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 September 30, 2026


☐	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 196,129,588 common shares outstanding as of October 27, 2026.

DIRTT ENVIRONMENTAL SOLUTIONS LTD.

FORM 10-Q

FOR THE QUARTER ENDED September 30, 2026

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 Sheet		4
Interim Condensed Consolidated Statement of Operations and Comprehensive Income (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		26
Item 3. Quantitative and Qualitative Disclosures About Market Risk		43
Item 4. Controls and Procedures		43

PART II – OTHER INFORMATION		44
Item 1. Legal Proceedings		44
Item 1A. Risk Factors		44
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		44
Item 3. Defaults Upon Senior Securities		45
Item 4. Mine Safety Disclosures		45
Item 5. Other Information		45
Item 6. Exhibits		46

Cautionary Statement Regarding Forward-Looking Statements

Certain statements contained in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2026 (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, 2025, filed with the U.S. Securities and Exchange Commission (the “SEC”) and applicable securities commissions or similar regulatory authorities in Canada on February 25, 2026 (our “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:

•

the effects of existing or renegotiated trade agreements, including uncertainty surrounding the Canada-United States-Mexico Agreement (“CUSMA”), or tariffs and other trade barriers on exports or imports to and from Canada and the U.S., and any retaliatory measures in response thereto, including potential increases in the cost of our raw materials, our finished goods, and our ability to mitigate such effects and timing thereof;

•

general economic and business conditions in the jurisdictions in which we operate, including potential recession risks in North America;

•

our ability to successfully implement the Company’s strategic transformation plan to grow DIRTT’s revenue and pipeline and manage profitability;

•

our ability to develop our Construction Services channel (previously referred to as Integrated Solutions) and the effects thereof;

•

inflation and material fluctuations of commodity prices, including raw materials, and our ability to set prices for our products that satisfactorily adjust for inflation, tariffs, and fluctuations in commodity prices;

•

shortages of supplies of certain key components and materials or disruption in supplies due to global events;

•

global economic, political and social conditions affecting financial markets, such as the war in Ukraine and the conflict in the Middle East, including Iran;

•

volatility of our share price and potentially limited liquidity for U.S. investors due to our common shares being quoted on the “OTCQX”;

•

the availability of capital or financing on acceptable terms, or at all, which may impact our liquidity and impair our ability to make investments in the business;

•

turnover of our key executives and difficulties in recruiting or retaining key employees;

•

our ability to generate sufficient revenue to achieve and sustain profitability and positive cash flows;

•

our ability to attract, train and retain qualified hourly labor on a timely basis to increase overall productive capacity in our manufacturing facilities to enable us to capture any rising demand in the construction industry;

•

our ability to achieve and manage growth effectively;

•

competition in the interior construction industry;

•

the voting influence our three largest shareholders are able to exercise over the Company due to their ownership of our common shares;

•

competitive behaviors by our co-founders and former executives;

•

the condition and changing trends of the overall construction industry;

•

our reliance on our network of Construction Partners (as defined herein) for sales, marketing and installation of our solutions;

•

our ability to introduce new designs, solutions and technology and gain client and market acceptance;

•

defects in our designing and manufacturing software and warranty and product liability claims brought against us;

•

the effectiveness of our manufacturing processes and our success in implementing improvements to those processes;

•

the effectiveness of certain elements of our administrative systems and the need for investment in those systems;

•

our exposure to currency exchange rates, tax rates, interest rates and other fluctuations, including those resulting from changes in laws or administrative practice, or changes in monetary policies;

•

legal and regulatory proceedings brought against us;

•

infringement on our patents and other intellectual property and our ability to protect and enforce our intellectual property rights, including certain intellectual property rights that are jointly owned with a third party;

•

cyber-attacks and other security breaches of our information and technology systems;

•

damage to our information technology and software systems;

•

our requirements to comply with applicable environmental, health, safety and other similar laws;

•

the impact of environmental, social and governance (“ESG”) matters on our business, including potentially incurring additional expenses implementing Canadian, U.S. and other regulations requiring additional disclosures regarding greenhouse gas emissions and/or broader ESG related-factors;

•

periodic fluctuations in our results of operations and financial condition;

•

the effect of being governed by the corporate laws of a foreign country, including the difficulty of enforcing civil liabilities against directors and officers residing in a foreign country;

•

the availability and treatment of government subsidies (including any current or future requirements to repay or return such subsidies); and

•

future mergers, acquisitions, agreements, consolidations or other corporate transactions we may engage in.

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.

iii

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

DIRTT Environmental Solutions Ltd.

Interim Condensed Consolidated Balance Sheet

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


	As at September 30,			As at December 31,
	2026			2025
ASSETS
Current Assets
Cash and cash equivalents		19,259			20,326
Restricted cash		249			249
Trade and accrued receivables, net of expected credit losses of $0.1 million at September 30, 2026 and December 31, 2025		23,464			22,369
Other receivables		1,915			716
Inventory		13,754			15,757
Prepaids and other current assets		3,023			2,970
Total Current Assets		61,664			62,387
Property, plant and equipment, net		12,884			14,930
Capitalized software, net		2,687			3,009
Operating lease right-of-use assets, net		15,896			18,900
Other assets		2,852			3,278
Deferred tax assets, net		13,068			-
Total Assets		109,051			102,504
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities		17,031			19,430
Other liabilities		6,706			5,436
Customer deposits and deferred revenue		3,697			3,507
Current portion of long-term debt and accrued interest		12,619			23,159
Current portion of lease liabilities		4,582			5,215
Total Current Liabilities		44,635			56,747
Long-term debt		8,001			220
Long-term lease liabilities		14,254			17,002
Total Liabilities		66,890			73,969
SHAREHOLDERS’ EQUITY
Common shares, unlimited authorized without par value, 196,120,034 issued and outstanding at September 30, 2026 and 191,912,548 issued and outstanding at December 31, 2025		217,475			214,990
Additional paid-in capital		8,714			11,189
Accumulated other comprehensive loss		(17,764	)		(17,065	)
Accumulated deficit		(166,264	)		(180,579	)
Total Shareholders’ Equity		42,161			28,535
Total Liabilities and Shareholders’ Equity		109,051			102,504

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

DIRTT Environmental Solutions Ltd.

Interim Condensed Consolidated Statement of Operations

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


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2026			2025			2026			2025
Product revenue		41,545			36,677			121,252			114,764
Service revenue		3,187			1,039			6,222			3,169
Total revenue		44,732			37,716			127,474			117,933

Product cost of sales		26,822			25,794			78,529			79,512
Service cost of sales		2,199			455			6,249			1,594
Total cost of sales		29,021			26,249			84,778			81,106
Gross profit		15,711			11,467			42,696			36,827

Expenses
Sales and marketing		4,049			4,795			13,296			15,265
General and administrative		4,552			4,429			14,536			15,652
Operations support		1,184			1,801			4,036			5,703
Technology and development		719			805			2,562			3,513
Stock-based compensation		529			742			2,128			2,075
Reorganization		300			2,593			3,723			2,977
Total operating expenses		11,333			15,165			40,281			45,185

Operating income (loss)		4,378			(3,698	)		2,415			(8,358	)
Interest income		103			226			290			720
Gain on extinguishment of convertible debentures		-			8			-			22
Foreign exchange (loss) gain		(48	)		602			337			(1,422	)
Interest expense		(362	)		(465	)		(1,066	)		(1,401	)
		(307	)		371			(439	)		(2,081	)
Net income (loss) before tax		4,071			(3,327	)		1,976			(10,439	)
Income taxes
Current and deferred income tax expense (recovery)		(13,049	)		157			(12,930	)		308
Net income (loss) after tax		17,120			(3,484	)		14,906			(10,747	)

Net income (loss) per share
Net income (loss) per share − basic		0.09			(0.02	)		0.08			(0.06	)
Net income (loss) per share − diluted		0.09			(0.02	)		0.07			(0.06	)

Weighted average number of shares outstanding (in thousands)
Basic		194,391			190,981			193,776			190,693
Diluted		198,815			190,981			199,786			190,693

Refer to Note 15 for Related Party Transactions included in this statement.

DIRTT Environmental Solutions Ltd.

Interim Condensed Consolidated Statement of Comprehensive Income (Loss)

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


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2026			2025			2026			2025
Net income (loss) after tax for the period		17,120			(3,484	)		14,906			(10,747	)
Exchange differences on translation of foreign operations		(95	)		(540	)		(699	)		1,266
Comprehensive income (loss) for the period		17,025			(4,024	)		14,207			(9,481	)

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

DIRTT Environmental Solutions Ltd.

Interim Condensed Consolidated Statement of Changes in Shareholders’ Equity

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


										Accumulated
	Number of						Additional			other						Total
	Common			Common			paid-in			comprehensive			Accumulated			shareholders’
	shares			shares			capital			loss			deficit			equity
As at December 31, 2024		193,605,237			219,023			8,206			(18,541	)		(166,098	)		42,590
Stock-based compensation		-			-			566			-			-			566
Issued on vesting of RSUs		343,455			366			(366	)		-			-			-
Issued for employee share purchase plan		236,834			152			-			-			-			152
Cancelled from Shares NCIB and Share Repurchase (as each defined in Note 9)		(4,439,107	)		(4,880	)		1,368			-			-			(3,512	)
RSUs withheld to settle employee tax obligations		-			-			(1	)		-			-			(1	)
Foreign currency translation adjustment		-			-			-			67			-			67
Net loss for the period		-			-			-			-			(661	)		(661	)
As at March 31, 2025		189,746,419			214,661			9,773			(18,474	)		(166,759	)		39,201
Stock-based compensation		-			-			561			-			-			561
Issued on vesting of RSUs		1,130,876			524			(524	)		-			-			-
Issued for employee share purchase plan		298,039			152			-			-			-			152
Cancelled from Shares NCIB		(730,148	)		(852	)		365			-			-			(487	)
RSUs withheld to settle employee tax obligations		-			-			(60	)		-			(16	)		(76	)
Foreign currency translation adjustment		-			-			-			1,739			-			1,739
Net loss for the period		-			-			-			-			(6,602	)		(6,602	)
As at June 30, 2025		190,445,186			214,485			10,115			(16,735	)		(173,377	)		34,488
Stock-based compensation		-			-			604			-			-			604
Issued on vesting of RSUs		235,807			231			(231	)		-			-			-
Settlement of DSU liability (as defined in Note 9)		1,234,487			592			-			-			-			592
RSUs withheld to settle employee tax obligations		-			-			(92	)		-			-			(92	)
Issued for employee share purchase plan		267,012			130			-			-			-			130
Cancelled from Shares NCIB		(341,629	)		(386	)		175			-			-			(211	)
Foreign currency translation adjustment		-			-			-			(540	)		-			(540	)
Net loss for the period		-			-			-			-			(3,484	)		(3,484	)
As at September 30, 2025		191,840,863			215,052			10,571			(17,275	)		(176,861	)		31,487

As at December 31, 2025		191,912,548			214,990			11,189			(17,065	)		(180,579	)		28,535
Stock-based compensation		-			-			537			-			-			537
Issued on vesting of RSUs		1,715,613			1,669			(1,669	)		-			-			-
Issued for employee share purchase plan		188,899			94			-			-			-			94
Cancelled from Renewed Shares NCIB (as defined in Note 9)		(208,006	)		(234	)		96			-			-			(138	)
RSUs withheld to settle employee tax obligations		-			-			(401	)		-			(529	)		(930	)
Foreign currency translation adjustment		-			-			-			(377	)		-			(377	)
Net loss for the period		-			-			-			-			(3,273	)		(3,273	)
As at March 31, 2026		193,609,054			216,519			9,752			(17,442	)		(184,381	)		24,448
Stock-based compensation		-			-			380			-			-			380
Issued on vesting of RSUs		582,915			361			(361	)		-			-			-
Issued for employee share purchase plan		140,627			62			-			-			-			62
RSUs withheld to settle employee tax obligations		-			-			(3	)		-			-			(3	)
Foreign currency translation adjustment		-			-			-			(227	)		-			(227	)
Net income for the period		-			-			-			-			1,059			1,059
As at June 30, 2026		194,332,596			216,942			9,768			(17,669	)		(183,322	)		25,719
Stock-based compensation		-			-			191			-			-			191
Issued on vesting of RSUs		1,679,565			473			(473	)		-			-			-
Issued for employee share purchase plan		107,873			60			-			-			-			60
RSUs withheld to settle employee tax obligations		-			-			(772	)		-			(62	)		(834	)
Foreign currency translation adjustment		-			-			-			(95	)		-			(95	)
Net income for the period		-			-			-			-			17,120			17,120
As at September 30, 2026		196,120,034			217,475			8,714			(17,764	)		(166,264	)		42,161

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

DIRTT Environmental Solutions Ltd.

Interim Condensed Consolidated Statement of Cash Flows

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


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2026			2025			2026			2025
Cash flows from operating activities:
Net income (loss) for the period		17,120			(3,484	)		14,906			(10,747	)
Adjustments:
Depreciation and amortization		1,331			1,534			4,164			4,561
Stock-based compensation		529			742			2,128			2,075
Foreign exchange loss (gain)		76			(492	)		(388	)		1,573
Gain on extinguishment of convertible debentures		-			(8	)		-			(22	)
Accretion of debt		28			80			139			255
Loss on disposal		-			-			-			115
Deferred income tax (recovery)		(13,068	)		-			(13,068	)		-
Changes in operating assets and liabilities:
Trade and accrued receivables		(4,413	)		1,977			(947	)		4,638
Other receivables		(733	)		242			(1,257	)		(425	)
Inventory		115			(422	)		1,610			(498	)
Prepaid and other assets, current and long term		(254	)		118			(17	)		(447	)
Accounts payable and accrued liabilities		1,251			1,773			(2,075	)		1,342
Other liabilities		(79	)		(110	)		268			(110	)
Customer deposits and deferred revenue		1,099			2,387			196			1,730
Current portion of long-term debt and accrued interest		214			(11	)		(79	)		(14	)
Lease liabilities		(124	)		64			(340	)		126
Net cash flows provided by operating activities		3,092			4,390			5,240			4,152

Cash flows from investing activities:
Purchase of property, plant and equipment, net of accounts payable changes		(448	)		(283	)		(1,140	)		(1,084	)
Capitalized software development expenditures		(182	)		(490	)		(648	)		(1,420	)
Other asset expenditures		(22	)		(58	)		(192	)		(149	)
Recovery of software development expenditures		-			51			59			165
Net cash flows (used in) investing activities		(652	)		(780	)		(1,921	)		(2,488	)

Cash flows from financing activities:
Common share repurchases		-			(211	)		(138	)		(4,204	)
Repayment of long-term debt		(326	)		(122	)		(12,712	)		(312	)
Employee tax payments on vesting of RSUs		(1,279	)		(89	)		(1,683	)		(149	)
Net proceeds received on long-term debt		3,705			-			10,613			-
Net cash flows provided by (used in) financing activities		2,100			(422	)		(3,920	)		(4,665	)
Effect of foreign exchange on cash, cash equivalents and restricted cash		(107	)		(156	)		(466	)		(155	)
Net increase (decrease) in cash, cash equivalents and restricted cash		4,433			3,032			(1,067	)		(3,156	)
Cash, cash equivalents and restricted cash, beginning of period		15,075			23,343			20,575			29,531
Cash, cash equivalents and restricted cash, end of period		19,508			26,375			19,508			26,375
Supplemental disclosure of cash flow information:
Interest paid		(42	)		(367	)		(878	)		(1,076	)
Income taxes paid		(95	)		(1	)		(271	)		(5	)

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within
the consolidated balance sheet.							As at September 30,
							2026			2025
Cash and cash equivalents								19,259			26,132
Restricted cash								249			243
Total cash, cash equivalents and restricted cash								19,508			26,375

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

DIRTT Environmental Solutions Ltd.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

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

1. GENERAL INFORMATION

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

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

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

2. BASIS OF PRESENTATION

The accompanying unaudited interim condensed consolidated financial statements (the “Financial Statements”) have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X and, accordingly, the Financial Statements do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of the Company, the Financial Statements contain all adjustments necessary, consisting of only normal recurring adjustments, for a fair statement of its financial position as of September 30, 2026, and its results of operations and cash flows for the three and nine months ended September 30, 2026 and 2025. The condensed balance sheet at December 31, 2025, 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, 2025 and 2024 and for each of the three years in the period ended December 31, 2025 included in the Annual Report on Form 10-K of the Company as filed with the U.S. Securities and Exchange Commission (the “SEC”) and applicable securities commission or similar regulatory authorities in Canada on February 25, 2026 (the “Annual Report on Form 10-K”).

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

Principles of consolidation

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

Basis of measurement

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

Seasonality

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

3. ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS

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

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

On July 30, 2025, the FASB issued Accounting Standards Update No. 2025-05, “Financial Instruments - Credit Losses” (“ASU-2025-05”) which requires additional consideration when estimating the expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. The amendments in ASU-2025-05 are effective for fiscal years beginning after December 15, 2025. The Company has adopted this standard and there is minimal impact to the financial statements and disclosures.

On September 18, 2025, the FASB issued Accounting Standards Update No. 2025-06, “Intangibles - Goodwill and Other - Internal-Use Software” (“ASU-2025-06”) which targets improvements to the accounting for internal-use software. The amendments in ASU-2025-06 are effective for fiscal years beginning after December 15, 2027, on a prospective basis with an option of retrospective application. The Company is evaluating the impact of the adoption of this standard.

On December 8, 2025, the FASB issued Accounting Standards Update No. 2025-11, “Narrow-Scope Improvements to Interim Reporting” (“ASU-2025-11”) which clarifies the guidance on interim reporting disclosures. The amendments in ASU-2025-11 are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. The Company is evaluating the impact of the adoption of this standard.

On May 19, 2026, the FASB issued Accounting Standards Update No. 2026-02, “Environmental Credits and Environmental Credit Obligations” (“ASU-2026-02”) which establishes guidance for the recognition, measurement, presentation, and disclosure of environmental credits and environmental credit obligations. The amendments in ASU-2026-02 are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. The Company is evaluating the impact of the adoption of this standard.

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

4. REORGANIZATION

Transformation Office

In early 2025, a transformation office was set up, to accelerate the strategic transformation of our business by streamlining the Company’s processes and procedures, supporting the Construction Services channel, and improving productivity across the Company (the “Transformation Office”). We are incurring one-time consultant costs to assist in, advise, and implement our transformation actions, as well as one-time termination benefits as a result of elimination of positions. The program is planned to be completed in 2026.

For the three and nine months ended September 30, 2026 and 2025, the following reorganization costs incurred relate to the above mentioned initiatives:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2026		2025		2026		2025
Termination benefits		204		1,879		2,191		1,879
Transformation Office costs		96		689		1,517		689
Other costs		-		25		15		409
Total reorganization costs		300		2,593		3,723		2,977


Reorganization costs in accounts payable and accrued liabilities at January 1, 2026	2,088
Reorganization expense	3,723
Reorganization costs paid	(4,696	)
Reorganization costs in accounts payable and accrued liabilities at September 30, 2026	1,115

Of the $1.1 million of reorganization costs in accounts payable and accrued liabilities as at September 30, 2026 (December 31, 2025 – $2.1 million), $1.1 million relates to termination benefits (December 31, 2025 – $1.8 million) and $nil million relates to other reorganization costs (December 31, 2025 – $0.3 million).

5. TRADE AND ACCRUED RECEIVABLES

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

In order to manage and assess our risk, management maintains credit policies that include regular review of credit limits of individual receivables and systematic monitoring of aging of trade receivables and the financial well-being of our customers. At September 30, 2026, approximately 46% of our trade accounts receivable are trade credit insured, relating to accounts receivable from counterparties deemed creditworthy by the insurer and excluding accounts receivable from government entities. In addition, where possible, we collect a 50% deposit on sales, excluding government and certain other clients.

Our trade balances are spread over a broad Construction Partners and Construction Services customers, which is geographically dispersed. For the three months ended September 30, 2026, one customer accounted for greater than 10% of revenue. For the nine months ended September 30, 2026 and for the three and nine months ended September 30, 2025, no single Construction Partner or customer accounted for greater than 10% of revenue.

The Company’s aged receivables were as follows:


	As at
	September 30, 2026			December 31, 2025
Current		19,343			19,894
Overdue		4,192			2,552
		23,535			22,446
Less: expected credit losses		(71	)		(77	)
Trade and accrued receivables, net of expected credit losses		23,464			22,369

No adjustment to our expected credit losses of $0.1 million was required for the three and nine months ended September 30, 2026 for our trade receivables. Receivables are generally considered to be past due when over 60 days old, unless there is a separate payment arrangement in place for the collection of the receivable.

6. OTHER LIABILITIES


	As at
	September 30, 2026		December 31, 2025
Warranty provisions (1)		853		863
DSU and PSU liability		2,886		1,954
Income taxes payable		109		247
Sublease deposits		152		206
Other provisions and other liabilities(2)		2,706		2,166
Other liabilities		6,706		5,436

(1)

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


	As at
	September 30, 2026			December 31, 2025
As at January 1,		863			849
Additions to warranty provision		761			619
Payments related to warranties		(771	)		(605	)
		853			863

(2)

As previously disclosed, DIRTT Environmental Solutions Inc. received a subpoena for records in relation to an ongoing inquiry by the U.S. Department of Justice into certain projects and services provided by a third party and DIRTT dating back to 2014. The Company is complying with the subpoena and cooperating with the U.S. Department of Justice. There have been ongoing discussions regarding the possible resolution of these matters with the U.S. Department of Justice without admitting or denying liability. Based on the discussions to date, the Company provided $2.0 million as at December 31, 2025 for the cost of a potential settlement of these matters with the U.S. Department of Justice. There have been no material developments as at September 30, 2026.

7. LONG-TERM DEBT


	Leasing Facilities			Convertible Debentures			BDC Loan			Total Debt
Balance at January 1, 2025		373			21,979			-			22,352
Accretion of issue costs		-			338			-			338
Accrued interest		28			1,384			-			1,412
Interest payments		(28	)		(1,394	)		-			(1,422	)
Principal repayments		(81	)		(314	)		-			(395	)
Gain on extinguishment		-			(24	)		-			(24	)
Exchange differences		17			1,101			-			1,118
Balance at December 31, 2025		309			23,070			-			23,379
Current portion of long-term debt and accrued interest		89			23,070			-			23,159
Long-term debt		220			-			-			220

Balance at January 1, 2026		309			23,070			-			23,379
Issuances		-			-			10,613			10,613
Accretion of issue costs		-			107			32			139
Accrued interest		17			562			220			799
Interest payments		(17	)		(690	)		(171	)		(878	)
Principal repayments		(74	)		(12,043	)		(595	)		(12,712	)
Exchange differences		-			(416	)		(304	)		(720	)
Balance at September 30, 2026		235			10,590			9,795			20,620
Current portion of long-term debt and accrued interest		92			10,590			1,937			12,619
Long-term debt		143			-			7,858			8,001

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”), as disclosed in our Annual Report on Form 10-K. The Company has extended the RBC Facility a number of times since 2023, including on November 4, 2025 (the “Fifth Extended RBC Facility”). The Fifth Extended RBC Facility matures on November 30, 2026 and is subject to the same borrowing base terms as the previous facility with the borrowing base calculation based on accounts receivable balances to a maximum of C$25.0 million. Interest is calculated as the Canadian or U.S. prime rate plus 50 basis points or at the Term CORRA Rate as adjusted by the Term CORRA Adjustment or Term SOFR plus the Term SOFR Adjustment, in each case plus 175 basis points. The Company would have been in default under the Fifth Extended RBC Facility if the January Debentures were not paid in full or refinanced on terms and conditions satisfactory to RBC by January 31, 2026. The January Debentures were paid in full on January 31, 2026.

On February 11, 2026 and in connection with the Loan (as defined herein), the Company amended the Fifth Extended RBC Facility (the “Seventh Amended RBC Facility”) and, together with its subsidiary, entered into priority agreements with RBC and BDC (collectively, the “Priority Agreement”). The Seventh Amended RBC Facility matures on November 30, 2026 and is subject to the same borrowing base terms as the previous facility. The Seventh Amended RBC Facility allows the Company to incur indebtedness to BDC of C$15 million under the Loan and incorporates permitting specific encumbrances to BDC and the Priority Agreement. The Seventh Amended RBC Facility also releases certain mortgage collateral held by RBC.

On March 11, 2026, the Company entered into the Waiver and Eighth Amendment to Loan Agreement (the “Eighth Amended RBC Facility”), which matures on November 30, 2026. The Eighth Amended RBC Facility is subject to the same borrowing base terms stated in the Seventh Amended RBC Facility. The Eighth Amended RBC Facility includes a customary “Restricted Payments” covenant that prohibits us from, among other things, repurchasing our common shares and paying dividends, unless we have satisfied certain conditions (the “Payment Conditions”). The Payment Conditions include conditions that, after giving effect to the relevant Restricted Payment, the Company has a net borrowing availability of at least C$5.0 million over the preceding 30-day period, and our fixed charge coverage ratio (“FCCR”) be at least 1.10 to 1.00 on a trailing 12-month basis. In February 2026, we and RBC determined that our purchases of our common shares under our NCIB in December 2025 did not comply with the Restricted Payments covenant because our FCCR was below 1.10 to 1.00. The Eighth Amended RBC Facility provided a waiver in connection with the foregoing.

At September 30, 2026, available borrowings under the Eighth Amended RBC Facility are C$12.0 million ($8.4 million) (December 31, 2025 – C$16.3 million ($11.8 million) of available borrowings), calculated in the same manner as the RBC Facility described above, of which no amounts have been drawn. Under the RBC Facility, outstanding loans include an irrevocable standby letter of credit dated September 15, 2026 issued by RBC on behalf of the Company in the face amount of C$3.5 million. Under the RBC Facility, if the “Net Borrowing Availability” (defined as the borrowing base less any loan advances and letters of credit or guarantee and if undrawn including unrestricted cash), was less than C$3.0 million for at least thirty consecutive calendar days, the Company is subject to a FCCR covenant of 1.10:1 on a trailing twelve-month basis. As at September 30, 2026, the Company is in compliance with its financial covenants.

On November 3, 2026, subsequent to the quarter-end, the Company, together with DIRTT Environmental Solutions, Inc., amended the Eighth Amended RBC Facility (as amended, the “Ninth Amended RBC Facility”). The Ninth Amended RBC Facility matures on November 30, 2029 and continues to provide for a C$25.0 million senior secured revolving credit facility. The Ninth Amended RBC Facility also expands the borrowing base to include eligible inventory.

Leasing Facilities

The Company has a C$5.0 million equipment leasing facility in Canada (the “Canada Leasing Facility”) of which C$4.4 million ($3.1 million) has been drawn and C$4.1 million ($3.0 million) has been repaid. The Canada Leasing Facility has a seven-year term and bears interest at 4.25%.

The Company did not make any draws on the Canada Leasing Facility during the three and nine months ended September 30, 2026 (2025 – $nil). The associated financial liabilities are shown on the consolidated balance sheet in the current portion of long-term debt and accrued interest and long-term debt.

Convertible Debentures

On January 25, 2021, the Company completed a C$35.0 million ($27.5 million) bought-deal financing of convertible unsecured subordinated debentures (the “January Debentures”) with a syndicate of underwriters. On January 29, 2021, the Company issued a further C$5.25 million ($4.1 million) of the January Debentures under the terms of an overallotment option granted to the underwriters. The January Debentures matured and became repayable on January 31, 2026 (the “January Debentures Maturity Date”) and accrued 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 were payable in cash or shares at the option of the Company. The January Debentures were 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. 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). 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 (“Issuer Bid”). On August 2, 2024, the Company repurchased for cancellation C$18.9 million ($14.0 million) principal amount of the January Debentures held by 22NW Fund, L.P. (“22NW”). On August 28, 2024, the Company commenced the Debentures normal course issuer bid (the “Debentures NCIB”) which expired on August 27, 2025. On August 26, 2025, the Company announced the renewal of the Debentures NCIB which commenced on August 28, 2025 upon expiry of the Debentures NCIB (the “Renewed Debentures NCIB”) and terminated on August 27, 2026 for the December Debentures. The Renewed Debentures NCIB terminated on January 31, 2026, with respect to the January Debentures, concurrent with the January Debentures Maturity Date and repayment of the January Debentures. The Company made $nil repurchases under the Renewed Debentures NCIB of the January Debentures during the three and nine months ended September 30, 2026 and (C$0.01 million ($0.01 million) and C$0.06 million ($0.04 million)), in aggregate, for the three and nine months ended September 30, 2025, respectively, as part of the Debentures NCIB and Renewed Debentures NCIB.

On December 1, 2021, the Company completed a C$35.0 million ($27.4 million) bought-deal financing of convertible unsecured subordinated debentures (the “December Debentures”), and collectively with the January Debentures, the “Debentures” with a syndicate of underwriters. The December Debentures will mature and be repayable on December 31, 2026 (the “December Debentures Maturity Date”) and accrue interest at the rate of 6.25% per annum payable semi-annually in arrears on the last day of June and December of each year commencing on June 30, 2022 until the December Debentures Maturity Date. Interest and principal are payable in cash or shares at the option of the Company. The December Debentures will be convertible into common shares of DIRTT, at the option of the holder, at any time prior to the close of business on the business day prior to the earlier of the December Debentures Maturity Date and the date specified by the Company for redemption of the December Debentures. Costs of the transaction were approximately C$2.3 million, including the underwriters’ commission. As a result of the Rights Offering, 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. On August 2, 2024, the Company repurchased for cancellation C$13.6 million ($10.1 million) principal amount of December Debentures held by 22NW. On August 28, 2024, the Company commenced the Debentures NCIB which expired on August 27, 2025. On August 26, 2025, the Company announced the Renewed Debentures NCIB which commenced on August 28, 2025 upon expiry of the Debentures NCIB. The Renewed Debentures NCIB terminated on August 27, 2026 with respect to the December Debentures. The Company did not repurchase any of the December Debentures during the three months ended September 30, 2026. During the nine months ended September 30, 2026, the Company repurchased for cancellation C$0.03 million ($0.02 million) principal amount of the December Debentures, as part of the Renewed Debentures NCIB (C$0.1 million ($0.1 million) and C$0.3 million ($0.2 million), in aggregate, for the three and nine months ended September 30, 2025, respectively, as part of the Debentures NCIB and Renewed Debentures NCIB). As at September 30, 2026, C$14.8 million ($10.4 million) principal amount of the December Debentures was outstanding.

BDC Loan

On December 11, 2025, the Company entered into a letter agreement (the “Letter”) with the Business Development Bank of Canada (“BDC”), pursuant to which BDC committed to lending the Company up to C$15.0 million (the “Loan”) subject to the satisfaction of certain conditions. The Letter was subsequently amended on January 30, 2026, February 9, 2026 and March 9, 2026 (the “Amended Letter”).

Following the satisfaction of the conditions precedent set forth in the Letter, the Company received an initial disbursement of C$5.5 million on February 13, 2026. Following satisfaction of certain additional conditions, the Company received a second disbursement of C$4.5 million on March 11, 2026 and a third disbursement of C$5.0 million on September 18, 2026. The Loan accrues interest at a rate equal to BDC’s floating base rate (6.55% per annum) minus 0.75%. Monthly principal repayments of the Loan commenced in May 2026 and additional monthly interest payments are due on the last day of each month, beginning on March 31, 2026. The Loan matures on April 30, 2032. Costs of the transaction were approximately C$0.4 million ($0.3 million). As at September 30, 2026, the Company is in compliance with the Loan’s financial covenants.

The obligations of the Company under the Amended Letter are secured by: (a) general security agreements from the Company granting (i) a first-ranking security interest in specific equipment, and (ii) a second priority security interest in all other present and after acquired personal property (excluding consumer goods), subject to certain registered charges; (b) guarantees from DIRTT Environmental Solutions, Inc. for the full amount of the Loan, supported by general security agreements granting (i) a first ranking security interest in specific equipment and (ii) second priority security interest in all other present and after acquired personal property (excluding consumer goods), subject to certain registered charges; (c) various landlord’s waivers of distraint; (d) first mortgage in the principal amount of US$5.0 million on the land and buildings located at 325 North Wells Street, Chicago, IL, USA, and (e) a letter of credit for C$3.5 million for the third disbursement of C$5.0 million.

In connection with, and as a condition to receiving, the funding under the Loan, RBC issued an irrevocable standby letter of credit, dated September 15, 2026 (the “Letter of Credit”), in favor of BDC for the account of the Company, in an aggregate amount of C$3.5 million.

The Letter of Credit is available to BDC upon written demand in the form specified in the Letter of Credit and may be drawn upon in partial or multiple drawings. The Letter of Credit has an initial term of one year and is automatically extended for successive one-year periods unless RBC gives notice of non-renewal.

The proceeds of the Loan, together with cash on hand, were used to refinance the January Debentures.

The following table includes principal maturities of the BDC Loan at September 30, 2026:


	BDC Loan
2026		441
2027		1,762
2028		1,762
2029		1,762
2030		1,762
Thereafter		1,564
Total		9,053

8. STOCK-BASED COMPENSATION

In May 2020, shareholders approved the DIRTT Environmental Solutions Ltd. Long Term Incentive Plan, which was subsequently amended and restated in each of 2023, 2024 and 2025 and is currently called the DIRTT Environmental Solutions Ltd. Third Amended and Restated Long-Term Incentive Plan (as amended and restated, the “LTIP”). Each amendment and restatement was approved by our shareholders. The 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”). No further awards have been or will be granted under either the Stock Option Plan or the PSU Plan following initial approval of the LTIP in May of 2020, but both plans remain in place to govern the terms of any awards that were granted pursuant to such plans.

The 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 LTIP, the sum of (i) 30,350,000 common shares plus (ii) the number of common shares subject to stock options previously granted under the Stock Option Plan that, following May 22, 2020, expire or are cancelled or terminated without having been exercised in full, have been reserved for issuance under the LTIP. Upon vesting of certain LTIP awards, the Company may withhold 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.

Prior to May of 2023, deferred share units (“DSUs”) were 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. As of May 30, 2023, the LTIP provides 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 LTIP. Effective May 30, 2023, no new awards have been or 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 September 30,				For the Nine Months Ended September 30,
	2026		2025		2026			2025
Equity-settled awards		487		741		2,178			2,219
Cash-settled awards		42		1		(50	)		(144	)
		529		742		2,128			2,075

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


	RSU Time-			RSU Performance-
	Based			Based			PSU			DSU
	Number of			Number of			Number of			Number of
	units			units			units			units
Outstanding at December 31, 2024		10,260,791			45,177			1,845,608			4,033,894
Granted		25,000		-				-			780,025
Vested or settled		(1,710,138	)	-				-			(1,234,487	)
Withheld to settle employee tax obligations		(335,975	)	-				-			-
Forfeited or expired		(439,119	)		(45,177	)		-			(347,628	)
Outstanding at September 30, 2025		7,800,559			-			1,845,608			3,231,804
Outstanding at December 31, 2025		8,181,585			-			2,597,608			3,464,988
Granted		887,450			-			1,193,750			819,429
Vested or settled		(3,978,093	)		-			-			-
Withheld to settle employee tax obligations		(3,020,798	)		-			-			-
Forfeited or expired		(374,023	)		-			(922,804	)		-
Outstanding at September 30, 2026		1,696,121			-			2,868,554			4,284,417

Restricted share units (time-based vesting)

Except as noted below, outstanding restricted share units (“RSUs”) that vest based on time have an aggregate time-based vesting period of three years and generally one-third of the RSUs vest every year over a three-year period from the date of grant. The RSUs will be settled following vesting by way of the provision of cash or shares to employees (or a combination thereof), at the discretion of the Company. The weighted average fair value of the RSUs granted in the nine months ended September 30, 2025 and September 30, 2026 was C$0.82 and C$0.87, respectively. During the second quarter of 2026, the Executive Chairman of the Board was granted 150,000 RSUs with a weighted average fair value of C$0.77, which was determined using the closing price of the Company’s common shares on the respective grant date. These RSUs vested on July 2, 2026.

Restricted share units (performance-based vesting)

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

Performance share units

During the second quarter of 2023, certain executives were issued a strategic equity grant through performance share units (“PSUs”). The performance period of the PSUs is from January 1, 2023, to December 31, 2026, with a cliff vesting term for December 31, 2026. An aggregate of 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 September 30, 2026, the fair value of these PSUs has been deemed to be $nil based on the likelihood of achieving the targets compared to current results. During the third quarter of 2023 and the first quarter of 2026, 738,553 PSUs and 922,804 PSUs, respectively, with a $nil value were forfeited as a result of executive departures and 922,804 PSUs with a $nil value are outstanding at September 30, 2026.

During the fourth quarter of 2025, the Company granted 752,000 PSUs to its chief transformation officer. The performance period was from November 26, 2025 to June 30, 2026. The performance measures relate to success of cost savings targets tied to transformation efforts by the Company. The assessment of the performance criteria during the performance period will be determined by the Board of Directors in the fourth quarter of 2026. As of September 30, 2026, the PSUs were deemed to have a value of $0.6 million (December 31, 2025 – $0.6 million).

During the third quarter of 2026, the Company granted 1,193,750 PSUs to certain employees. The performance period is for the year ended December 31, 2026. The performance measures are weighted evenly and relate to Adjusted EBITDA and absolute total shareholder return. As of September 30, 2026, the fair value of these PSUs has been deemed to be $0.4 million based on the likelihood of achieving the targets compared to current results.

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 September 30, 2026 had a fair value of $0.4 million which is included in other liabilities on the balance sheet (December 31, 2025 – $0.5 million).

Granted under the LTIP

DSUs granted after May 30, 2023 (the “New DSUs”) will be settled by way of the provision of cash or shares (or a combination thereof) to the directors, at the discretion of the Company. The Company intends to settle these DSUs through issuances of common shares. The weighted average fair value of the DSUs granted in the first nine months of 2026 and 2025 was C$0.77 ($0.54) and C$0.89 ($0.63), respectively, which was determined using the closing price of the Company’s common shares on the grant date. New DSUs outstanding at September 30, 2026 had a fair value of $1.9 million which is included in other liabilities on the balance sheet (December 31, 2025 – $1.4 million).

Dilutive Instruments

For the three months ended September 30, 2026, 0.7 million RSUs, 0.8 million PSUs, and 18.5 million common shares which would have been issued if the principal amounts of the December Debentures were settled in common shares at the quarter-end price were excluded from the diluted weighted average number of common shares, as their effect would have been anti-dilutive to the net income per share. 1.1 million RSUs and 3.3 million New DSUs were included in the diluted weighted average number of common shares. See Note 10 for the dilutive impact on net income per share.

For the nine months ended September 30, 2026, 0.9 million RSUs, 0.8 million PSUs, and 18.5 million common shares which would have been issued if the principal amounts of the December Debentures were settled in common shares at the quarter-end price were excluded from the diluted weighted average number of common shares, as their effect would have been anti-dilutive to the net income per share. 3.0 million RSUs and 3.0 million New DSUs were included in the diluted weighted average number of common shares. See Note 10 for the dilutive impact on net income per share.

For the three and nine months ended September 30, 2025, 0.3 million and 5.3 million RSUs, respectively, 2.5 million and 2.3 million New DSUs, 1.8 million PSUs, and 39.9 million common shares which would have been issued if the principal amount of the December Debentures and the January Debentures were settled in common shares at the quarter-end price were excluded from the diluted weighted average number of common shares, as their effect would have been anti-dilutive to the net loss per share.

9. SHARE REPURCHASES

On December 18, 2024, the Company announced a normal course issuer bid for common shares (the “Shares NCIB”), which commenced on December 20, 2024 and terminated on December 19, 2025, and permitted DIRTT to acquire up to 7,515,233 common shares. 341,629 and 1,590,040 common shares were acquired and cancelled during the three and nine months ended September 30, 2025, respectively. All repurchases under the Shares NCIB were made on the open market through the facilities of the Toronto Stock Exchange (the “TSX”) at the market price of common shares at the time of acquisition. Any common shares acquired through the Shares NCIB were immediately cancelled.

On December 18, 2025, the Company announced the renewal of the Shares NCIB which commenced on December 22, 2025 and will terminate on December 21, 2026 (the “Renewed Shares NCIB”). The Renewed Shares NCIB permits DIRTT to acquire up to 9,593,878 of its common shares. All purchases will be made on the open market through the facilities of the TSX at the market price of common shares at the time of the acquisition. Any common shares acquired through the Renewed Shares NCIB will be immediately cancelled.

On February 13, 2025, the Company entered into a share repurchase agreement (the “NGEN Repurchase Agreement”) with NGEN III, LP (“NGEN”), pursuant to which the Company purchased for cancellation 3,920,844

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

Under the Renewed Shares NCIB, DIRTT acquired and cancelled nil common shares during the three months ended September 30, 2026 and 208,006 common shares during the nine months ended September 30, 2026.

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


Period	Total number of shares purchased		Average price paid per share		Total number of shares purchased as part of publicly announced programs		Maximum number of shares that may yet be purchased under the program
January 1, 2026 - January 31, 2026		116,253	$	0.64		116,253		9,477,625
February 1, 2026 - February 28, 2026		53,085	$	0.65		53,085		9,424,540
March 1, 2026 - March 31, 2026		38,668	$	0.69		38,668		9,385,872
April 1, 2026 - April 30, 2026		-	NA			-		9,385,872
May 1, 2026 - May 31, 2026		-	NA			-		9,385,872
June 1, 2026 - June 30, 2026		-	NA			-		9,385,872
July 1, 2026 - July 31, 2026		-	NA			-		9,385,872
August 1, 2026 - August 31, 2026		-	NA			-		9,385,872
September 1, 2026 - September 30, 2026		-	NA			-		9,385,872
Total		208,006				208,006		9,385,872

10. EARNINGS (LOSS) PER SHARE


	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
	2026		2025			2026		2025
Net income (loss) per share – basic
Net income (loss) (thousands of U.S. dollars)	$	17,120	$	(3,484	)	$	14,906	$	(10,747	)
Weighted average number of shares outstanding (thousands of shares)		194,391		190,981			193,776		190,693
Net income (loss) per share (U.S. dollars) − basic (as on the Consolidated Statement of Operations)	$	0.09	$	(0.02	)	$	0.08	$	(0.06	)

Net income (loss) per share − diluted
Net income (loss) (thousands of U.S. dollars)	$	17,120	$	(3,484	)	$	14,906	$	(10,747	)
Weighted average number of shares outstanding (thousands of shares)		194,391		190,981			193,776		190,693
Dilutive RSUs (thousands of shares) (1)		1,090		-			2,961		-
Dilutive New DSUs (thousands of shares) (1)		3,334		-			3,049		-
Weighted average number of shares outstanding (thousands of shares)		198,815		190,981			199,786		190,693
Net income (loss) per share (U.S. dollars) − diluted (as on the Consolidated Statement of Operations)	$	0.09	$	(0.02	)	$	0.07	$	(0.06	)

(1) For the three and nine months ended September 30, 2026 the Net income per share − diluted includes the effect of 1.1 million and 3.0 million RSUs and 3.3 million and 3.0 million New DSUs, respectively, as they would have the potential to dilute basic income per share. Refer to Note 8 for the anti-dilutive impact on the three and nine months ended September 30, 2026 and the three and nine months ended September 30, 2025.

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 September 30,				For the Nine Months Ended September 30,
	2026		2025		2026		2025
Product		37,204		32,431		107,976		102,130
Transportation		4,167		4,066		12,688		12,095
License fees from Construction Partners		174		180		588		539
Total product revenue		41,545		36,677		121,252		114,764
Installation and other services		3,187		1,039		6,222		3,169
		44,732		37,716		127,474		117,933

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 September 30,				For the Nine Months Ended September 30,
	2026		2025		2026		2025
At a point in time		41,371		36,497		120,664		114,225
Over time		3,361		1,219		6,810		3,708
		44,732		37,716		127,474		117,933

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 includes pre-construction services, license fees, 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
	September 30, 2026		December 31, 2025		December 31, 2024
Customer deposits		3,522		3,474		4,028
Deferred revenue		175		33		-
Contract liabilities		3,697		3,507		4,028

Contract liabilities primarily relate to deposits received from customers and maintenance revenue from license subscriptions. The balance of contract liabilities was higher as at September 30, 2026 compared to December 31, 2025 mainly due to the timing of orders and payments. Contract liabilities as at December 31, 2025 and 2024 totaling $3.5 million and $4.0 million, respectively, were recognized as revenue in the nine months ended September 30, 2026 and 2025, 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 September 30,				For the Nine Months Ended September 30,
	2026		2025		2026		2025
Commercial		28,188		21,675		79,660		70,581
Healthcare		3,717		8,645		21,091		25,014
Government		4,798		2,057		10,564		7,713
Education		4,668		4,120		9,349		10,917
License fees from Construction Partners		174		180		588		539
Total product and transportation revenue		41,545		36,677		121,252		114,764
Installation and other services		3,187		1,039		6,222		3,169
		44,732		37,716		127,474		117,933

12. SEGMENT REPORTING

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

Revenue from external customers


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2026		2025		2026		2025
Canada		8,035		3,298		19,005		14,220
U.S.		36,697		34,418		108,469		103,713
		44,732		37,716		127,474		117,933

Non-current assets, excluding deferred tax assets


	As at September 30,		As at December 31,
	2026		2025
Canada		22,475		26,013
U.S.		11,844		14,104
		34,319		40,117

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

DIRTT’s chief operating decision makers are its chief financial officer and chief executive officer. The chief operating decision makers assess performance for the solutions segment and decide how to allocate resources based on gross profit and net income (loss) that also is reported on the Consolidated Statement of Operations and Comprehensive Income (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 makers use net income to evaluate income generated from segment assets (return on assets) in deciding whether to reinvest profits into the solutions segment or into other parts of the entity, such as to repay long-term debt.

Net income (loss) is used to monitor budget versus actual results. The chief operating decision makers also use net income (loss) in competitive analysis by benchmarking to DIRTT’s competitors. The competitive analysis along with the monitoring of budgeted versus actual results are used in assessing performance of the segment and in establishing management’s compensation.

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

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


	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
	2026		2025			2026		2025
	($ in thousands)					($ in thousands)
Revenue		44,732		37,716			127,474		117,933
Operating expenses (1)		11,333		15,165			40,281		45,185
Operating income (loss)		4,378		(3,698	)		2,415		(8,358	)
Other income/(expenses) and gains/(losses) (2)		12,742		214			12,491		(2,389	)
Net income (loss) after tax		17,120		(3,484	)		14,906		(10,747	)

Reconciliation of profit or loss
Adjustments and reconciling items		-		-			-		-
Net income (loss) after tax		17,120		(3,484	)		14,906		(10,747	)

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

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

13. INCOME TAXES

As at September 30, 2026, the Company had a valuation allowance of $17.2 million against deferred tax assets as the Company has experienced cumulative losses in recent years (December 31, 2025 – $30.9 million).

Management evaluated the positive and negative evidence bearing on realization of the deferred tax asset. The significant evidence considered included the history of cumulative losses in both Canada and the U.S. The Canadian entity continues to accumulate losses which begin to expire in 2037 while the U.S. entity has began to show income in the last 3 years. Based on the weight of the available evidence, management concluded that it is more likely than not that $13.1 million of the gross deferred tax asset will be realized and has recognized a deferred tax asset as at September 30, 2026. For the Canadian entity, we continue to record a valuation allowance as at September 30, 2026.

14. COMMITMENTS AND CONTINGENCIES

As at September 30, 2026, the Company had outstanding purchase obligations of approximately $3.8 million related to service commitments, inventory, and property, plant and equipment purchases (December 31, 2025 – $4.0 million). As at September 30, 2026, the Company had undiscounted operating lease liabilities of $23.2 million (December 31, 2025 – $27.8 million).

As previously disclosed, DIRTT Environmental Solutions Inc. received a subpoena for records in relation to an ongoing inquiry by the U.S. Department of Justice into certain projects and services provided by a third party and DIRTT dating back to 2014. The Company is complying with the subpoena and cooperating with the Department of Justice. There have been ongoing discussions regarding the possible resolution of these matters with the Department of Justice without admitting or denying liability. Based on the discussions to date, the Company provided $2.0 million as at December 31, 2025 for the cost of a potential settlement of these matters with the Department of Justice. There have been no material developments as at September 30, 2026.

DIRTT’s filed action against Falkbuilt, Messrs. Smed and Loberg and several other former DIRTT employees alleges breaches of certain restrictive covenants, fiduciary duties, employment duties and confidentiality resulting in damages to DIRTT.

Counterclaim filed by the Defendants relates to unpaid bonus entitlements, and termination entitlements outlined in the Employment Agreements of Smed and Loberg, totaling an alleged C$2.0 million plus interest and Costs. The counterclaim was heard simultaneously with the primary action.

The trial concluded on August 7, 2026. Written submissions were exchanged in September and October of 2026, and three days of oral argument are scheduled for November 18-20, 2026. Following the conclusion of oral argument, it is expected that the presiding Justice will reserve and issue written reasons for judgment sometime in 2027, with no mandated timing.

DIRTT’s alleged damages approach C$90.0 million, inclusive of pre-judgment interest, plus Costs pursuant to Schedule C of the Alberta Rules of Court. This represents the high-water mark of alleged damages. The Court has inherent discretion to award a lesser amount based on specific findings of fact.

While the Company believes it has meritorious claims and may ultimately recover damages, any recovery would represent a gain contingency and the outcome of the litigation is uncertain as well as ability to recover if successful. Accordingly, no amounts have been recognized in the financial statements pending resolution of the matter.

In connection with this matter, on October 28, 2026, the Company entered into an amended retainer agreement with our attorneys Burnet, Duckworth & Palmer LLP (BDP) pursuant to which 25% of BDP’s fees incurred after February 2024 will be deferred and only become payable if the court awards damages to the Company. The agreement includes a contingency multiplier pursuant to which, subject to certain conditions, we would be required to pay additional amounts of one times the deferred fees if the court awards us damages of C$10 million or more and twice the deferred fees if the court awards us damages of C$25 million or more, in each case only if we actually recover such damages from the defendants. As of September 30, 2026, the total amount of deferred fees outstanding was $2.1 million (excluding any multiplier scenarios), and we currently expect that our insurance would reimburse us for a portion of the deferred fees only.

While the Company believes it has meritorious claims and may ultimately recover damages, any recovery would represent a gain contingency and the outcome of the litigation and our ability to recover any damages we are awarded are uncertain. Accordingly, no amounts have been recognized in the financial statements pending resolution of the matter.

15. RELATED PARTY TRANSACTIONS

On August 2, 2024, DIRTT entered into a support and standstill agreement (the “2024 Support Agreement”) with 22NW and WWT Opportunity #1 LLC (“WWT”), DIRTT’s second largest shareholder at the time, which replaced the support and standstill agreement entered into with 22NW on March 22, 2024. Under the 2024 Support Agreement, both 22NW and WWT agreed to certain voting and standstill obligations, including voting in favor of the management director nominees at each of DIRTT’s next two annual general meetings and voting in favor of the ratification of the Company’s amended and restated shareholder rights plan. Additionally, each of 22NW and WWT had the right to designate a director nominee at each of DIRTT’s next two annual general meetings, and is subject to certain restrictions with respect to commencing a take-over bid for the Company. The 2024 Support Agreement also permits WWT to acquire up to 4,067,235 additional shares through market purchases (representing approximately 2% of the then issued and outstanding shares), which provides WWT with an opportunity to own the same number of shares as 22NW (being 57,447,988 shares, or approximately 29.8% of the issued and outstanding shares as of the date of the 2024 Support Agreement). The 2024 Support Agreement otherwise prohibits each of 22NW and WWT from acquiring any additional shares. As a result of the share sale by WWT to the 726 Entities on February 13, 2026 as described below, WWT is no longer entitled to its nomination right under the 2024 Support Agreement. Except as amended by the 2026 Support Agreement described below, the 2024 Support Agreement otherwise remains in force.

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 during the April 2022 proxy contest . The Claim asserts that as a result DIRTT suffered loss and damages and

seeks compensation of approximately C$30 million. On December 18, 2025, the Company entered into a litigation funding agreement with 22NW, DIRTT’s largest shareholder, whereby 22NW would fund all costs relating to pursuing this litigation. In exchange, 22NW is entitled to receive 90% of any settlement or judgment proceeds and DIRTT would receive the remaining 10%, subject to limited exceptions. $0.5 million has been funded under this agreement as of September 30, 2026. As of the date of the report, the outcome of this matter is uncertain.

On February 17, 2026, the Company entered into a support and standstill agreement (the “2026 Support Agreement”) with 22NW, and 726 BF LLC and 726 BC LLC (collectively, the “726 Entities”), which amends the 2024 Support Agreement in respect of certain matters. The 2026 Support Agreement was entered into in connection with the acquisition by the 726 Entities of certain common shares from WWT, as a result of which the 726 Entities own collectively approximately 15.0% of the Company’s outstanding common shares. Under the 2026 Support Agreement, each of 22NW and the 726 Entities had the right to designate a director nominee at the Company’s annual general meeting that was held on May 7, 2026 (the “2026 Meeting”), so long as they respectively owned at least the lesser of (i) 10% of the then outstanding common shares, or (ii) 19,174,445 common shares. Under the 2026 Support Agreement, both 22NW and the 726 Entities are subject to certain voting and standstill obligations, including voting in favor of the management director nominees at the 2026 Meeting. Additionally, 22NW and the 726 Entities are each subject to certain restrictions with respect to commencing a take-over bid for the Company. The 2026 Support Agreement otherwise prohibits each of 22NW and the 726 Entities from acquiring any additional common shares. The 2026 Support Agreement terminated on August 5, 2026, being 90 days following the 2026 Meeting. Pursuant to the terms of the 2026 Support Agreement, the Company appointed Jeremy Gold, Managing Director, Briger Family Office, to the Board effective February 13, 2026. Mr. Gold was the nominee director for the 726 Entities under the 2026 Support Agreement.

Other related party transactions for the nine months ended September 30, 2026, relate to the sale of DIRTT products and services to the Fortress Investment Group, a related party to the 726 Entities, for $0.1 million. The sale to the Fortress Investment Group was based on price lists in force and terms that are available to all employees. There were no related party transactions for the three months ended September 30, 2026.

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 on Form 10-Q for the quarter ended September 30, 2026 (this “Quarterly Report”). This discussion contains forward-looking statements reflecting our current expectations and estimates and assumptions concerning events and financial trends that may affect our future operating results or financial position. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those described under the headings “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” appearing elsewhere in this Quarterly Report.

Summary of Financial Results

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

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

Key Third Quarter Highlights and Other Recent Developments

•

Revenue for the quarter ended September 30, 2026 was $44.7 million, an increase of $7.0 million or 19%, from $37.7 million for the same period of 2025.

•

Gross profit and gross profit margin for the quarter ended September 30, 2026 were $15.7 million or 35.1% of revenue compared to $11.5 million or 30.4% of revenue for the quarter ended September 30, 2025. Adjusted Gross Profit (see “– Non-GAAP Financial Measures”) for the three months ended September 30, 2026 was $16.6 million, an increase from $12.5 million Adjusted Gross Profit for the third quarter of 2025. Adjusted Gross Profit Margin (see “– Non-GAAP Financial Measures”) was 37.1% in the third quarter of 2026, an increase from 33.1% in the comparative period of 2025. Gross profit and Adjusted Gross Profit for the quarter ended September 30, 2026 improved from prior year periods primarily due to lower tariff and tariff mitigation costs and higher volumes offsetting material costs. A 1% aluminum price surcharge was put in place on orders placed after March 18, 2026 to help mitigate the impact of rising aluminum prices. We incurred $0.3 million of tariff and tariff mitigation costs in the third quarter of 2026 compared to $1.9 million tariff and tariff mitigation costs in the third quarter of 2025.

•

During the first nine months of 2025, various tariffs were levied by the U.S. and Canadian governments. The Company was most significantly impacted by the 50% tariff levied on Canadian aluminum exports to the U.S. which increased from 25% in June 2025. Following tariff revisions announced by the U.S. Government on April 6, 2026 and June 8, 2026, the Company believes that the import of DIRTT product into the U.S. is no longer subject to certain tariffs under Section 232 of the Trade Expansion Act of 1962 (“Section 232 tariffs”) on steel and aluminum. We incurred $0.3 million (0.7% of total revenue) in tariffs and costs related to tariff mitigation actions for the three months ended September 30, 2026 compared to $1.9 million tariff and tariff mitigation costs incurred in the three months ended September 30, 2025.

•

Reorganization expenses for the three months ended September 30, 2026 included $0.3 million primarily related to termination benefits.

•

During the three months ended September 30, 2026, we recognized a deferred tax asset of $13.1 million primarily related to net operating loss carryforwards. We recognized the asset based on sustained profitability, which supported our conclusion that the related tax benefits are more likely than not to be realized. Recognition resulted in an income tax benefit of $13.1 million. The benefit was non-cash, and

we will continue to assess the realizability of the deferred tax asset based on future operating results, forecasts, and other relevant evidence.

•

Net income after tax and net income margin for the third quarter of 2026 was $17.1 million and 38.3% of revenue, respectively, compared to $3.5 million net loss after tax and net loss margin of 9.2% for the same period of 2025. The increase in net income is primarily the result of a $4.2 million increase in gross profit, $0.7 million decrease in sales and marketing expense, and a $0.6 million decrease in operations support expenses and a $2.3 million decrease in reorganization expenses, offset by a $0.7 million increase in foreign exchange loss.

•

Adjusted EBITDA (see “– Non-GAAP Financial Measures”) for the third quarter of 2026 was $6.5 million, or 14.6% of revenue, an increase of $5.4 million from $1.2 million, or 3.1% of revenue, for the third quarter of 2025. Higher Adjusted EBITDA was mainly driven by a $4.1 million increase in Adjusted Gross Profit and the decrease in other operating expenses discussed above.

•

Cash on hand increased by $4.4 million in the third quarter of 2026 to $19.3 million, compared to a $3.0 million increase in cash in the third quarter of 2025. The increase in cash in the third quarter of 2026 was driven by $3.1 million of net cash flows provided by operating activities and the $2.1 million provided by financing activities, offset by $0.7 million in investment activities. During the third quarter of 2026, the Company received the third disbursement of net proceeds of $3.7 million from Business Development Bank of Canada (“BDC”) to further strengthen our balance sheet.

•

On August 7, 2026, evidentiary hearings concluded for DIRTT’s action against Falkbuilt, Messrs. Smed and Loberg and several other former DIRTT employees alleging breaches of restrictive covenants, fiduciary duties, employment duties and confidentiality. Final argument is scheduled for November 18, 2026 to November 20, 2026.

•

On November 3, 2026, subsequent to the quarter-end, the Company, together with DIRTT Environmental Solutions, Inc., amended the Eighth Amended RBC Facility (as defined herein) which matures on November 30, 2029 and continues to provide for a C$25.0 million senior secured revolving credit facility.

Pipeline

The table below presents our qualified leads and twelve-month forward pipeline as at October 1, 2026, January 1, 2026, and October 1, 2025. We define qualified leads as the quantity of projects being pursued as of the date presented, and define our pipeline as the estimated potential revenue from qualified leads where a client has engaged DIRTT and is assessing DIRTT as a potential provider of prefabricated interior solutions. We believe these metrics are helpful to estimate near-term performance.

As of October 1, 2026, our twelve-month forward pipeline decreased year-over-year and from January 1, 2026, 13% illustrated in the table below.


	As at
	October 1, 2026		January 1, 2026		% Change			October 1, 2025		% Change
Twelve-Month Forward Pipeline ($ 000s)
Commercial		157,866		183,323		(14	)		183,011		(14	)
Healthcare		61,602		65,962		(7	)		67,140		(8	)
Government		49,309		52,796		(7	)		51,877		(5	)
Education		21,519		30,763		(30	)		31,431		(32	)
		290,296		332,844		(13	)		333,459		(13	)
Leads (#)		1,662		1,457		14			1,464		14

Pipeline decreased from January 1, 2026, reflecting, in part, actions taken to improve pipeline quality and forecasting reliability through more rigorous opportunity qualification, enhanced forecasting processes and greater commercial discipline. These actions are intended to improve the reliability of pipeline as an indicator of near-term performance.

Price Increases and Impact of Tariffs

Throughout 2025 and into 2026, the U.S. Government proposed and enacted various tariffs as disclosed in our Annual Report on Form 10-K.

Conflict in the Middle East, including Iran, has resulted in rising oil and aluminum prices which have been compressing our gross margin. In response, we implemented an 8% freight price increase and a 1% aluminum price surcharge earlier in 2026. Subsequent to the quarter, freight prices have been increased by a further 2%.

As of the date of this report, tariff revisions were announced effective April 6, 2026 and subsequently updated effective June 8, 2026, specific to steel and aluminum tariffs. Based on our review of the proclamations, we believe that the import of DIRTT products into the U.S. is no longer subject to Section 232 tariffs on steel and aluminum. In June 2026, certain tariffs under Section 338 of the Tariff Act of 1930 (“Section 338 tariffs”) were imposed by the U.S. on certain Canadian goods. We believe these tariffs have an immaterial impact on the Company. In response to the Section 338 tariffs, Canada imposed retaliatory tariffs ranging from 15% to 50% on similar American goods effective September 8, 2026. We believe these retaliatory tariffs have an immaterial impact on the Company.

Further, on July 1, 2026, the Free Trade Commission held its mandatory six-year joint review of the Canada-United States-Mexico Agreement (“ CUSMA”), the free trade agreement among Canada, the U.S., and Mexico. Both Canada and Mexico expressed support for a 16-year extension of CUSMA but the U.S. declined to renew CUSMA in its current form, triggering annual joint reviews. CUSMA remains fully in force through July 1, 2036. If the U.S. were to withdraw from or materially modify the CUSMA or impose significant tariffs or taxes on goods imported into the U.S., the cost of our products could significantly increase or no longer be priced competitively for U.S. customers, and our business, financial condition, and results of operations could be materially and adversely affected. We continue to evaluate these developments.

We are monitoring and mitigating the impact of tariffs and raw material costs through pricing actions, surcharges, and other operational strategies. Although aluminum is our most significant raw material, we are seeing double digit price increases in some of our other raw materials due to rising oil prices. We are maintaining our 3.5% tariff surcharge and the additional 1% aluminum price surcharge announced earlier in the year. Through our business transformation, we are aiming to absorb other raw material price increases by finding business efficiencies through DIRTT’s new operating model.

On February 20, 2026, the U.S. Supreme Court issued a decision invalidating tariffs imposed under the International Emergency Economic Powers Act. As a result of this ruling, we may be eligible for a refund of certain tariffs previously paid on imported goods. As of September 30, 2026, the U.S. Customs and Borders Protection has confirmed that we are eligible to a refund of $0.8 million under Phase 1 and Phase 2 of the program including $0.04 million of interest. These amounts have been recorded in our financial statements. We may be eligible for additional refunds in the future under Phase 3. However, no adjustments have been recorded in the accompanying interim condensed consolidated financial statements for this phase as the recoverability and timing of any such refund remains uncertain and we cannot reasonably predict or estimate the financial impact.

Outlook

As we progress through the latter part of 2026, DIRTT continues to build on the operational and commercial improvements achieved over the past eighteen months. Third-quarter revenue was $44.7 million, an increase of 19% over the prior-year period, while year-to-date revenue increased 8% to $127.5 million. Although customer decision-making timelines remain measured in certain markets, we are seeing increased consistency in project qualification, stronger alignment between commercial activity and forecasted revenue opportunities, and improved visibility into the timing of potential project awards.

Our commercial activity continues to support confidence in the business. The moderation in our twelve-month forward pipeline is, in our view, temporary and reflects tactical actions we have taken to improve its quality, including more rigorous opportunity qualification, clearer stage ownership and exit criteria, more structured Salesforce data, and improved pipeline review and reporting. At October 1, 2026, the pipeline was approximately $290 million across more than 1,600 opportunities. We believe a more rigorous pipeline, even at a lower notional value, is more actionable and more likely to convert into revenue over time. With these actions in place, revenue

growth remains a priority, and we are focused on building a larger pipeline that converts more consistently into revenue over time.

Construction Services is becoming a more prominent element of our commercial strategy and business development efforts. These engagements typically benefit from contractual arrangements that provide greater visibility following award and support more predictable revenue realization. As the offering scales, we are focused on strengthening project execution, maximizing margin performance, and expanding the range of solutions we can deliver to customers. Reflecting the growing contribution from installation and other services, service revenue reached $3.2 million in the third quarter, up from $1.0 million in the prior-year period, and totaled $6.2 million year to date, compared with $3.2 million in the comparable period of 2025.

We continue to advance DIRTT's transformation across the organization, including process standardization, cost optimization, partner enablement, commercial execution, and greater operating discipline. The improvements in revenue, adjusted gross profit, and Adjusted EBITDA demonstrate the increasing impact of these actions as they become embedded in the business. Third-quarter adjusted gross profit increased 33% year over year to $16.6 million, while adjusted gross profit margin improved to 37.1% from 33.1%. Adjusted EBITDA increased to $6.5 million from $1.2 million, with Adjusted EBITDA margin expanding to 14.6% from 3.1%. While these results reflect meaningful progress, we believe the transformation has not yet reached its full run rate, providing further opportunity for sustained value creation.

On a year-to-date basis, adjusted gross profit increased 14% to $45.5 million, while Adjusted EBITDA increased to $12.7 million from $1.3 million in the comparable period of 2025. Targeted investments in leadership, organizational capability, and go-to-market effectiveness are intended to strengthen commercial execution and support more efficient conversion of opportunities into revenue. Collectively, these efforts are enhancing organizational effectiveness and positioning the Company to drive sustainable revenue growth and profitability.

With $19.3 million of cash at September 30, 2026, improving commercial discipline, and a streamlined operating model, DIRTT remains focused on disciplined execution and building a larger, stronger, and more profitable business for shareholders, partners, and employees.

Non-GAAP Financial Measures

Note Regarding Use of Non-GAAP Financial Measures

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

As a result, we also provide financial information in this Quarterly Report that is not prepared in accordance with GAAP and should not be considered as an alternative to the information prepared in accordance with GAAP. Management uses these non-GAAP financial measures in its review and evaluation of the financial performance of the Company. We believe that these non-GAAP financial measures also provide additional insight to investors and securities analysts as supplemental information to our GAAP results and as a basis to compare our financial performance period-over-period and to compare our financial performance with that of other companies. We believe that these non-GAAP financial measures facilitate comparisons of our core operating results from period to period and to other companies by removing the effects of our capital structure (net interest income on cash deposits, interest expense on outstanding debt and debt facilities, or foreign exchange movements), asset base (depreciation and amortization), tax consequences, reorganization expense, unusual or infrequent charges or gains (such as gain on extinguishment of debt), and stock-based compensation. We remove the impact of foreign exchange (loss) gain 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 addition, management bases certain forward-looking estimates and budgets on non-GAAP financial measures, primarily Adjusted EBITDA. We have not reconciled forward-looking non-GAAP measures to its corresponding GAAP measures due to the high variability and difficulty in making accurate forecasts and projections, particularly with respect to non-operating income and expenditures, which are difficult to predict and subject to change.

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

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


Adjusted Gross Profit	Gross profit before deductions for depreciation and amortization

Adjusted Gross Profit Margin	Adjusted Gross Profit divided by revenue

EBITDA	Net income (loss) before interest, taxes, depreciation, and amortization

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

Adjusted EBITDA Margin	Adjusted EBITDA divided by revenue

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

Results of Operations

Three and Nine Months Ended September 30, 2026, Compared to the Three and Nine Months Ended September 30, 2025


	For the Three Months Ended September 30,									For the Nine Months Ended September 30,
	2026			2025			% Change			2026			2025			% Change
	($ in thousands)									($ in thousands)
Revenue		44,732			37,716			19			127,474			117,933			8
Gross Profit		15,711			11,467			37			42,696			36,827			16
Gross Profit Margin		35.1	%		30.4	%					33.5	%		31.2	%
Operating expenses
Sales and marketing		4,049			4,795			(16	)		13,296			15,265			(13	)
General and administrative		4,552			4,429			3			14,536			15,652			(7	)
Operations support		1,184			1,801			(34	)		4,036			5,703			(29	)
Technology and development		719			805			(11	)		2,562			3,513			(27	)
Stock-based compensation		529			742			(29	)		2,128			2,075			3
Reorganization		300			2,593			(88	)		3,723			2,977			25
Total operating expenses		11,333			15,165			(25	)		40,281			45,185			(11	)
Operating income (loss)		4,378			(3,698	)		218			2,415			(8,358	)		129
Operating margin		9.8	%		(9.8	)%					1.9	%		(7.1	)%
Interest income		103			226			(54	)		290			720			(60	)
Gain on extinguishment of convertible debentures		-			8			(100	)		-			22			(100	)
Foreign exchange (loss) gain		(48	)		602			(108	)		337			(1,422	)		124
Interest expense		(362	)		(465	)		(22	)		(1,066	)		(1,401	)		(24	)
		(307	)		371			(183	)		(439	)		(2,081	)		79
Net income (loss) before tax		4,071			(3,327	)		222			1,976			(10,439	)		119
Current and deferred income tax expense (recovery)		(13,049	)		157			(8,411	)		(12,930	)		308			(4,298	)
Net income (loss) after tax		17,120			(3,484	)		591			14,906			(10,747	)		239

Revenue

Revenue mainly reflects sales to our construction partners (“Construction Partners”) for resale to their clients and, in some circumstances, our direct sales to clients. Our revenue is generally affected by the timing of order execution, 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 September 30,							For the Nine Months Ended September 30,
	2026		2025		% Change			2026		2025		% Change
	($ in thousands)							($ in thousands)
Product		37,204		32,431		15			107,976		102,130		6
Transportation		4,167		4,066		2			12,688		12,095		5
License fees from Construction Partners		174		180		(3	)		588		539		9
Total product revenue		41,545		36,677		13			121,252		114,764		6
Installation and other services		3,187		1,039		207			6,222		3,169		96
		44,732		37,716		19			127,474		117,933		8

Revenue for the three months ended September 30, 2026 was $44.7 million, an increase of $7.0 million compared to $37.7 million in the comparative period of 2025. Revenue for the nine months ended September 30, 2026 was $127.5 million, an increase of $9.5 million from $117.9 million in the comparative period of 2025 due to higher volume as well as pricing increases implemented in response to tariffs. See “Price Increases and Impact of Tariffs.”

Installation and other services revenue was $3.2 million for the quarter ended September 30, 2026 compared to $1.0 million in the quarter ended September 30, 2025 and $6.2 million for the nine months ended September 30, 2026 compared to $3.2 million for the same period of 2025. Historically, this revenue primarily reflects services performed by our Design Editor teams for third parties. Except in limited circumstances, historically our Construction Partners, rather than the Company, perform installation services. For the three and nine months ended September 30, 2026, our Construction Services channel was involved in a higher number of installation projects resulting in a 207% and a 96% growth in that revenue stream, respectively. The increase relates to two large healthcare projects and one large technology project that were in progress during the nine months ended September 30, 2026.

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 September 30, 2026, we had 59 Construction Partners (September 30, 2025: 69; December 31, 2025: 66) servicing multiple locations. We continue to both develop our Construction Services team and partner with our Construction Partner network to drive increased revenue for DIRTT.

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


	For the Three Months Ended September 30,							For the Nine Months Ended September 30,
	2026		2025		% Change			2026		2025		% Change
	($ in thousands)							($ in thousands)
Commercial		28,188		21,675		30			79,660		70,581		13
Healthcare		3,717		8,645		(57	)		21,091		25,014		(16	)
Government		4,798		2,057		133			10,564		7,713		37
Education		4,668		4,120		13			9,349		10,917		(14	)
License fees from Construction Partners		174		180		(3	)		588		539		9
Total product revenue		41,545		36,677		13			121,252		114,764		6
Service revenue		3,187		1,039		207			6,222		3,169		96
		44,732		37,716		19			127,474		117,933		8


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2026		2025		2026		2025
	(in %)				(in %)
Commercial		68		60		66		62
Healthcare		9		23		17		21
Government		12		6		9		7
Education		11		11		8		10
Total Product Revenue(1)		100		100		100		100

(1) Excludes license fees from Construction Partners.

We continue to pursue opportunities across all market sectors, especially healthcare, where projects typically exhibit longer sales cycles and implementation timelines.

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


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2026		2025		% Change		2026		2025		% Change
	($ in thousands)
Canada		8,035		3,298		144		19,005		14,220		34
U.S.		36,697		34,418		7		108,469		103,713		5
		44,732		37,716		19		127,474		117,933		8

For the three months ended September 30, 2026, 18% of revenue was from Canada, as compared to 9% for the three months ended September 30, 2025. Historically, approximately 10-15% and 85-90% of revenues are derived from sales to Canada and the United States, respectively. We expect the historical split to continue.

Sales and marketing expenses

Sales and marketing expenses decreased by $0.7 million to $4.0 million for the three months ended September 30, 2026, compared to $4.8 million for the three months ended September 30, 2025. The decrease is primarily due to a $0.6 million decrease in salaries and benefits costs and a $0.2 million decrease in commissions expense.

Sales and marketing expenses decreased by $2.0 million to $13.3 million for the nine months ended September 30, 2026, compared to $15.3 million for the nine months ended September 30, 2025. The decrease is primarily due to a $1.2 million decrease in salaries and benefits costs, a $0.5 million decrease in commissions and a $0.3 million decrease in travel and marketing costs.

General and administrative expenses

General and administrative expenses increased by $0.1 million to $4.6 million for the three months ended September 30, 2026, compared to $4.4 million for the three months ended September 30, 2025. The increase is primarily related to an increase in professional services costs.

General and administrative expenses decreased by $1.1 million to $14.5 million for the nine months ended September 30, 2026, compared to $15.7 million for the nine months ended September 30, 2025. The decrease is primarily related to a $0.4 million decrease in professional services costs, a $0.4 million decrease in salaries and benefits costs and a $0.2 million decrease in public company costs.

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, our manufacturing operations, and support staff for the operational processes team. Operations support expenses decreased by $0.6 million for the three months ended

September 30, 2026 to $1.2 million from $1.8 million for the comparative period of 2025 primarily due to a $0.5 million decrease in salaries and benefits costs.

Operations support expenses decreased by $1.7 million to $4.0 million for the nine months ended September 30, 2026, compared to $5.7 million for the nine months ended September 30, 2025 primarily due to a $1.4 million decrease in salaries and benefits costs.

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 $0.1 million to $0.7 million for the three months ended September 30, 2026 compared to $0.8 million for the three months ended September 30, 2025. The decrease is primarily related to a $0.1 million decrease in professional service costs.

Technology and development expenses decreased by $1.0 million to $2.6 million for the nine months ended September 30, 2026 compared to $3.5 million for the nine months ended September 30, 2025. The decrease is primarily related to a $0.5 million decrease in professional services costs and a $0.4 million decrease in salaries and benefits expenses.

Stock-based compensation

Stock-based compensation expense is dependent on share price in a period for fair value adjustments made on cash-settled deferred share units (“DSUs”) awards and grants, exercises, expirations or forfeitures made on other awards.

Stock-based compensation expense for the three months ended September 30, 2026 was $0.5 million compared to $0.7 million in the same period of 2025. The decrease in expense was largely due to a decrease in restricted share units (“RSUs”) outstanding for the quarter ended September 30, 2026 compared to the same period of 2025, offset by an increase related to grants of performance share units (“PSUs”) and DSUs in the third quarter of 2026, compared to the third quarter of 2025.

Stock-based compensation expense for the nine months ended September 30, 2026 was $2.1 million and consistent with the same period of 2025. A decrease in DSU expense was offset by increases in RSUs and PSUs expenses as a result of third quarter 2026 grants.

Reorganization

Reorganization expenses for the three and nine months ended September 30, 2026 were $0.3 million and $3.7 million, respectively, compared to $2.6 million and $3.0 million, respectively, in the three and nine months ended September 30, 2025. Reorganization expenses for the three and nine months ended September 30, 2026 and 2025, primarily relate to termination benefit costs, as described in Note 4 of our interim condensed consolidated financial statements.

Interest income

Interest income for the three and nine months ended September 30, 2026 was $0.1 million and $0.3 million, respectively, compared to $0.2 million and $0.7 million for the comparative periods of 2025. The decreased interest income is due to declining prime rates on the Company’s lower cash equivalents during the nine months ended September 30, 2026 compared to the same period of 2025.

Foreign exchange gain (loss)

Foreign exchange gain (loss) decreased from a gain of $0.6 million for the three months ended September 30, 2025 to a loss of $0.05 million for the three months ended September 30, 2026 and increased from a loss of $1.4 million for the nine months ended September 30, 2025 to a gain of $0.3 million for the same periods of 2026. The increase is primarily due to the weakening of the Canadian dollar for the nine months ended September 30, 2026.

Interest expense

Interest expense decreased by $0.1 million and $0.3 million from $0.5 million and $1.4 million in the three and nine months ended September 30, 2025, respectively, to $0.4 million and $1.1 million for the three and nine months ended September 30, 2026, respectively. This decrease is largely due to repayment of the 6.00% convertible unsecured subordinated debentures on January 31, 2026 (the “January Debentures”). Offsetting the decreases from the January Debentures repayment, interest on the C$15 million loan from the Business Development Bank of Canada (“BDC”) advanced during February, March and September 2026 bears an interest rate of 5.8% .

Current and deferred income tax expense (recovery)

Current and deferred income tax (recovery) for the three and nine months ended September 30, 2026 was $13.0 million compared to $0.2 million and $0.3 million in the same period of 2025. The current period recovery represents the income tax provision after the utilization of non-capital loss carry forwards against current period taxable income and the recording of the deferred tax asset for $13.1 million. The provision for income taxes comprises U.S. and Canadian federal, state and provincial taxes based on pre-tax income. Given positive indications of future profitability, including the strength of our pipeline, and a history of income the Company has determined that it is likely that a deferred tax asset will be utilized. As at September 30, 2026 the Company plans to maintain a valuation allowance of $17.2 million (December 31, 2025: $30.9 million) against deferred tax assets. The Company plans to continue to evaluate indicators on whether a valuation allowance continues to be needed. As at September 30, 2026, we had C$113.4 million of non-capital loss carry-forwards in Canada and $40.9 million of non-capital loss carry-forwards in the United States. These loss carry-forwards will begin to expire in 2037.

Net income (loss) after tax

Net income after tax was $17.1 million or $0.09 net income per common share, basic and diluted, in the three months ended September 30, 2026, an increase of $20.6 million from net loss after tax of $3.5 million or $0.02 net loss per common share, basic and diluted, for the three months ended September 30, 2025. The increase in net income is primarily the result of a $13.0 million deferred tax recovery, a $3.8 million decrease in operating expenses and a $4.2 million increase in gross profit, offset by a $0.7 million decrease in foreign exchange gains.

Net income after tax was $14.9 million or $0.08 net income per common share, basic and diluted, for the nine months ended September 30, 2026, an improvement of $25.7 million from net loss after tax of $10.7 million or $0.06 net loss per common share, basic and diluted, for the nine months ended September 30, 2025. The increase in net income is primarily the result of a $5.7 million decrease in operating expenses (excluding stock-based compensation and reorganization expenses), a $ 13.0 million deferred tax recovery and a $5.9 million increase in gross profit, offset by a $0.7 million increase in reorganization expenses.

Adjusted Gross Profit and Adjusted Gross Profit Margin for the Three and Nine months ended September 30, 2026 and 2025

The following table presents a reconciliation for the three and nine months ended September 30, 2026 and 2025 of Adjusted Gross Profit to our gross profit and Adjusted Gross Profit Margin to gross profit margin, which are the most directly comparable GAAP measures for the periods presented:


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2026			2025			2026			2025
	($ in thousands)						($ in thousands)
Gross profit		15,711			11,467			42,696			36,827
Gross profit margin		35.1	%		30.4	%		33.5	%		31.2	%
Add: Depreciation and amortization expense		902			1,013			2,784			2,977
Adjusted Gross Profit		16,613			12,480			45,480			39,804
Adjusted Gross Profit Margin		37.1	%		33.1	%		35.7	%		33.8	%

For the quarter ended September 30, 2026, gross profit margin increased to 35.1% compared to 30.4% for the same period of 2025. Adjusted Gross Profit Margin was 37.1% for the third quarter of 2026, an increase from 33.1% in the comparative period of 2025. The increase in Adjusted Gross Profit Margin was mainly attributable to lower tariff costs and higher volumes offsetting increasing material costs. With respect to higher aluminum prices, we have put in place a 1% aluminum price surcharge on orders placed after March 18, 2026 to help mitigate the impact of rising aluminum prices.

EBITDA and Adjusted EBITDA for the Three and Nine months ended September 30, 2026 and 2025

The following table presents a reconciliation for the results for the three and nine months ended September 30, 2026 and 2025 of EBITDA and Adjusted EBITDA to our net income (loss) after tax, and of Adjusted EBITDA Margin to net income (loss) margin, which are the most directly comparable GAAP measures for the periods presented:


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2026			2025			2026			2025
	($ in thousands)						($ in thousands)
Net income (loss) after tax for the period		17,120			(3,484	)		14,906			(10,747	)
Add back (deduct):
Interest income		(103	)		(226	)		(290	)		(720	)
Interest expense		362			465			1,066			1,401
Income tax expense (recovery)		(13,049	)		157			(12,930	)		308
Depreciation and amortization		1,331			1,534			4,164			4,561
EBITDA		5,661			(1,554	)		6,916			(5,197	)
Stock-based compensation		529			742			2,128			2,075
Reorganization expense(2)		300			2,593			3,723			2,977
Foreign exchange loss (gain)		48			(602	)		(337	)		1,422
Gain on extinguishment of convertible debentures(2)		-			(8	)		-			(22	)
Legal provision(2)		-			-			250			-
Adjusted EBITDA		6,538			1,171			12,680			1,255
Net income (loss) Margin(1)		38.3	%		(9.2	)%		11.7	%		(9.1	)%
Adjusted EBITDA Margin		14.6	%		3.1	%		9.9	%		1.1	%

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

(2) Reorganization expenses (refer to Note 4 of the interim condensed consolidated financial statements), the legal provision, and the gain on extinguishment of convertible debentures are not core to our business and are therefore excluded from the Adjusted EBITDA calculation.

For the three months ended September 30, 2026, Adjusted EBITDA increased by $5.4 million to $6.5 million from $1.2 million and Adjusted EBITDA Margin increased to 14.6% from 3.1% for the same period of 2025. This increase is attributed to the $4.1 million increase in Adjusted Gross Profit (explained above) and a decrease in operating expenses (excluding reorganization expense and stock-based compensation) of $1.3 million.

Liquidity and Capital Resources

As at September 30, 2026, the Company had $19.3 million of cash on hand and C$12.0 million ($8.4 million) of available borrowings, compared to $20.3 million of cash on hand and C$16.3 million ($11.8 million) of available borrowings as at December 31, 2025. Through the first nine months of 2026, the Company used $1.1 million of cash primarily for $12.7 million repayment of long-term debt ($12.1 million relating to repayment of outstanding January Debentures), $2.0 million for capital expenditures, $1.7 million for tax payments on vesting RSUs and $0.1 million to repurchase common shares and debentures under the Renewed Shares NCIB and Renewed Debentures NCIB (as defined herein), offset by $10.6 million net proceeds received from the Loan (as defined herein) and $5.3 million of net cash flows provided by operating activities.

We have assessed the Company’s liquidity as at September 30, 2026, taking into account our sales outlook for the next twelve months, our budget, forecast and expected cash outflows, our existing cash balances and available credit facilities. Based upon this analysis, we believe the Company has sufficient liquidity to remain a going concern for at least the next twelve months. We note that the outstanding principal balance of the December Debentures (as defined herein) amounting to C$14.8 million ($10.4 million) as of September 30, 2026 are due on December 31, 2026 and have therefore been classified as current on our balance sheet. We are evaluating whether we will settle or refinance this debt.

On December 11, 2025, the Company entered into a letter agreement (the “Letter”) with BDC, pursuant to which BDC committed to lending the Company up to C$15.0 million (the “Loan”) subject to the satisfaction of certain conditions. The Letter was subsequently amended on January 30, 2026, February 9, 2026, and March 9, 2026. Following the satisfaction of the conditions precedent set forth in the Letter, the Company received an initial disbursement of C$5.5 million on February 13, 2026, following satisfaction of certain additional conditions, a secondary disbursement of C$4.5 million on March 11, 2026 and, following satisfaction of certain additional conditions, a tertiary disbursement of C$5.0 million on September 18, 2026.

On November 4, 2025, the Company entered into the Fifth Extended RBC Facility (as defined herein), which matures on November 30, 2026. The Fifth Extended RBC Facility is subject to the same borrowing base terms as the previous facility; with the borrowing base calculation based on accounts receivable balances to a maximum of C$25.0 million. Interest is calculated as the Canadian or U.S. prime rate plus 50 basis points or at the Term CORRA Rate as adjusted by the Term CORRA Adjustment or Term SOFR plus the Term SOFR Adjustment, in each case plus 175 basis points.

On February 11, 2026 and in connection with the Loan, the Company entered into the Seventh Amended RBC Facility and the Priority Agreement (each as defined herein). The Seventh Amended RBC Facility matures on November 30, 2026 and is subject to the same borrowing base terms as the previous facility. The Seventh Amended RBC Facility allows the Company to incur indebtedness to BDC of C$15 million under the Loan and incorporates permitting specific encumbrances to BDC and the Priority Agreement. The Seventh Amended RBC Facility releases certain mortgage collateral held by RBC.

On March 11, 2026, the Company entered into the Eighth Amended RBC Facility (as defined herein), which matures on November 30, 2026. The Eighth Amended RBC Facility is subject to the same borrowing base terms stated in the Seventh Amended RBC Facility. The Eighth Amended RBC Facility includes a customary “Restricted Payments” covenant that prohibits us from, among other things, repurchasing our common shares and paying dividends, unless we have satisfied certain conditions (the “Payment Conditions”). The Payment Conditions include conditions that, after giving effect to the relevant Restricted Payment, the Company has a net borrowing availability of at least C$5.0 million over the preceding 30-day period, and our fixed charge coverage ratio (“FCCR”) be at least 1.10 to 1.00 on a trailing 12-month basis. In February 2026, we and RBC determined that our purchases of our common shares under our NCIB in December 2025 did not comply with the Restricted Payments covenant because our FCCR was below 1.10 to 1.00. The Eighth Amended RBC Facility provided a waiver in connection with the foregoing.

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

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

Equity and Debt Issuances and Buyback Programs

During 2025, we continued to execute on various debt and share buyback programs. The Debenture Repurchase, Debentures NCIB, Renewed Debentures NCIB, Shares NCIB, Renewed Shares NCIB, and the Share Repurchase (each as defined herein) were initiated after careful consideration of cash flow, and the Company continues to evaluate uses of cash on hand. As discussed in the “Part II, Item 1A. Risk Factors” section and elsewhere of this Quarterly Report, proposed and implemented tariffs on Canadian exports into the U.S., and vice versa, may have a material impact on future cash flows and liquidity, which the Company will continue to monitor.

In January 2021, we issued the January Debentures for net proceeds after costs of C$37.6 million ($29.5 million). The January Debentures accrued interest at a rate of 6.00% per annum and were convertible into common shares of DIRTT at an adjusted exercise price of C$4.03 per common share, or if not converted would mature and be repayable on January 31, 2026. The Company repaid the outstanding principal and interest on the January Debentures on January 31, 2026.

On December 1, 2021, we issued C$35.0 million of convertible unsecured subordinated debentures (the “December Debentures”, and collectively with the January Debentures, the “Debentures”) for net proceeds after costs of C$32.7 million ($25.6 million). The December Debentures accrue interest at a rate of 6.25% per annum and are convertible into common shares of DIRTT at an adjusted exercise price of C$3.64 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.

On August 2, 2024, the Company repurchased for cancellation C$13,638,000 principal amount of December Debentures and C$18,915,000 principal amount of the January Debentures held by 22NW Fund, L.P. (the “Debenture Repurchase”).

On August 28, 2024, the Company commenced the Debentures normal course issuer bid (the “Debentures NCIB”) which expired on August 27, 2025. Under the Debentures NCIB, DIRTT was permitted to acquire up to C$1,664,200 principal amount of the January Debentures and C$1,558,700 principal amount of the December Debentures. For the three months ended September 30, 2025, C$0.1 million ($0.1 million) and C$0.01 million ($0.01 million) principal amounts of the December Debentures and January Debentures, respectively, had been acquired through the Debentures NCIB. On August 26, 2025, the Company announced the renewal of the Debentures NCIB which commenced August 28, 2025 and terminated on August 27, 2026 for the December Debentures and terminated on January 31, 2026 for the January Debentures, concurrent with the maturity date of the January Debentures (the “Renewed Debentures NCIB”). Under the Renewed Debentures NCIB, DIRTT was permitted to acquire up to C$1,656,900 principal amount of the January Debentures and is permitted to acquire C$1,493,500 principal amount of the December Debentures. For the nine months ended September 30, 2026, C$0.03 million ($0.02 million) principal amounts of the December Debentures had been acquired through the Renewed Debentures NCIB. As at September 30, 2026, C$14.8 million ($10.4 million) principal amount of the December Debentures are outstanding.

On December 20, 2024, the Company commenced a normal course issuer bid for common shares (the “Shares NCIB”) which terminated on December 19, 2025. Under the Shares NCIB, DIRTT was permitted to acquire up to 7,515,233 common shares. All purchases were made on the open market at the market price of common shares at the time of acquisition. Any common shares acquired through the Shares NCIB were immediately cancelled. On December 18, 2025, the Company announced the renewal of the Shares NCIB which commenced on December 22, 2025, and is expected to terminate on December 21, 2026 (the “Renewed Shares NCIB”). Under the Renewed Shares NCIB, DIRTT is permitted to acquire up to 9,593,878 common shares. All purchases will be made on the open market at the market price of common shares at the time of acquisition. Any common shares acquired through the Shares NCIB will be immediately cancelled.

On February 13, 2025, the Company entered a share repurchase agreement with NGEN III, LP (“NGEN”) to purchase for cancellation 3,920,844 common shares held by NGEN (the “NGEN Shares”) at a purchase price of $0.80 per NGEN Share (the “Share Repurchase”). Following the Share Repurchase, there were 189,643,903 common shares outstanding. The NGEN Shares repurchased under the Share Repurchase were counted against the maximum number of shares that may be repurchased pursuant to the Shares NCIB being 7,515,233 shares. As at September 30, 2026, 6,047,480 common shares had been repurchased and cancelled for proceeds of C$6.5 million ($4.6 million) through the Shares NCIB, Renewed Shares NCIB, and the Share Repurchase.

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

Facilities

On February 12, 2021, the Company entered into a loan agreement governing a C$25.0 million senior secured revolving credit facility with the Royal Bank of Canada (“RBC”), as lender (the “RBC Facility”), as disclosed in our Annual Report on Form 10-K. The Company has extended the RBC Facility a number of times since 2023, including on November 4, 2025 (the “Fifth Extended RBC Facility”). The Fifth Extended RBC Facility expires November 30, 2026 and is subject to the same borrowing base terms as the previous facility, with the borrowing base calculation based on accounts receivable balances to a maximum of C$25.0 million. Interest is calculated as the Canadian or U.S. prime rate plus 50 basis points or at the Term CORRA Rate as adjusted by the Term CORRA Adjustment or Term SOFR plus the Term SOFR Adjustment, in each case plus 175 basis points. At September 30, 2026, available borrowings were C$12.0 million ($8.4 million) (December 31, 2025 – C$16.3 million ($11.8 million) of available borrowings), calculated in the same manner as the RBC Facility described above, of which no amounts have been drawn.

On February 11, 2026 and in connection with the Loan, the Company amended the Fifth Extended RBC Facility (the “Seventh Amended RBC Facility”) and entered into a priority agreement with RBC and BDC (the “Priority Agreement”). The Seventh Amended RBC Facility matures on November 30, 2026 and is subject to the same borrowing base terms as the previous facility. The Seventh Amended RBC Facility allows the Company to incur indebtedness to BDC of C$15 million under the Loan and incorporates permitting specific encumbrances to BDC and the Priority Agreement. The Seventh Amended RBC Facility also releases certain mortgage collateral held by RBC.

On March 11, 2026, the Company entered into the Waiver and Eighth Amendment to Loan Agreement (the

“Eighth Amended RBC Facility”), which matures on November 30, 2026. The Eighth Amended RBC Facility is subject to the same borrowing base terms stated in the Seventh Amended RBC Facility. The Eighth Amended RBC Facility includes a customary “Restricted Payments” covenant that prohibits us from, among other things, repurchasing our common shares and paying dividends, unless we have satisfied certain conditions (the “Payment Conditions”). The Payment Conditions include conditions that, after giving effect to the relevant Restricted Payment, the Company has a net borrowing availability of at least C$5.0 million over the preceding 30-day period, and our FCCR be at least 1.10 to 1.00 on a trailing 12-month basis. In February 2026, we and RBC determined that our purchases of our common shares under our NCIB in December 2025 did not comply with the Restricted Payments covenant because our FCCR was below 1.10 to 1.00. The Eighth Amended RBC Facility provided a waiver in connection with the foregoing.

The Company has a C$5.0 million equipment leasing facility in Canada (the “Canada Leasing Facility”) of which, as of September 30, 2026, C$4.4 million ($3.1 million) has been drawn and C$4.1 million ($3.0 million) has been repaid. The Canada Leasing Facility has a seven-year term and bears interest at 4.25%. The Company did not make any draws on the Canada Leasing Facility during the nine months ended September 30, 2026 and 2025.

As at September 30, 2026, the Eighth Amended RBC Facility was currently secured by substantially all of our real and personal property located in Canada and the United States. The Seventh Amended RBC Facility released certain mortgage collateral held by RBC. The existing security was reaffirmed and continues to secure the Amended and Restated RBC Facility.

Analysis of Cash Flow Changes During the Three and Nine Months Ended September 30, 2026 and 2025

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


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2026			2025			2026			2025
	($ in thousands)						($ in thousands)
Net cash flows provided by operating activities		3,092			4,390			5,240			4,152
Net cash flows (used in) investing activities		(652	)		(780	)		(1,921	)		(2,488	)
Net cash flows provided by (used in) financing activities		2,100			(422	)		(3,920	)		(4,665	)
Effect of foreign exchange on cash, cash equivalents and restricted cash		(107	)		(156	)		(466	)		(155	)
Net increase (decrease) in cash, cash equivalents and restricted cash		4,433			3,032			(1,067	)		(3,156	)
Cash, cash equivalents and restricted cash, beginning of period		15,075			23,343			20,575			29,531
Cash, cash equivalents and restricted cash, end of period		19,508			26,375			19,508			26,375

Operating Activities

For the three months ended September 30, 2026, net cash flows provided by operating activities were $3.1 million compared to $4.4 million provided by operating activities in the same period of 2025. The decrease in cash flows provided by operations in the third quarter of 2026 is largely due to a $2.9 million decrease in working capital in the third quarter of 2026 compared to a $6.0 million increase in the third quarter of 2025 offset by a $5.4 million increase in Adjusted EBITDA.

For the nine months ended September 30, 2026, net cash flows provided by operating activities were $5.2 million compared to $4.2 million provided in the same period of 2025. The $2.6 million decrease in working capital

in the first nine months of 2026 compared to a $6.3 million increase in the same period of 2025 was offset by a $11.4 million increase in Adjusted EBITDA.

Investing Activities

We invested $0.7 million and $2.0 million in capital expenditures for the three and nine months ended September 30, 2026, compared to $0.8 million and $2.7 million for the three and nine months ended September 30, 2025. The capital expenditures for the three and nine months ended September 30, 2026 primarily consisted of $0.2 million and $0.6 million on capitalized software, $0.2 million and $0.5 million on manufacturing upgrades, $0.2 million and $0.6 million on office furniture and leasehold improvements, respectively.

The capital expenditures for the three and nine months ended September 30, 2025 primarily consisted of $0.5 million and $1.4 million on capitalized software, $0.1 million and $0.4 million on manufacturing upgrades, $0.1 million and $0.3 million on marketing, $0.03 million and $0.2 million on leasehold improvements, and $0.3 million and $0.5 million on other asset spend, respectively.

Financing Activities

Cash flows provided by financing activities totaled $2.1 million for the three months ended September 30, 2026 compared to $0.4 million used in the three months ended September 30, 2025. The increase in net cash flows provided by financing activities is related to $3.7 million in net proceeds received from the BDC loan offset by $0.3 million repayment of long term debt and $1.3 million paid to cover employee taxes on the vesting of RSUs. Cash flows used in financing activities in the three months ended September 30, 2025 included a $0.1 million repayment of long-term debt, a $0.1 million payment to cover employee taxes on the vesting of RSUs and $0.2 million repurchases of common shares.

Cash used in the nine months ended September 30, 2026 was mainly driven by the full repayment of the outstanding January Debentures of $12.1 million and $1.7 million for employee tax payments on vesting RSUs offset by $10.6 million in net proceeds received from the BDC loan. Cash used in the nine months ended September 30, 2025 consisted of $4.2 million spent in repurchases of common shares through the Shares NCIB and the Share Repurchase, and $0.3 million as repayment on convertible debt through the Debentures NCIB.

Contractual Obligations

In addition to the contractual obligations disclosed in the “Management’s Discussion and Analysis of Financial Condition and results of Operations - Contractual Obligations” in our Annual Report on Form 10-K, we received gross proceeds of C$15.0 million ($10.6 million) from BDC. Monthly principal repayments of the Loan commenced in May 2026 and additional monthly interest payments are due on the last day of each month, beginning on March 31, 2026. The Loan matures on April 30, 2032. Refer to Note 7 in our condensed consolidated interim financial statements.

Critical Accounting Policies and Estimates

There have been no material changes in our critical accounting policies during the nine months ended September 30, 2026, as compared to those disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K. For information regarding critical accounting policies and estimates, please refer to Item 7 and Item 8 in our Annual Report on Form 10-K. As disclosed in Note 3, “Adoption of New and Revised Accounting Standards” to our interim condensed consolidated financial statements appearing in this Quarterly Report, we have adopted Accounting Standards Update No. 2024-04, “Induced Conversions of Convertible Debt Instruments” (“ASU-2024-04”) which requires discussing an entity’s assessment of induced conversion and debt extinguishment of convertible debt instruments. The Company has adopted this standard and expects minimal impact, as the Company has no existing convertible debt instruments to which this update applies. The Company has also adopted Accounting Standards Update No. 2025-05, “Financial Instruments - Credit Losses” (“ASU-2025-05”) which requires additional consideration when estimating the expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. The Company expects minimal impact to the financial statements and disclosures.

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 “–Critical 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

Evaluation of 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 Securities Exchange Act of 1934, as amended (the “Exchange Act”) is accumulated and communicated to management, including our principal executive officer 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 officer and principal financial officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2026. Based upon their evaluation, our principal executive officer 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 September 30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

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, 2025 (our “2025 Form 10-K”), except as described below regarding DIRTT’s litigation against Falkbuilt Ltd. (“Falkbuilt”), Messrs. Smed and Loberg, and their associates.

With respect to DIRTT’s lawsuit against Falkbuilt in Utah, on February 5, 2025, the U.S. District Court for the Northern District of Utah (the “Utah Court”) granted Falkbuilt’s motion to dismiss the case, on the basis of forum non conveniens, ruling that it would not hear DIRTT’s claim in Utah because Canada was more appropriate, and because Canadian law applies to most of DIRTT’s claims. Further the Utah Court found that DIRTT’s Canadian company, DIRTT Environmental Solutions Ltd., owns the trade secrets that were the subject matter of the Utah claim, so whether the theft of those trade secrets occurred in Canada or abroad, they would result in injury to DIRTT Environmental Solutions Ltd. and should be pursued in Canada. The Utah Court, in essence, redirected the determination of those damages from Utah to Canada, being the appropriate forum for the legal dispute. The reconsideration requests relief from the Utah Court’s February 5, 2025, Memorandum Decision and Order granting the Defendant’s motion to dismiss for forum non conveniens. On March 19, 2026, the Utah Court denied the Plaintiff’s motion for relief. DIRTT filed a notice of appeal from the February 5, 2025 and March 19, 2026 rulings (the “Appeal”). The Appeal has been discontinued.

In November 2024, the Alberta Court of King’s Bench scheduled a 10-week trial commencing February 2, 2026 through April 10, 2026, with an additional three weeks reserved for the trial which began on July 20, 2026 and completed its hearing dates on August 7, 2026, for DIRTT’s action against Falkbuilt, Messrs. Smed and Loberg and several other former DIRTT employees alleging breaches of restrictive covenants, fiduciary duties, employment duties and confidentiality. DIRTT is pursuing damages and losses it suffered in Canada, the United States, and abroad in the Court of King’s Bench of Alberta. The Court of King’s Bench will determine whether Falkbuilt, Messrs. Smed and Loberg and others wrongfully caused DIRTT to suffer damages, which are alleged to approach C$90.0 million, inclusive of pre-judgment interest, plus costs pursuant to Schedule C of the Alberta Rules of Court. Final argument is scheduled for November 18, 2026 to November 20, 2026.

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 2025 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

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


Period	Total number of shares purchased		Average price paid per share		Total number of shares purchased as part of publicly announced programs(1)(2)		Maximum number of shares that may yet be purchased under the program(1)(2)
January 1, 2026 - January 31, 2026		116,253	$	0.64		116,253		9,477,625
February 1, 2026 - February 28, 2026		53,085	$	0.65		53,085		9,424,540
March 1, 2026 - March 31, 2026		38,668	$	0.69		38,668		9,385,872
April 1, 2026 - April 30, 2026		-	NA			-		9,385,872
May 1, 2026 - May 31, 2026		-	NA			-		9,385,872
June 1, 2026 - June 30, 2026		-	NA			-		9,385,872
July 1, 2026 - July 31, 2026		-	NA			-		9,385,872
August 1, 2026 - August 31, 2026		-	NA			-		9,385,872
September 1, 2026 - September 30, 2026		-	NA			-		9,385,872
Total		208,006				208,006		9,385,872

(1) The Renewed Shares NCIB was announced on December 18, 2025, commenced on December 22, 2025 and will terminate on December 21, 2026,

(2) The maximum number of common shares approved to be purchased under the Renewed Shares NCIB is 9,593,878, of which 9,385,872 remain.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

During the fiscal quarter ended September 30, 2026, none of the Company’s directors or executive officers (as defined in Rule 16a-1 under the Exchange Act) adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “ non-Rule 10b5-1 trading arrangement” (as defined by Item 408(c) of Regulation S-K).

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 4.2 to the Registrant’s Current Report on Form 8-K, File No. 001-39061, filed on January 29, 2021).
4.3		Second Supplemental Indenture, dated December 1, 2021, by and among the Company, Computershare Trust Company of Canada and Computershare Trust Company, National Association as Trustees (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, File No. 001-39061, filed on December 1, 2021).
10.1*+		Ninth Amendment to Loan Agreement, dated November 3, 2026, by and among the Royal Bank of Canada, DIRTT Environmental Solutions Ltd. and DIRTT Environmental Solutions, Inc., as borrowers.
10.2*		Amendment to Priority Agreement with BDC, dated September 11, 2026, by and DIRTT Environmental Solutions, Ltd., Business Development of Canada, and Royal Bank of Canada.
10.3		Letter of Credit, dated September 15, 2026, among the Company, Royal Bank of Canada and Business Development Bank of Canada (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on September 23, 2026).
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
+		Certain schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K

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: November 4, 2026