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Desert Control AS
Annual Report • Feb 12, 2025
3577_rns_2025-02-12_6bb9b9c8-8643-4db2-8d08-30bc6d3b8805.pdf
Annual Report
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| CEO MESSAGE3 | |
|---|---|
| FINANCIAL REVIEW4 | |
| COMPANY UPDATE5 | |
| OUTLOOK 10 | |
| RESPONSIBILITY STATEMENT | 11 |
| CONDENSED INTERIM FINANCIAL STATEMENTS AND NOTES | 12 |
| ADDITIONAL INFORMATION | 24 |
COMPANY UPDATE FINANCIAL REVIEW
ADDITIONAL INFORMATION
CEO Message
2024 marked a turning point for Desert Control, setting the stage for larger-scale commercialization and accelerated growth. With revenues and project deployments more than doubling year over year, our technology is now transitioning from validation to broader market adoption, driven by technological breakthroughs, commercial successes in the United States, and strong traction with our partners in the Middle East.
A significant milestone in the fourth quarter was the selection of Liquid Natural Clay (LNC) by the United Nations World Food Programme
(WFP) Innovation Accelerator. Together with Soyl and WFP Iraq, LNC will be deployed in droughtaffected areas to restore degraded soil, creating a blueprint for food security and water resilience in climate-stressed regions. This initiative reinforces our mission of Making Earth Green Again by delivering scalable solutions to some of the world's most urgent environmental challenges.
In the United States, milestone agreements with Berkeley Country Club and Woodland Hills Country Club mark the first full-scale LNC deployments for golf courses under our "pay-as-you-save" model. This innovative approach accelerates adoption, generates recurring revenue, and delivers immediate cash-flow-positive water savings for customers. In agriculture, the transition of pilots to largerscale deployments continues to demonstrate LNC's impact on water conservation, soil health, and farm profitability. This momentum was further underscored by a postquarter agreement with North America's largest date grower, Oasis Date, to roll out LNC starting with one of their many farms in California a pivotal step toward scaling LNC adoption in permanent crops.
The Middle East is now a growth driver, with licensing income and deployment volumes tripling in the fourth quarter. The region's growing demand for water and soil conservation solutions signals a shift from pilot programs to commercialscale adoption. At COP16 UNCCD in Riyadh, global commitments of over \$12 billion to combat desertification and drought underscored the critical need for scalable innovations like LNC. Our Saudi partner, Saudi Desert Control, further advanced this agenda by signing a landmark agreement with Estidama, positioning LNC as a cornerstone for sustainable agriculture and water efficiency in the Kingdom.
Technology development and R&D remain the backbone of our strategy, driving cost efficiencies, scaling production capacity, and expanding the reach and impact of LNC. Our next-generation production system remains on track for commercial readiness in mid-2025, enabling us to meet the growing demand for sustainable soil and water management solutions. As our innovation ecosystem expands, LNC is increasingly recognized as a platform for water conservation and soil health, strengthening clients' economic resilience.
With a robust pipeline, secured agreements, and a new business model driving recurring revenue streams, 2025 will be a transformational year for Desert Control. The technological breakthroughs, strategic partnerships, and business model innovations achieved in 2024 set the stage for scaling revenues and LNC deployment more than tenfold in 2025.
Thank you to our team, clients, partners, and shareholders for your continued support as we scale solutions for a more sustainable future.
Sincerely,
Ole Kristian Sivertsen Chief Executive Officer Desert Control
ADDITIONAL INFORMATION
Financial Review
KEY FIGURES *
| NOK million | Quarters | YTD | |||
|---|---|---|---|---|---|
| Q4 2024 | Q4 2023 | 2024 | 2023 | ||
| LNC Revenue | 0,00 | -0,00 | 1,88 | 0,89 | |
| Licensing Royalties | 0,22 | - | 0,29 | - | |
| Other Income | - | 15,54 | - | 17,24 | |
| Total revenue and other income | 0,22 | 15,54 | 2,17 | 18,13 | |
| EBITDA | -11,99 | 0,76 | -56,78 | -60,05 | |
| Net Income | -7,07 | -8,41 | -53,14 | -65,27 | |
| Total cash balance | 63,57 | 119,29 | 63,57 | 119,29 | |
| (Bank deposits and funds) | |||||
| Equity at 31 December 2024 | 74,27 | 129,07 | 74,27 | 129,07 | |
| Equity Ratio | 90,7% | 96,7% | 90,7% | 96,7% |
* Includes both continued and discontinued operations. For more details, refer to Note 5, "Discontinued Operations," and the 2023 Annual Report.
For the full year of 2024, Desert Control reached a record number of installations, increased LNC deployment volumes, and more than doubled LNC revenue compared to the previous year. These milestones reflect improved operational efficiency enabled by next-generation LNC production system, enhanced irrigation system integration, and insights gained from pilots and prior projects.
• LNC Revenue and Licensing Royalties Increase: Desert Control generated NOK 2.17 million in LNC revenue for 2024, compared to NOK 0.89 million in 2023. This increase reflects the company's continued expansion and operational scaling in line with strategic objectives. Total revenue and other income declined year over year, primarily due to one-off impact of NOK 15.54 million related to the Middle East licensing transition, which was reported as part of discontinued operations.
In Q4 2024, total revenue and other income reached NOK 0.22 million, compared to NOK 0.00 million in Q4 2023. This reflects the initial phase of royalty revenue from our Middle East operations, demonstrating the progress of our licensing model.
While some revenue streams remain at an early stage, these figures highlight the transition from pilot projects to commercial operations and the increasing traction of our licensing model.
Additionally, contract momentum has strengthened in late 2024, with several agreements secured that will primarily contribute to 2025 financial performance. These developments reinforce the company's commercial progress and provide a strong foundation for scaling operations in the year ahead.
• Improved EBITDA: For the full year of 2024, EBITDA improved to NOK -56,78 million from NOK -60.05 million in the same period last year. This improvement was primarily driven by operational efficiencies and the transition to a licensed operator model in the Middle East. Additionally, the capitalization of development efforts related to LNC production units in 2024 further contributed to the improvement, particularly impacting Salary and Employee Benefit Expenses.
In Q4 2024, EBITDA declined to NOK -11.99 million, compared to NOK 0.76 million in Q4 2023. The financial results for Q4 2023 included a one-off positive impact of NOK 15.54 million related to the Middle East licensing transition, which was reported under discontinued operations.
Excluding this one-off item, Desert Control's full-year EBITDA improvement amounts to approximately NOK 19 million in 2024.
• Cash Position: Desert Control ended Q4 2024 with a cash balance of NOK 64 million, compared to NOK 119 million at year-end 2023. The company continues to operate with no interest-bearing debt. The combination of increasing project volumes, improved unit economics, and EBITDA progress underscores our ability to scale operations efficiently while maintaining financial resilience. Our continued focus on cost discipline and optimizing deployment efficiency positions us for sustainable growth in the coming years.
ADDITIONAL INFORMATION
Company Update
SCALING MARKET ADOPTION WITH DIVERSIFIED BUSINESS MODELS IN THE U.S.
In the fourth quarter, Desert Control developed and launched its "pay-asyou-save" business model, securing its first binding agreements for implementation in 2025. This model is designed to fast-track market adoption by offering customers immediate financial benefits from water savings, with monthly payments structured as a share of those savings. While enabling faster penetration into high-water-cost markets, this model also establishes long-term recurring revenue streams for Desert Control.
The first agreements under this model were signed with Berkeley Country Club in the San Francisco Bay Area and Woodland Hills Country Club in Los Angeles. These fiveyear contracts are likely to exceed NOK 14 million in revenues over the term of the agreements and mark an important milestone in Desert Control's expansion into the golf and turf management sector. Initial implementations are scheduled for
April 2025, aligning with the golf club maintenance schedules to ensure minimal course disruptions.
California, home to over 950 golf courses, represents a significant market opportunity for Desert Control. The company is targeting additional agreements across high-water-cost regions, from San Francisco in the north to San Diego in the south. These projects are expected to serve as key reference points, facilitating expansion into adjacent landscaping markets and other large-scale irrigation applications.
A key enabler of this market expansion has been the technological breakthroughs achieved in 2024. The next-generation LNC production system—at half the size and eightfold capacity compared to the current mobile factories—will significantly improve deployment speed and scalability. This advancement allows entire golf courses to be treated in days rather than weeks and months, aligning with tight maintenance
a major growth opportunity for Desert Control, with plans for expansion from San Francisco to San Diego.
windows and overcoming previous barriers to adoption.
While the pay-as-you-save model is expected to play a role in accelerating adoption, Desert Control will continue to secure traditional upfront-paid contracts. The company anticipates a balanced revenue mix, combining high-value upfront sales with recurring revenue contracts, ensuring sustainable growth while optimizing the utilization of financial resources.
REVIEW
ADDITIONAL INFORMATION
ADVANCING AGRICULTURE COMMERCIALIZATION IN THE U.S.
Desert Control continued its development in the U.S. agriculture sector, advancing from pilot programs to commercial deployments. Following successful trials and negotiations, the company secured a post-quarter agreement with Oasis Date, North America's largest date grower and processor, to deploy LNC across 160 acres of organic Medjool date palms at Corn Springs Ranch in California. This NOK 1.5 million deployment follows a successful pilot
launched in July 2024, demonstrating improved soil health, water retention, and crop performance. The project is scheduled for completion in the first quarter of 2025 and is the first of multiple commercial deployments anticipated across Oasis Date's 5,000-acre farming operations.
During the fourth quarter, the company initiated discussions for 2025 expansions with three date farms, reflecting growing industry interest in LNC for permanent crops. These expansions will further serve as solid references for LNC's role in enhancing soil productivity and water efficiency, critical for long-term farm profitability.
Ongoing pilot programs across multiple crops and applications continue to demonstrate LNC's value beyond water savings. While high water costs remain a key financial driver for adoption, trials confirm that yield improvements and soil enhancement alone can justify investment, even in regions where water remains inexpensive. For highvalue permanent crops such as
dates, citrus, and vineyards, LNC has proven long-term economic benefits that further strengthen the value proposition. Desert Control's nearterm commercialization strategy, therefore, focuses on high-value permanent crops in high-water-cost regions, where ROI is strongest. Meanwhile, the yield and land value improvement benefits from LNC adoption in lower-water-cost regions remain a mid to long-term focus as economic conditions evolve.
REGULATORY SHIFTS STRENGTHENING LNC'S VALUE PROPOSITION
The evolving water policy landscape in Arizona and regions reliant on Colorado River water is expected to drive LNC adoption. The expiration of the Law of the River agreements in 2026 is anticipated to increase water costs for farmers, significantly improving the financial case for LNC. In preparation, Desert Control is advancing pilot programs that showcase LNC's soil-health-driven yield benefits, ensuring readiness as regulatory shifts further drive the demand.
MIDTERM VALIDATION FROM THE UNIVERSITY OF ARIZONA
The midterm status from Desert Control's five-year program with the University of Arizona confirm that LNC helps sandy soils retain water longer. Different seasons have shown similar or higher yields for LNC treated vs control plots at reduced irrigation volumes (20-50% less) or reduced irrigation frequencies (up to 33% less frequent). Recent crop cycles of the program have demonstrated up to 32% higher cotton yields and 56% higher celery yields with regular irrigation.
CONDENSED INTERIM FINANCIAL STATEMENTS AND NOTES
ADDITIONAL INFORMATION
The program continues to validate LNC's impact, and the midterm report is available on the company's website. https://desertcontrol.com/midterm-validationfrom-the-university-of-arizona/
THE MIDDLE EAST BECOMES A HIGH-GROWTH REGION FOR LNC ADOPTION
After years of market development, the Middle East is now a high-growth region for Desert Control, with licensing revenue and deployment activity tripling from the third to the fourth quarter. This momentum underscores the region's accelerating transition from pilots to commercialscale projects, supported by growing demand across landscaping and agriculture.
Desert Control's licensed partner in the UAE is scaling operations to meet demand. In the first half of 2025, LNC volumes are expected to exceed six times the total deployment for all of 2024. Key commercial landscaping projects completed in the fourth quarter provide critical references that strengthen market confidence and create pathways for future growth.
For Desert Control's local partners, the shift toward higher-volume deployments demonstrates the scalability of the licensed business model. These partnerships deliver on local sustainability goals and
serve as a blueprint for how licensing can expand globally, enabling rapid deployment while leveraging local expertise. With commitments to water conservation and sustainability becoming national priorities, the Middle East highlights how strategic partnerships can unlock scalable solutions for land restoration, urban development, and agriculture.
WORLD FOOD PROGRAMME (WFP) INNOVATION ACCELERATOR AND COP16 COMMITMENTS
During the fourth quarter, Desert Control was selected for the United Nations World Food Programme (WFP) Innovation Accelerator's SPRINT Program, funding a six-month demonstration project in Iraq in collaboration with WFP Iraq Country Office and Desert Control's regional partner, Soyl. The initiative aims to develop a blueprint for drought response and land restoration, turning degraded desert land into arable soil capable of sustaining resilient farming in water-stressed regions.
The WFP program aligns closely with the outcomes of COP16 UNCCD in Riyadh, where global stakeholders pledged over \$12 billion to combat desertification, land degradation, and drought. The financial commitments made at COP16 reinforce the increasing importance of solutions like LNC to support sustainable agriculture, water conservation, and climate adaptation. As the WFP project progresses, it could serve as a validation platform for scaling LNCbased solutions in arid regions while informing future funding mechanisms aimed at drought resilience and food security.
EXPANDING LNC'S ROLE IN SUSTAINABLE AGRICULTURE
In the agriculture sector of the Middle East, Desert Control's LNC technology is positioned to improve water-use efficiency for existing farms and expand cultivated land within the constraints of available water resources. LNC further creates opportunities for climate-smart farming and food security in arid regions by transforming desert land
CONDENSED INTERIM FINANCIAL STATEMENTS AND NOTES
ADDITIONAL INFORMATION
into fertile soil. One example is a demonstration project with Tanmiah Food Company. LNC is deployed to convert desert land into productive farmland for growing local feedstock, reducing reliance on imported feed, and optimizing water, energy, and carbon efficiency. This project highlights the growing demand for regenerative farming solutions and will serve as a reference case for scaling LNC applications in desert agriculture.
Further strengthening LNC's role in sustainable agriculture, Saudi Desert Control signed a landmark agreement with Estidama, the Saudi National Center for Sustainable Agriculture, under the Ministry of Environment, Water, and Agriculture (MEWA). This collaboration will focus on enhancing water efficiency, soil health, and crop productivity in line with Saudi Arabia's national sustainability goals. The agreement is expected to drive further pilot-tocommercial transitions and position LNC as a scalable solution for water conservation in the Kingdom's agricultural sector.
With established partners in the UAE and Saudi Arabia, Desert Control's focus in 2025 will be on scaling commercial volumes, strengthening licensing revenue, and leveraging government partnerships to integrate LNC into larger-scale sustainability initiatives and regulatory water conservation frameworks. The longterm investments made in the region are now materializing into tangible growth, positioning the Middle East as a key contributor to the company's growth.
TECHNOLOGY BREAKTHROUGHS ENABLE SCALABLE, COST-EFFICIENT LNC DEPLOYMENTS
Desert Control achieved key technology breakthroughs in 2024, significantly improving scalability, cost efficiency, and market reach. The next-generation production system remains on track for commercial readiness in the first half of 2025, with extensive field testing completed in the second half of 2024. Recent trials confirmed that the system will reach its target capacity of over 120,000 liters per hour, reinforcing confidence in scalability and operational performance. The unit's 50% smaller footprint and weight make it highly mobile, enabling rapid deployment, lower costs, and faster project turnaround times, unlocking highvolume opportunities requiring short operational windows.
Another major milestone was enabling the shift from manual, laborintensive applications to applying LNC through existing irrigation systems, drastically reducing labor
costs and improving scalability for large-scale deployments. Additionally, automated bulk handling of raw materials—transitioning from 25kg bags to 1-tonne bulk bags with direct feeding mechanisms—improves efficiency, reduce operating costs, and enables sustained high-volume production.
Further advancements in automation and process optimization, developed in collaboration with Siemens, enhance labor efficiency, production predictability, fleet management, and deployment quality, ensuring consistent, cost-effective scaling.
R&D ADVANCEMENTS EXPAND MARKET POTENTIAL & REDUCE DEPLOYMENT COSTS
Adaptive formulation increasingly allows using the varying water qualities available locally at client sites for LNC production, including higher salinity variations, eliminating the need for trucked-in potable water, and significantly reducing logistics and operational costs. The technology's applicability has also shown promising potential for expansion beyond sandy soils, increasing the addressable market and enabling broader adoption across more regions.
Additionally, studies show enhanced soil health benefits, including synergies with biostimulants and biologicals such as fungi. Early results from the collaboration with Limoneira in Yuma, Arizona, indicate that LNC improves conditions for mycorrhizal colonization, which is of high value for nutrient absorption and long-term soil fertility in desert farming.
STRENGTHENING THE INNOVATION ECOSYSTEM
Desert Control continues to build a strong innovation ecosystem, leveraging strategic partnerships to accelerate technological advancement and market adoption. The collaboration with Siemens drives automation, digital process optimization, and efficiency improvements for LNC production, ensuring higher precision and scalability. Meanwhile, the engagement with Syngenta is focused on exploring synergies between LNC and biological solutions, strengthening its potential as an ecosystem platform for soil health and regenerative agriculture.
As Desert Control enters 2025, the focus remains on commercializing these advancements to drive largescale adoption, lower costs, and drive growth across key markets.
Webcast presentation for Desert Control Q4 2024 Report and Interim Financial Results is hosted on 12 February 2025 at 10:00 AM, Central European Time (CET). Register: https://go.desertcontrol.com/Q4-2024
UPDATE
Outlook
STRATEGIC PRIORITIES FOR 2025
With accelerating market adoption and scalable technology capabilities, Desert Control enters 2025 strongly positioned to expand its commercial footprint. The company's key priorities for the year include:
- Expanding LNC's footprint in golf and turf management, building on the early success of the pay-as-you-save model to drive recurring revenue and expand adoption.
- Scaling deployments in high-value permanent crops, leveraging industry partnerships and strong reference projects to drive adoption.
- Growing licensing revenues and deployment volumes in the Middle East following the transition of pilot projects into larger-scale commercial implementations.
- Executing the commercial launch of the next-generation production system, unlocking significant operational efficiencies, cost reductions, and the ability to meet increasing demand while opening new revenue opportunities from sales of production units and hardware to partners.
With a strong pipeline, secured contracts, strategic partnerships, and a diversified revenue model—including recurring revenues, upfront projects, hardware and licensing revenues, Desert Control is on track to grow its contracted revenues more than tenfold in 2025.
COMPANY UPDATE FINANCIAL REVIEW
ADDITIONAL INFORMATION
Responsibility Statement
Today, the Board of Directors and the Chief Executive Officer have reviewed and approved the Desert Control Group Condensed Interim Financial Statements as of 31 December 2024.
Pursuant to the Norwegian Securities Trading Act § 5-6 and the Norwegian Accounting Act § 3-3d, we hereby confirm, to the best of our knowledge, that:
The Desert Control Group Condensed Interim Financial Statements for the fourth quarter and full year ended
31 December of 2024 have been prepared in accordance with IFRS Accounting Standards as adopted by the European Union (EU), IFRS® Accounting Standards as issued by the International Accounting Standards Board (IASB), and additional Norwegian disclosure requirements.
The Condensed Interim Financial Statements give a true and fair view of the Group's assets, liabilities, financial position, and results as of 31 December 2024.
The interim report provides fair and objective view of important events that have occurred during financial year ended 31 December 2024 and their impact on the Condensed Interim Financial Statements.
Lars R. Eismark Executi ve Chairman
Ole Kristi an Sivertsen Chief Executi ve Offi cer
Sandnes, 11.02.2025
Marit Røed Ødegaard Board Member
Roar Husby Board Member
Maryne Lemvik Board Member
James Thomas Board Member
COMPANY UPDATE FINANCIAL REVIEW
CONDENSED INTERIM FINANCIAL STATEMENTS AND NOTES
ADDITIONAL INFORMATION
CONDENSED INTERIM FINANCIAL STATEMENTS AND NOTES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME............................ 13 CONSOLIDATED STATEMENT OF FINANCIAL POSITION .................................... 14 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ...................................... 15 CONSOLIDATED STATEMENT OF CASH FLOWS .................................................... 16 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS................................ 17
1.1 General information.................................................................................................................17 1.2 Basis of preparation................................................................................................................17 2 Revenue from contracts with customers .....................................................................18 3 Equity and shareholders.........................................................................................................19 4 Cash and cash equivalents....................................................................................................21
UPDATE
Consolidated Statement of Comprehensive Income
| Quarters | Full year | ||||
|---|---|---|---|---|---|
| (Amounts in NOK thousand) | Notes | Q4 2024 | Q4 2023¹ | 2024 (unadited) (audited) |
2023 |
| Revenue from sales | 2 | 220 | -0 | 2 172 | 844 |
| Other income | - | 5 | - | 543 | |
| Total revenue and other income | 220 | 4 | 2 172 | 1 387 | |
| Cost of goods sold (COGS) | 14 | -1 | 270 | 62 | |
| Gross margin | 206 | 5 | 1 901 | 1 325 | |
| Salary and employee benefit expenses | 4 952 | 7 696 | 31 308 | 39 064 | |
| Other operating expenses | 7 408 | 4 564 | 27 043 | 22 286 | |
| Depreciation and amortisation | 1 291 | 1 212 | 5 112 | 4 175 | |
| Operating profit or loss | -13 445 | -13 467 | -61 562 | -64 200 | |
| Finance income | 5 758 | 6 840 | 13 545 | 17 600 | |
| Finance costs | 28 | 11 095 | 5 053 | 12 776 | |
| Profit or loss before tax from continuing operations | -7 715 | -17 721 | -53 071 | -59 376 | |
| Income tax expense | -7 | -0 | 52 | -13 | |
| Profit or loss for the year from continuing operations | -7 708 | -17 721 | -53 123 | -59 364 | |
| Discontinued operations | |||||
| Profit or loss after tax for the year from discontinued operations |
5 | 638 | 9 310 | -15 | -5 910 |
| Profit or the loss for the year | -7 070 | -8 411 | -53 139 | -65 274 |
| Quarters | Full year | ||||
|---|---|---|---|---|---|
| (Amounts in NOK thousand) | Notes | Q4 2024 | Q4 2023¹ | 2024 (unadited) (audited) |
2023 |
| Allocation of profit or loss: | |||||
| Profit/loss attributable to the parent | -7 070 | -8 411 | -53 139 | -65 274 | |
| Other comprehensive income: | |||||
| Items that subsequently may be reclassified to profit or loss: | |||||
| Exchange differences on translation | |||||
| of foreign operations | -3 913 | 1 383 | -7 439 | 1 414 | |
| Total items that may be reclassified to profit or loss | -3 913 | 1 383 | -7 439 | 1 414 | |
| Total other comprehensive income for the year | -11 622 | 1 383 | -60 578 | 1 414 | |
| Total comprehensive income for the year | -11 622 | -7 028 | -60 578 | -63 860 | |
| Allocation of total comprehensive income | |||||
| Total comprehensive income attributable | |||||
| to owners of the parent | -11 622 | -7 028 | -60 578 | -63 860 | |
1) Certain 4Q 2023 line items have been restated to align with the audited full year 2023 financial statements. These adjustments ensure that the sum of quarterly published line item values agree with the numbers published in audited 2023 annual report.
CEO
ADDITIONAL INFORMATION
Consolidated Statement of Financial Position
| At 31 December | ||||
|---|---|---|---|---|
| 2024 | 2023 | |||
| (Amounts in NOK thousand) | Notes (unaudited) | (audited) | ||
| ASSETS | ||||
| Non-current assets | ||||
| Property, plant and equipment | 5 | 11 200 | 8 044 | |
| Right-of-use assets | - | 439 | ||
| Total non-current assets | 11 200 | 8 484 | ||
| Current assets | ||||
| Inventory | 152 | 217 | ||
| Trade receivables | 376 | 17 | ||
| Other receivables | 6 576 | 5 172 | ||
| Other current financial assets | 3 | 19 616 | ||
| Cash and cash equivalents | 4 | 63 572 | 100 008 | |
| Total current assets | 70 678 | 125 030 | ||
| TOTAL ASSETS | 81 878 | 133 514 | ||
| EQUITY AND LIABILITIES | ||||
| Equity | ||||
| Share capital | 3 | 161 | 161 | |
| Share premium | 6 | 133 402 | 321 180 | |
| Currency translation differences | -6 156 | -80 | ||
| Retained earnings | -53 139 | -192 194 | ||
| Total equity | 74 267 | 129 067 |
| At 31 December | |||
|---|---|---|---|
| 2024 | 2023 | ||
| (Amounts in NOK thousand) | Notes (unaudited) | (audited) | |
| Current liabilities | |||
| Current lease liabilities | - | 464 | |
| Trade and other payables | 4 205 | 1 873 | |
| Public duties payable | 1 383 | 912 | |
| Other current liabilities | 2 023 | 1 198 | |
| Total current liabilities | 7 611 | 4 447 | |
| Total liabilities | 7 611 | 4 447 | |
| TOTAL EQUITY AND LIABILITIES | 81 878 | 133 514 |
Sandnes, 11.02.2025
Marit Røed Ødegaard Board Member
Roar Husby Board Member
Maryne Lemvik Board Member
James Thomas Board Member
| 4 | 63 572 | 100 008 | |
|---|---|---|---|
| 70 678 | 125 030 | ||
| 81 878 | 133 514 | ||
| Lars R. Eismark |
|---|
| Executi ve Chairman |
Ole Kristi an Sivertsen Chief Executi ve Offi cer
ADDITIONAL INFORMATION
Consolidated Statement of Changes in Equity
| Cumulative | |||||||
|---|---|---|---|---|---|---|---|
| Share | translation | Retained | |||||
| (Amounts in NOK thousand) | Share capital | premium | differences | earnings | Total equity | ||
| At 1 January 2023 | 123 | 235 132 | -1 336 | -126 919 | 107 001 | ||
| Profit (loss) for the year | -65 274 | -65 274 | |||||
| Other comprehensive income | -1 837 | -1 837 | |||||
| Translation differences related to deconsolidated subsidary reclassified to proft or loss | 3 093 | 3 093 | |||||
| Issue of share capital | 37 | 85 436 | 85 473 | ||||
| Transaction cost | -3 608 | -3 608 | |||||
| Share based program options | 4 219 | 4 219 | |||||
| At 31 December 2023 (audted) | 161 | 321 180 | -80 | -192 194 | 129 067 | ||
| At 1 January 2024 (audited) | 161 | 321 180 | -80 | -192 194 | 129 067 | ||
| Profit (loss) for the period | -53 139 | -53 139 | |||||
| Currency translation differences in OCI | -6 076 | -6 076 | |||||
| Issue of share capital | 0 | 0 | |||||
| Share based program options | 4 416 | 4 416 | |||||
| Share premium reclassification1 | -192 194 | 192 194 | - | ||||
| At 31 December 2024 (unaduted) | 161 | 133 402 | -6 156 | -53 139 | 74 267 |
1) For more information see note 6. Share Premium reclassification
UPDATE
ADDITIONAL INFORMATION
Consolidated Statement of Cash Flows
| Quarters | Full year | |||
|---|---|---|---|---|
| (Amounts in NOK thousand, unaudited) | Q4 2024 | Q4 2023¹ | 2024 (unadited) |
2023 (audited) |
| Profit or loss before tax from continuing operations | -7 715 | -17 721 | -53 071 | -59 376 |
| Profit or loss before tax for discontinued operations | 638 | 9 310 | -15 | -5 910 |
| Adjustments to reconcile profit before tax to net cash flows: | ||||
| Depreciation and amortisation | 1 291 | 2 177 | 5 112 | 6 492 |
| Net financial income/expense | -6 167 | 3 798 | -8 478 | -4 449 |
| Foreign exchange gains or losses | 89 | 3 186 | 115 | 3 186 |
| Share-based payment expense | 220 | 1 409 | 4 416 | 4 219 |
| Derecognition of Goodwill | - | 7 220 | - | 7 220 |
| Working capital adjustments: | ||||
| Changes in accounts receivable and other receivables | 894 | 25 267 | -1 696 | 5 802 |
| Changes in trade payables, duties and social security payables | 2 577 | -931 | 2 802 | -3 162 |
| Changes in other current liabilities and contract liabilities | 1 357 | -29 107 | 825 | -4 236 |
| Net cash flows from operating activities | -6 817 | 4 608 | -49 991 | -50 214 |
| Cash flows provided by (used in) investing activities (NOK) | ||||
| Capital expenditures and investments | -4 860 | -345 | -7 823 | -691 |
| Sale (Purchase) of financial instruments | -0 | 209 | 19 613 | 22 346 |
| Proceeds from sale of property, plant and equipment | - | 9 331 | - | 10 556 |
| Interest received | 438 | 217 | 2 065 | 398 |
| Net cash flow provided by (used in) investing activities | -4 422 | 9 412 | 13 855 | 32 610 |
1) Certain 4Q 2023 line items have been restated to align with the audited full year 2023 financial statements. These adjustments ensure that the sum of quarterly published line item values agree with the numbers published in audited 2023 annual report.
| Quarters | Full year | ||||
|---|---|---|---|---|---|
| (Amounts in NOK thousand, unaudited) | Q4 2024 | Q4 2023¹ | 2024 (unadited) |
2023 (audited) |
|
| Cash flow provided by (used in) financing activities (NOK) | |||||
| Proceeds from issuance of equity | - | 75 471 | - | 85 473 | |
| Transaction costs on issue of shares | - | -3 608 | - | -3 608 | |
| Lease payments | -87 | -2 169 | -471 | -1 146 | |
| Interest paid | -5 | -20 | -5 | -23 | |
| Net cash flows provided by (used in) financing activities | 69 674 | -476 | 80 696 | ||
| Net increase/(decrease) in cash and cash equivalents | -11 332 | 83 694 | -36 612 | 63 092 | |
| Cash and cash equivalents at beginning of the year/period | 74 833 | 15 731 | 100 008 | 36 791 | |
| Net foreign exchange difference | 72 | 583 | 176 | 125 | |
| Cash and cash equivalents, end of period | 63 572 | 100 008 | 63 572 100 008 |
CEO
COMPANY UPDATE CONDENSED INTERIM FINANCIAL STATEMENTS AND NOTES
ADDITIONAL INFORMATION
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
1.1 GENERAL INFORMATION
Corporate information
The condensed interim financial statements of Desert Control AS and its subsidiaries (collectively, "the Group", "Company" or "Desert Control") for the fourth quarter of 2024 were authorised for issue by a Board meeting held on 11 February 2025.
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 climatesmart 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.
1.2 BASIS OF PREPARATION
The condensed interim financial statements include the consolidated statement of comprehensive income, consolidated statement of financial position, consolidated statement of cash flows, consolidated statement of changes in equity, and the accompanying notes. These condensed interim financial statements have been prepared in accordance with IAS 34 Interim Financial
Reporting, as issued by the International Accounting Standards Board (IASB) and adopted by the European Union (EU).
The interim financial statements are condensed and do not include all the disclosures required by IFRS® Accounting Standards for a complete set of financial statements. Accordingly, they should be read in conjunction with the company's consolidated annual financial statements for the year ended 31 December 2023.
The 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.
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.
Presentation currency and functional currency
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. The subtotals and totals in some of the tables in the notes may not equal the sum of the amounts shown in the primary financial statements due to rounding. All amounts have been rounded to the nearest thousand unless otherwise stated.
Going concern basis of accounting
Desert Control is currently in the precommercialization phase, focusing on refining our technologies and securing key partnerships for market entry. We anticipate completing this phase within the next two years, transitioning into commercial operations and revenue generation by the end of 2025.
This timeline is based on our current progress in product development, expected regulatory approvals, and initial customer engagement strategies. Management is committed to regularly reviewing and updating this timeline as circumstances evolve, ensuring our financial strategies are aligned with operational milestones to support the ongoing viability of the company. Desert Control's consolidated financial statements are prepared on a going concern basis.
2 REVENUE FROM CONTRACTS WITH CUSTOMERS
ACCOUNTING POLICIES
Revenue from sales is recognised when control of the goods or services transfers to the customer, reflecting the total consideration expected under the terms of the contract. Specifically, for our product LNC, revenue is recognised at the moment the product is applied at the delivery point, as this is when control typically passes to the customer, in accordance with the contractual agreements. This process marks the completion of the sole performance obligation per sale.
Revenue from royalties is recognized in accordance with IFRS 15.B63, whereby royalties based on sales or usage of licensed intellectual property are recognized when the licensee's underlying sales occur.
The Group's revenue from contracts with customers has been disaggregated and presented in the tables below:
| Quarters | Full Year | ||||
|---|---|---|---|---|---|
| By area of operation: (Amounts in NOK thousand) | Q4 2024 | Q4 2023 | 2024 (unaudited) |
2023 (audited) |
|
| Liquid NaturalClay (LNC) continued operations | - | - | 1879 | 844 | |
| Liquid NaturalClay (LNC) discontinued operations | - | - | - | 48 | |
| Licensing Royalties | 220 | - | 293 | - | |
| Total Revenues from contracts with customers and other revenues | 220 | - | 2172 | 892 |
| Quarters | Full Year | ||||
|---|---|---|---|---|---|
| By geographic market: | Q4 2024 | Q4 2023 | 2024 (unaudited) |
2023 (audited) |
|
| Norway | 220 | - | 293 | - | |
| USA | - | - | 1879 | 844 | |
| UAE, ref note 5 discontinued operations | - | - | - | 48 | |
| Revenue from contracts with customers | 220 | - | 2172 | 892 |
3 EQUITY AND SHAREHOLDERS
ACCOUNTING POLICIES
Costs related to equity transactions
Transaction costs are deducted from equity, net of associated income tax.
Distribution to shareholders
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.
Issued capital and reserves:
| Share capital in Desert Control AS | Number of shares authorised and fully paid |
Par value per share (NOK) |
Financial Position |
|---|---|---|---|
| At 31 December 2022 | 41 099 680 | 0,003 | 123 299 |
| Share issue 10 March 2023 | 227 109 | 0,003 | 681 |
| Share issue 31 July 2023 | 1 000 000 | 0,003 | 3 000 |
| Share issue 13 October 2023 | 10 000 000 | 0,003 | 30 000 |
| Share issue (rep) 17 November 2023 | 1 181 188 | 0,003 | 3 544 |
| At 31 December 2023 | 53 507 977 | 0,003 | 160 524 |
| Share issue 22 February 2024 | 120 000 | 0,003 | 360 |
| At 31 December 2024 | 53 627 977 | 0,003 | 160 884 |
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.
ADDITIONAL INFORMATION
The Group's shareholders:
| Shareholders in Desert Control AS at 31.12.2024 | Total shares | Ownership/ Voting rights |
|---|---|---|
| Woods End Interests LLC | 5 343 472 | 10,0% |
| J.P. Morgan SE | 4 247 077 | 7,9% |
| Citibank | 3 610 828 | 6,7% |
| Nordnet Livsforsikring AS | 2 617 583 | 4,9% |
| Lithinon AS | 1 720 002 | 3,2% |
| BNP Paribas | 1 627 836 | 3,0% |
| Olesen Ole Morten | 1 586 083 | 3,0% |
| Lin AS | 1 502 275 | 2,8% |
| Olesen Consult HVAC AS | 1 475 000 | 2,8% |
| Glomar AS | 1 368 456 | 2,6% |
| DNB Bank ASA | 1 315 718 | 2,5% |
| Ninas Holding AS | 1 225 173 | 2,3% |
| Jakob Hatteland Holding AS | 1 222 222 | 2,3% |
| Hako Ventures AS | 1 112 431 | 2,1% |
| Idland Atle | 1 090 491 | 2,0% |
| OKS Consulting AS | 1 050 000 | 2,0% |
| The Northern Trust Comp | 958 275 | 1,8% |
| Sortun Invest AS | 949 937 | 1,8% |
| Clearstream Banking S.A. | 945 107 | 1,8% |
| Yggdrasil Venture AS | 787 220 | 1,5% |
| Sundvolden Holding AS | 594 431 | 1,1% |
| Others | 17 278 360 | 32,2% |
| Total | 53 627 977 | 100,0 % |
Origin of shareholders:
CEO MESSAGE
| Country of Origin | No of shares | % | No of shareholders |
|---|---|---|---|
| Norway | 35 394 135 | 66,0% | 3 103 |
| United States | 5 636 059 | 10,5% | 7 |
| Luxembourg | 5 222 184 | 9,7% | 8 |
| Ireland | 3 626 814 | 6,8% | 12 |
| France | 1 618 104 | 3,0% | 5 |
| United Kingdom | 1 117 175 | 2,1% | 7 |
| Sweden | 604 403 | 1,1% | 14 |
| Others | 409 103 | 0,8% | 33 |
| Grand Total | 53 627 977 | 100% | 3 189 |
COMPANY UPDATE
4 CASH AND CASH EQUIVALENTS
ACCOUNTING POLICIES
Cash and cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes. 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.
| At 31 December | ||||
|---|---|---|---|---|
| Cash and cash equivalents (Amounts in NOK thousand) |
2024 (unaudited) |
2023 (audited) |
||
| Bank deposits, unrestricted | 62 819 | 99 522 | ||
| Bank deposits, restricted | 753 | 486 | ||
| Total cash and cash equivalents | 63 572 | 100 008 |
Bank deposits earns a low interest at floating rates based on the bank deposit rates.
COMPANY UPDATE FINANCIAL REVIEW
CONDENSED INTERIM FINANCIAL STATEMENTS AND NOTES
ADDITIONAL INFORMATION
5 DISCONTINUED OPERATIONS
ACCOUNTING POLICIES
In June 2023, Desert Control entered into a significant agreement with Mawarid Holding Investment LLC (MHI) for the sale of its production entity in the United Arab Emirates, which included transferring the shares in the joint venture, Mawarid Desert Control, along with the Liquid Clay (LNC) production assets. This agreement designated MHI as the exclusive licensed operator for the UAE, aiming to expand operations across the Middle East. Subsequently, in July 2023, an agreement was reached with Holistic Earth Advanced Regeneration Technologies SA (H-EART), resulting in the transfer of a single LNC Production cluster, which includes four production units, and granting H-EART the operational license on behalf of Desert Control in the Kingdom of Saudi Arabia.
Following these agreements, Desert Control Middle East LLC initiated the liquidation process to phase out the company's operations in the Middle East effectively.
In alignment with IFRS 5, the Group has classified its operations in the United Arab Emirates as discontinued following the strategic decision to exit the market. This reflects a significant shift in our
geographical and operational focus, deemed material to our business structure and financial outlook.
The financial results from these discontinued operations, including the gain or loss on deconsolidation, are separately reported in the Consolidated Statement of Comprehensive Income to enhance clarity and decision-usefulness for our stakeholders. Non-current assets and disposal groups related to these operations were measured at the lower of their carrying amount and fair value less costs to sell and have been presented as held for sale in prior reporting periods until their disposal in 2023.
As of this date, Desert Control has no assets classified as held for sale, indicating the completion of significant transactions related to the discontinued operations within the 2023 fiscal year. All remaining minor transactions are expected to be settled by the final liquidation of Desert Control Middle East LLC in 2024.
The net results from these discontinued operations have been reported as a single line item in the Consolidated Statement of Comprehensive Income. For enhanced transparency and comparability, prior period figures have been restated
| Net result for discontinues operations as of 31 December | Quarters | Full year | |||
|---|---|---|---|---|---|
| Notes | Q4 2024 | Q4 2023¹ | 2024 | 2023 | |
| (Amounts in NOK thousand, unaudited) | (unaudited) | (audited) | |||
| Revenue from sales | 2 | 0 | 0 | 0 | 48 |
| Other income | 0 | 15 540 | 5 | 16 697 | |
| Total income from discontinued operations | - | 15 540 | 5 | 16 745 | |
| Cost of goods sold (COGS) | -164 | 51 | 156 | 353 | |
| Gross margin from discontinued operations | 164 | 15 490 | -151 | 16 393 | |
| Salary and employee benefit expenses | - | 1 346 | - | 10 398 | |
| Other operating expenses | 1 | 1 128 | 184 | 6 016 | |
| Depreciation and amortisation | - | 146 | - | 2 317 | |
| Impairment | - | - | - | ||
| Operating profit or loss from discontinued operations | 163 | 12 870 | -335 | -2 338 | |
| Finance income | - | - | - | - | |
| Finance costs | - | 688 | - | 3 571 | |
| Profit or loss before tax from discontinued operations | 163 | 12 182 | -335 | -5 910 | |
| Income tax expense | - | - | - | - | |
| Profit or loss for the year from discontinued operations | 163 | 12 182 | -335 | -5 910 |
1) Certain 4Q 2023 line items have been restated to align with the audited full year 2023 financial statements.
These adjustments ensure that the sum of quarterly published line item values agree with the numbers published in audited 2023 annual report.
6 SHARE PREMIUM RECLASSIFICATION
During Q3 2024, NOK 192,193,571 was reclassified from the share premium account to retained earnings to offset accumulated losses. This reclassification was approved by the Board of Directors and will be submitted for shareholder approval at the upcoming Annual General Meeting (AGM), in accordance with the Norwegian Companies Act (Aksjeloven). The reclassification did not impact the total equity of the company, as it was an internal adjustment within equity.
The purpose of this adjustment was to offset retained earnings losses with share premium and strengthen the company's equity position, ensuring compliance with Skattefunn and other relevant regulatory requirements.
There were no further reclassifications in Q4 2024.
FORWARD-LOOKING STATEMENTS
Disclaimer related to forward-looking statements
Additional Information
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 forwardlooking 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 forwardlooking statements.
Q4 2024
The information enclosed is subject to the disclosure requirements pursuant to sections 5-12 in the Norwegian Securities Trading Act.
CEO
INQUIRIES
For more information, please contact:
Ole Kristian Sivertsen President and Group CEO
Email: [email protected] Mobile (NOR): +47 957 77 777 Mobile (USA): +1 650 643 6136
Leonard Chaparian
Chief Financial Officer
Email: [email protected] Mobile: +47 90 66 55 40
COMPANY UPDATE
Making Earth Green Again
GROUP HQ – NORWAY
YUMA
1219 E 21st St
Desert Control AS Grenseveien 21 (FOMO Works) 4313 Sandnes, Norway
PALO ALTO
PHOENIX / MARICOPA
Yuma, AZ 85365, USA
Desert Control Americas Inc
Desert Control Americas Inc 470 Ramona Street Palo Alto, CA 94301, USA
Desert Control Americas Inc 37860 W Smith Enke Rd Maricopa, AZ 85138, , USA
www.desertcontrol.com