Desert Control AS

Earnings Release • Aug 20, 2024

Desert Control Releases Q2 2024 Report and Year-to-Date Company Update

Desert Control Releases Q2 2024 Report and Year-to-Date Company Update

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 0,02

in 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.

Key Figures (in MNOK):

Second quarter 2024 [second quarter 2023 in brackets]

· LNC Revenue: 0.5 [0.0]

· Total Revenues: 0.5 [0.5]

· EBITDA: -16.0 [-19.5]

First half 2024 [first half 2023 in brackets]

· LNC Revenue: 1.8 [0.9]

· Total Revenues: 1.8 [2.3]

· EBITDA: -30.4 [-42.9]

Total cash balance 30.06.24 (bank deposits and funds): 91 [42]

Equity 30.06.24: 100 (equity ratio 94.5%) [68 (91.2%)]

Q2 Report 2024:

· The information enclosed is subject to the disclosure requirements pursuant

to sections 5-12 of the Norwegian Securities Trading Act.

· The report can be downloaded from the company webpage:

https://desertcontrol.com/investors/

· A webcast presentation for Desert Control Q2 2024 Report and Company Update

is hosted on 20 August 2024 at 10.00 AM, Central European Time (CET). Register:

https://go.desertcontrol.com/Q2-2024

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

guarantees of 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 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.

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 (NOR): +47 90 66 55 40

About Desert Control:

Desert Control develops innovative solutions to enhance soil health, conserve

water, and promote ecosystem resilience. The company's mission is to combat

desertification, soil degradation, and water scarcity. Our patented Liquid

Natural Clay (LNC) transforms sandy, fast-draining soils to retain water and

nutrients, improving soil health, crop yields, and ecosystem vitality while

conserving water. Desert Control provides customized solutions to strengthen

sustainability, profitability, and prosperity for agriculture, forests, and

green landscapes. In collaboration with partners and clients, we aim to preserve

natural resources, restore biodiversity, enhance food security, and ensure a

climate-resilient future.

For more information, visit https://www.desertcontrol.com