivables			200
Twenty Two NW Fund LP [Member] | Debt Settlement Agreement
Related Party Transaction [Line Items]
Debt								$ 1,600
Percentage of issued and outstanding common shares	19.50%
Liability and expense			$ 2,100

v3.24.1.u1

RIGHTS OFFERING (Additional Information) (Details) $ / shares in Units, $ / shares in Units, $ in Thousands, $ in Millions	Jan. 09, 2024 CAD ($) $ / shares shares	Jan. 09, 2024 USD ($) shares	Nov. 21, 2023 CAD ($)	Nov. 21, 2023 USD ($)	Mar. 31, 2024 shares	Jan. 09, 2024 $ / shares shares	Dec. 31, 2023 shares
Class of Stock [Line Items]
Aggregate Gross Proceeds	$ 30.0	$ 22,400	$ 30.0	$ 22,400
Additional Subscription Privilege | $			$ 15.0
Purchasers for their reasonable expenses | $				$ 30
Common shares, shares issued	85,714,285				191,880,226	85,714,285	105,377,667
Common shares at a price | (per share)	$ 0.35					$ 0.26
Aggregate net proceeds | $		21,300
Costs associated with the Rights Offering | $		$ 1,100
Eligible holders to subscribe common shares	0.81790023	0.81790023
Rights were required to purchase one common share	1.22264301	1.22264301
Basic Subscription Privilege
Class of Stock [Line Items]
Common shares, shares issued					67,379,471
Additional Subscription Privilege
Class of Stock [Line Items]
Common shares, shares issued					18,334,814

v3.24.1.u1

COMMITMENTS - (Additional Information) (Detail) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Dec. 31, 2023
Long Term Purchase Commitment [Line Items]
Undiscounted operating lease liabilities	$ 43.4	$ 45.1
Undiscounted rent obligations	$ 1.4
Extended the term of the lease agreement	3 years
Inventory And Property Plant And Equipment [Member]
Long Term Purchase Commitment [Line Items]
Purchase obligation, outstanding	$ 1.1	$ 2.8

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