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DIRTT Seeks Summary Judgment Against Falkbuilt, Smed and Loberg

DIRTT Environmental Solutions Ltd. (DIRTT or the Company) (Nasdaq: DRTT, TSX: DRT), an interior construction company that uses proprietary software to design, manufacture and install fully customizable environments, today announces that it has filed a summary judgment application in the Court of Queen's Bench of Alberta, Action No. 1901-06550 (the Action), seeking an expedited, pre-trial, final determination of its liability claims against Falkbuilt Ltd., Falkbuilt, Inc., Mogens Smed (Smed), Barrie Loberg (Loberg), and others.

In the Action, DIRTT seeks, among other things, an order restraining the defendants from competing with DIRTT, a judgment for its losses and damages, and an accounting and disgorgement of the defendants' gains from their wrongful misconduct.

In the summary judgment application DIRTT filed an affidavit tendering over 1,200 pages of evidence supporting its liability claims in the Action. This includes excerpts of Questioning transcripts that document admissions made under oath by Smed, Loberg and other witnesses, and related documents. DIRTT believes that the affidavit evidence establishes that:

  • Smed, Loberg, and others breached the duties they owed to DIRTT, including their contractual and fiduciary duties;

  • Smed, Loberg, and others began developing the new competing company immediately after Smed's departure from DIRTT, in breach of contractual restrictive covenants and fiduciary duties owed to DIRTT;

  • before it was called Falkbuilt, the new competing company operated through a covert group comprised of then-current DIRTT employees and distribution partners known as the TTIMit Group (which stands for "This Time I Mean It");

  • members of the TTIMit Group took steps to conceal their communications by using private and personal email addresses and phone numbers, and holding secret meetings and gatherings;

  • the TTIMit Group also used then-current DIRTT employees to name the new company, build the Falkbuilt warehouse and offices, source and purchase equipment for Falkbuilt, assist with market research, develop Falkbuilt's products, build vignettes and drawings, and address Falkbuilt's software and computer needs;

  • members of the TTIMit Group conspired together to solicit DIRTT employees and distribution partners, design and sell competing products using DIRTT's confidential information, including DIRTT's pricing lists, DIRTT's product designs, DIRTT's personnel information, and revenue forecast information for DIRTT's distribution partners;

  • Smed, Loberg, and other members of the TTIMit Group solicited and encouraged DIRTT employees and distribution partners to cease their relationships with DIRTT, and induced them to enter into employment or other contractual relationships with Falkbuilt; and

  • Falkbuilt competes with DIRTT in the international interior construction market.

Special Note Regarding Forward-Looking Statements

Certain statements contained in this news release are “forward-looking information” and “forward-looking statements” (collectively, “Forward-Looking Information”) as defined under applicable provisions of the United States Private Securities Litigation Reform Act of 1995, and Section 21E of the Exchange Act and within the meaning of applicable Canadian securities laws. All statements, other than statements of historical fact included in this news release, regarding the Action, including the potential outcome of the lawsuit, the effect of previous actions by the defendants on DIRTT's financial performance and the plans and objectives of management is Forward-Looking Information. When used in this news release, the words “anticipate,” “believe,” “expect,” “intend,” “plan,” “may,” “will,” “should,” “would,” “could,” “can,” the negatives thereof, variations thereon and other similar expressions are intended to identify Forward-Looking Information, although not all Forward-Looking Information contains such identifying words. Forward-Looking Information, by its nature, is based on assumptions, and is subject to important risks and uncertainties. You should not rely on any Forward-Looking Information, which represents our beliefs, assumptions and estimates only as of the dates on which it was made, as predictions of future events. We undertake no obligation to update this Forward-Looking Information, even though circumstances may change in the future, except as required under applicable securities laws. We qualify all of our Forward-Looking Information with these cautionary statements.

About DIRTT

DIRTT is a global leader in industrialized construction. Its 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 commercial, healthcare, education, and public sector markets, DIRTT’s system provides total design freedom, and greater certainty in cost, schedule, and outcomes. Headquartered in the US and Canada, DIRTT trades on Nasdaq under the symbol “DRTT” and on the Toronto Stock Exchange under the symbol “DRT”.

For further information please contact:

  • Kim MacEachern

    Investor Relations, DIRTT

    1-403-723-5000kmaceachern@dirtt.com

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