DRTT Dirtt Environmental Solutions Ltd

DIRTT Environmental Solutions Ltd., (TSX:DRT; Nasdaq: DRTT) (“DIRTT” or the “Company”) an interior construction company that uses technology for client-driven design and manufacturing, today announced the following information has been disclosed on SEDAR and posted DIRTT's website at: www.dirtt.com/investors/financial-reports/:

• Unaudited financial statements for the second quarter of 2019 prepared in accordance with the accounting standards generally accepted in the United States (“U.S. GAAP”), which include the consolidated balance sheets as of June 30, 2019 and December 31, 2018, and the related statements of operations, comprehensive income (loss), shareholders’ equity and cash flows for the three- and six-month periods ended June 30, 2019 and June 30, 2018;
• Unaudited financial statements for the first quarter of 2019 prepared in accordance with U.S. GAAP, which include the consolidated balance sheets as of March 31, 2019 and December 31, 2018, and the related statements of operations, comprehensive income (loss), shareholders’ equity and cash flows for the three-month periods ended March 31, 2019 and March 31, 2018; and
• Annual U.S. GAAP financial statements, which include consolidated balance sheets as of December 31, 2018 and 2017 and the related statements of operations, comprehensive income (loss), shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2018, 2017 and 2016 (on SEDAR such statements are contained in the Form 10 which was filed as an "Other" document on October 8, 2019).

Upon the U.S. Securities and Exchange Commission’s (“SEC”) declaration of effectiveness of the Company’s Registration Statement on Form 10 on June 8, 2019, in connection with the listing of its common shares on The Nasdaq Global Select Market ("Nasdaq"), the Company completed a conversion of its financial statements from International Financial Reporting Standards (“IFRS”) to U.S. GAAP and adopted U.S. GAAP as its financial reporting framework. The Company’s Registration on Form 10 and other filings with the SEC are available to the public through SEC’s website at www.sec.gov.  The purpose of this press release is to help readers accustomed to the past preparation of DIRTT’s financial statements under IFRS understand the change in preparation to U.S. GAAP.

DIRTT changed its reporting currency to U.S. dollars (“US$”) upon adoption of U.S. GAAP. The change in reporting currencies has a material impact on the Company’s financial statements for all periods presented. DIRTT continues to consolidate the Company and its subsidiaries’ financial statements in Canadian dollars (“C$”), the Company’s functional currency, and translates the assets and liabilities at the period end rate which results in period-on-period translation adjustments recorded in comprehensive income from the impact of the change in exchange rate on net assets. 

The following discussion has been prepared using the Accounting Standards Codifications (“ASCs”), Accounting Standards Updates (“ASUs”) and interpretations currently issued and expected to be effective at the end of the Company’s first U.S. GAAP annual reporting period, December 31, 2019.  Management does not expect the adoption of U.S. GAAP to have a material impact on the Company’s business activities or cash flows; however, it will impact certain aspects of the reported financial results, the more significant of which are described as follows:

1.    Accounting for intangible assets and software development costs

Under U.S. GAAP, product development costs are not eligible for capitalization, and therefore the initial value of the Company’s intangible assets is lower as compared to IFRS.  This change also has the impact of reducing net income and Adjusted EBITDA (see Non-GAAP measures) as product development costs are expensed as incurred. This change has also resulted in a reduction in the impairment charges recognized in 2018 as development costs for the DIRTT for Life and DIRTT Timber lines of business would have been previously expensed as incurred under U.S. GAAP and therefore not subject to impairment. 

Under U.S. GAAP, software development costs are capitalized as internal use software in accordance with ASC 350 – Intangibles Goodwill and Other, with no material differences to the accounting treatment under IFRS. 

2.     Amounts included in cost of sales

Certain of the Company’s fixed costs were treated as overhead items under IFRS and accounted for as operating expenditures.  Under U.S. GAAP, these costs are presented within cost of sales as they relate to the production of DIRTT solutions.  The impact of this is a reclassification of US$8 to US$9 million (including US$4 million to US$5 million of depreciation and amortization) annually from operating costs to cost of sales with a corresponding 3% to 4% reduction in gross profit. This change is an adjustment within the statement of operations only; there is no impact to net income or Adjusted EBITDA (see Non-GAAP measures) as compared to amounts previously reported under IFRS.

3.    Adoption of ASC 842 – Leases (“ASC 842”) and onerous lease accruals

On January 1, 2019, DIRTT adopted IFRS 16 – Leases (“IFRS 16”), which had a material impact on DIRTT’s balance sheet and cash flows, and Adjusted EBITDA (see Non-GAAP measures). The impact is described in DIRTT’s unaudited condensed consolidated interim financial statements and management’s discussion and analysis for the first and second quarters of 2019, previously filed on SEDAR.  Consistent with IFRS 16, the adoption of ASC 842 had a material impact on the Company’s balance sheet, resulting in the recognition of US$23 million of right-of-use (“ROU”) assets and associated US$24 million lease liabilities as at January 1, 2019.  Under U.S. GAAP, the charge on the statement of operations is accounted for as rent expense on a straight-line basis.  This treatment is different from that under IFRS, which classifies the expense as depreciation of the ROU asset and interest expense for the accretion of the lease liability. 

This difference results in changes to cash flows from operations and Adjusted EBITDA (see Non-GAAP measures) from January 1, 2019 forward with minimal change in net income.   In 2019, cash flows from operations are lower under U.S. GAAP as lease payments are classified as operating expenditures rather than as financing expenditures under IFRS.  Adjusted EBITDA (see Non-GAAP measures) is lower from January 1, 2019 forward as a result of the change in classification of the expense from depreciation and interest under IFRS to lease expense under US GAAP.  

Additionally, the Company recognized a provision of C$1.8 million for an onerous lease under IFRS in 2018.  Under US GAAP, this provision would not be recognized.

4.    Stock-based compensation

During 2018, the Company modified its employee stock option plan to provide a cash settlement alternative to its employees in connection with the exercise of stock options.  At period end under U.S. GAAP, the liability is adjusted to fair value and the excess of fair value over previously recognized stock-based compensation is expensed.  Increases or decreases in fair value subsequent to the modification date of the stock option plan will be recorded in earnings, except that the Company may not recognize a cumulative expense lower than the grant date fair value of the original equity awards. IFRS does not have the ‘previously recognized’ thresholds in modification accounting, which has resulted in a C$2.1 million increase in stock-based compensation charges in 2018.

Additionally, U.S. GAAP allows for a policy choice for graded or straight-line attribution of stock-based compensation expense, whereas IFRS requires stock options to be expensed using the graded vesting methodology only.  On adoption of US GAAP, the Company’s management has elected to use the straight-line methodology to be more comparable with U.S. peer companies. This change resulted in a C$0.9 million increase to stock-based compensation expense for the year-ended December 31, 2018.

5.    Other items, presentation and disclosures

The Company has disclosed other items in its reconciliation from IFRS to US GAAP, which include adjustments that are considered individually immaterial to the financial statements.

The Company has incorporated changes to the presentation and disclosure of certain items in the consolidated balance sheets, statements of operations, comprehensive loss and cash flows, and notes to the consolidated financial statements to conform to the requirements of the applicable ASCs, ASUs and, if applicable, U.S. securities laws and the rules of the United States Securities and Exchange Commission.

The following is an unaudited tabular reconciliation from IFRS to US GAAP:

Q2 2019: Statement of Operations for the three-month period ended June 30, 2019 (unaudited)

	IFRS C$	Opening Adjs	Intangible Assets	Cost of Sales	Leases and Onerous Contracts	Stock Based Comp	Other	Adjusted C$	US GAAP US$
Product revenue	81,808	-	157	-	-	-	-	81,965	61,273
Service revenue	3,769	-	-	-	-	-	-	3,769	2,818
Total revenue	85,577	-	157	-	-	-	-	85,734	64,091
Product cost of sales	47,079	-	-	2,554	-	-	-	49,633	37,102
Service cost of sales	3,048	-	-	386	-	-	-	3,434	2,568
Total cost of sales	50,127	-	-	2,940	-	-	-	53,067	39,670
Gross profit	35,450	-	157	(2,940)	-	-	-	32,667	24,421
Operating expenses	29,050	-	(135)	(2,940)	325	-	-	26,300	19,660
Operating income	6,400	-	292	-	(325)	-	-	6,367	4,761
Foreign exchange loss	591	-	-	-	-	-	-	591	441
Interest income	(51)	-	-	-	-	-	-	(51)	(38)
Interest expense	402	-	-	-	(368)	-	-	34	25
Net income before tax	5,458	-	292	-	43	-	-	5,793	4,333
Current tax	1,251	-	-	-	-	-	-	1,251	936
Deferred tax	1,223	-	79	-	-	-	(250)	1,052	786
Net income	2,984	-	213	-	43	-	250	3,490	2,611
Exchange differences on foreign ops	(1,712)	-	-	-	-	-	-	(1,712)	1,276
Comprehensive income	1,272	-	213	-	43	-	250	1,778	3,887
Net income per share	0.03							0.04	0.03

Q2 2019: Adjusted EBITDA for the three-month period ended June 30, 2019 (unaudited, see Non-GAAP measures)

	IFRS C$	Opening Adjs	Intangible Assets	Cost of Sales	Leases and Onerous Contracts	Stock Based Comp	Other	Adjusted C$	US GAAP US$
Net income	2,984	-	213	-	43	-	250	3,490	2,611
Interest expense	402	-	-	-	(368)	-	-	34	25
Interest income	(51)	-	-	-	-	-	-	(51)	(38)
Income tax expense	2,474	-	79	-	-	-	(250)	2,303	1,722
Depreciation on ROU assets	1,386	-	-	-	(1,386)	-	-	-	-
Depreciation and amortization	4,166	-	(233)	-	-	-	-	3,933	2,940
EBITDA	11,361	-	59	-	(1,711)	-	-	9,709	7,260
Stock based compensation	(2,212)	-	-	-	-	-	-	(2,212)	(1,655)
Adjusted EBITDA	9,149	-	59	-	(1,711)	-	-	7,497	5,605
Adjusted EBITDA %	10.7%							8.7%	8.7%

Q2 2019: Statement of Operations for the six-month period ended June 30, 2019 (unaudited)

	IFRS C$	Opening Adjs	Intangible Assets	Cost of Sales	Leases and Onerous Contracts	Stock Based Comp	Other	Adjusted C$	US GAAP US$
Product revenue	166,516	-	324	-	-	-	-	166,840	125,113
Service revenue	5,392	-	-	-	-	-	-	5,392	4,039
Total revenue	171,908	-	324	-	-	-	-	172,232	129,152
Product cost of sales	97,450	-	-	5,453	-	-	-	102,903	77,170
Service cost of sales	4,895	-	-	386	-	-	-	5,281	3,957
Total cost of sales	102,345	-	-	5,839	-	-	-	108,184	81,127
Gross profit	69,563	-	324	(5,839)	-	-	-	64,048	48,025
Operating expenses	69,989	-	(170)	(5,839)	608	(571)	-	64,017	48,029
Operating income	(426)	-	494	-	(608)	571	-	31	(4)
Foreign exchange loss	1,280	-	-	-	-	-	-	1,280	960
Interest income	(123)	-	-	-	-	-	-	(123)	(92)
Interest expense	811	-	-	-	(712)	-	-	99	74
Net income before tax	(2,394)	-	494	-	104	571	-	(1,225)	(946)
Current tax	1,454	-	-	-	-	-	-	1,454	1,088
Deferred tax	983	-	134	-	-	(36)	(250)	831	620
Net income (loss)	(4,831)	-	360	-	104	607	250	(3,510)	(2,654)
Exchange differences on foreign ops	(2,399)	-	-	-	-	-	-	(2,399)	3,372
Comprehensive income	(7,230)	-	360	-	104	607	250	(5,909)	718
Net income per share	(0.06)							(0.04)	(0.03)

Q2 2019: Adjusted EBITDA for the six-month period ended June 30, 2019 (unaudited, see Non-GAAP measures)

	IFRS C$	Opening Adjs	Intangible Assets	Cost of Sales	Leases and Onerous Contracts	Stock Based Comp	Other	Adjusted C$	US GAAP US$
Net income (loss)	(4,831)	-	360	-	104	607	250	(3,510)	(2,654)
Interest expense	811	-	-	-	(712)	-	-	99	74
Interest income	(123)	-	-	-	-	-	-	(123)	(92)
Income tax expense	2,437	-	134	-	-	(36)	(250)	2,285	1,708
Depreciation on ROU assets	2,805	-	-	-	(2,805)	-	-	-	-
Depreciation and amortization	8,906	-	(459)	-	-	-	-	8,447	6,335
EBITDA	10,005	-	35	-	(3,413)	571	-	7,198	5,371
Stock based compensation	6,930	-	-	-	-	(571)	-	6,359	4,792
Foreign exchange on debt revaluation	(280)	-	-	-	-	-	-	(280)	(211)
Reorganization expense	3,508	-	-	-	-	-	-	3,508	2,639
Adjusted EBITDA	20,163	-	35	-	(3,413)	-	-	16,785	12,591
Adjusted EBITDA %	11.7%							9.7%	9.7%

Q2 2019: Balance Sheet as at June 30, 2019 (unaudited)

	IFRS C$	Opening Adjs	Intangible Assets	Cost of Sales	Leases and Onerous Contracts	Stock Based Comp	Other	Adjusted C$	US GAAP US$
ASSETS
Current Assets
Cash and cash equivalents	76,868	-	-	-	-	-	-	76,868	58,736
Trade and other receivables	37,280	-	-	-	-	-	-	37,280	28,487
Inventory	24,488	-	-	-	-	-	-	24,488	18,712
Prepaids and other current assets	2,927	-	-	-	-	-	-	2,927	2,236
Total Current Assets	141,563	-	-	-	-	-	-	141,563	108,171
Property, plant and equipment, net	47,207	-	-	-	-	-	-	47,207	36,072
Intangible assets	18,620	(18,922)	302	-	-	-	-	-	-
Capitalized software, net	-	11,371	(325)	-	-	-	-	11,046	8,442
Right of use assets	25,909	-	-	-	1,578	-	-	27,487	21,004
Deferred tax assets, net	6,278	(321)	(134)	-	-	35	250	6,108	4,665
Goodwill	1,845	-	-	-	-	-	-	1,845	1,410
Other assets	2,309	4,790	54	-	-	-	-	7,153	5,465
Total Assets	243,731	(3,082)	(103)	-	1,578	35	250	242,409	185,229
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities	30,413	(1,974)	-	-	-	-	-	28,439	21,730
Other liabilities	9,990	-	-	-	-	-	-	9,990	7,615
Customer deposits	9,785	674	(465)	-	-	-	-	9,994	7,638
Current lease liabilities	5,347	-	-	-	783	-	-	6,130	4,685
Total Current Liabilities	55,535	(1,300)	(465)	-	783	-	-	54,553	41,668
Other liabilities	1,523	246	-	-	1,432	-	-	3,201	2,465
Long-term lease liabilities	23,352	-	-	-	(742)	-	-	22,610	17,277
Total Liabilities	80,410	(1,054)	(465)	-	1,473	-	-	80,364	61,410
SHAREHOLDERS' EQUITY
Common shares	198,575	295	-	-	-	-	-	198,870	180,579
Additional paid-in capital	8,161	1,174	-	-	-	(571)	-	8,764	6,185
Accumulated other comprehensive income	4,008	(2,093)	-	-	-	-	-	1,915	(18,720)
Accumulated deficit	(47,423)	(1,404)	362	-	105	606	250	(47,504)	(44,225)
Total Shareholders' Equity	163,321	(2,028)	362	-	105	35	250	162,045	123,819
Total Liabilities and Shareholders' Equity	243,731	(3,082)	(103)	-	1,578	35	250	242,409	185,229

Q1 2019: Statement of Operations for the three-month period ended March 31, 2019 (unaudited)

	IFRS C$	Opening Adjs	Intangible Assets	Cost of Sales	Leases and Onerous Contracts	Stock Based Comp	Other	Adjusted C$	US GAAP US$
Product revenue	84,708	-	167	-	-	-	-	84,875	63,840
Service revenue	1,623	-	-	-	-	-	-	1,623	1,221
Total revenue	86,331	-	167	-	-	-	-	86,498	65,061
Product cost of sales	50,371	-	-	2,899	-	-	-	53,270	40,068
Service cost of sales	1,847	-	-	-	-	-	-	1,847	1,389
Total cost of sales	52,218	-	-	2,899	-	-	-	55,117	41,457
Gross profit	34,113	-	167	(2,899)	-	-	-	31,381	23,604
Operating expenses	40,939	-	(35)	(2,899)	283	(571)	-	37,717	28,369
Operating income	(6,826)	-	202	-	(283)	571	-	(6,336)	(4,765)
Foreign exchange loss	689	-	-	-	-	-	-	689	519
Interest income	(72)	-	-	-	-	-	-	(72)	(54)
Interest expense	409	-	-	-	(344)	-	-	65	49
Net income before tax	(7,852)	-	202	-	61	571	-	(7,018)	(5,279)
Current tax	203	-	-	-	-	-	-	203	152
Deferred tax	(240)	-	55	-	-	(36)	-	(221)	(166)
Net income	(7,815)	-	147	-	61	607	-	(7,000)	(5,265)
Exchange differences on foreign ops	(687)	-	-	-	-	-	-	(687)	2,096
Comprehensive income	(8,502)	-	147	-	61	607	-	(7,687)	(3,169)
Net income per share	(0.09)	-	0.00	-	0.00	0.01	-	(0.08)	(0.06)

Q1 2019: Adjusted EBITDA for the three-month period ended March 31, 2019 (unaudited, see Non-GAAP measures)

	IFRS C$	Opening Adjs	Intangible Assets	Cost of Sales	Leases and Onerous Contracts	Stock Based Comp	Other	Adjusted C$	US GAAP US$
Net income	(7,815)	-	147	-	61	607	-	(7,000)	(5,265)
Interest expense	409	-	-	-	(344)	-	-	65	49
Interest income	(72)	-	-	-	-	-	-	(72)	(54)
Income tax expense	(37)	-	55	-	-	(36)	-	(18)	(14)
Depreciation on ROU assets	1,419	-	-	-	(1,419)	-	-	-	-
Depreciation and amortization	4,740	-	(226)	-	-	-	-	4,514	3,395
EBITDA	(1,356)	-	(24)	-	(1,702)	571	-	(2,511)	(1,889)
Stock based compensation	9,142	-	-	-	-	(571)	-	8,571	6,447
Foreign exchange on debt revaluation	(280)	-	-	-	-	-	-	(280)	(211)
Reorganization costs	3,508	-	-	-	-	-	-	3,508	2,639
Adjusted EBITDA	11,014	-	(24)	-	(1,702)	-	-	9,288	6,986
Adjusted EBITDA %	12.8%							10.7%	10.7%

Q1 2019: Balance Sheet as at March 31, 2019 (unaudited)

	IFRS C$	Opening Adjs	Intangible Assets	Cost of Sales	Leases and Onerous Contracts	Stock Based Comp	Other	Adjusted C$	US GAAP US$
ASSETS
Current Assets
Cash and cash equivalents	72,239	-	-	-	-	-	-	72,239	54,059
Trade and other receivables	49,686	-	-	-	-	-	-	49,686	37,182
Inventory	24,650	-	-	-	-	-	-	24,650	18,447
Prepaids and other current assets	3,408	-	-	-	-	-	-	3,408	2,550
Total Current Assets	149,983	-	-	-	-	-	-	149,983	112,238
Property, plant and equipment, net	48,170	-	-	-	-	-	-	48,170	36,048
Intangible assets	18,270	(18,922)	652	-	-	-	-	-	-
Capitalized software, net	-	11,371	(575)	-	-	-	-	10,796	8,079
Right of use assets	27,590	-	-	-	1,549	-	-	29,139	21,805
Deferred tax assets, net	7,722	(321)	(55)	-	-	35	-	7,381	5,522
Goodwill	1,845	-	-	-	-	-	-	1,845	1,381
Other assets	2,202	4,790	(141)	-	-	-	-	6,851	5,126
Total Assets	255,782	(3,082)	(119)	-	1,549	35	-	254,165	190,199
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities	37,093	(1,974)	-	-	-	-	-	35,119	26,281
Other liabilities	16,712	-	-	-	-	-	-	16,712	13,771
Customer deposits	7,829	674	(267)	-	-	-	-	8,236	6,163
Current lease liabilities	5,943	-	-	-	(49)	-	-	5,894	4,410
Total Current Liabilities	67,577	(1,300)	(267)	-	(49)	-	-	65,961	50,625
Other liabilities	1,424	246	-	-	1,432	-	-	3,102	1,056
Long-term lease liabilities	24,749	-	-	-	105	-	-	24,854	18,599
Total Liabilities	93,750	(1,054)	(267)	-	1,488	-	-	93,917	70,280
SHAREHOLDERS' EQUITY
Common shares	198,558	295	-	-	-	-	-	198,853	180,566
Additional paid-in capital	8,161	1,174	-	-	-	(571)	-	8,764	6,185
Accumulated other comprehensive income	5,720	(2,093)	-	-	-	-	-	3,627	(19,996)
Accumulated deficit	(50,407)	(1,404)	148	-	61	606	-	(50,996)	(46,836)
Total Shareholders' Equity	162,032	(2,028)	148	-	61	35	-	160,248	119,919
Total Liabilities and Shareholders' Equity	255,782	(3,082)	(119)	-	1,549	35	-	254,165	190,199

Q4 2018: Statement of Operations for the year ended December 31, 2018 (unaudited):

	IFRS C$	Opening Adjs	Intangible Assets	Cost of Sales	Leases and Onerous Contracts	Stock Based Comp	Other	Adjusted C$	US GAAP US$
Product revenue	346,028	-	(296)	-	-	-	-	345,732	266,434
Service revenue	10,651	-	-	-	-	-	-	10,651	8,247
Total revenue	356,679	-	(296)	-	-	-	-	356,383	274,681
Product cost of sales	199,329	-	-	10,738	-	-	-	210,067	161,844
Service cost of sales	7,527	-	-	-	-	-	-	7,527	5,828
Total cost of sales	206,856	-	-	10,738	-	-	-	217,594	167,672
Gross profit	149,823	-	(296)	(10,738)	-	-	-	138,789	107,009
Operating expenses	148,483	-	(7,501)	(10,738)	(1,729)	2,997	-	131,512	101,315
Operating income	1,340	-	7,205	-	1,729	(2,997)	-	7,277	5,694
Foreign exchange gain	(3,280)	-	-	-	-	-	(917)	(4,197)	(3,214)
Interest income	(550)	-	-	-	-	-	-	(550)	(425)
Interest expense	655	-	-	-	-	-	-	655	503
Net income before tax	4,515	-	7,205	-	1,729	(2,997)	917	11,369	8,830
Current tax	2,798	-	-	-	-	-	-	2,798	2,178
Deferred tax	(1,280)	-	1,941	-	467	36	247	1,411	1,102
Net income (loss)	2,997	-	5,264	-	1,262	(3,033)	670	7,160	5,550
Exchange differences on foreign ops	434	-	-	-	-	-	292	726	(9,980)
Comprehensive income	3,431	-	5,264	-	1,262	(3,033)	962	7,886	(4,430)
Net income per share	0.04							0.08	0.07

Q4 2018: Adjusted EBITDA for the year ended December 31, 2018 (unaudited, see Non-GAAP measures):

	IFRS C$	Opening Adjs	Intangible Assets	Cost of Sales	Leases and Onerous Contracts	Stock Based Comp	Other	Adjusted C$	US GAAP US$
Net income	2,997	-	5,264	-	1,262	(3,033)	670	7,160	5,550
Interest expense	655	-	-	-	-	-	-	655	503
Interest income	(550)	-	-	-	-	-	-	(550)	(425)
Income tax expense	1,518	-	1,941	-	467	36	247	4,209	3,280
Depreciation and amortization	19,474	-	(1,717)	-	-	-	-	17,757	13,699
EBITDA	24,094	-	5,488	-	1,729	(2,997)	917	29,231	22,607
Stock based compensation	1,761	-	-	-	-	2,997	-	4,758	3,661
Foreign exchange on debt revaluation	741	-	-	-	-	-	-	741	546
Impairment expense	19,975	-	(6,864)	-	(1,729)	-	-	11,382	8,680
Reorganization costs	9,600	-	-	-	-	-	-	9,600	7,380
Adjusted EBITDA	56,171	-	(1,376)	-	-	-	917	55,712	42,874
Adjusted EBITDA %	15.7%							15.6%	15.6%

Q4 2018: Balance Sheet as at December 31, 2018 (unaudited)

	IFRS C$	Opening Adjs	Intangible Assets	Cost of Sales	Leases and Onerous Contracts	Stock Based Comp	Other	Adjusted C$	US GAAP US$
ASSETS
Current Assets
Cash and cash equivalents	72,865	-	-	-	-	-	-	72,865	53,412
Trade and other receivables	59,852	-	-	-	-	-	-	59,852	43,873
Inventory	25,442	-	-	-	-	-	-	25,442	18,650
Prepaids and other current assets	3,025	-	-	-	-	-	-	3,025	2,217
Total Current Assets	161,184	-	-	-	-	-	-	161,184	118,152
Property, plant and equipment, net	50,104	-	-	-	-	-	-	50,104	36,728
Intangible assets	18,922	(24,718)	5,796	-	-	-	-	-	-
Capitalized software, net	-	10,440	931	-	-	-	-	11,371	8,335
Deferred tax assets, net	8,618	1,162	(1,941)	-	(467)	(36)	962	8,297	6,083
Goodwill	1,845	-	-	-	-	-	-	1,845	1,353
Other assets	2,385	4,313	477	-	-	-	-	7,175	5,260
Total Assets	243,058	(8,803)	5,263	-	(467)	(36)	962	239,977	175,911
LIABILITIES
Current Liabilities
Trade accounts payable and other liabilities	42,673	-	-	-	-	-	-	42,673	31,283
Other liabilities	9,262	-	(283)	-	327	-	-	9,306	6,823
Customer deposits	9,832	674	-	-	-	-	-	10,506	7,701
Current portion of long-term debt	3,411	-	-	-	-	-	-	3,411	2,500
Total Current Liabilities	65,178	674	(283)	-	327	-	-	65,896	48,307
Deferred tax liabilities, net	1,314	2	-	-	-	-	-	1,316	965
Other liabilities	1,773	-	-	-	(1,773)	-	-	-	-
Long-term debt	4,263	-	-	-	-	-	-	4,263	3,125
Total Liabilities	72,528	676	(283)	-	(1,446)	-	-	71,475	52,397
SHAREHOLDERS' EQUITY
Common shares	198,552	295	-	-	-	-	-	198,847	180,562
Additional paid-in capital	8,163	(1,824)	1,167	-	(283)	2,114	-	9,337	6,615
Accumulated other comprehensive income	6,407	(2,385)	-	-	-	-	292	4,314	(22,092)
Accumulated deficit	(42,592)	(5,565)	4,379	-	1,262	(2,150)	669	(43,996)	(41,571)
Total Shareholders' Equity	170,530	(9,479)	5,546	-	979	(36)	962	168,502	123,514
Total Liabilities and Shareholders' Equity	243,058	(8,803)	5,263	-	(467)	(36)	962	239,977	175,911

Q3 2018: Statement of Operations for the three-month period ended September 30, 2018 (unaudited)

	IFRS C$	Opening Adjs	Intangible Assets	Cost of Sales	Leases and Onerous Contracts	Stock Based Comp	Other	Adjusted C$	US GAAP US$
Product revenue	93,738	-	-	-	-	-	-	93,738	71,720
Service revenue	2,866	-	-	-	-	-	-	2,866	2,193
Total revenue	96,604	-	-	-	-	-	-	96,604	73,913
Product cost of sales	52,500	-	-	2,658	-	-	-	55,158	42,202
Service cost of sales	2,128	-	-	-	-	-	-	2,128	1,628
Total cost of sales	54,628	-	-	2,658	-	-	-	57,286	43,830
Gross profit	41,976	-	-	(2,658)	-	-	-	39,318	30,083
Operating expenses	47,786	-	(7,120)	(2,658)	-	1,769	-	39,777	30,435
Operating income	(5,810)	-	7,120	-	-	(1,769)	-	(459)	(352)
Foreign exchange (gain) loss	(73)	-	-	-	-	-	598	525	400
Interest income	(132)	-	-	-	-	-	-	(132)	(101)
Interest expense	127	-	-	-	-	-	-	127	97
Net income before tax	(5,732)	-	7,120	-	-	(1,769)	(598)	(979)	(748)
Current tax	1,495	-	-	-	-	-	-	1,495	1,144
Deferred tax	(2,360)	-	1,919	-	-	-	(162)	(603)	(461)
Net income (loss)	(4,867)	-	5,201	-	-	(1,769)	(436)	(1,871)	(1,431)
Exchange differences on foreign ops	(2,293)	-	-	-	-	-	1,807	(486)	1,783
Comprehensive income	(7,160)	-	5,201	-	-	(1,769)	1,371	(2,357)	352
Net income per share	(0.06)							(0.02)	(0.02)

Q3 2018: Adjusted EBITDA for the three-month period ended September 30, 2018 (unaudited, see Non-GAAP measures)

	IFRS C$	Opening Adjs	Intangible Assets	Cost of Sales	Leases and Onerous Contracts	Stock Based Comp	Other	Adjusted C$	US GAAP US$
Net income (loss)	(4,867)	-	5,201	-	-	(1,769)	(436)	(1,871)	(1,433)
Interest expense	127	-	-	-	-	-		127	97
Interest income	(132)	-	-	-	-	-	-	(132)	(101)
Income tax expense	(865)	-	1,919	-	-	-	(162)	892	683
Depreciation and amortization	5,010	-	(378)	-	-	-	-	4,632	3,545
EBITDA	(727)	-	6,742	-	-	(1,769)	(598)	3,648	2,791
Stock based compensation	893	-	-	-	-	1,769	-	2,662	2,037
Foreign exchange on debt revaluation	(134)	-	-	-	-	-	-	(134)	(100)
Impairment expense	14,834	-	(6,864)	-	-	-	-	7,970	6,098
Reorganization costs	2,923	-	-	-	-	-	-	2,923	2,236
Other	(1)	-	-	-	-	-	1	-	-
Adjusted EBITDA	17,789	-	(122)	-	-	-	(597)	17,070	13,062
Adjusted EBITDA %	18.4%							17.7%	17.7%

Q3 2018: Statement of Operations for the nine-month period ended September 30, 2018 (unaudited):

	IFRS C$	Opening Adjs	Intangible Assets	Cost of Sales	Leases and Onerous Contracts	Stock Based Comp	Other	Adjusted C$	US GAAP US$
Product revenue	249,196	-	-	-	-	-	-	249,196	193,378
Service revenue	8,823	-	-	-	-	-	-	8,823	6,863
Total revenue	258,019	-	-	-	-	-	-	258,019	200,241
Product cost of sales	141,559	-	-	7,853	-	-	-	149,412	115,941
Service cost of sales	6,317	-	-	-	-	-	-	6,317	4,912
Total cost of sales	147,876	-	-	7,853	-	-	-	155,729	120,853
Gross profit	110,143	-	-	(7,853)	-	-	-	102,290	79,388
Operating expenses	109,052	-	(7,404)	(7,853)	-	2,545	-	96,340	74,698
Operating income	1,091	-	7,404	-	-	(2,545)	-	5,950	4,690
Foreign exchange (gain) loss	(96)	-	-	-	-	-	(917)	(1,013)	(805)
Interest income	(421)	-	-	-	-	-	-	(421)	(327)
Interest expense	387	-	-	-	-	-	-	387	300
Net income before tax	1,221	-	7,404	-	-	(2,545)	917	6,997	5,522
Current tax	3,531	-	-	-	-	-	-	3,531	2,732
Deferred tax	(1,783)	-	1,995	-	-	-	247	459	381
Net income (loss)	(527)	-	5,409	-	-	(2,545)	670	3,007	2,409
Exchange differences on foreign ops	(86)	-	-	-	-	-	292	206	(3,801)
Comprehensive income	(613)	-	5,409	-	-	(2,545)	962	3,213	(1,392)
Net income per share	(0.01)							0.04	0.03

Q3 2018: Adjusted EBITDA for the nine-month period ended June 30, 2019 (unaudited, see Non-GAAP measures)

	IFRS C$	Opening Adjs	Intangible Assets	Cost of Sales	Leases and Onerous Contracts	Stock Based Comp	Other	Adjusted C$	US GAAP US$
Net income (loss)	(527)	-	5,409	-	-	(2,545)	670	3,007	2,407
Interest expense	387	-	-	-	-	-	-	387	300
Interest income	(421)	-	-	-	-	-	-	(421)	(327)
Income tax expense	1,748	-	1,995	-	-	-	247	3,990	3,113
Depreciation and amortization	14,706	-	(1,385)	-	-	-	-	13,321	10,343
EBITDA	15,893	-	6,019	-	-	(2,545)	917	20,284	15,836
Stock based compensation	1,567	-	-	-	-	2,545	-	4,112	3,172
Foreign exchange on debt revaluation	397	-	-	-	-	-	-	397	313
Impairment expense	14,834	-	(6,864)	-	-	-	-	7,970	6,098
Reorganization costs	5,987	-	-	-	-	-	-	5,987	4,646
Other	(1)	-	-	-	-	-	1	-	-
Adjusted EBITDA	38,678	-	(845)	-	-	-	918	38,751	30,065
Adjusted EBITDA %	15.0%							15.0%	15.0%

Q2 2018: Statement of Operations for the three-month period ended June 30, 2018 (unaudited)

	IFRS C$	Opening Adjs	Intangible Assets	Cost of Sales	Leases and Onerous Contracts	Stock Based Comp	Other	Adjusted C$	US GAAP US$
Product revenue	78,177	-	-	-	-	-	-	78,177	60,552
Service revenue	2,489	-	-	-	-	-	-	2,489	1,928
Total revenue	80,666	-	-	-	-	-	-	80,666	62,480
Product cost of sales	46,185	-	-	2,630	-	-	-	48,815	37,809
Service cost of sales	1,730	-	-	-	-	-	-	1,730	1,340
Total cost of sales	47,915	-	-	2,630	-	-	-	50,545	39,149
Gross profit	32,751	-	-	(2,630)	-	-	-	30,121	23,331
Operating expenses	30,952	-	(149)	(2,630)	-	423	-	28,596	22,151
Operating income	1,799	-	149	-	-	(423)	-	1,525	1,180
Foreign exchange (gain) loss	120	-	-	-	-	-	(727)	(607)	(469)
Interest income	(145)	-	-	-	-	-	-	(145)	(112)
Interest expense	129	-	-	-	-	-	-	129	99
Net income before tax	1,695	-	149	-	-	(423)	727	2,148	1,662
Current tax	1,312	-	-	-	-	-	-	1,312	1,015
Deferred tax	(395)	-	40	-	-	-	196	(159)	(123)
Net income (loss)	778	-	109	-	-	(423)	531	995	770
Exchange differences on foreign ops	1,056	-	-	-	-	-	(727)	329	(2,368)
Comprehensive income	1,834	-	109	-	-	(423)	(196)	1,324	(1,598)
Net income per share	0.01							0.01	0.01

Q2 2018: Adjusted EBITDA for the three-month period ended June 30, 2018 (unaudited, see Non-GAAP measures)

	IFRS C$	Opening Adjs	Intangible Assets	Cost of Sales	Leases and Onerous Contracts	Stock Based Comp	Other	Adjusted C$	US GAAP US$
Net income (loss)	778	-	109	-	-	(423)	531	995	770
Interest expense	129	-	-	-	-	-	-	129	99
Interest income	(145)	-	-	-	-	-	-	(145)	(112)
Income tax expense	917	-	40	-	-	-	196	1,153	892
Depreciation and amortization	4,997	-	(510)	-	-	-	-	4,487	3,475
EBITDA	6,676	-	(361)	-	-	(423)	727	6,619	5,124
Stock based compensation	305	-	-	-	-	423	-	728	564
Foreign exchange on debt revaluation	207	-	-	-	-	-	-	207	160
Reorganization costs	986	-	-	-	-	-	-	986	764
Adjusted EBITDA	8,174	-	(361)	-	-	-	727	8,540	6,612
Adjusted EBITDA %	10.1%							10.6%	10.6%

Q2 2018: Statement of Operations for the six-month period ended June 30, 2018 (unaudited)

	IFRS C$	Opening Adjs	Intangible Assets	Cost of Sales	Leases and Onerous Contracts	Stock Based Comp	Other	Adjusted C$	US GAAP US$
Product revenue	155,458	-	-	-	-	-	-	155,458	121,658
Service revenue	5,957	-	-	-	-	-	-	5,957	4,670
Total revenue	161,415	-	-	-	-	-	-	161,415	126,328
Product cost of sales	89,059	-	-	5,195	-	-	-	94,254	73,739
Service cost of sales	4,189	-	-	-	-	-	-	4,189	3,284
Total cost of sales	93,248	-	-	5,195	-	-	-	98,443	77,023
Gross profit	68,167	-	-	(5,195)	-	-	-	62,972	49,305
Operating expenses	61,266	-	(284)	(5,195)	-	776	-	56,563	44,263
Operating income	6,901	-	284	-	-	(776)	-	6,409	5,042
Foreign exchange (gain) loss	(23)	-	-	-	-	-	(1,515)	(1,538)	(1,205)
Interest income	(289)	-	-	-	-	-	-	(289)	(226)
Interest expense	260	-	-	-	-	-	-	260	203
Net income before tax	6,953	-	284	-	-	(776)	1,515	7,976	6,270
Current tax	2,036	-	-	-	-	-	-	2,036	1,588
Deferred tax	577	-	76	-	-	-	409	1,062	842
Net income (loss)	4,340	-	208	-	-	(776)	1,106	4,878	3,840
Exchange differences on foreign ops	2,207	-	-	-	-	-	(1,515)	692	(5,584)
Comprehensive income	6,547	-	208	-	-	(776)	(409)	5,570	(1,744)
Net income per share	0.05							0.06	0.05

Q2 2018: Adjusted EBITDA for the six-month period ended June 30, 2018 (unaudited, see Non-GAAP measures)

	IFRS C$	Opening Adjs	Intangible Assets	Cost of Sales	Leases and Onerous Contracts	Stock Based Comp	Other	Adjusted C$	US GAAP US$
Net income (loss)	4,340	-	208	-	-	(776)	1,106	4,878	3,840
Interest expense	260	-	-	-	-	-	-	260	203
Interest income	(289)	-	-	-	-	-	-	(289)	(226)
Income tax expense	2,613	-	76	-	-	-	409	3,098	2,430
Depreciation and amortization	9,696	-	(1,007)	-	-	-	-	8,689	6,798
EBITDA	16,620	-	(723)	-	-	(776)	1,515	16,636	13,045
Stock based compensation	674	-	-	-	-	776	-	1,450	1,135
Foreign exchange on debt revaluation	531	-	-	-	-	-	-	531	413
Reorganization costs	3,064	-	-	-	-	-	-	3,064	2,410
Adjusted EBITDA	20,889	-	(723)	-	-	-	1,515	21,681	17,003
Adjusted EBITDA %	12.9%							13.5%	13.5%

Q1 2018: Statement of Operations for the three-month period ended March 31, 2018 (unaudited)

	IFRS C$	Opening Adjs	Intangible Assets	Cost of Sales	Leases and Onerous Contracts	Stock Based Comp	Other	Adjusted C$	US GAAP US$
Product revenue	77,281	-	-	-	-	-	-	77,281	61,106
Service revenue	3,468	-	-	-	-	-	-	3,468	2,742
Total revenue	80,749	-	-	-	-	-	-	80,749	63,848
Product cost of sales	42,874	-	-	2,565	-	-	-	45,439	35,930
Service cost of sales	2,459	-	-	-	-	-	-	2,459	1,944
Total cost of sales	45,333	-	-	2,565	-	-	-	47,898	37,874
Gross profit	35,416	-	-	(2,565)	-	-	-	32,851	25,974
Operating expenses	30,314	-	(135)	(2,565)	-	353	-	27,967	22,112
Operating income	5,102	-	135	-	-	(353)	-	4,884	3,862
Foreign exchange gain	(143)	-	-	-	-	-	(788)	(931)	(736)
Interest income	(144)	-	-	-	-	-	-	(144)	(114)
Interest expense	131	-	-	-	-	-	-	131	104
Net income before tax	5,258	-	135	-	-	(353)	788	5,828	4,608
Current tax	724	-	-	-	-	-	-	724	573
Deferred tax	972	-	36	-	-	-	213	1,221	965
Net income (loss)	3,562	-	99	-	-	(353)	575	3,883	3,070
Exchange differences on foreign ops	1,151	-	-	-	-	-	(788)	363	(3,216)
Comprehensive income	4,713	-	99	-	-	(353)	(213)	4,246	(146)
Net income per share	0.04							0.05	0.04

Q1 2018: Adjusted EBITDA for the three-month period ended March 31, 2018 (unaudited, see Non-GAAP measures)

	IFRS C$	Opening Adjs	Intangible Assets	Cost of Sales	Leases and Onerous Contracts	Stock Based Comp	Other	Adjusted C$	US GAAP US$
Net income (loss)	3,562	-	99	-	-	(353)	575	3,883	3,070
Interest expense	131	-	-	-	-	-	-	131	104
Interest income	(144)	-	-	-	-	-	-	(144)	(114)
Income tax expense	1,696	-	36	-	-	-	213	1,945	1,538
Depreciation and amortization	4,699	-	(497)	-	-	-	-	4,202	3,323
EBITDA	9,944	-	(362)	-	-	(353)	788	10,017	7,921
Stock based compensation	369	-	-	-	-	353	-	722	571
Foreign exchange on debt revaluation	324	-	-	-	-	-	-	324	253
Reorganization costs	2,078	-	-	-	-	-	-	2,078	1,646
Adjusted EBITDA	12,715	-	(362)	-	-	-	788	13,141	10,391
Adjusted EBITDA %	15.7%							16.3%	16.3%

Q4 2017: Statement of Operations for the year ended December 31, 2017 (unaudited)

	IFRS C$	Opening Adjs	Intangible Assets	Cost of Sales	Leases and Onerous Contracts	Stock Based Comp	Other	Adjusted C$	US GAAP US$
Product revenue	280,100	-	(258)	-	-	-	-	279,842	216,216
Service revenue	13,324	-	-	-	-	-	-	13,324	10,323
Total revenue	293,424	-	(258)	-	-	-	-	293,166	226,539
Product cost of sales	158,345	-	-	11,683	-	-	-	170,028	131,326
Service cost of sales	12,535	-	-	-	-	-	-	12,535	9,724
Total cost of sales	170,880	-	-	11,683	-	-	-	182,563	141,050
Gross profit	122,544	-	(258)	(11,683)	-	-	-	110,603	85,489
Operating expenses	128,352	-	2,265	(11,683)	-	337	-	119,271	91,990
Operating income	(5,808)	-	(2,523)	-	-	(337)	-	(8,668)	(6,501)
Foreign exchange loss	6	-	-	-	-	-	864	870	665
Interest income	(519)	-	-	-	-	-	-	(519)	(399)
Interest expense	610	-	-	-	-	-	40	650	500
Net loss before tax	(5,905)	-	(2,523)	-	-	(337)	(904)	(9,669)	(7,267)
Current tax	4,276	-	-	-	-	-	-	4,276	3,277
Deferred tax	(2,772)	-	(680)	-	-	(70)	(233)	(3,756)	(2,819)
Net loss	(7,409)	-	(1,843)	-	-	(267)	(671)	(10,189)	(7,725)
Exchange differences on foreign ops	(2,746)	-	-	-	-	-	1,179	(1,567)	7,417
Comprehensive income	(10,155)	-	(1,843)	-	-	(267)	508	(11,756)	(308)
Net loss per share	(0.09)							(0.12)	(0.09)

Q4 2017: Adjusted EBITDA for the year ended December 31, 2017 (unaudited, see Non-GAAP measures)

	IFRS C$	Opening Adjs	Intangible Assets	Cost of Sales	Leases and Onerous Contracts	Stock Based Comp	Other	Adjusted C$	US GAAP US$
Net loss	(7,409)	-	(1,843)	-	-	(267)	(671)	(10,189)	(7,725)
Interest expense	610	-	-	-	-	-	40	650	500
Interest income	(519)	-	-	-	-	-	-	(519)	(399)
Income tax expense	1,504	-	(680)	-	-	(70)	(233)	521	458
Depreciation and amortization	17,916	-	(1,231)	-	-	-	-	16,685	12,856
EBITDA	12,103	-	(3,754)	-	-	(337)	(864)	7,148	5,690
Stock based compensation	3,233	-	-	-	-	337	-	3,571	2,738
FX on debt revaluation	(945)	-	-	-	-	-	-	(945)	(731)
Reorganization costs	1,453	-	-	-	-	-	-	1,453	1,143
Adjusted EBITDA	15,844	-	(3,754)	-	-	-	(864)	11,226	8,840
Adjusted EBITDA %	5.4%							3.8%	3.9%

Q4 2017: Balance Sheet as at December 31, 2017 (unaudited)

	IFRS C$	Opening Adjs	Intangible Assets	Cost of Sales	Leases and Onerous Contracts	Stock Based Comp	Other	Adjusted C$	US GAAP US$
ASSETS
Current Assets
Cash and cash equivalents	79,641	-	-	-	-	-	-	79,641	63,484
Trade and other receivables	24,133	-	-	-	-	-	-	24,133	19,237
Inventory	24,297	-	-	-	-	-	-	24,297	19,368
Prepaids and other current assets	2,549	-	-	-	-	-	-	2,549	2,032
Total Current Assets	130,620	-	-	-	-	-	-	130,620	104,121
Property, plant and equipment, net	60,860	-	-	-	-	-	-	60,860	48,513
Intangible assets	24,718	(19,961)	(4,757)	-	-	-	-	-	-
Capitalized software, net	-	8,728	1,712	-	-	-	-	10,440	8,322
Deferred tax assets, net	8,365	(136)	680	-	-	70	548	9,527	7,594
Goodwill	1,845	-	-	-	-	-	-	1,845	1,471
Other assets	1,228	3,791	522	-	-	-	-	5,541	4,417
Total Assets	227,636	(7,578)	(1,843)	-	-	70	548	218,833	174,438
LIABILITIES
Current Liabilities
Trade accounts payable and accrued liabilities	34,599	-	-	-	-	-	-	34,599	27,580
Other liabilities	3,494	-	-	-	-	-	-	3,494	2,785
Customer deposits	7,325	674	-	-	-	-	-	7,999	6,376
Current portion of long-term debt	5,715	-	-	-	-	-	-	5,715	4,556
Total Current Liabilities	51,133	674	-	-	-	-	-	51,807	41,297
Deferred tax liabilities, net	1,248	3	-	-	-	-	-	1,251	997
Long-term debt	7,057	-	-	-	-	-	-	7,057	5,625
Total Liabilities	59,438	677	-	-	-	-	-	60,114	47,919
SHAREHOLDERS' EQUITY
Common shares	195,656	254	41	-	-	-	-	195,951	178,397
Additional paid-in capital	12,158	(2,161)	337	-	-	-	-	10,334	7,355
Accumulated other comprehensive income	5,973	(3,564)	-	-	-	-	1,179	3,588	(12,112)
Accumulated deficit	(45,589)	(2,784)	(2,221)	-	-	70	(631)	(51,154)	(47,121)
Total Shareholders' Equity	168,198	(8,255)	(1,843)	-	-	70	548	158,718	126,519
Total Liabilities and Shareholders' Equity	227,636	(7,578)	(1,843)	-	-	70	548	218,833	174,438

Q4 2016: Statement of Operations for the year ended December 31, 2016 (unaudited)

	IFRS C$	Opening Adjs	Intangible Assets	Cost of Sales	Leases and Onerous Contracts	Stock Based Comp	Other	Adjusted C$	US GAAP US$
Product revenue	260,563	-	(263)	-	-	-	-	260,300	196,482
Service revenue	6,467	-	-	-	-	-	-	6,467	4,882
Total revenue	267,030	-	(263)	-	-	-	-	266,767	201,364
Product cost of sales	144,638	-	-	11,159	-	-	-	155,797	117,600
Service cost of sales	6,120	-	-	-	-	-	-	6,120	4,620
Total cost of sales	150,758	-	-	11,159	-	-	-	161,917	122,220
Gross profit	116,272	-	(263)	(11,159)	-	-	-	104,850	79,144
Operating expenses	103,602	-	3,499	(11,159)	-	(404)	-	95,538	72,114
Operating income	12,670	-	(3,762)	-	-	404	-	9,312	7,030
Foreign exchange (gain) loss	800	-	-	-	-	-	(226)	574	433
Interest income	(605)	-	-	-	-	-	-	(605)	(457)
Interest expense	339	-	-	-	-	-	(57)	282	213
Net income (loss) before tax	12,136	-	(3,762)	-	-	404	283	9,061	6,841
Current tax	4,102	-	-	-	-	-	-	4,102	3,096
Deferred tax	750	-	(1,016)	-	-	-	61	(205)	(154)
Net income (loss)	7,284	-	(2,746)	-	-	404	221	5,164	3,899
Exchange differences on foreign ops	(558)	-	-	-	-	-	(78)	(636)	2,997
Comprehensive income	6,726	-	(2,746)	-	-	404	143	4,528	6,896
Net income per share	0.09							0.06	0.05

Q4 2016: Adjusted EBITDA for the year ended December 31, 2016 (unaudited, see Non-GAAP measures)

	IFRS C$	Opening Adjs	Intangible Assets	Cost of Sales	Leases and Onerous Contracts	Stock Based Comp	Other	Adjusted C$	US GAAP US$
Net income (loss)	7,284	-	(2,746)	-	-	404	221	5,164	3,899
Interest expense	339	-	-	-	-	-	(57)	282	213
Interest income	(605)	-	-	-	-	-	-	(605)	(457)
Income tax expense	4,852	-	(1,016)	-	-	-	61	3,898	2,942
Depreciation and amortization	15,485	-	(349)	-	-	-	-	15,136	11,425
EBITDA	27,355	-	(4,111)	-	-	404	226	23,874	18,022
Stock based compensation	3,817	-	-	-	-	(404)	-	3,413	2,576
Foreign exchange on debt revaluation	57	-	-	-	-	-	-	57	43
Adjusted EBITDA	31,230	-	(4,111)	-	-	-	226	27,345	20,641
Adjusted EBITDA %	11.7%							10.3%	10.3%

Non-GAAP Measures

Our consolidated financial statements are prepared in accordance with GAAP. These GAAP financial statements include noncash 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, as shown in this release, 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 from period to 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, or foreign exchange movements on debt revaluation), asset base (depreciation and amortization), tax consequences and stock-based compensation. In addition, management bases certain forward-looking estimates and budgets on non-GAAP financial measures, primarily Adjusted EBITDA.

Reorganization expenses, impairment expenses, depreciation and amortization, and stock-based compensation 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 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 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 release with a reconciliation to the GAAP financial measure, and a description of the calculation for each measure is included.

EBITDA	Net income before interest, taxes, depreciation and amortization
Adjusted EBITDA	EBITDA adjusted for non-cash foreign exchange gains or losses on debt revaluation; impairment expenses; stock-based compensation expense; reorganization expenses; 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.

Special Note Regarding Forward-Looking Statements

Certain information and statements contained in this news release constitute “forward-looking information” and “forward-looking statements” (collectively, “Forward-Looking Information”) as defined under applicable Canadian and U.S. securities laws and the Company hereby cautions investors about important factors that could cause the Company’s actual results or outcomes to differ materially from those projected in any Forward-Looking Information contained in this news release. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words or phrases such as “will likely result”, “are expected to”, “will continue”, “is anticipated”, “believes”, “estimated”, “intends”, “plans”, “projection” and “outlook”), are not historical facts and may be forward-looking and may involve estimates, assumptions and uncertainties which could cause actual results or outcomes to differ materially from those expressed in such Forward-Looking Information. In particular and without limitation, this release contains Forward-Looking Information pertaining to whether or not the adoption of US GAAP or change in financial statement presentation currency will have a material effect on the Company’s financial statements.

Since actual results or outcomes could differ materially from those expressed in the Forward-Looking Information provided by or on behalf of the Company, investors and others should not place undue reliance on any such Forward-Looking Information.

About DIRTT DIRTT is a building process powered by technology. The Company uses its proprietary ICE® software to design, manufacture and install fully customized interior environments. The technology drives DIRTT’s advanced manufacturing and provides certainty on cost, schedule and the final result. Complete interior spaces are constructed faster, cleaner and more sustainably. DIRTT’s manufacturing facilities are located in Phoenix, Savannah and Calgary and the Company works with nearly 100 sales construction partners globally. DIRTT trades on the Nasdaq under the symbol “DRTT” and on the Toronto Stock Exchange under the symbol “DRT.” For more information, visit dirtt.com/investors.

For more information, please contact:
Kim MacEachern
Investor Relations, DIRTT 
Kmaceachern@dirtt.com
403.618.4539