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.