Sandnes, Norway, 20 August 2024 — Desert Control AS (DSRT) announces its second-quarter report and interim financial results for the fiscal period ending 30 June 2024. 

Desert Control made significant progress in the second quarter of 2024. Technological advancements drove a record number of installations and expanded the U.S. project portfolio, while collaboration with partners advanced key regulatory and operational milestones in the Middle East. 

Operational Highlights: 

Technological Breakthroughs Drove Record Growth in Installations 

• Increased Production Capacity: Achieved a sixfold increase in LNC production capacity with a new compact, lightweight prototype, enhancing deployment efficiency and scalability. 

• Record Number of Installations: Field-testing the new prototype drove a record number of installations, significantly reducing project execution time and costs. 

• Enhanced Agility and Scale-Up Readiness: The prototype’s high capacity and lightweight design improve mobility, opening profitable pathways to more diverse projects and facilitating the transition from pilots to larger deployments. 

Increased Pilot Acquisition Rate and Expanded Markets in the United States 

• Accelerated Pilot Acquisition: Accelerated the pilot acquisition rate, expanding the U.S. project portfolio from 29 to 38 projects, with strong performance in citrus, dates, vineyards, and landscaping. 

• Direct to Larger-Scale Pilots: Several projects bypassed small-scale tests and moved directly to extended (stage 2) pilots, demonstrating increased market confidence. 

• Expansion in High-Value Markets: Significant progress in golf courses and sports fields, with multiple new pilots and promising early results, paving the way for larger-scale contracts by year-end. 

Accelerated Regulatory Integration and Solidified Position in the Middle East 

• Regulatory Framework Integration: Progressing toward integrating LNC into regulatory frameworks as a preferred solution for soil and water conservation requirements in the UAE. 

• Operational Readiness in Saudi Arabia: Both of Desert Control’s licensed operators are now fully operational with offices, production capacity, and initial LNC deployments activated. 

• Strategic Pilots and Deployments: Ongoing pilots and projects with government entities and large enterprises in the UAE and Saudi Arabia are progressing, with additional strategic deployments underway. 

Entered New Strategic Partnerships and Strengthened Market Validation 

• Syngenta Collaboration: MoU with Syngenta underscores the growing recognition and validation of LNC beyond water conservation, extending impact to holistic soil health solutions. 

• University of Arizona: The five-year research program with the University of Arizona continues, with the inaugural interim publication under peer review. 

• University of California: Initiated research with the industry-leading Turf Research Center in Riverside to position LNC as a relevant, trusted, and attractive solution in the golf and turf segment. 

Financial Highlights: 

In the first half of 2024, Desert Control executed a record number of installations, increased LNC deployment volumes, and doubled LNC revenue compared to the same period the previous year. This progress reflects enhanced operational efficiency, driven by the new prototype LNC production system, the integration of LNC application with irrigation systems, a more streamlined organization, and learnings from the implementation of pilots and projects. 

• Revenue Increase: LNC revenue in Q2 2024 was MNOK 0,5, compared to MNOK 0,02in Q2 2023. For the first half of 2024, LNC revenue totaled MNOK 1,8, up from MNOK 0,8 in the first half of 2023, driven by larger-scale deployments and an increased volume of pilots and project installations.

• Improved EBITDA: Operational efficiency improvements and the transition to a licensed operator model in the Middle East contributed to an EBITDA result of MNOK -16 in Q2 2024, an improvement from MNOK -19.5 in Q2 2023. For the first half, EBITDA improved to MNOK -30.4 from MNOK -42.9 in the same period last year.

• Cash Position: Desert Control ended Q2 2024 with a cash balance of MNOK 91, compared to MNOK 42 in Q2 2023. The company continues to operate with no interest-bearing debt.

The growth in project volume and LNC deployment, combined with improved EBITDA figures, underscores the enhanced efficiency of operations. The ability to handle larger volumes at a reduced cost base positions Desert Control to maintain healthy margins as the company scales up. 

Outlook: 

Diverse opportunities in the U.S. and Middle East, combined with regulatory integration and technological advancements, are driving the transition towards more significant contracts by year-end and strengthening the foundation for long-term value creation for stakeholders. ation for long-term value creation for stakeholders.