SCHEDULE: 22NW Group Boosts DIRTT Stake to 30.5% After Rights Offering

Investment group 22NW and its affiliates, led by Aron R. English, increased their beneficial ownership in DIRTT Environmental Solutions Ltd. to 30.5% following a C$30.0 million rights offering and DSU settlements.

Summary

• 22NW Fund, LP and its affiliates, along with Aron R. English, have updated their beneficial ownership in DIRTT Environmental Solutions Ltd.
• Aron R. English, individually and through the 22NW entities, now beneficially owns an aggregate of 58,038,870 Common Shares, representing approximately 30.5% of the Issuer's outstanding shares.
• 22NW Fund, LP directly beneficially owns 49,955,045 shares, or 26.2% of the outstanding shares.
• The increase in ownership stems from participation in the Issuer's C$30.0 million rights offering at C$0.35 per share, DSU settlements, and previous share purchases.
• Shares were acquired through working capital, personal funds, reimbursement for legal fees from a 2022 contested director election, and the exercise of subscription rights.
• Adrian R. Zarate, a director of the Issuer, was awarded 25,875 Deferred Share Units (DSUs) on October 7, 2025.
• Aron R. English also had 590,882 DSUs settled in shares and 182,144 DSUs settled in cash on August 29, 2025.

Sentiment

Score: 6

Explanation: The filing is primarily a factual update on beneficial ownership, reflecting past transactions including participation in a rights offering and DSU settlements. The increased stake by a major investor group could be seen as a positive signal of confidence.

Positives

• Significant investment by the 22NW group, indicating strong conviction in DIRTT Environmental Solutions Ltd. with an aggregate beneficial ownership reaching 30.5%.
• Participation in the C$30.0 million Rights Offering suggests support for the company's capital raising efforts.
• Reimbursement of legal fees to 22NW Fund for a contested director election in 2022 indicates a resolution or recognition of their prior activism.

Future Outlook

The filing details the settlement terms for Deferred Share Units (DSUs), stating that DSUs settle following the cessation of service and employment with the Issuer. For U.S. taxpayers, DSUs will settle no later than forty days following cessation of service, either in shares or cash equivalent based on the closing price prior to the 30th day following separation.

Industry Context

This filing is a routine update to a Schedule 13D, reflecting changes in beneficial ownership by an activist investor group. It does not provide broader industry context or trends. The participation in a rights offering suggests a capital raise by DIRTT Environmental Solutions Ltd., which could be a response to market conditions or strategic needs, but the filing itself does not elaborate on these.

Management Changes

Corporate Governance

Legal Proceedings

• The filing mentions that 22NW Fund received shares as reimbursement for legal fees incurred in connection with a "contested director election at the Issuer's 2022 annual and special meeting." This is a historical event and not a current legal proceeding.

Related Party Transactions

• Reimbursement of legal fees to 22NW Fund (a reporting person) by the Issuer.
• Granting of Deferred Share Units (DSUs) to Adrian R. Zarate (a director of the Issuer and a reporting person).
• Settlement of Deferred Share Units (DSUs) for Aron R. English (a director of the Issuer and a reporting person).

Stakeholder Impact

• Shareholders: Increased concentration of ownership by the 22NW group, potentially indicating stronger oversight or influence. Participation in the rights offering diluted existing shareholders who did not participate.
• Management/Directors: Directors (Aron R. English, Adrian R. Zarate) are receiving equity-based compensation (DSUs), aligning their interests with long-term shareholder value.

Next Steps

• DSUs held by Adrian R. Zarate will settle following the cessation of his service as a director, either in shares or cash.
• DSUs for U.S. taxpayers will settle no later than forty days following cessation of service.

Key Dates

Keywords

DIRTT Environmental Solutions Ltd., 22NW Fund, Aron R. English, Schedule 13D, Beneficial Ownership, Rights Offering, Common Shares, Deferred Share Units, Corporate Governance, Investment Management