Desert Control releases its Q3 2022 Report and Year-to-Date Company Update
ISSUER
DESERT CONTROL AS
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.
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
https://www.desertcontrol.com/investors.
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.