Earnings call transcript: Desert Control Q3 2025 sees market adoption challenges

Desert Control AS reported its Q3 2025 earnings, revealing challenges in market adoption and a significant revenue miss. The company posted an earnings per share (EPS) of -0.1487, matching forecasts, while actual revenues reached only 60,000 NOK, falling short of the 5 million NOK forecast by a substantial margin. The company’s stock showed resilience, rising 3.57% to 2.03 NOK in pre-market trading despite the revenue shortfall.

Key Takeaways

• Desert Control’s Q3 revenue fell significantly short of expectations.
• The company maintains a focus on its Liquid Natural Clay (LNC) technology.
• Relocation of R&D operations to the United States aims to enhance market reach.
• A rights issue is set to fund operations into the second half of 2026.
• The stock price increased by 3.57% in pre-market trading, showing investor confidence.

Company Performance

Desert Control’s Q3 performance reflects the challenges of early-stage market adoption. Revenues were primarily derived from licensing royalties, underscoring the nascent stage of its product market penetration. The company is focusing on expanding its operations in the U.S. and Middle East, targeting high-value agricultural segments and addressing water scarcity issues with its LNC technology.

Financial Highlights

• Revenue: 60,000 NOK, a significant shortfall from the 5 million NOK forecast.
• Earnings per share: -0.1487, in line with expectations.
• Cash and financial assets stand at 8 million NOK, bolstered by a 75 million NOK rights issue.

Earnings vs. Forecast

Desert Control’s Q3 earnings matched EPS forecasts, but the revenue surprise was a notable -98.8%. This shortfall highlights the challenges of market adoption and the need for strategic adjustments to meet financial goals.

Market Reaction

Despite the revenue miss, Desert Control’s stock rose 3.57% in pre-market trading, reaching 2.03 NOK. This increase suggests investor confidence in the company’s long-term strategy and potential market opportunities, particularly in the U.S. and Middle East.

Outlook & Guidance

Looking ahead, Desert Control anticipates revenue realization in Q4 2025, targeting 50 million NOK from the Middle East and 15 million NOK from the U.S. market. The company is focusing on expanding its presence in golf courses and permanent crop markets, with new manufacturing capabilities expected to come online soon.

Executive Commentary

CEO James Thomas emphasized the company’s growth potential, stating, "We are more worried about our ability to make enough LNC to meet the demand than we do about the demand for LNC." This highlights the company’s confidence in its product’s market potential despite current challenges.

Risks and Challenges

• Market Adoption: Slow uptake of LNC technology could impact future revenues.
• Operational Costs: Increased expenses from U.S. expansion may strain financial resources.
• Competitive Landscape: Emerging competitors in soil science technology could pose a threat.
• Economic Conditions: Fluctuating economic conditions in target markets may affect demand.
• Manufacturing Capacity: Delays in new manufacturing capabilities could hinder growth.

Q&A

During the earnings call, analysts inquired about the company’s water savings in turf applications and potential collaborations with organizations like the World Food Program. Desert Control confirmed ongoing discussions and exploration of grant opportunities in Arizona, indicating a proactive approach to expanding its market presence.

Full transcript - Desert Control AS (DSRT) Q3 2025:

Ari, Webcast Moderator, Desert Control: Welcome to the Desert Control Q3 2025 Company Update webcast. Today’s presentation will review our Q3 2025 report and financial results for the fiscal period ending September 30, 2025. We will also share selected updates from Q4 2025 to date. Following the presentation, there will be a Q&A session. We have received many questions today, but of course, you’re encouraged to submit questions anytime using the Q&A function. To begin, Lars Eismark, Chair of the Board, will share some opening remarks, and after that, our CEO, James Thomas, will present the Q3 update.

Lars Eismark, Chairman of the Board, Desert Control: Thank you, Ari. Good morning. Dear shareholders and supporters of Desert Control, I hope that you all are doing well and enjoying the autumn season. My name is Lars Eismark, and I’m the Chairman of Desert Control, and I want to welcome you to this Q3 2025 webcast. Q3 2025 was a very eventful quarter. First of all, we closed a rights issue that has given us capital to pursue our ambitions and strategy. Thank you to all of you who supported the process with positive support and remarks, and to those of you who chose to invest. We’ll do our utmost to live up to your expectations and believe in us. On the same note, the continued strengthening of our balance sheet is an ongoing effort, and the management and the board see this task as a natural part of our daily sovereign.

The board and management have had organizational build and efficiency on the agenda for some time. Hence, we took the decision to move our R&D in Norway to the US. This comes on the back of an acknowledgment that having R&D in different locations was not optimal. Shipments of tests, soil samples, etc., were increasingly complicated, and the fact that we need proximity to our test facilities, to our customers and our partners, made the decision necessary. This means goodbye to loyal and valued employees in Norway, and I want to send my gratitude to them for the efforts in taking Desert Control to where we are today. At the same time, we’re also saying welcome to new employees in the US. We have earlier informed you of our need to execute swiftly on our strategy in the US, and we have several ongoing hiring processes.

This is primarily within our sales force, the operations team, and in R&D. We’re helped by professional search firms, and we’re excited to announce results in Q1 and Q2 2026. The same goes for two additional board members. I’ve made it very clear that the new board members must be rooted in the southwest of the US, and they must have a track record within agriculture and aquatic. We have currently positive dialogues, and I hope to announce the outcome of these in Q1 2026. As you might recall, we underlined the importance of being structured in our go-to-market priorities and hence being compliant with our strategy. Permanent crops is an instrumental segment for us, and I’m so proud that we’ve secured existing pilots. Exciting pilots, sorry, in the very attractive segments almond and wine.

The pilots are leading growers in the segments, and needless to say, important for our success in showing the way for their colleagues. Q3 has also given me the opportunity to interact with our licensed partners, Saudi Desert Control and Soil. I’m so happy to see their commitment and their investments giving positive results in an environment where you have to be very, very patient, and where solid personal relationships are crucial for success. Well done, and good luck with the exciting opportunities that you have in front of us, in front of you. On an ending note, the rights issue and the organizational changes have taken a lot of attention and massive resources from the management team. It’s important that we now get back to normal life and concentrate our efforts on generating a solid pipeline, onboarding new colleagues successfully, and staying close to our customers and partners.

Before I hand it over to our CEO, James Thomas, I want to wish you and your families a wonderful autumn and winter season. Thank you. James, over to you. Thank you, Lars. Let me add my note of thanks to our shareholders in every day and in the rights issue. It is, as I said in my letter, fantastic to have a group of shareholders who are so passionate about our mission and our company. Having said that, we actually have some new investors on the call. To those of you who know the company so well, I apologize, but I’m going to need to run through some of the basics of the company, and I’ll try and do that in some degree of haste but provide the right overview.

As I think most of you obviously know on the call, Desert Control is a technology company in the soil health business. Our target markets are agriculture, trees and forests, and golf and landscaping. The company is now really in its early stages of commercial launch in all of those sectors, and it is an exciting time to be part of the journey with Desert Control. Ari, if I can get the next slide. Also, just really as a reminder, the product is delivered on site and made fresh. In a manufacturing facility we essentially bring on site, and several of you have put in questions on the status of manufacturing, and we will address those through the course of the conversation. We are in the science business, and we are increasingly in the science business.

We believe this company has a fundamental role in soil science and is the leader for sure in our own technology. All right. We’ve covered this a lot. One of the things that Lars and I have been very focused on is focus. Despite the applicability of this technology in many, many parts of the world, we are intensely focused at this time in the US Southwest and with our partners in the Middle East. These markets are very large on their own, and the company needs to execute against the near-term opportunities in each. Next slide. Again, this is a slide you’ve all seen before, or at least most of you have seen before. We are direct in the United States. We are distributor-based in the Middle East. Lars has touched on that, and Jan will touch on that later.

We do offer the product in two ways: the pay-on-delivery and the pay-as-you-save model, which we have executed in the Gulf area and one that I am a big fan of. Our revenues from the Middle East come from licensing and hardware sales. Apologize. Go ahead. Next slide, Ari. Sometimes I get questions from investors about why not Spain, why not Australia, why not, why not? Jan and I get 10 emails a week from somebody who wants to bring LNC to their home market. The answer to all of them is, "We will get to you." Right now, we are positioned in two of the three largest markets. We have plenty of opportunity in our core markets, and that will remain our focus in the near term.

I’m sorry to all those people who really want us to bring the technology somewhere else, but we have our hands full capturing our own opportunities at the time. All right, next slide. I think we’ve covered this, but it’s important to kind of come back to it, especially given the recent activity that we’re seeing in the pilots. Permanent crops are truly our focus. Trees is where we’ve had a lot of success. We are seeing success in early trials in vineyards. We will be doing more of that in the near term. On the far right-hand slide, we haven’t given up on the high-value parts of field crops. We continue to try and find the right application and the right academic groups to work with.

But as I think we’ve all said before, much as there’s a lot of acreage in alfalfa and corn and cotton, those are not target markets for us at this time. If the product is not being applied in what’s truly a high-value situation, we’re not doing that at this time. Next slide, Ari. I think we’ve touched on this, and we have news, I think, on almost all of these places during this quarter. The major turf segments, obviously parks, and you’ll hear from Jan, I think, about some work being done in parks. During the quarter, we did additional work with Cal State Fullerton in their fields and expect to do more work with them in coming times. Golf has obviously been our major focus in the turf segment. Go ahead, Ari. This slide is again something many of you have seen before.

Our product is very well proven in 80% sandy soils and higher. That is today our core customer. And while that may seem in some ways to limit the technology, which we believe over time will be applicable in soils with lower sand fractions, I just would like to remind all investors that the California market in highly sandy soils is a $500 million market by itself. So we don’t, at least I don’t feel, and I don’t think the company feels at all constrained by pursuing our highest value opportunities today because they, of their own right, are very, very large. Obviously, as we can move down the sand fraction towards 60, the market expands dramatically, and there is ongoing scientific work there. And we’ll keep you posted on how we move it.

In the short run, there’s more than enough business in the 80% sand and higher level. Next slide. You’ve seen this slide before, many of you, and it’s meant to point out kind of the obvious. California is a big market. We are investing additional resources there. Most of the hiring we’re doing is in the California markets. The pilots that we’re doing this week and the pilots we have scheduled in coming weeks are all in California. We are not giving up on Arizona. Arizona is a good market for this technology, but the California market is just so much larger. The emphasis on water savings, water subsidies, and the price of water are all stronger in California than they are in Arizona at this time. Although there are some interesting things happening in Arizona around government grants and other opportunities to subsidize the technology.

We may actually see Arizona start to perk up, but for the moment, I want to talk about California. Go ahead, Ari. Equally, the other market I want to talk about, or at least make people aware of, where we are not yet active because it is 3,000 miles from where we are active and we are very focused, is the Florida market. At some point, it will be very large for this technology. Go ahead, Ari. Okay. Let us get into the company update. This is the first slide. We called out, I think, almost all of these in the letter that we wrote and the report we have just published, but I do want to touch on some of the more significant ones that are of interest to shareholders based on all the questions.

Last quarter, we had to talk about kind of where Woodland Hills was after we had our problems with some damage to the irrigation system. I think it is really good news there. I think a couple of things that we have tried to make clear to the market. The customer is very happy. The customer is happy with the way we handled the issues that were created, and those issues are behind us. The customer is really happy with how the golf course looks. The customer is really happy with their water savings. We are seeing significant water savings in August and September in particular, two of the hottest months in the LA market. The product is performing as hoped. I was going to say as expected, but it is performing better than expected.

We will be issuing our first invoices to that customer in coming weeks. Woodland Hills is in good shape. Everybody’s happy, and the technology is working well. Wood Ranch continues to be very happy with the pilot we’ve done with them. They look at both the soil sensor data and some drone data, and they’re quite happy. We’re in the process of trying to figure out when to do a full application there. We’ve got a contract out to them. We mentioned in the letter, the almonds. This is, I think, a testament to the demand for the product, frankly. We’ve talked about adding people to the company, and we’ve added agricultural sales in the Salinas Valley. Cord Nunez started three weeks ago, and we already have three pilots. We already have three pilots in almonds. Almonds is a 200 million tree market.

As I say in the letter, we’re not going to get 200 million trees out of it. I think the rapidity with which we were able to get these pilots shows the interest in our technology from some of the large California crop growers. Almonds is the biggest, but pistachios, avocados, obviously, we’ve seen success in dates in Arizona. I expect to see a lot more activity in the California area. I touched on this very briefly, but we now see some grant activity in Arizona. They’ve issued recently a $1.8 million grant for soil health and soil amendments, which we feel we qualify for. We are working with existing customers to pursue that grant money. We will know in the first quarter of next year on that. I’m going to let Jan handle the direct slides on the Middle East.

He and I were down there three weeks ago, or I guess four weeks ago now, and spent a bunch of time with our partners and with their customers. The story is much the same. They are working hard. They are moving the profile of LNC up the value chain and up the government chain. It is a matter of hunting that elephant and shooting that elephant, catching that elephant, whatever proper term would be used in the Middle East at this moment in time. On the science and technology side, Lars did mention in his opening comments that we have decided to move research and development to the United States, a decision that was not made lightly. It is really important to move closer to the customers and to the soil types and the water types in the US. Despite that move, R&D continues here.

R&D at both the very fundamental clay level, R&D at the microbial level, and R&D in some of the agronomy aspects, some very interesting work being done both in our own laboratories in Maricopa, continuing work being done here in Norway, and work with collaborators in both California and Arizona. I had the pleasure of speaking at a function that went on in conjunction with Climate Week, the UN Climate Week in New York, a few weeks ago. I was a guest of our partner, Siemens, on a panel discussing how their technologies are influencing climate health. I have to tell you, the energy at that meeting was fantastic and the solutions being shown by Siemens and by many others. There were probably 100 exhibitors there. It was really, frankly, for somebody who works.

In climate tech, really exciting to find so many other passionate people and see some of the technologies that are being developed. Next slide, Ari. I think I’ve essentially covered this slide other than to comment on Berkeley. Berkeley is also quite interested in pursuing further application, and we’re in conversations with them about how that would fit into their maintenance cycle because I would want to remind people that we do this during the times when the golf courses are closed for maintenance. Our applications are not, as I would love them to be, uniformly scheduled through the course of the year. They’re going to be very heavy in the spring and the fall. Next slide. I think I touched on this too. Super exciting, right? And we’re going to do. A.

Very large pilot with a very sizable commercial grower that will be focused both on water savings, soil health, nutrient use efficiency, and importantly, yield. Stay tuned is, I think, really the right way to say this. Go ahead. At this point, I’ll turn it over to Jan Vader, our Head of International, to speak about our partners in the Middle East. Thank you, James. I’ll touch briefly on the updates on LNC-related activities in the Middle East, starting with United Arab Emirates and Soil. In the UAE, our partner, Soil, is seeing continued strong momentum within the new construction landscaping projects. We’re excited to announce that they’ve been awarded an LNC treatment for the landscaping of the new Reem Hills development, which is a very large new residential community centrally in Abu Dhabi.

This is a large project where we will apply more than 4 million liters of LNC. As for the general sort of new construction projects, we have to do the treatment as the landscaping gets finished. It is a project that will go on over several quarters. Soil has also completed the Connect Park with Masdar City in Abu Dhabi. This is a client that we’ve done a few projects for now and where they have included LNC as a requirement for their new public parks. We are quite excited about that. Masdar City also highlighted LNC technology as a model for sustainable technology within landscaping in their recent ESG report. Q3 also saw some very interesting demonstration results.

We have had, or our partner, Soil, has been running for one year a project in the Western region deserts of the UAE, very harsh environments, where they’ve been testing the survivability and growth of newly planted native species trees without regular irrigation. We are seeing very encouraging results on this and great interest and involvement from governmental bodies, right? There is a lot of tree planting initiatives in the region. What you can do with limited or less irrigation obviously adds significant value. There will be more results coming on that directly from our partner. If we move to the Saudi side, Ari. Thank you. In Saudi, we have had positive progress on validations and collaboration projects. We did not have any commercial projects in the quarter, but there is more to come there.

We have a new research collaboration initiated with the Princess Nourah bint Abdulrahman University to study LNC in high clay soils. This is important in terms of broadening agricultural applicability. Our partner, SDC, also continues to receive positive data points from ongoing validation projects, both in terms of water retention, where we’re seeing in diverse soil environments still. The sort of double the water retention for the LNC-treated parts of the validation projects. Also seeing significant increase in nutrient holding capacity over time on some of our longer-term validation projects. We can see in Misk City, which is a very high-profile development within Riyadh. A nonprofit city. You can see the park there where we have been treating the sort of desert-type environment landscaping. With significant water reductions over the harsh summer months, we’re still seeing better plant vigor on the LNC-treated plants. Very positive news overall.

Just hot off the press, last night, they did another trial, or yesterday, they finished another trial, which is the first trial in the eastern region of Saudi. Where we’re doing a landscaping pilot, and we did the first LNC treatment there to initiate a project. This is for Saudi Aramco, which is obviously a large governmental actor in Saudi. Overall, we see SDC continue to build a reputation as a technology and research leader supporting the Saudi Vision 2030, which is driving a lot of the greening initiatives across the kingdom. That is the update from the Middle East. I’ll now hand over to our CFO, Leonard Chaparian, for the financial updates. Thank you. Thank you, Jan, and good morning to all of you. The figures are shared in detail in the financial report published earlier this morning.

These financial key figures will be covered in more detail in the following slides. In Q3, Desert Control continued to make operational progress while maintaining tight cost control. Preparations for upcoming commercial deliveries advanced in both the US and the Middle East. Total revenues remained limited, reflecting the early-stage nature of the market adoption and the time-based recognition of income under performer-linked contracts. Operating expenses increased compared to last year, mainly due to expanded US operations and ramp-up activities, while depreciation decreased as certain legacy assets were fully written off. At the end of Q3, cash and financial assets stood at NOK 8 million prior to receiving the proceeds from the NOK 75 million rights issue in early October. Revenue from sales in Q3 comes from licensing royalties. For further details, please refer to note two. Revenue remained modest, reflecting the US-based contract structure where income is recognized only after.

Verified water savings. The company expects revenue realization to begin in the fourth quarter as customer validation milestones are achieved and invoices commence under the PACE framework. Operating expenses increased. The increase primarily reflects higher field activity in the US production, scaling to support upcoming commercial deliveries and continued investment in organizational capacity to enable future growth. The period also included approximately NOK 2.5 million in one-off restructuring costs, with limited remaining effects expected in the fourth quarter of 2025. Excluding these temporary items, the underlying cost base remained broadly stable compared with prior periods, reflecting continued cost discipline. Total equity improved slightly year over year, supported by the fully subscribed NOK 75 million rights issue completed before quarter end, with cash received in October.

Cash decreased during the quarter due to continued investment in product development, commercialization, and organizational growth, while the rights issue proceeds received after quarter end have significantly improved liquidity. The proceeds strengthened the company’s capital base and will fund operations well into the second half of 2026. Operating cash flow now reflects only continued operations, adjusted for depreciation and amortization, highlighting the group’s disciplined cash-focused approach in Q3 2025. Desert Control received NOK 2.3 million in SkatteFUNN grant funding from approved R&D activities, up from NOK 1.5 million in the same period last year. We have recently engaged consultants from Euronext to collect information about our nominees as required under the EU shareholder rights directive. We have already published an updated shareholder list that you can download on our web page. For more information, it will be available at desertcontrol.com/investors.

Back to you, James, if you want to comment on this. Thanks, Leo. Yes. We wanted to bring this to all shareholders’ attention. We had gotten requests from a couple of shareholders to work to look behind the nominee accounts, and we worked with Euronext and have discovered more than 95% of the nominee shareholdings. I think the most interesting piece that comes out, if you look at the table, is that we have another large shareholder, another individual large shareholder, and then a few other meaningful shareholders, and they are from the Middle East or that part of the world. I find that gratifying, with the Middle East being an important territory for us, to see that we are getting shareholder support in those markets, I think, is a sign of the penetration, at least from a share of mind that we see there.

As Leo has pointed out, this is available on the website, but I was gratified to see the support coming from the Middle East. Next slide, please. I used these slides in the last quarterly report, and they’re exactly the same. I see the world developing as I did three months ago. I think the company is in a very high potential place at this time. We have a lot of incoming inquiry. We have new team members driving us forward. I think the wind remains at our back with regard to the benefits of water saving and soil health that we bring to the party.

We are still a very small company, as you’re all aware, but I continue to be more worried at this point in time about our ability to make enough LNC to meet the demand than I do about the demand for LNC. All of these things remain. How we see the world. Next slide, please. I used this slide last quarter also, and also no changes in my expectations with regard to the important milestones in the coming year and a half. Obviously, we’re three months into it, and we are, in fact, seeing better execution in California. We are, and I will answer this question, I guess, during the Q&A because it’s come in, and not surprisingly, we are in the final stages, I hope, of getting a contract negotiated with our contract manufacturer for new units. We are seeing interest at the golf course level.

We’re seeing interest in the agricultural area. I really do believe, after Jan and I’s trip down there, that the guys in the Middle East are on the cusp of something big. I know we’ve felt that for a while, but it’s palpable how much progress they’re making in laying the groundwork. I do believe that the use cases for LNC will continue to expand. I think one of the things that is very important, and I hate to keep saying it, but is focus, focus, focus. We are trying to build the science cases here in a very measured and thorough way, but I expect that we’ll be finding new benefits from this product for years to come. Next slide, please. Next slide, please. This is the next slide, James, because now we are preparing for our Q&A session.

I think the cautionary statement slide is next, right? That is the last slide. Yep, exactly. I could have concluded on the other page, but let me just say that six months into this, I am more convinced than ever that LNC will be an important part of the soil health armamentarium for growers who have very sandy soils. We are working hard every day to make that true. We are working hard every day to do justice to the product by being able to make it in quantity and quality, to apply it in quantity and quality, and to meet customer demands, both for water savings and for nutrient use and ultimately for yield, which, as I have said before, yield is important to everybody. Water is important to many of our customers that have high-cost water, for instance, Woodland Hills.

I’m very encouraged by what we see at Woodland Hills, and I think that will be a meaningful breakthrough for the company. I’m encouraged by what I hear from the people we’re interviewing because we are doing significant amounts of hiring. People’s passion for this project internally is great. It brings us to work every day, but it’s nice to see some of that passion reflected also in applicants. With that, I think we’re going to go to Q&A. Oh, let me add one last thing. We are currently evaluating the right way to communicate with shareholders. We want to communicate with shareholders in an open and transparent way, which I think we’ve tried to bring to the table. We are evaluating whether quarterly reporting is actually the right way to do that. It is a costly.

Burden, both in actual kroner, where we spend a fair amount of money on it, and in the time that we take to get prepared for it. We are evaluating the potential to change our reporting to make it, frankly, more relevant for a company at this stage. Our financials are of interest, but I think what is more of interest is what we are seeing in the field, what we are seeing with the customers, what we are seeing with the team. With that, thank you for listening to some of that being repeated to you, and Ari, over to you with questions. Thank you, James. I will stop sharing my screen now so I am able to read all the questions. We have received some of them, and we can start now. You are also encouraged to use the Q&A function to have some questions.

Question number one, for which species. Market segments in the U.S. where Desert Control is present in the business for. Applying LNC, taking current costs and obvious benefits into consideration? Hopefully, I’ve covered much of that in the course of the presentation because I tried to. I think, and you see it in the customer demand. Obviously, turf in California, where water costs are high and turf is thirsty, is a target market that I think we’ve proven at this point. On the agricultural side, I think we have very good results in date palms. And so we can argue that that’s a proven crop type now. Obviously, the focus is heavily on other tree crops, beginning with almonds, but I think we’ll do trials, as I said in the letter, in pistachios and hopefully avocado in coming months.

It is that nexus of crop type, which permanent crops are a thing, sandy soils, which are present in Arizona and Southern California, and then water scarcity or water price or both. I think that is a core question. Yep. Next question. Our signing of additional golf resources pay-as-you-save model or upfront payment is absent, delaying the last ones. Berkeley and Woodland Hills were almost a year ago. Right. Let me try and answer that in a few different ways. Obviously, golf is a target market for us. In golf, some golf courses have a lot of money. Some golf courses do not have very much money. All golf courses that want to talk to us have high-cost water.

For us, the pay-as-you-save model is, as I said before, a great risk-sharing model, one in which we will ultimately receive more payment than we would with an upfront price. I would expect that as we expand into golf, we are going to see some of both. From a timing standpoint, look, we have been very upfront about it. The issues that we had at Woodland Hills in July and at PGA West in July slowed down the pipeline. There continues to be incoming interest. I am quite optimistic about golf for the spring of next year and then for the fall of next year. As I said before, unfortunately, the golf business tends to be very concentrated in spring and fall. Next question. We continue with golf.

How close are you to concluding the agreement with PGA West and thus the discussion concern one course initially or a contract covering all 12 courses on their own? Correct. Let’s talk about PGA West. I think we’ve talked about it before, but PGA West is a group of many courses out in Palm Springs, Palm Desert, Palm, whatever you want to call it, all along the Coachella Valley. The work we have been doing, we’re doing with PGA West is very much focused. More on the research is too weak a word. On the water savings in the future is probably a better thing. At the current time, PGA West has an attractively priced water situation. They are very aware that that can change pretty substantially. I think this group is largely aware of something called the Law of the River.

We’ve spoken to that before, which governs how water in the western part of the United States is distributed. It was put in place in 1926 and expires in 2026. If you’re in the American West and you use a lot of water, which PGA West does, you are concerned about your water use. Our work with PGA West was very much on the insurance, if you will, side of that. PGA West is a very research-driven place. They have great superintendents and heads of agronomy. I expect that we’ll be back at PGA West with our next trial sometime in the spring of next year. We are certainly not on the cusp of signing a 9-golf course or 10-golf course contract with PGA West.

When and if PGA West finds itself in need of LNC, I would expect it would be pretty typical that we do a course or maybe two, and they’d see how it goes. I hate to take any hopes out of the PGA West story, but PGA West is an important customer, big reference site, very good guys, Nick and Jeremy. It is not a 9-course deal for next year. Next question is, a Citibank account owns approximately 10% of the company. Who is behind? I think we answered that earlier with the nominee disclosure. Go ahead. When will the new units be ready for use and there is an immediate need for them to give them a prototype that appears performing well? Great question. One, obviously, that Jan and I think about every day. It has been slow, right?

I think we’ve said it’s been slow. I do believe that we’re in the final stages of a contract with a contract manufacturer. I think that’ll get signed this month. If it wasn’t for Christmas next month, I’d say I think we’re going to get a unit next month. I think it’s probably safer to say we’ll get it sometime early next year. As far as needing it goes, really great question. The answer is we need it. The prototype is performing well. We will use the prototype to do the larger of the almond trials. With the advance into California, the geography is big, just to be perfectly straightforward, right? It’s a 10-hour drive from Yuma to the vineyards we’re going to be treating in a couple of weeks.

We need more equipment, both for geographical dispersion and because we’re getting enough interest where even if the jobs aren’t big, we can’t be in two places at the same time. That’s the status of the manufacturing unit. We had many questions about the specific role of Siemens and what is the position or the rollout that they played in the units. The partnership with Siemens has been great. As I mentioned during my presentation, I was with them at Climate Week in New York. The team here in Norway is very close to them. I do want to at least address, I’ve heard some people speculating that we’re going to have Siemens build the entire unit and maybe take over global manufacturing. I don’t think that will be the case. We are pursuing contract manufacturers in local geographies.

The control systems will be Siemens, but the actual pipe bending and things will take place closer to the customers. I mean, Siemens is great. We’re using their technology. I don’t think they’re going to be building our machines. Will Desert Control at some point to ensure smooth global rollout and satisfy its partners, outsource everything regarding unit production, maintenance, and logistics to a dedicated partner? I don’t think so. We’re a technology company, and we’re still an emerging technology company. We’re going to roll this out across a lot of different crop types and a lot of different soil types and a lot of different places. That’s what we do, right? It’s a core part of who we are and what we do. No, I don’t see us having kind of a global execution partner where all we do is sales and marketing.

The application is too important, as we’ve found out, both to our success and failure, so. We can take this question. The NOK 50 million revenue guidance from the Middle East seems partly outside our control. How confident are you in achieving this? It is totally outside of our control, let’s be perfectly honest. I mean, we have partners in the Middle East who are completely in charge of their territories. How good do I feel about it? Look, I was just down there with Jan. Jan and I talk about this. Lars has spent a bunch of time with these guys. He was just with our Saudi Desert Control partner head office in Geneva a couple of weeks ago. We think they’re on the cusp of big things. And they do have production equipment of their own.

We think the productivity of the new unit versus the units they have today, our old units that we used before we built the new prototype, is such that they will need new units in order to deliver the kinds of quantities of LNC that they’re talking about needing. I can’t tell you that it’s contracted, but I feel pretty good about it, both the machine sales and the royalties. They got to catch a big account because until they catch a big account, they can use their own equipment to do it. Continuing, where will the NOK 15 million of LNC revenues from the US come from, given that only two golf courses are currently included in your guidance? Right. I think that the revenue stream from the US will be heavily turf.

At least through the summer of next year and potentially through the course of the whole year. The good news is, a golf course is a valuable thing. If I was to say to you, do I think two-thirds of the revenue will be golf and one-third will be agriculture, that’s probably a pretty good bet. This is a very small revenue target, and it’s a very lumpy business. If you think that a single golf course is NOK 4 million, it’s not a big number. The next question is, when do you expect the MOU with Syngenta to be concluded, and are you in discussions with other potential industrial partners? Syngenta, I think we’ll have news in coming months on Syngenta. Syngenta, as you know, we did an application of the product for them at their Colorado research farm.

Harvests are being completed, but data is not yet in. I think we’ll have an update for you on Syngenta later. In time. As far as other partners, we get approached by potential partners a lot. To be perfectly straightforward, we turn most of those partners down because they tend to be regional partners or not the right fit for us. As far as people like Syngenta, we remain interested in a dialogue, but I don’t have any new partnerships to announce. Yeah. When the United Nations concludes its pilot project and what are the next steps once the results are available? I guess I’ll take that, Jan. The World Food Program is something we really want to be involved with. I know they’re frustrated. We’re frustrated. Everybody’s a little frustrated by how long this is taking.

World Food is important to us. We continue to work with both their office in Iraq and other offices to try and get this thing executed. We literally have the will to do it, but we’re up against some significant bureaucracy in Iraq, and we’re working our way around it. I personally and the whole company really want to see this project go and other World Food Program projects go because it’s a great application for the technology. Yes. The next question comes directly to our Chief Innovation Officer. It’s directed to him. We see postings on social media this week on Green Yield Yard, 70.5 million trees will be planted, and another Green Yield Yard project management specialist at Saudi Desert Control saying that my visit marks the final stage of developing an LNC product.

Can you enlighten us a bit regarding the process and the potential of the LNC in this project? Jan, that’s you. Do you like to take it? Sure. Yeah. I’m not entirely sure what post is referred to here, but Green Yield Yard is one of the large projects related to the Riyadh City. They are under the Royal Commission of Riyadh City. We mentioned last quarter, there are some other projects in the kingdom which are being revisited in terms of timelines and budgets and such. The large projects in Riyadh City themselves are moving ahead. Green Yield Yard, Sports Boulevard, King Salman Park, all very interested for us, good partnerships or good fit technically for LNC. Both our partners have activities related to these entities. We’re not in a position where we can comment specifically on what they’re doing so far.

As we mentioned in our update. Our partner SDC is very much positioning themselves both in terms of technology and research. For this kind of governmental project, right? Yes, of course, if there is something significant commercially, we will come back to that. It is a very good fit for us, and it’s a natural thing for us to pursue. We do have some activities, but we can’t go into the details of exactly what they are yet. Thank you, Jan. We are going back to woodlands and golf. Our two questions are very similar. In an approximate percentage, what level of water savings is Woodland Hills experiencing? I think that the way I can answer that is we have over time suggested that LNC could save between 20-30% of the water needs in turf applications.

I would say what we see is in line with our previous thoughts. Thank you, James. Last question. How do you plan to create shareholder value from the proceeds of this raise, considering that the previous fundings have led to value erosion rather than appreciation? The only way I can answer that question, I think, is that the proof is in the pudding, and we are going to be out pushing LNC forward. We see increasing appetite, and we see increasing opportunity in permanent crops and turf in particular. That is what we get up every day to do, to get more LNC in the ground, to have more customers like it, to have more people pay us for the product. That is, at the end of the day, where we are trying to build value.

We’ll do that and have been doing that through the recruitment of team members. Again, what we see is when we have the resources to talk to customers and the equipment to deliver the product, there is interest in having a product load. Those are the milestones we set for ourselves. I think on the slide, we presented them. That’s how I measure value creation. Thank you. That was the last question, and I will just share my screen to say thank you for joining our Q3 report and financial results presentations 2025. Yep. Thank you, everybody, for listening. Thank you for your support. Hopefully, the call has provided a sense of our optimism and, frankly, what’s really going on in the business. The passion of our shareholder group is awesome. We look forward to reporting progress in the future.

We’re working on that in the right kind of ways. Thank you, and I send along my thanks for the end of the year also, our best wishes for the end of the year as Lars did. Bye-bye. Bye-bye.

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