DIRTT Reports Second Quarter 2014 Results

CALGARY, ALBERTA--(Marketwired - Aug. 7, 2014) - DIRTT Environmental Solutions Ltd. ("DIRTT" or the "Company") (TSX:DRT), a leading technology-enabled designer, manufacturer and installer of fully customized, prefabricated interiors, today announced its financial results for the three and six months ended June 30, 2014.

The following financial information should be read in conjunction with the Company's condensed consolidated financial statements and management's discussion and analysis for the three and six months ended June 30, 2014, which will be available at www.sedar.com and http://ir.dirtt.net/financial-reports/.

This news release contains references to Canadian dollars and United States dollars. Canadian dollars are referred to as "$" and United States dollars are referred to as "US$".

Selected Highlights

Highlights for the second quarter of 2014 include:

• Revenue increasing by $3.7 million, or 9.7%, to $42.2 million compared with Q2 2013 and by $13.8 million, or 20.1%, to $82.7 million compared with the first six months of 2013;
• Adjusted gross profit percentage (see "Non-IFRS Measures") for Q2 2014 was 40.7% and 42.1% for the first six months of 2014;
• Completion of a bought deal secondary offering of approximately $18.6 million;
• Conversion of 50% or $5.5 million principal and accrued interest of the 14% convertible notes issued in December 2012 ("December 2012 Notes") into 2,430,595 Common Shares, with the other 50% converted subsequent to quarter end;
• Award of a notice of contract in excess of US$30.0 million to DIRTT and its Distribution Partner;
• Launch of the Employee Share Purchase Plan ("ESPP"); and
• Launch of the new Enzo Approach to interior construction at the Company's annual marketing and training event in Chicago.

"The first half of 2014 saw us record a 20% improvement in top line growth versus the year ago period as our solutions continued to gain traction," said Scott Jenkins, President of DIRTT. "In the second quarter we received a notice of contract for the largest sale in the Company's history valued in excess of US$30 million gross. This type of contract demonstrates both the scalability of our solutions and our ability to supplement baseline growth with major contract wins."

"In the second quarter we closed a bought deal secondary offering that allowed certain selling shareholders to sell their shares to a syndicate of underwriters, permitting an orderly transition in our shareholder base as early stakeholders exited their positions," said Derek Payne, CFO of DIRTT. "Subsequent to the offering, we believe a number of selling shareholders were able to further reduce their positions, significantly decreasing the number of shares set to come off lock-up at the end of November 2014. We also recently saw the conversion of all of our outstanding convertible notes into common shares of the Company. This allowed us to eliminate high interest debt, further strengthening our balance sheet."

Management Announcement

DIRTT also announced today that Chief Financial Officer Derek Payne will take a temporary medical leave of absence to treat a long-standing medical condition. In the interim, Scott Jenkins will act as interim CFO with additional oversight by the board of directors.

"Derek is a core member of our team, and with the full support of our board, is taking a temporary leave to focus on getting the treatment he needs to support his continued good health," said Scott Jenkins. "We look forward to welcoming Derek back and wish him a full and speedy recovery."

Summary Financial Results

	Three months ended				Six months ended
	June 30, 2014		June 30, 2013		June 30, 2014		June 30, 2013
($ thousands, except per share amounts)	$		$		$		$
Revenue	42,218		38,494		82,733		68,885
Gross profit	16,758		16,843		33,848		26,484
Gross profit %	39.7	%	43.8	%	40.9	%	38.4	%
Adjusted gross profit % (1)	40.7	%	45.2	%	42.1	%	40.1	%
Selling, general and administrative	18,337		15,126		34,429		27,692
Operating (loss) income	(1,579	)	1,717		(581	)	(1,208	)
Finance costs	584		1,359		1,200		2,675
Adjusted EBITDA (1)	1,149		4,258		4,864		3,855
Income tax (recovery) expense	(215	)	1,074		79		1,074
Net loss	(2,055	)	(1,271	)	(2,125	)	(5,850	)
Net loss per basic and diluted share:	(0.03	)	(0.04	)	(0.03	)	(0.16	)

Note:
(1)	See "Non-IFRS Measures".

Revenue

Revenue increased by $3.7 million or 9.7% in the three months ended June 30, 2014 compared with the same period in 2013. For the three months ended June 30, 2014, these increases were achieved despite the adverse winter weather conditions that impacted businesses across much of North America, particularly in the early part of the quarter. DIRTT was not immune to these conditions and experienced a particularly weak April. These conditions proved to be relatively short-lived and the Company saw a strong recovery in revenue levels for the remainder of the quarter that were in excess of levels achieved in the same period of the prior year.

Revenue increased by $13.8 million or 20.1% in the six months ended June 30, 2014 compared with the same period in 2013. Revenue in the six-month period ended June 30, 2014 was significantly influenced by a higher than normal number of project orders received late in the fourth quarter of 2013, during the traditionally slower holiday season, which drove strong revenue early in the first quarter of 2014.

As a significant amount of DIRTT's revenue is generated by the US market DIRTT also benefitted from a stronger US dollar during the three and six months ended June 30, 2014.

Included in the total revenue reported for the three and six months ended June 30, 2014, was approximately one-third and two-thirds, respectively, of the $12.0 million of significant projects announced in January 2014. These projects, for leading players in the energy, insurance and healthcare sectors, are scheduled to deliver through 2014 and into 2015.

Adjusted Gross Profit

Adjusted gross profit as a percentage of revenue decreased by 4.5% from 45.2% to 40.7% in the three months ended June 30, 2014 compared with the same period in 2013. The higher adjusted gross profit experienced during the three months ended June 30, 2013 was positively impacted by one-time adjustment items, including a final adjustment after completion of a Fortune 500 company's project.

In general, consistent manufacturing throughput throughout a quarter contributes to stronger gross profit, as this allows for more efficient operations over the period versus significant fluctuations in monthly manufacturing volumes. As a result of poor weather conditions during the first quarter of 2014, April's revenue was significantly lower than May and June which contributed to the lower adjusted gross profit % during the second quarter of 2014.

Adjusted gross profit as a percentage of revenue increased by 2.0% from 40.1% to 42.1% in the six months ended June 30, 2014 compared with the same period in 2013 even with the positive one-time adjustments experienced in the prior year as noted above. The increase was due primarily to significantly better results in the first quarter of 2014 compared with the same period in 2013. These results were achieved with a $10.1 million or 33.7% increase in revenue in the first quarter of 2014 over the same period in the prior year, leading to greater efficiencies driven by higher overall volumes in the Company's production facilities.

Selling, General and Administrative ("SG&A") Expenses

SG&A expenses increased by $3.2 million or 21.2% in the three months ended June 30, 2014 compared with the same period in 2013. The most significant change can be attributed directly to sales-related efforts as salaries and benefits and commission expense for internal sales representatives and industry specific experts increased by $0.9 million and $0.3 million, respectively. These costs reflect personnel additions focused on generating and supporting higher business volumes, and are consistent with the use of proceeds as outlined in the prospectus filed in respect of DIRTT's IPO. Higher commission costs are in line with the increased revenue volumes in the current quarter. Other increases in SG&A in the current quarter included travel and marketing costs of $0.7 million, depreciation expense of $0.6 million, and $0.2 million in other miscellaneous items. The increase in travel and marketing costs was mainly due to the previously discussed annual marketing initiative in Chicago in June, with a total cost of $1.3 million incurred during the three months ended June 30, 2014 compared with $1.1 million in the same period in 2013. The increase was due to additional attendees for the event and training and for external tours through the newly refreshed GLC showcasing the latest DIRTT solutions. This cost does not occur in any other month but includes marketing and training efforts that benefit DIRTT throughout the remainder of the year and beyond. The stronger US dollar contributed to the overall increase in SG&A across the organization in the current quarter.

SG&A costs in the period also included $0.5 million in transaction costs related to the secondary offering that was completed in June 2014. Despite the fact that the Company did not receive any proceeds from the secondary offering, under the terms of agreements with certain shareholders DIRTT was responsible for the costs of the secondary offering.

SG&A expenses increased by $6.7 million or 24.3% in the six months ended June 30, 2014 compared with the same period in 2013. The increase was due to increases in salaries and benefits of $2.2 million, travel and marketing costs of $1.2 million, depreciation expense of $1.0 million, commission expense of $0.9 million, transaction costs from the secondary offering of $0.5 million, office supplies of $0.3 million, rent expense of $0.2 million, insurance expense of $0.1 million and $0.3 million in other miscellaneous items. Included in the $2.2 million increase in salaries and benefits is $0.3 million in accrued bonuses for senior management in accordance with the Board-approved 2014 bonus pool. The increase in salaries and benefits and commission expense are due to the same reasons as discussed above.

Adjusted EBITDA

Adjusted EBITDA decreased by $3.1 million in the three months ended June 30, 2014 compared with the same period in 2013. The decrease was mainly due to a lower adjusted gross profit percentage which dropped from 45.2% to 40.7% and increased SG&A of $3.2 million. These amounts were partially offset by increased revenue of $3.7 million.

Adjusted EBITDA increased by $1.0 million in the six months ended June 30, 2014 compared with the same period in 2013. The increase was mainly due to the $13.8 million increase in revenue, and the resulting improved adjusted gross profit percentage which grew from 40.1% to 42.1%. These amounts were partially offset by increased SG&A of $6.7 million for the reasons discussed above.

Finance Costs

Finance costs decreased by $0.8 million in the three months ended June 30, 2014 compared with the same period in 2013. Finance costs for the three months ended June 30, 2014 were comprised of $0.4 million non-cash and $0.2 million cash costs compared with $0.9 million and $0.4 million, respectively, for the same period in 2013. In November 2013, upon completion of the IPO, the Class A preferred shares and the convertible notes issued in June 2012 ("June 2012 Notes") were converted into Common Shares and as a result there were no accretion or accrued interest amounts reported during 2014 related to those items. Upon completion of the IPO, the Company also repaid US$10.0 million of the original US$20.0 million of December 2012 Notes. Under the terms of the note purchase agreement on the remaining principal portion of the December 2012 Notes, the interest rate increased from 8% to 14% (12% cash and 2% non-cash) effective March 7, 2014. The 2% non-cash portion of the interest is included with the accretion expense in the accreted / accrued interest (non-cash) section of the table above. In June 2014, in connection with the secondary offering, US$5.0 million of the then-remaining US$10.0 million December 2012 Notes plus all accrued interest at the time of conversion were converted into Common Shares.

Finance costs decreased by $1.5 million in the six months ended June 30, 2014 compared with the same period in 2013. Finance costs for the six months ended June 30, 2014 were comprised of $0.6 million non-cash and $0.6 million cash costs compared with $1.8 million and $0.9 million, respectively, for the same period in 2013. The reasons for the decrease are the same as discussed above.

Secondary Offering

In June 2014, the Company completed a secondary offering on a bought-deal basis, whereby a total of approximately 7.2 million Common Shares were sold by a group of selling shareholders to a syndicate of underwriters at an offering price of $2.60 per Common Share. DIRTT did not receive any proceeds from the secondary offering but incurred $0.5 million in transaction costs.

Outlook

Construction is a major global industry and consists of building new structures, making additions and modifications to existing structures, as well as conducting maintenance, repair and leasehold improvements on existing structures. The total US construction market was US$900 billion in 2013, of which US$562 billion was attributable to non-residential building [Source: US Census Bureau]. This includes both new building and renovation projects. Total US non-residential construction spending is forecasted to grow to US$714 billion in 2017 [Source: FMI US Markets Construction Overview 2014]. DIRTT believes conventional construction activities are fraught with challenges including cost overruns, quality issues and time delays and increasingly organizations are looking for a better way to build out their interior spaces, whether for new buildings or renovations. DIRTT's increasing roster of repeat clients is a strong testament to the benefits of technology-enabled prefabricated solutions.

DIRTT believes its solutions are a superior alternative to conventional construction in all sectors of the construction industry, and that a continued increase in construction activity can be expected to result in an ongoing improvement in revenue. The Company plans to invest additional resources, including the further development of ICE and the development of new DIRTT Solutions and test projects, to pursue further opportunities in healthcare, education and government, and new opportunities in the hospitality and residential sectors of the construction industry. The Company's product development team has been, and will continue to be, expanded to address industry-specific challenges and opportunities.

Looking at the American Institute of Architects' (AIA) Architecture Billings Index (ABI), which is a useful leading economic indicator of how non-residential billing activity could trend, the overall March numbers showed a decline in billings and enquiries due to the unseasonably cold and stormy weather that gripped much of the continent. As anticipated, the second quarter of 2014 got off to a slow start as adverse weather conditions negatively impacted sales volumes in April. These conditions were short-lived and monthly revenue bounced back as sales volume returned to anticipated levels. This momentum continued into the early part of the third quarter of 2014. This is consistent with the most recently released ABI numbers from the AIA for June 2014 which were at the strongest level since September 2013. The AIA believes that these numbers point to improved fundamentals that could support growth across all segments of the building industry for the next nine to 12 months.

In June 2014, DIRTT received notice of award for a project valued in excess of US$30.0 million to DIRTT and its Distribution Partner Agile OFIS of Houston, Texas, which is scheduled to commence during the first quarter of 2015 and is expected to be substantially completed in 2015.

Liquidity and Capital Resources

At June 30, 2014, DIRTT had $26.4 million in cash and cash equivalents compared with $34.4 million at December 31, 2013. At June 30, 2014, the Company had an undrawn US$18.0 million revolving operating facility.

Non-IFRS Measures

Adjusted gross profit, adjusted gross profit %, EBITDA, and Adjusted EBITDA are non-IFRS measures used by management to assess performance and financial condition. Consequently, they do not have a standard meaning as prescribed by IFRS, and are therefore unlikely to be comparable to similar measures presented and calculated by other companies. Management believes that the non-IFRS measures are useful supplemental measures that may assist investors in assessing the financial performance and the cash anticipated to be generated by DIRTT's business. The non-IFRS measures should not be considered as the sole measure of the Company's performance and should not be considered in isolation from, or as a substitute for, analysis of its financial statements. Please refer to the Company's management's discussion and analysis for three and six months ended June 30, 2014 for a definition and reconciliation of the non-IFRS measures used herein.

Conference Call Details

DIRTT will host a conference call and webcast on Friday, August 8, 2014 at 7 a.m. MT (9 a.m. ET) to discuss its second quarter results in greater detail. President Scott Jenkins and CFO Derek Payne will participate.

To access the conference call by telephone dial +1 416.764.8688 (Toronto and international callers) or 1.888.390.0546 (toll-free in North America). Please call 10 minutes prior to the start of the call. In addition, a live webcast (listen only mode) of the conference call will be available at www.newswire.ca/en/webcast/detail/1387857/1539755.

Investors are invited to submit questions by email before and during the conference call. Please send them to ir@dirtt.net.

A replay of the conference call will be available at +1 416.764.8677 or 1.888.390.0541, passcode 571299, from noon (ET) Friday August 8, 2014 to midnight (ET) Friday, August 15, 2014 or through the webcast archives at www.newswire.ca or on DIRTT's website at http://ir.dirtt.net/.

Financial Statements

DIRTT Environmental Solutions Ltd.

Consolidated Statements of Loss and Comprehensive Loss

(Stated in thousands of Canadian dollars, except per share amounts)

	For the three months ended				For the six months ended
	June 30, 2014		June 30, 2013		June 30, 2014		June 30, 2013
	$		$		$		$
Revenue	42,218		38,494		82,733		68,885
Cost of goods sold	25,460		21,651		48,885		42,401
Gross profit	16,758		16,843		33,848		26,484
Selling, general and administrative	18,337		15,126		34,429		27,692
Operating (loss) income	(1,579	)	1,717		(581	)	(1,208	)
Foreign exchange loss	29		557		257		899
Gain on sale of property, plant and equipment	(18	)	-		(18	)	-
Loss on derecognition of liability	153		-		153		-
Interest income	(57	)	(2	)	(127	)	(6	)
Finance costs	584		1,359		1,200		2,675
Loss before tax	(2,270	)	(197	)	(2,046	)	(4,776	)
Current tax expense	232		497		544		497
Deferred tax (recovery) expense	(447	)	577		(465	)	577
	(215	)	1,074		79		1,074
Net loss for the period	(2,055	)	(1,271	)	(2,125	)	(5,850	)
Other comprehensive (loss) income
Items that will not be reclassified to profit or loss:
Exchange differences on translation of foreign operations, net of tax of $nil (2013 - $nil)	(907	)	931		123		1,428
Total comprehensive loss for the period	(2,962	)	(340	)	(2,002	)	(4,422	)
Loss per share
Basic and diluted	(0.03	)	(0.04	)	(0.03	)	(0.16	)

DIRTT Environmental Solutions Ltd.

Consolidated Statements of Financial Position

(Stated in thousands of Canadian dollars)

As at	June 30, 2014		December 31, 2013
	$		$
ASSETS
Current Assets
Cash and cash equivalents	26,364		34,373
Trade and other receivables	22,879		17,166
Inventory	9,709		11,376
Prepaids and other current assets	3,421		1,058
	62,373		63,973
Non-current Assets
Long-term deposits	590		522
Property, plant and equipment	30,751		29,986
Intangible assets	11,138		10,112
Notes receivable	476		486
Deferred tax assets	2,092		1,967
Goodwill	1,845		1,845
	46,892		44,918
Total Assets	109,265		108,891
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Trade accounts payable and accrued liabilities	17,580		12,550
Customer deposits	5,417		8,370
Current portion of long-term debt	2,422		2,419
Provisions	358		469
Current tax liabilities	613		314
	26,390		24,122
Non-current Liabilities
Deferred tax liabilities	257		592
Long-term debt	4,474		5,673
Convertible notes	5,182		9,904
	9,913		16,169
Shareholders' Equity
Common share capital	129,809		123,127
Warrants	1,101		1,101
Equity component of convertible notes	28		57
Contributed surplus	5,903		6,192
Accumulated other comprehensive income	1,416		1,293
Accumulated deficit	(65,295	)	(63,170	)
	72,962		68,600
Total Liabilities and Shareholders' Equity	109,265		108,891

DIRTT Environmental Solutions Ltd.

Consolidated Statements of Cash Flows

(Stated in thousands of Canadian dollars)

	For the three months ended				For the six months ended
	June 30, 2014		June 30, 2013		June 30, 2014		June 30, 2013
	$		$		$		$
Cash flows from operating activities:
Net loss for the period	(2,055	)	(1,271	)	(2,125	)	(5,850	)
Items not affecting cash:
Depreciation included in cost of goods sold	442		571		975		1,171
Depreciation and amortization included in selling, general and administrative	2,137		1,530		4,089		3,108
Stock-based compensation	56		129		103		271
Loss on derecognition of liability	153		-		153		-
Write off of property, plant and equipment	-		217		-		217
Gain on sale of property, plant and equipment	(18	)	-		(18	)	-
Income tax provision	(215	)	1,074		79		1,074
Finance cost	584		1,359		1,200		2,675
Non-cash foreign exchange (gain) loss on debt revaluation	(389	)	651		24		1,195
Non-cash foreign exchange (gain) loss	(393	)	277		46		470
Net change in non-cash working capital relating to operating activities	353		(532	)	(4,545	)	(1,284	)
Cash taxes paid	(72	)	-		(229	)	-
Net cash flows provided by (used in) operating activities	583		4,005		(248	)	3,047
Cash flows from investing activities:
Purchase of property, plant and equipment	(3,127	)	(1,222	)	(4,174	)	(1,936	)
Capital expenditures on internally generated intangible assets	(1,267	)	(1,069	)	(2,602	)	(2,209	)
Proceeds from sale of property, plant and equipment	22		-		22		-
Receipt of proceeds from notes receivable	5		-		10		-
Net cash flows used in investing activities	(4,367	)	(2,291	)	(6,744	)	(4,145	)
Cash flows from financing activities:
Issuance of share capital on exercise of stock options	664		13		761		13
Interest paid on convertible notes	(161	)	(421	)	(413	)	(829	)
Proceeds of long-term debt	-		3,232		-		3,232
Repayment of long-term debt	(607	)	(62	)	(1,218	)	(643	)
Interest paid on long-term debt	(70	)	(24	)	(147	)	(55	)
Net cash flows (used in) provided by financing activities	(174	)	2,738		(1,017	)	1,718
Net (decrease) increase in cash and cash equivalents	(3,958	)	4,452		(8,009	)	620
Cash and cash equivalents and restricted cash, beginning of period	30,322		4,994		34,373		8,826
Cash and cash equivalents, end of period	26,364		9,446		26,364		9,446
Cash and cash equivalents consists of:
Cash	3,209		9,446		3,209		9,446
Temporary investments	23,155		-		23,155		-
	26,364		9,446		26,364		9,446

About DIRTT

DIRTT Environmental Solutions (Doing It Right This Time) uses its proprietary 3D software to design, manufacture and install fully customized prefab interiors. The Company's customers in the corporate, government, education and healthcare sectors benefit from DIRTT's precise design and costing; rapid lead times with the highest levels of customization and flexibility; and faster, cleaner construction.

DIRTT manufacturing facilities are in Phoenix, Savannah, Kelowna and Calgary. DIRTT's teams support more than 100 Distribution Partners throughout North America, the Middle East and Asia. For more information please visit www.dirtt.net.

To find out more about DIRTT (TSX:DRT) please visit our website www.dirtt.net or contact us at ir@dirtt.net.

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 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 news release contains Forward-Looking Information pertaining to the following: comments with respect to the Company's revenue, objectives and priorities for 2014 and beyond; project timetables; its growth strategies and opportunities; its ability to meet working capital requirements and financial obligations; the launch of the ESPP; use of proceeds from the IPO; and its outlook for its operations and the Canadian, US and international economies, and in particular, the US construction industry.

With respect to Forward-Looking Information contained in this news release, assumptions have been made regarding the Company, among other things:

• its ability to manage its growth;
• competition in its industry;
• its ability to enhance current products and develop and introduce new products;
• its ability to obtain components and products from suppliers on a timely basis and on favourable terms;
• its ability to obtain qualified staff and equipment in a timely and cost-efficient manner;
• the regulatory framework governing taxes in Canada and the US and any other jurisdictions in which the Company may conduct its business in the future;
• future development plans for its assets unfolding as currently envisioned;
• future capital expenditures to be made by the Company;
• future sources of funding for its capital program;
• the impact of increasing competition on the Company; and
• its success in identifying risks to its business and managing the risks mentioned below.

The Company's actual results or outcomes could differ materially from those expressed in the Forward-Looking Information as a result of the risks normally encountered in its industry such as:

• maintaining and managing growth;
• history of losses;
• risks related to global financial crisis;
• risks related to new technology;
• competition risks;
• operating results and financial condition fluctuations on a quarterly and annual basis;
• risks related to intellectual property;
• risks related to additional capital requirements;
• customer base and market acceptance;
• software and product defects and design risks;
• availability of key supplies;
• dependence on key personnel and consultants;
• commodity price risk;
• risks related to restricted covenants;
• credit risk;
• the effect of government regulation;
• risks related to international expansion;
• risks related to physical facilities;
• legal risks;
• foreign currency and fiscal matters;
• risks related to future acquisitions;
• risks related to Forward-Looking Information;
• reliance on third parties; and
• conflicts of interest.

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.

DIRTT cautions that the foregoing lists of factors are not exhaustive. Further, Forward-Looking Information is made as of the date hereof, and the Company undertakes no obligation to update Forward-Looking Information to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events, except as required by applicable Canadian securities laws. New factors emerge from time to time, and it is not possible for DIRTT's management to predict all of these factors and to assess in advance the impact of each such factor on the Company's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in Forward-Looking Information. No assurance can be given that these expectations will prove to be correct and such Forward-Looking Information contained in this news release should not be unduly relied upon. In addition, this news release may contain Forward-Looking Information attributed to third party industry sources.

For a detailed description of the risks and uncertainties facing the Company and its business and affairs, readers should refer to the Company's annual financial statements, management's discussion and analysis and annual information form for the 12 months ended December 31, 2013, all of which are available at www.sedar.com.