DESERT CONTROL RELEASES ITS Q1 2023 REPORT AND YEAR-TO-DATE COMPANY UPDATE
Sandnes, Norway, 24 August 2023 – Desert Control AS (DSRT) announces its second quarter and first half report for the fiscal period ending 30 June 2023.
Desert Control concludes strategic review, initiates transition to licensed operator model for the Middle East, delivers on target for the United States, and obtains key regulatory approvals. The Company closes the quarter with an outlook for significant cost reductions, improved capital efficiency, and strengthened liquidity.
Q2 and First Half 2023 Highlights
Corporate
Completed strategic review, initiating the transition to a licensed operator model for the Middle East, unlocking cash, and reducing annual operating costs by >NOK 15M.
Secured NOK 10M from a private placement and an additional ≈NOK 30M cash from asset sales and licensed operator transactions (impacting H2-2023 financials).
Achieved >2X increase in production capacity for all existing LNC production units, significantly improving unit economics and extending the reach of deployed CAPEX.
Received global recognition, won sustainability and environment award at the Entrepreneurship World Cup Global Finals, named Green Impact of the Year at Norwegian Impact Awards, and announced Top Innovator by the World Economic Forum and winner in the Uplink Challenge for Food Ecosystems in Arid Climates.
United States
Secured ten new pilots in H1- 2023, delivered on target, and expanded LNC application capabilities across various new crops and segments.
Steadily progressing toward conversion to larger deployments. Around the end of the year, the Company anticipates starting negotiations for the inaugural large-scale contract.
Obtained regulatory approval with OMRI certification in compliance with the USDA National Organic Program for LNC in the United States.
Achieved 30X improvement in efficiency and scalability of LNC application since July 2022. Demonstrated further operational efficiencies, including applying LNC through irrigation systems and streamlining the execution of pilot projects.
Middle East
Signed strategic licensed operator agreement for Mawarid Holding Investment (MHI) to take full responsibility for the production, sales, and delivery of LNC in the United Arab Emirates (UAE).
Securing significant cost reductions by removing the need for local subsidiaries in the UAE following the transition to the licensed operator model.
Achieved final regulatory approval by the Ministry of Climate Change and Environment (MOCCAE) authorizing LNC for sale and use across all sectors in the UAE.
Entering the Kingdom of Saudi Arabia through the signing of strategic licensed operator agreements with H-EART.
Webcast presentation for Desert Control Q2 and First Half 2023 Report and Interim Financial Results is hosted on 24 August 2023 at 10:00 AM, Central European Time (CET). Register: https://go.desertcontrol.com/Q2-2023
DSRT Q2-2023 Report: Download
Financial Highlights Second Quarter 2023
[second quarter 2022 in brackets]
Revenue NOK 0,5 M 2 [NOK 0,5 M]
EBITDA NOK -19,5 M [NOK -20,3 M]
Net Income NOK -18,2 M [NOK –16,8M]
Gross R&D expenses NOK 0,3 M [NOK 0,9 M]
Financial Highlights First Half 2023
[first half 2022 in brackets]
Revenue NOK 2,3 M 2 [NOK1 M]
EBITDA NOK -42,9M [NOK -43,1M]
Net Income NOK -37,5M [NOK –40,5M]
Gross R&D expenses NOK 0,6 M [NOK 2,9 M]
Total cash balance 30.06.23 (bank deposits and funds) NOK 42,0 M 1 [NOK 122,9 M]
Equity 30.06.2023 NOK 68,0 M (equity ratio 89,6%) [NOK 150,4 (92,4%)]
1 Private placement of NOK 10M by issue of 1M DSRT shares to H-EART as strategic anchoring of the licensed operator partnership for KSA will be reflected in the cash balance as of August 2023.
2 ≈NOK 30M (USD 2.8M) revenues from initial licensed operator agreement transactions and asset sales are anticipated to be recognized in H2-2023.
Outlook
Moving into the year’s second half, Desert Control remains committed to its sales strategy focused on the customer conversion model. The Company maintains its objective of securing a minimum of five new pilot projects per quarter, targeting a 50% conversion to larger deployments. Negotiations for the inaugural contract for large-scale deployment is anticipated to start from around the end of the year.
The outlook remains promising, bolstered by the strategic initiatives and advancements in the first half of 2023. The Company has increased LNC production capacity more than twofold, significantly improving unit economics and extending the reach of deployed CAPEX. This achievement enables delivery capabilities for larger projects without investment in additional assets. Innovation efforts focused on enhancing production capacity, unit economics, and operational efficiency will continue.
We thank our team, partners, shareholders, and all other stakeholders for the continued support!
Inquiries
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
Leonard Chaparian
Chief Financial Officer
Email: leonard.chaparian@desertcontrol.com
Mobile: +47 90 66 55 40
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 water usage and improve the efficiency of 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%.
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.
Q2 and First Half 2023 Report
The information enclosed is subject to the disclosure requirements pursuant to sections 5-12 in the Norwegian Securities Trading Act.