Sandnes, Norway, 25 November 2022 – Desert Control AS (DSRT) announces its third quarter report and interim financial results for the fiscal period ending 30 September 2022 and shares its year-to-date company update per 25 November 2022.
Desert Control secures the first commercial contract in the United States, increases efficiency with lower operational costs in the UAE, and enters MoU for future projects in Southern Europe. The company closes the third quarter with a positive cash balance of NOK 100 Million and has no interest-bearing debt.
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Q3 and Year-to-Date Highlights
Accelerating commercialization in the United States ahead of initial expectations:
• Signing contract with Limoneira Company (Nasdaq: LMNR) valued at NOK 1,8M. Initial scope includes LNC application for 4,000 citrus trees at two Limoneira ranches combined with a letter of intent for large-scale LNC deployment based on the successful outcome.
• Strengthening the organization by accelerating the recruitment of a sales team to drive commercialization in Arizona and California.
• Continuing collaboration with the University of Arizona for impact studies of LNC for American soil with positive results. Expanding the validation program with additional crops.
• Establishing an office in Yuma, Arizona, to prepare for commercial deliveries.
Increasing efficiency with lower operational cost in the UAE:
• Operationalizing the Mawarid partnership by transferring personnel and operational costs related to sales, distribution and project delivery from Desert Control Middle East to the Mawarid Desert Control sales and distribution company.
• Restructuring Desert Control Middle East into a focused LNC production entity with an indirect go-to-market model for the UAE market through the Mawarid partnership.
• Securing Mawarid Desert Control contract for a strategic commercial pre-project with a significant UAE food-security company for implementation commencing Q4 2022.
• Achieving exceptional full-year results for LNC treatment of date palms. Reduced water usage by 46% while increasing yield by 8% and gaining >20% increase in fruit quality.
Strengthening the foundation for scale-up:
• Streamlined organization with personnel transfer to Mawarid JV drives increased efficiency with lower UAE operational costs for Desert Control (reducing running costs by >50%).
• Strengthened management team improves organizational scalability for future growth.
• Improved scale-on-demand model with global mobility of assets to ensure optimal agility.
• MoU with Amarenco Group for soil and forest regeneration CSR initiative creates opportunities for future projects in Southern Europe.
Financial Highlights third quarter 2022
[third quarter 2021 in brackets]
Revenue NOK 0.1M [NOK 2.3M]
EBITDA NOK -21.6M [NOK -7.8M]
Net Income NOK -14.7M [NOK -8.5M]
Gross R&D expenses NOK 0.1M [NOK 3.4M]
Total cash balance 30.09.22 (bank deposits and funds) NOK 100.4M [NOK 191.2M]
Equity 30.09.22 NOK 133.3M (equity ratio 94.2%) [NOK 202.8 (94.7%)]
First nine months of 2022
Revenue NOK 1.2M [NOK 2.3M]
EBITDA NOK -64.7M [NOK -20.5M]
Net Income NOK -55.2M [NOK -21.2M]
Gross R&D expenses NOK 2.6M [NOK 3.4M]
Innovation Norway / Skattefunn grants NOK 2.9M [NOK 1M]
Total cash balance 30.09.22 (bank deposits and funds) NOK 100.4M [NOK 191.2M]
Equity 30.09.22 NOK 133.3M (equity ratio 94.2%) [NOK 202.8 (94.7%)]
The Q3 report and presentation will be made available at Investor — Desert Control.
A webcast presentation in English will be hosted on Friday 25 November 2022 at 10.00 AM, Central European Time (CET). Register: http://bit.ly/3g3fW5H
2022 Year-to-Date Company Update
Desert Control has developed Liquid Natural Clay (LNC) to restore and enhance soil ecosystems to; reduce the usage of and improve the efficiency of; water, fertilizers, and natural resources for agriculture, forests, and green landscapes. After 12 years of R&D, the innovation underwent academic independent validation and pilots in the United Arab Emirates (UAE) from 2019 to 2021.
In March 2021, the company raised 200 MNOK funding for a market-based proof of concept to demonstrate commercial viability in the UAE and prove transferability to other geographies. This initiative launched as the “2+2 strategy” with efforts and investments focused on two countries and two segments; the UAE and the United States, and the segments agriculture and landscaping.
“We must think big, start small, act fast, and build the foundation to scale exponentially. This is at the core of our strategy, says President and Group CEO Ole Kristian Sivertsen.”
More than 110 countries worldwide suffer desertification, degradation of vital topsoil, and increasing water scarcity, and issues are further accelerated by rising temperatures and severe droughts. According to the United Nations, the global addressable market is growing annually by 12 million hectares of land perishing to desertification. Therefore, a critical pillar of our strategy is to build the foundation for global scale-up, which requires focus and relentless execution.
For the first three quarters of 2022, the strategic focus has been to (1) commercialize in the UAE, (2) validate in the United States, and (3) build the foundation. Important milestones were achieved in all three areas during the third quarter. The UAE entity was restructured to fully implement the indirect go-to-market model through the Mawarid partnership with significant cost-efficiency gains for Desert Control. The Q3 progress in the United States strengthens confidence in the potential to accelerate commercialization significantly ahead of initial expectations. Further strengthening of the group management and a validated scale-on-demand model prepares the company for future growth.
The group conducted its annual strategy review in October 2022 based on the year-to-date progress. Commercialization has started with bite-sized deliveries in the UAE, and the focus for 2023 will shift to reaching larger-scale adoption. For the U.S., the company will continue its independent academic validation initiatives and, in parallel, focus on gaining accelerated commercialization. The company further aims to obtain a strategic position to grow into Southern Europe as the next market and will continue to waterproof the foundation for global scale-up.
Desert Control’s GROW strategy:
• Gain accelerated commercialization in the United States
• Reach large-scale adoption of LNC in the Middle East
• Obtain a strategic position to grow into Southern Europe
• Waterproof the foundation for global scale-up
For more information, please contact:
Ole Kristian Sivertsen
President and Group CEO
Email: oks@desertcontrol.com
Mobile (NOR): +47 957 77 777
Mobile (USA): +1 650 643 6136
Mobile (UAE): +971 52 521 7049
Marianne Vika Bøe
Chief Financial Officer
Email: marianne.boe@desertcontrol.com
Mobile: +47 406 36 356
About Desert Control:
Desert Control specializes in climate-smart AgTech solutions to combat desertification, soil degradation, and water scarcity. Its patented Liquid Natural Clay (LNC) restores and enhances soil ecosystems to; reduce the usage of and improve the efficiency of; water, fertilizers, and natural resources for agriculture, forests, and green landscapes. LNC enables sandy and arid soil to retain water and nutrients, thus increasing crop yields, plant health, and ecosystem resilience while preserving water and natural resources by up to 50%.
Agriculture and food production consumes more than 70% of all available freshwater. Desertification and soil degradation further increases the pressure on water and natural resources in a negative spiral. Feeding the global population requires growing more food in the next 40 years than was produced over the last 500 years; this can only be achieved by improving resource efficiency and regenerating nature.
According to the United Nations, twelve million hectares of fertile land perish annually to desertification, representing an annual $490 billion loss to the global economy. Desert Control’s vision is making earth green again to foster the prosperity of life.
For more about Desert Control, visit https://www.desertcontrol.com
Cautionary Note
Disclaimer related to forward-looking statements
This release contains forward-looking information and statements relating to the business, performance, and items that may be interpreted to impact the results of Desert Control and/or the industry and markets in which Desert Control operates.
Forward-looking statements are statements that are not historical facts and may be identified by words such as “aims”, “anticipates”, “believes”, “estimates”, “expects”, “foresees”, “intends”, “plans”, “predicts”, “projects”, “targets”, and similar expressions. Such forward-looking statements are based on current expectations, estimates, and projections, reflect current views concerning future events, and are subject to risks, uncertainties, and assumptions, and may be subject to change without notice. Forward-looking statements are not guaranteeing any future performance, and risks, uncertainties, and other important factors could cause the actual business, performance, results, or the industry and markets in which Desert Control operates in, to differ materially from the statements expressed or implied in this release by such forward-looking statements.
No representation is made that any of these forward-looking statements or forecasts will come to pass or that any forecasted performance, capacities, or results will be achieved, and you are cautioned not to place any undue reliance on any forward-looking statements.
Q3 Report 2022
The information enclosed is subject to the disclosure requirements pursuant to sections 5-12 in the Norwegian Securities Trading Act.
Kilde
