Annual Report • Feb 28, 2023
Annual Report
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Desert Control AS | Q4 Report 2022
| DESERT CONTROL FOURTH QUARTER 2022 REPORT4 | |
|---|---|
| Q4-2022 HIGHLIGHTS 5 |
|
| FINANCIAL KEY FIGURES 6 |
|
| 2022-Q4 COMPANY UPDATE7 | |
| Accelerating commercial activities in the United States |
7 |
| Streamlining the UAE operation for optimized cost efficiency | 8 |
| Achieves advances in LNC delivery capability | 8 |
| OUTLOOK | 10 |
| Q1-2023 UPDATES10 | |
| ABOUT DESERT CONTROL 12 |
|
| INQUIRIES 13 | |
| CAUTIONARY NOTE 14 |
|
| STATEMENT BY THE MANAGEMENT AND BOARD OF DIRECTORS | 15 |
| CONSOLIDATED FINANCIAL STATEMENTS DESERT CONTROL GROUP16 | |
| ENVIRONMENTAL, SOCIAL, AND GOVERNANCE (ESG)26 | |
| VISION AND MISSION | 27 |
| OUR STRATEGIC PRINCIPLES28 | |
| OUR CORE VALUES29 |
After successfully completing the first revenue-generating project with Limoneira Company in December 2022, Desert Control started 2023 by signing three new agreements for commercial pilots with; Five Rivers Cattle Feeding in Wellton Mohawk, Arizona, Lemonica Citrus in Calipatria, California, and the golf course Fortuna De Oro in Yuma, Arizona. The company is negotiating several additional agreements for similar projects, expected to be signed during Q1-2023.
Desert Control completes its first revenue-generating project and grows sales in the United States, continues streamlining the UAE operation for optimized cost efficiency, and deployed more LNC in the last three months than over previous years combined. The company closes the fourth quarter with a positive cash balance of NOK 78,2 Million and has no interestbearing debt.
Desert Control's sales pipeline is growing, and the company is negotiating several commercial pilots to develop into pre-projects similar to Limoneira, which are expected to be signed in Q1 2023.
Webcast presentation for Desert Control Q4 2022 Report and Interim Financial Results is hosted on 28 February 2023 at 10.00 AM, Central European Time (CET). Register:https://go.desertcontrol.com/2022-Q4
The first U.S. salesperson joined in December 2022, and the sales pipeline is growing
First-ever LNC deployment for a single area larger than 1 hectare was successfully achieved in December 2022.
More LNC was deployed covering more acreage of LNC treated land from December 2022 – February 2023 than over the foregoing five years combined.
Continued streamlining the UAE operation by transitioning to the Joint Venture partnership structure with Mawarid Desert Control (MDC).
Sandnes, Norway, 28 February 2023 – Desert Control AS (DSRT) announces its fourth quarter report for the fiscal period ending 31 December 2022.
Desert Control completes its first revenue-generating project and growing sales in the United States, continues streamlining the UAE operation for optimized cost efficiency, and deployed more LNC in the last three months than over previous years combined. The company closes the fourth quarter with a positive cash balance of NOK 78,2 Million and has no interest-bearing debt.
Desert Control specializes in climatesmart Ag-tech 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.
Awarded the SME 2022 Sustainability Business of the Business Intelligence (MEED)
Romain harvest from fieldtrial with the University of Arizona demonstrated increased yield for LNCtreated plots of 21% to 53% compared to control.
Financial Highlights fourth quarter 2022 [fourth quarter 2021 in brackets]
[Full year 2021 in brackets]
Gross R&D expenses NOK 1.4 [NOK 11M]
Revenue NOK 2.2M [NOK 3.1M]
As reported in the third quarter, Desert Control's progress in the U.S. is moving faster than initially anticipated. The extreme droughts, increasing regulatory water restrictions, and additional water conservation incentives contribute to strengthening market demand.
The first commercial agreement in the U.S. was signed in November following the successful pilot for 50 trees in July 2022. The project's initial scope, valued at NOK 1,8 Million, is to apply Liquid Natural Clay (LNC) for 2,000 citrus trees in Limoneira farms in Cadiz, California, and 2,000 citrus trees in Yuma, Arizona. The combined area covers 40 acres of land. The contract is further backed by a letter of intent (LOI) to expand LNC deployment to full-scale rollouts for Limoneira ranches starting by Cadiz in the Mohave desert. Limoneira's objective is to adopt LNC to enable climate-smart and resilient agribusiness with optimal usage of water, fertilizers, and natural resources while optimizing yields and quality of citrus production in desert environments.
The application of LNC was completed for the project's first phase, and 2,000 trees were treated in Cadiz, California, in December 2022. Monitoring equipment was installed to measure key indicators during the growing season. Valuable knowledge and experience were
gained to further improve efficiency for deploying the remaining 20 acres in Yuma, Arizona, in January 2023. Based on the successful outcome of these pre-projects, it is anticipated that a larger-scale roll-out for Limoneira ranches could start ultimo Q4 2023 for the Cadiz ranch, with 640 acres of land and approximately 70,000 citrus trees under cultivation. The broader opportunity includes the Yuma ranch of 1,300 acres with approx 120,000 trees and other applicable agribusiness operations of Limoneira.
https://vimeo.com/desertcontrol/ limoneira3min
2021 revenue relates to the pilot evaluation with Mawarid Holding Investment in conjunction with the partnership negotiations
The accelerated development in the U.S. drove the need to start the recruitment of salespeople ahead of initial plan. The first sales representative was onboarded in December 2022 as the launch of building a sales organization in the region to develop a pipeline and secure new projects throughout 2023. The recent governmental activity strengthens the urgency for water-saving solutions in the U.S., as the water crisis causes tension between the several Sun Belt states. Seven states, including California and Arizona, have negotiated for months about coping with the Colorado River's vanishing water.
The LNC validation initiative with the University of Arizona continued in Q4 with additional crops, including celery and romaine lettuce. The romaine was harvested in December, showing that the lettuce grown in LNC-treated plots was significantly healthier under high water stress
and had a more extensive vegetative canopy compared to control plots. Yield values for LNC plots were 21% to 53.5% higher than control plots.
Efforts to optimize operational cost efficiency and finalize the transition to the Joint Venture partnership model continued throughout the fourth quarter. The restructuring process in the UAE entity is close to completion, and the new organizational structure has been implemented. The restructuring effectively lowers Desert Control Middle East operational costs by more than 50%.
The first Mawarid Desert Control (MDC) driven commercial preproject announced in Q3 2022 was successfully completed in the fourth quarter. The project is with a strategic UAE food security company that aims to adopt LNC on farms with various crops, soil, and water conditions across the UAE. The initial scope was the deployment of LNC for the company's experimental
farm and R&D facility, intending to develop a concept for larger-scale implementation.
https://www.youtube.com/ watch?v=pxqqv6NrEYE
Gaining experience in larger LNC deployments and improving the efficiency of production and field application have been crucial developments during the fourth quarter of 2022.
Historically Desert Control completed some 20 field deployments of LNC for independent validation studies and pilots from November 2017 to November 2022. The majority of these projects were smaller than one acre, with only one previous project deployment larger than two acres. In December 2022, the largest-ever LNC deployment was successfully achieved with the Limoneira citrus project for 20 acres in Cadiz, California.
This critical milestone was achieved under challenging conditions in a remote area of the Mohave desert with limited supporting infrastructure. Desert Control deployed LNC to more acreage from December 2022 – February 2023 than over the preceding five years combined.
Along with the experience of deploying LNC to larger acreages, the speed and efficiency of LNC production and application improved. In July 2022, it took three full days to produce and apply LNC for 50 citrus trees. In December, for the Limoneira project in Cadiz, we reached approximately 250 trees per day, and in January 2023, for the Limoneira project in Yuma, the target pace is 500 trees per day with the same deployment team size.
The learnings from the recent projects strengthen the foundation for future deployments and the company's confidence in the ability to reach the efficiency levels required for profitable business and scalable unit economics.
A crucial part of securing commercial projects is documenting and visualizing the impact of LNC and results obtained in pre-projects. For the customers to monitor performance and results, a digital dashboard has been developed to show real-time water usage, soil moisture, and soil temperature in LNC treated field compared to the control. The initial focus for the dashboard is to support our sales
team with converting pre-project opportunities into full-scale projects.
Two additional LNC production units are being shipped from UAE to the U.S. The units are expected to arrive during April 2023 and will double the production capacity in the U.S. The on-demand scalability and mobility of the production assets enable Desert Control to be flexible and quickly shift production capacity to regions with high demand for LNC.
(*Full-Time Intelligent Passionate People – in other companies, referred to as FTE) Fourteen nationalities have joined Desert Control from multiple sectors bringing unique experience, expertise, and skillsets. High diversity in education, ages, and cultural backgrounds enriches our organization and is vital to deliver on our mission. 22% of the employees are female. The team has 20 people in Norway, 24 in the UAE, and 9 in the U.S.
Desert Control's sales strategy for 2023 focuses on generating revenue and developing a pipeline of opportunities through commercial pilots and pre-projects similar to Limoneira, with the objective to start converting pre-projects into contracts for large-scale deployment by the end of the year.
Three new agreements for commercial pilots were signed by 28 February 2023, and the company anticipates the signing of several additional agreements for similar projects during Q1-2023. The company will provide guidance and quarterly reporting on the number of commercial pilots and pre-projects with anticipated conversion rates going forward.
The three newly signed agreements in Q1 are with customers that represent significant potential; Five Rivers is the world's largest "cattle feeder," with farms in Colorado, Kansas, Oklahoma, Texas, Idaho, and Arizona. The commercial LNC pilot will be carried out on the McElhaney farm in Wellton Mohawk, which has 1,100 acres of irrigated fields and alfalfa as the main crop for animal feed. Lemonica Citrus has a 1200-acre citrus farming operation in Calipatria, California, and Fortuna De Oro is a 47 acres golf course in Yuma, Arizona, located in a desert region with very little rainfall. Based on positive pilot results, the objectives are to expand LNC deployments for larger-scale rollouts.
The company's sales pipeline keeps growing, and Desert Control is negotiating several similar projects, expected to be signed in Q1-2023. In preparation for increased activity, two additional LNC production units are being sent to the U.S. The units are expected to arrive at the newly established operational base in Yuma, Arizona, during April 2023 and will double production capacity in the United States. The long-term objective is to establish local fabrication of LNC production units for the U.S. market to support scale-up.
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%.
Agriculture and food production consumes more than 70% of all available freshwater. Desertification and soil degradation further increase 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, visithttps://www.desertcontrol.com
Ole Kristian Sivertsen President and Group CEO
Email: [email protected] Mobile (NOR): +47 957 77 777 Mobile (USA): +1 650 643 6136 Mobile (UAE): +971 52 521 7049
Chief Financial Officer
Email: [email protected] Mobile: +47 406 36 356
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 forwardlooking 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.
The information enclosed is subject to the disclosure requirements pursuant to sections 5-12 in the Norwegian Securities Trading Act
The Board of Directors and the CEO have considered and approved the Q4 2022 Report and Interim Financial Results for Desert Control AS ("Company") and Desert Control Group ("Group") for the twelve months ending on 31 December 2022. The interim consolidated financial statements are unaudited and have been prepared in accordance with IFRS as well as additional information requirements as per the Norwegian Accounting Act.
We confirm to the best of our knowledge that:
Sandnes, 27.02.2023
Knut Nesse Chair
Maryne Lemvik Board Member
Kristi an P. Olesen Board Member
Marit Røed Ødegaard Board Member
Ole Kristi an Sivertsen
Chief Executi ve Offi cer
Brage Wårheim Johansen Board Member
Geir Hjellvik Board Member
| CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME |
17 |
|---|---|
| CONSOLIDATED STATEMENT OF FINANCIAL POSITION 18 | |
| CONSOLIDATED STATEMENT OF CASH FLOWS 19 |
|
| CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 20 |
|
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS21 | |
| 1.1 General information | 21 |
| 1.2 Basis of preparation |
21 |
| 2 Revenue from contracts with customer | 22 |
| 3 Equity and shareholders | 23 |
| 4 Cash and cash equivalents | 25 |
| (Amounts in NOK thousand, unaudited) Notes |
Q4 2022 | Q4 2021 | 2022 | 2021 |
|---|---|---|---|---|
| Revenue from sales 2 |
1 040 | 850 | 2 221 | 3 127 |
| Other income | - | - | - | - |
| Total income | 1 040 | 850 | 2 221 | 3 127 |
| Cost of goods sold (COGS) | 407 | 44 | 2 765 | 563 |
| Gross margin | 632 | 806 | -544 | 2 564 |
| Salary and employee benefit expenses | 16 914 | 5 338 | 61 018 | 14 993 |
| Other operating expenses | 8 517 | 6 099 | 27 960 | 18 662 |
| Depreciation and amortisation | 1 814 | 1 315 | 6 108 | 1 544 |
| Impairment | - | 658 | - | 658 |
| Operating profit or loss | -26 612 | -12 604 | -95 630 | -33 293 |
| Finance income | 1 456 | 2 257 | 15 871 | 1 730 |
| Finance costs | 9 367 | 151 | 9 986 | 179 |
| Profit or loss before tax | -34 523 | -10 499 | -89 745 | -31 743 |
| Income tax expense | 3 | - | 3 | - |
| Profit or loss for the year | -34 525 | -10 499 | -89 748 | -31 743 |
| Allocation of profit or loss: | ||||
| Profit/loss attributable to the parent | -34 523 | -10 499 | -89 745 | -31 743 |
| Other comprehensive income: | ||||
| Items that subsequently may be reclassified to profit or loss: | ||||
| Exchange differences on translation of foreign operations | -828 | -72 | -6 | -72 |
| Total items that may be reclassified to profit or loss | -828 | -72 | - | - |
| Total other comprehensive income for the year | -828 | -72 | -6 | - |
| Total comprehensive income for the year | -35 353 | -10 571 | -89 754 | -31 815 |
| Allocation of total comprehensive income | ||||
| Total comprehensive income attributable to owners of the parent | -35 353 | -10 571 | -89 754 | -31 815 |
| (Amounts in NOK thousand, unaudited) | Notes | 31.12.2022 | 31.12.2021 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Goodwill | 7 210 | 6 504 | |
| Property, plant and equipment | 20 979 | 10 525 | |
| Right-of-use assets | 1 633 | 2 006 | |
| Total non-current assets | 29 823 | 19 036 | |
| Current assets | |||
| Inventory | 584 | - | |
| Accounts receivable | 1 572 | 544 | |
| Other receivables | 9 046 | 5 597 | |
| Other current financial assets | 41 414 | 77 347 | |
| Cash and cash equivalents | 4 | 36 787 | 101 924 |
| Total current assets | 89 403 | 185 412 | |
| TOTAL ASSETS | 119 226 | 204 447 | |
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Share capital | 123 | 122 | |
| Share premium | 3 | 230 849 | 230 849 |
| Currency translation differences | -1 283 | -107 | |
| Retained earnings | -121 992 | -36 592 | |
| Total equity | 107 767 | 194 272 | |
| Non-current liabilities | |||
| Non-current lease liabilities | 898 | 1 423 | |
| Total non-current liabilities | 898 | 1 423 | |
| Current liabilities | |||
| Current lease liabilities | 586 | 528 | |
| Trade and other payables | 5 300 | 2 523 | |
| Intercompany payables | -396 | - | |
| Public duties payable | 945 | 1 023 | |
| Other current liabilities | 4 125 | 1 497 | |
| Contract liabilities | - | 3 181 | |
| Total current liabilities | 10 560 | 8 751 | |
| Total liabilities | 11 459 | 10 175 | |
| TOTAL EQUITY AND LIABILITIES | 119 226 | 204 447 |
Knut Nesse Chair
Maryne Lemvik Board Member
Kristi an P. Olesen Board Member
Marit Røed Ødegaard Board Member
Ole Kristi an Sivertsen Chief Executi ve Offi cer
Brage Wårheim Johansen Board Member
Geir Hjellvik Board Member
| Cash flows from operating activities Notes |
Q4 2022 | Q4 2021 | 2022 | 2021 |
|---|---|---|---|---|
| Profit or loss before tax | -34 523 | -10 499 | -89 745 | -31 743 |
| Adjustments to reconcile profit before tax to net cash flows: | ||||
| Net financial income/expense | 7 911 | -2 105 | -5 884 | -1 550 |
| Depreciation and amortisation | 1 814 | 1 315 | 6 108 | 1 544 |
| Impairment | - | 658 | - | 658 |
| Share-based payment expense | 4 126 | 139 | 4 283 | 811 |
| Working capital adjustments: | ||||
| Changes in accounts receivable and other receivables | -3 748 | 5 514 | -5 060 | -4 139 |
| Changes in trade payables, duties and social security payables | 1 616 | 2 975 | 2 458 | 2 293 |
| Changes in other current liabilities and contract liabilities | 320 | -4 135 | -552 | 2 579 |
| Net cash flows from operating activities | -22 483 | -5 958 | -88 393 | -29 547 |
| Proceeds from sale of property, plant and equipment Interest received |
-0 469 |
300 167 |
890 1 063 |
300 |
| Purchase of property, plant and equipment Purchase of financial instruments |
-170 - |
-7 390 12 991 |
-13 969 36 744 |
-10 632 -77 009 |
| 462 | ||||
| Net cash flow from investing activities | 299 | 6 068 | 24 729 | -86 879 |
| Cash flow from financing activities (NOK) Proceeds from issuance of equity |
- | - | 1 | 200 000 |
| Transaction costs on issue of shares | - | - | -10 093 | |
| Lease payments | -39 | -11 | -1 590 | -1 098 |
| Interest paid | -18 | 490 | -250 | 462 |
| Net cash flows from financing activities | -57 | 479 | -1 839 | 189 271 |
| Net increase/(decrease) in cash and cash equivalents | -22 242 | 589 | -65 503 | 72 845 |
| Cash and cash equivalents at beginning of the year/period | 59 453 | 101 173 | 101 923 | 28 935 |
| Net foreign exchange difference | -423 | 342 | 367 | 144 |
| Cash and cash equivalents, end of period | 36 788 | 101 924 | 36 787 | 101 923 |
| Cumulative | |||||
|---|---|---|---|---|---|
| (Amounts in NOK thousand, unaudited) | Share capital | Share premium |
translation differences |
Retained earnings |
Total equity |
| Balance at 1 January 2020 | 68 | 43 537 | - | -301 | 43 304 |
| Profit (loss) for the year | -4 209 | -7 020 | -11 229 | ||
| Other comprehensive income | -35 | -35 | |||
| Issue of share capital | 1 | 1 719 | 1 720 | ||
| Transaction costs | -52 | -52 | |||
| Share based payments | 1 608 | 1 608 | |||
| Balance at 31 December 2020 | 70 | 40 994 | -35 | -5 713 | 35 316 |
| Profit (loss) for the year | -31 743 | -31 743 | |||
| Other comprehensive income | -72 | 53 | -19 | ||
| Issue of share capital | 53 | 199 948 | 200 000 | ||
| Transaction costs | -10 093 | -10 093 | |||
| Share based payments | 811 | 811 | |||
| Balance at 31 December 2021 | 122 | 230 849 | -107 | -36 592 | 194 272 |
| Profit (loss) for the year | -89 748 | -89 745 | |||
| Other comprehensive income | -1 175 | 134 | -1 043 | ||
| Issue of share capital | 1 | 1 | |||
| Transaction costs | - | ||||
| Share based payments | 4 283 | 4 283 | |||
| Balance at 31 December 2022 | 123 | 230 849 | -1 283 | -121 923 | 107 767 |
The consolidated financial statements of Desert Control AS and its subsidiaries (collectively, "the Group" or "Desert Control") for the fouth quarter period ended 31 December 2022 were authorised for issue by a Board meeting held on 27 February 2023.
Desert Control AS is a private limited liability company incorporated and domiciled in Norway. It's shares are traded at the unregulated market place Euronext Growth. The Group's head office is located at Grenseveien 21, 4313 Sandnes, Norway.
Desert Control specializes in climate-smart Agri-tech solutions to combat desertification, soil degradation, and water scarcity. Its patented Liquid Natural Clay (LNC) enables sustainable ecosystem management by restoring and protecting soil's ability to preserve water and increase yields for agriculture, forests, and green landscapes.
LNC enables sand and degraded soil to retain water and nutrients, thus increasing crop yields and ecosystem resilience while preserving water resources by up to 50%.
Agriculture and food production already consume more than 70% of all available freshwater. Desertification and soil degradation drive a negative spiral of increasing water consumption and decreasing yields for global food production. Feeding our planet's growing population will require more food in the next 40 years than was produced over the last 500 years, putting even more pressure on vital resources such as water. This is the problem Desert Control is determined to solve. According to the United Nations, thirty million acres of fertile land (equal to Pennsylvania) perish to desertification annually, representing an annual loss of \$490 billion to the global economy. Desert Control's vision is to make our planet earth green again.
The interim consolidated financial statements of the Group comprise consolidated statement of comprehensive income, consolidated statement of financial position, consolidated statement of cash flows, consolidated statement of changes in equity, and related notes. The consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting as adopted by the EU (IAS 34). The same accounting policies and methods of computation are followed in the interim financial statements as compared with the most recent annual financial statement. The condensed interim financial statements do not include all of the information and disclosures required by International Reporting Standards (IFRS) for a complete set of financial statements, and these condensed interim financial statements should be read in conjunction with the most recent annual financial statements. The annual financial statements were prepared in accordance with International Financial Reporting Standards and interpretations as issued by the International Standards Board and as adopted by the EU The interim consolidated financial statements have been prepared on a historical cost basis, except for certain financial instruments measured at fair value. Further, the financial statements are prepared based on the going concern assumption. There have been no changes to significant accounting policies since the preparation of the annual financial statements for 2021. The condensed interim financial statements are unaudited.
Comparative financial information is provided for the preceding period in the Consolidated statement of comprehensive income, Consolidated statement of financial position and Consolidated statement of cash flows. The consolidated financial figures for Q4 2021 and the twelve months 2021 are restated due to the first time adoption of IFRS.
The consolidated financial statements are presented in Norwegian Kroner (NOK), which is also the functional currency of the parent company. For each entity, the Group determines the functional currency and items included in the financial statements of each entity are measured using that functional currency.
For presentation purposes, balance sheet items are translated from functional currency to presentation currency by using exchange rates at the reporting date. Items within total comprehensive income are translated from functional currency to presentation currency by applying monthly average exchange rates. If currency rates are fluctuating significantly, transaction date exchange rates are applied for significant transactions.
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services. The Group has generally concluded that it is the principle in its revenue arrangements, because it typically controls the goods or services before transferring them to the customer.
The Group's revenue from contracts with customers has been disaggregated and presented in the tables below:
| By area of operation: (Amounts in NOK thousand) | Q4 2022 | Q4 2021 | 2022 | 2021 |
|---|---|---|---|---|
| Liquid NaturalClay (LNC) | 1 040 | 850 | 2 221 | 3 127 |
| Total | 1 040 | 850 | 2 221 | 3 127 |
| By geographic market: | Q4 2022 | Q4 2021 | 2022 | 2021 |
| Norway | -105 | - | 226 | 223 |
| USA | 1 100 | - | 1 100 | - |
| UAE | 44 | 850 | 895 | 2 903 |
| Total | 1 040 | 850 | 2 221 | 3 127 |
The revenue recognised in 2021 relates to the pilot project performed for Mawarid Holding Investment in conjunction with the partnership negotiations
Transaction costs are deducted from equity, net of associated income tax.
The Group recognises a liability to make distributions to equity holders when the distribution is authorised and no longer at the discretion of the Group. As per the corporate laws of Norway, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.
No distributions were made to shareholders in the current or prior period.
| Share capital in Desert Control AS | Number of shares authorised and Par value per |
fully paid share (NOK) | Financial Position |
|---|---|---|---|
| At 1 January 2020 | 22 681 | 3,00 | 68 043 |
| Share issue | 497 | 3,00 | 1 491 |
| At 31 December 2020 | 23 178 | 3,00 | 69 534 |
| Share split 1:1 000 | 23 178 000 | 0,003 | 69 534 |
| Share issue 22 February 2021 | 340 000 | 0,003 | 1 020 |
| Share issue 9 April 2021 | 17 108 640 | 0,003 | 51 326 |
| Share issue 6 August 2021 | 98 000 | 0,003 | 294 |
| At 31 December 2021 | 40 724 640 | 0,003 | 122 174 |
| Share issue 10 March 2022 | 375 040 | 0,003 | 1 125 |
| At 31 December 2022 | 41 099 680 | 0,003 | 123 299 |
| Share capital in Desert Control AS | Number of shares authorised and Par value per |
fully paid share (NOK) | Financial Position |
|---|---|---|---|
| At 1 January 2020 | 22 681 | 3,00 | 68 043 |
| Share issue | 497 | 3,00 | 1 491 |
| At 31 December 2020 | 23 178 | 3,00 | 69 534 |
| Share split 1:1 000 | 23 178 000 | 0,003 | 69 534 |
| Share issue 22 February 2021 | 340 000 | 0,003 | 1 020 |
| Share issue 9 April 2021 | 17 108 640 | 0,003 | 51 326 |
| Share issue 6 August 2021 | 98 000 | 0,003 | 294 |
| At 31 December 2021 | 40 724 640 | 0,003 | 122 174 |
| Share issue 10 March 2022 | 375 040 | 0,003 | 1 125 |
| At 31 December 2022 | 41 099 680 | 0,003 | 123 299 |
All shares are ordinary and have the same voting rights and rights to dividends. Reconciliation of the Group's equity is presented in the statement of changes in equity.
| Shareholders in Desert Control AS at 31.12.2022 | Ownership/ Total shares Voting rights |
||
|---|---|---|---|
| Olesen Consult HVAC AS | 5 900 000 | 14,4 % | |
| J.P. Morgan SE | 2 605 802 | 6,3 % | |
| Ole Morten Olesen | 1 650 000 | 4,0 % | |
| Nordnet Livsforsikring AS | 1 553 658 | 3,8 % | |
| JPMorgan Chase Bank, N.A., London | 1 516 166 | 3,7 % | |
| Lithinon AS | 1 423 706 | 3,5 % | |
| Nesse & Co AS | 1 360 000 | 3,3 % | |
| Beyond Centauri AS | 1 243 371 | 3,0 % | |
| LIN AS | 1 215 275 | 3,0 % | |
| Monsunen Forvaltning AS | 1 146 158 | 2,8 % | |
| Idland | 1 122 540 | 2,7 % | |
| Jakob Hatteland Holding AS | 1 000 000 | 2,4 % | |
| DNB BANK ASA | 993 659 | 2,4 % | |
| The Northern Trust Comp, London Br | 958 275 | 2,3 % | |
| Investore Finans AS | 883 147 | 2,1 % | |
| Clearstream Banking S.A. | 838 396 | 2,0 % | |
| OKS Consulting AS | 805 000 | 2,0 % | |
| Sortun Invest AS | 677 715 | 1,6 % | |
| Glomar AS | 627 715 | 1,5 % | |
| Others | 13 579 097 | 33,0 % | |
| Total | 41 099 680 | 100,0 % |
| No of shares | % | Origin | # shareholders |
|---|---|---|---|
| 33 592 531 | 81,7 | Norway | 3 756 |
| 3 711 167 | 9 | Luxembourg | 9 |
| 2 600 430 | 6,3 | UK | 11 |
| 564 456 | 1,4 | Sweden | 18 |
| 631 095 | 1,5 | Others | 54 |
| 41 099 679 | 100 | Total | 3 848 |
Cash and cash equivalents in the statement of financial position comprise cash at banks and short-term deposits with a maturity of three months or less, which are subject to an insignificant risk of changes in value. For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash and short-term deposits. Restricted bank deposits comprise of cash for withholding taxes which may not be used for other purposes.
| Cash and cash equivalents (Amounts in NOK thousand) | 31.12.2022 | 31.12.2021 | 01.01.2021 |
|---|---|---|---|
| Bank deposits, unrestricted | 35 613 | 101 303 | 28 696 |
| Bank deposits, restricted | 1 174 | 621 | 239 |
| Total cash and cash equivalents | 36 787 | 101 924 | 28 935 |
Bank deposits earns a low interest at floating rates based on the bank deposit rates. Other current financial assets consists of fixed income fund.
Liquid Natural Clay (LNC) can reduce water consumption for agriculture, forests, and green landscapes by up to 50%. The amount of water required to produce LNC is recovered within 2-3 weeks (offset by irrigation water savings). Improved water efficiency and increased crop yields contribute significantly to a positive impact on the United Nations Sustainable Development Goals (SDGs), including reducing hunger and competition for scarce resources and securing access to clean water. Arid regions using energy-intensive seawater desalination can further significantly reduce CO2 and greenhouse gas (GHG) emissions.
LNC enables sandy soil and desert land to retain water and nutrients. Reduction of water consumption further allows for reducing fertilizer usage. Reduced leaching of fertilizers and pesticides through the soil can further minimize the risk of chemical run-off reaching through to natural water systems and oceans. Stopping fertilizer and pesticide leaching can further improve life below the water by reducing ocean acidification and eutrophication.
According to the Intergovernmental Panel on Climate Change (IPCC), restoring degraded soil ecosystems can globally offset 5-6 Gt of CO2 annually. Even degraded soils have degrees of stored carbon. When tilling or mechanically working amendments into the ground, carbon exposed to oxygen may turn into CO2 and escape into the atmosphere. LNC can be applied directly to the surface of the ground without intervention to the soil. LNC percolates into the ground in a non-intrusive way without exposing any carbon to surface air oxygen, safeguarding the carbon storage of soil ecosystems and fostering increased carbon sequestration.
Non-intrusive soil treatment is further gentle to fragile soil ecosystems, home to 95% of all biological species on earth. Reclaiming and protecting soil is therefore critical to preserving and restoring biodiversity.
Mining clay and the production of LNC requires energy. Logistics and transportation of material, equipment, personnel, and manufacturing also require energy. Desert Control strives to reduce energy consumption in all stages of the process and facilitate the use of renewable energy sources wherever available. These negative impact factors are, by far, surpassed by the sum of positive impacts from stopping and reversing desertification and soil degradation, reducing water consumption, and other environmental benefits.
LNC has no adverse impact on any of the 17 United Nations Sustainable Development Goals (SDGs). Further, LNC has a significant direct positive impact on 9 of the SDGs.
Making earth green again to foster the prosperity of life
• We aim to have a positive impact on 100 million hectares by 2030
• We strive to create sustainable social impact, immense water savings, global food security, and regeneration of ecosystems to sequester carbon and balance our climate
• We aim to establish a Sub-Sahara social impact initiative from 2025
We combat desertification, land degradation, and water scarcity by;
• Restoring and enhancing soil ecosystems to protect vital topsoil;
• Reclaiming degraded land – turning sand into soil;
• Regenerating soil biodiversity and natural ecosystems;
• Reducing the consumption of water, fertilizers, and natural resources; for agriculture, forests, and green landscapes
resources.
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%.
From sand to soil in 7 hours.
How
What
"Think Big" reminds the team to always keep in mind the bigger picture and how their work connects to the overall mission.
"Start Small" encourages the team to focus on a narrow scope to ensure a solid foundation before expanding.
"Act Fast" promotes a sense of urgency and quick decision-making, which is important in a rapidly changing world.
"Design to Scale Exponentially" emphasizes the need for scalable solutions to address the urgent issue of climate change.
"Keep it Simple" highlights the importance of simplicity in achieving exponential scalability, which allows Desert Control to be efficient and cost-effective in its operations while still preparing for the next steps and future growth.
Desert Control's strategy is to build the foundation to bring our innovation to global markets with exponential scalability. The fundamental principles for executing our strategy are:
Leadership Inspirational pro-active execution
Curious and solution-oriented
Challenge status-quo | create value
Integrity Keep promises | grow strong relationships
Desire to make everything better
Diversity Inclusive | open-minded | respectful
Desert Control AS Grenseveien 21 (FOMO Works) 4313 Sandnes, Norway
Desert Control Americas Inc 470 Ramona Street Palo Alto, CA 94301, USA
Desert Control Middle East LLC Abu Dhabi Business Hub Unit No. B2-25 and B2-26, ICAD1 P.O.BOX 114043 Abu Dhabi, UAE
Desert Control Americas Inc 37860 W Smith Enke Rd Maricopa, AZ 85138, , USA
Desert Control Middle East LLC Arenco Towers, Office No.1408 Dubai Media City, Dubai, UAE
YUMA
Desert Control Americas Inc 1219 E 21st St Yuma, AZ 85365, USA
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