Filed Pursuant to Rule 424(b)(4)
Registration No. 333-275172
PROSPECTUS
C$30,000,000
![LOGO](https://capedge.com/proxy/424B4/0001193125-23-292032/g576166g69s00.jpg)
DIRTT Environmental Solutions Ltd.
SUBSCRIPTION RIGHTS TO PURCHASE UP TO 85,714,285 SHARES
OF COMMON SHARES AT C$0.35 PER SHARE
DIRTT Environmental Solutions Ltd. (“we,” “us,” “our,” or the “Company”) is distributing, at no charge, to holders of our Common Shares (“Common Shares”) as of the close of business on December 12, 2023 (the “Record Date”), transferable subscription rights (the “Rights”) to purchase up to an aggregate of 85,714,285 of our Common Shares in Canada and the United States of America (the “Offering”). This prospectus also registers, under the laws of the United States of America, the issuance of our Common Shares upon exercise of the Rights distributed to holders of Common Shares. If you are a resident in or otherwise subject to the securities laws of Canada, you should refer to the amended and restated rights offering circular (the “Canadian Circular”) filed on our SEDAR+ profile at www.sedarplus.ca. Each holder will receive one Right for each Common Share owned by such holder at the close of business on the Record Date. Each Right will entitle its holder to purchase 0.81790023 Common Shares at a subscription price of C$0.35 per full share (the “Subscription Price”), exercisable for whole Common Shares only on or before 5:00 pm (Eastern Time) (the “Expiration Time”) on January 5, 2024 (the “Expiration Date”) (the “Basic Subscription Privilege”). As a result, 1.22264301 Rights are required to subscribe for one whole Common Share.
The Company expects to use the proceeds of the Offering to reduce its outstanding indebtedness by any one or more of several means, including tender offers, open market or privately negotiated repurchases, or redemptions of its Debentures (as defined herein), or through prepayments or repayment of necessary operating lease facilities and amounts outstanding under the Leasing Facilities (as defined herein). The Company also expects to use the proceeds of the Offering for general corporate purposes, which may include investments in its business, funding potential future cash needs or operating losses, or funding working capital and capital expenditure needs. See “Use of Proceeds” in this prospectus for a further explanation of our intended use of proceeds from this Offering. If we sell all the Common Shares being offered in this Offering, we will receive gross proceeds of approximately C$30,000,000 (subject to adjustment for rounding).
The Rights and the Common Shares issuable upon the exercise of the Rights (collectively, the “Offered Securities”) are expected to be listed on the Toronto Stock Exchange (the “TSX”) on December 11, 2023 under the symbol “DRT.RT” and “DRT”, respectively.
The Rights issued pursuant to this Offering will be granted and exercisable beginning on or about December 12, 2023. The Rights will expire and will have no value if they are not exercised prior to the 5:00 pm (Eastern Time) on January 5, 2024, the Expiration Date of this Offering. Computershare Investor Services, Inc. (“Computershare”) will serve as the subscription agent in the Offering.
You should carefully consider whether to exercise your Rights before the expiration of the Offering and review carefully the information contained in or incorporated by reference in this prospectus and any accompanying prospectus supplement or any free writing prospectus that we have authorized for use in connection with this Offering prior to exercising such Rights. All exercises of Rights are irrevocable once they are exercised. Our board of directors (our “Board”) is making no recommendation regarding your exercise of the Rights. Holders who do not participate in the Offering will continue to own the same number of Common Shares. Holders who do not subscribe for the greatest number of shares permitted in the Offering will own a smaller percentage of the total Common Shares outstanding if and to the extent other holders fully exercise their Basic Subscription Privileges and Additional Subscription Privileges (as defined herein) or in the Standby Commitments. Rights that are not exercised by the Expiration Time on the Expiration Date will expire and have no value.
If you exercise your Basic Subscription Privilege in full (other than those Rights to acquire less than one whole Common Share, which cannot be exercised) and our other holders do not fully exercise their Basic Subscription Privileges, you may also exercise an additional subscription privilege (the “Additional Subscription Privilege”) to purchase additional Common Shares not issued under the Basic Subscription Privilege, subject to availability and pro rata allocation of shares among persons exercising the Additional Subscription Privilege. No fractional Common Shares will be issued. Where any exercise of Rights would otherwise entitle a holder of Rights to receive fractional Common Shares, the shareholder’s entitlement will be reduced and rounded down to the next lowest whole number of Common Shares, and the fraction shall be cancelled without any repayment of capital or other consideration therefor.
The Company has entered into a Standby Purchase Agreement, dated November 20, 2023 (the “Standby Purchase Agreement”), with each of 22NW (as defined herein) and the 726 Group (as defined herein). As of the date hereof, 22NW (and Aron English) and the 726 Group (and Shaun Noll) hold 27,658,157 and 22,195,589 issued and outstanding Common Shares, representing approximately 26.4% and 21.2% of the issued and outstanding Common Shares, respectively. Pursuant to the Standby Commitments (as defined herein), each Standby Purchaser (as defined herein) has agreed to exercise its Basic Subscription Privilege in full and, in addition thereto, to collectively purchase Common Shares not subscribed for by holders under the Basic Subscription Privilege or Additional Subscription Privilege with an aggregate Subscription Price of up to C$15,000,000 (including Common Shares acquired by such Standby Purchaser under its Basic Subscription Privilege and Additional Subscription Privilege, if any), so that 85,714,285 Common Shares will be sold and the Company will realize gross proceeds of C$30,000,000 under the Offering (collectively, the “Standby Commitments”), assuming each of the Standby Purchasers satisfies their Standby Commitment.
Our issued and outstanding Common Shares are listed on the TSX under the trading symbol “DRT” and are quoted on the OTC Markets (“OTC”) on the “OTC Pink Tier” under the symbol “DRTTF.” On November 20, 2023, the closing price of the Common Shares was C$0.46 on the TSX and the last reported sales price on the OTC was US$0.33.
This Offering is being made directly by us. We are not using an underwriter or selling agent. The Subscription Price, and proceeds to us before expenses, is C$0.35 per full share, for aggregate proceeds to us, before expenses, of C$30,000,000 (or US$21,856,331) assuming the Offering is fully subscribed.
We have applied to have the Offered Securities registered for sale, or we are relying on exemptions from registration, in the District of Columbia, Puerto Rico and all 50 states in the United States, except that we will distribute the Rights to eligible holders in the state of Arizona, but we will not sell the Common Shares issuable upon the exercise of the Rights in the state of Arizona.
Our Board is making no recommendation regarding your exercise of the Rights. You should carefully consider whether to exercise your Rights before the Expiration Date. You may not revoke or revise any exercises of Rights once made.
Completion of the Offering is not subject to raising a minimum amount of proceeds.
We are an “emerging growth company” as that term is used in the Jumpstart Our Business Startups Act of 2012, and, as such, we have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings.
Investing in our securities involves a high degree of risk. See “Risk Factors” beginning on page 25 of this prospectus.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is December 11, 2023.