Desert Control AS (DSRT) Earnings Call Transcript

Welcome to the Q2 2025 Company Update Webcast. Today's presentation will review our Q2 '25 report and interim financial results for the fiscal period ending June 30, 2025. We will also share selected updates from Q3 2025 today. Following the presentation, there will be a Q&A session. You are encouraged to submit your questions with the Q&A function. And to begin, Lars Eismark, Executive Chair of the Board will share opening remarks. And after, our CFO -- our CEO, James Thomas, will present the Q&A. Thank you.

Thank you very much, and before going in there, I can see that you have to turn the camera on for me. So while you're doing that. So dear shareholders, first of all, I hope that you have had a nice summer holiday, having spent time with family and friends and now have returned reenergized. So second quarter and the start of the summer season has been very eventful for Desert Control. We faced, as you know, challenges 3.5 weeks after our application of 4.5 million liters of material at Woodland Hills, where smaller number of sprinklers were clogged with material. Our analysis points in the direction of human error during the application process, and this has now been mitigated, and we have learned a valuable lesson. Thank you to Woodland Hills staff for being a good partner in problem solving and co-creating process excellence in these matters. And the same kudos goes to PGA West for being an understanding and supportive partner in the efforts of handling a challenging infrastructure and operational challenge during the application. These 2 projects are lessons that remind us of the stage of maturity that Desert Control is in and what it takes to achieve operational excellence. All hands are on deck to get these lessons into our standard operating procedure setup. Second quarter was also a quarter full of interesting applications into new segments and even more interesting pilots and research projects with our partners. I'm personally excited about these steps, and I'm indeed fascinated about the prospects that the positive results will mean in terms of increasing addressable margins for Desert Control. James will touch upon some of these examples during today's webcast. The Board has been, beyond the normal board meetings, very active during the second quarter, and I want to thank my Board colleagues for being -- for their sincere interest, engagement and professional attitude. A special thank you goes to Roar Husby for his efforts during the past year. Roar will not continue on the Board due to other commitments, and the Board will use the upcoming period to expand the Board with a new Board member. It would be natural for us to have a new Board member whose experience and expertise mirror our strategy in landscaping and agriculture, and especially with the personal footprint in the U.S. markets that we are addressing. Lastly, the Board is actively evaluating funding alternatives and strategic partnerships to secure additional resources as needed. This may include potential equity financing grants and cost optimization measures to extend the financial run rate and enable execution of the long-term growth plan. In conjunction with these evaluations, the Board may also assess other strategic alternatives to enhance shareholder value. And with this introduction, I'll hand over the word to James Thomas, our CEO.

Thank you, Lars, and good morning, good afternoon and good evening to shareholders, depending on which time zones you're in. We appreciate your investment in Desert Control and your interest in attending these meetings. And my objectives in this meeting are a fewfold. One is just to make sure that people understand where we are from a technology standpoint and a market standpoint. I want to address some of the operational issues that we faced. I want to assure you that the technology is still robust and valid and customers are engaging with us across all our segments. I do want to try and further refine the market opportunity for the company today. I think one of the things that's happened in the history of Desert Control because it is quite an amazing technology and has such broad applications is we have maybe spent too much time on how big the global market opportunity is and not communicated effectively how big the local opportunity where we currently operate is. And I want to make sure that we have a chance to have comments from my colleagues, Marty Weems and Jan Vader, who are on the call today and will be available in the Q&A section, also along with Leo Chaparian, our CFO, who will cover the financial details. So with that, I think we'll try and get right into the presentation to leave plenty of time for questions. But for those of you relatively new to the story, we are a soil health, soil amendment company, and we do that by adding minerals to soil, sandy soils, and we do that mineral delivery through clay. And our core segments continue to be agriculture, trees and golf and landscaping. And the opportunities, in some ways, may mirror those. Agriculture is the biggest opportunity, but also the longest term opportunity. Trees and forest are an opportunity today and in various geographies are very large in the golf and landscaping, and turf business is a place we have already shown commercial results. So that's us. Ari, if you can take us to the next slide. Many of you have seen this slide before, and I don't intend really to go into deep detail here other than to actually try and address some of these questions earlier about the operational challenges that we experienced in the -- and we'll get into in greater detail later. But this product, as you know, is a scientifically based product where we have to blend the right soils, the right plant types, the right water [ at the ] customer and the right clay to get the optimal results. And so first and foremost, we strongly believe we are able to do that. This is part of the magic of Desert Control, part of the intellectual property of Desert Control. This is not one-size-fits-all, and we have a good handle on what the important variables are and continue to believe we do have those things. Secondarily, as you all know, we make this product fresh at the customer site. This is actually a picture of the prior or the current in the Middle East production unit, but we make this product fresh. And this is also part of our technology intellectual property piece, and I want to assure people that our belief is we do not have a problem in any way with our production methodologies, with the core technology or with our ability to produce LNC and high volume. The third thing that we do in our commercial applications is we use customer irrigation systems and customer irrigation systems by their very nature for big customers are big, and they produce a lot of flow and they do that using high-pressure in big pipes. And we, to be successful in an installation, need to blend the product coming off our equipment successfully into the customer's irrigation system. And these irrigation systems vary from 60-year-old pipes in the ground behind 40-year-old high-pressure pumps flowing to 1-week old sprinkler heads to brand-new drip tape being installed in a field that is being first cultivated. And we have to adapt to each one of those environments. And we do that successfully many, many times. We didn't do that successfully at PGA West or at Woodland Hills. And we'll get into kind of the specifics of that blending. But here, I want to leave you with the message that we believe in LNC and have seen nothing to tell us that LNC is not the valuable product. We believe it to be. We believe in our production methodology and the technology we bring to bear there needs to be optimized, but we've seen nothing that makes us question our production technology core, and we have successfully used irrigation systems in many places, but this is the sharp end of the spear. If we don't do this well, it doesn't matter that LNC will work and that we've made it well, we have to get it out in the ground effectively through customer irrigation. So we'll talk a little bit more about that, but I do want to highlight the fact that the company is fundamentally the same company it was 5 months ago with the same upside, the same technological innovation and the same challenges that we face. And so let me leave it there for the moment. Next slide, please. So I think you guys have seen this all slide before. This is a big global opportunity, and we are focused in the American Southwest and in the Middle East through distributor partners. We do plan to get to all of these other markets. But for this stage of the company, at this market capitalization, we're plenty active and have plenty on our plates in the Middle East and in the U.S., particularly, frankly, in the U.S. All right. Can I get the next slide. And a little further drill down, mostly as a reminder, in the U.S., we are focused on California and Arizona. We'll do work in Nevada. We will do some work in New Mexico, et cetera. But our real interest at the moment is California and Arizona. We do that directly on the account of Desert Control, and we offer that product in 2 different ways: an upfront purchase, which we have seen at Oasis Date and others, and a pay-as-you-save model where we share risk with the customer of our technology, saving them sufficient water, which is the only variable at the moment. But hopefully, ultimately, it will be all inputs in our sharing in the savings in those inputs. In the Middle East, we do have our activities conducted currently in the UAE through an exclusive distributor and in Saudi Arabia through 2 nonexclusive distributors, and we are going to expand our presence in the Middle East as the technology matures and those markets mature. But that just lays the table. And I want to get a little more granular with the next slide. So even though we're restricted to 2 markets at the moment, these are 2 of the 3 largest markets for our technology based on the analysis of third parties and ourselves. And I think that's important as you think about our opportunity set and where this company can grow from here. We are already active in 2 of the 3 major markets. We're not ignoring the other markets, but we have positions where it most matters. A little more granularity. Ari, if you can get to the next slide. As we talk about our opportunity, I think it's important also to define what we mean by agriculture and what we mean by landscaping because we use those terms and they're actually somewhat specific. So our focus in agriculture is in permanent crops, by which we mean trees, largely trees of the lemon variety, of the date palm variety, of the avocado variety, of the almond variety, et cetera, and fruit orchards, predominantly again citrus, but other fruit trees also are being grown in soils that are receptive to our technology. We mean vineyards, again, a permanent crop. And this is an area we've done some pilots, and we'll continue to focus on. And in the field crop, which is the biggest series by acres by far, in the United States and in Saudi Arabia and everywhere, this is where we are grow -- people are growing a lot of fundamental feedstocks. We are really only interested in the high-value part of that market, which are the vegetables that we see in Yuma Arizona and other places in berries. We are not, at this time, pursuing corn, alfalfa, cotton peas. we've done a trial in corn. We'll continue to work with collaborators in these places, but they are not a commercial focus. Next slide, please, Ari. When we talk about turf. In some ways, turf is also a permanent crop, right? It's just a permanent crop of a particular variety, mostly grass. And we are focused on parks, playing fields and golf courses. And if you're wondering why this golf course slide looks a little ready, because it does look a little ready, we -- it's a customer, right? This is a guy who has a problem with sandy soils and water. So the Augusta National course where they play the Masters, they're not a customer. But this guy is a customer, and that's what we care about, is customers. So if I can get the next slide, please. I want to touch again on this market piece, and I know I'm spending a lot of time on it, but it's how we think about the business, and so I'm trying to share that with you. As you know, the product is designed to work in sandy soils. And sandy soils are classified in 2 broad buckets. Obviously, it's a continuum from 1%. I guess, going to backwards, 99% sand, 98% sand, et cetera, but they're classified in 2 buckets, kind of the 80% and above soils, which are the ones you may most think about us addressing because clearly, the UAE, Saudi Arabia and parts of Arizona and California are almost 100% sand. And then there's a group of sands or soils that have 60% to 80% sand. And what this slide is attempting to show you on the left-hand side is that if we look only at the most sandy soils, greater than 80% sand, the market in our target markets, in agriculture. So back to the trees, the vineyards, the fruits and the vegetables but not the corn and other large broad crops. In California, it's $500 million alone. And in Arizona, it's another $40 million. And we'll show some slides later showing you some other states. But even in our most restricted markets, we have a large market opportunity. If we can expand the technology below 80% sand, and we have done work in 70%, that would expand our markets in these states another tenfold. So the $500 million market in California becomes $5 billion. I am not saying we are going to get to 60% sand. I'm saying that if we could, it would be big, and we're below 80% sand today, and we are doing the work in our research labs and with our field collaborators to find out how far down we can push the value of this technology. So big markets, big markets, even when we narrow them completely. Next slide, please. And here, I want to get into even more detail. I'm using the 60%, 80% sand or 60% to 100% sand here, but again, excluding broad crops. And in California, you can see that it's a $5 billion market, 1/3 of which is trees, 1/3 of which is vineyards, 10% of the orchards and the balance is high-value fruits and vegetables kind of crop. In Arizona, a market that's much more dominated by the vegetable and fruit kind of side of the equation. That's Yuma Arizona, if you've ever flown over Yuma Arizona or more importantly, maybe driven across a pickup truck. There's a lot of lettuce, a lot of bell peppers, a lot of stuff growing down there. And in Texas, you'll see this market. And Texas is on this list because it is so big, not that we're currently super active there. But again, good tree crops and some high value dominated by high value vegetables. I talk about these states, but I want to touch on 4 more. Can you give me the new slide. So these are other states just in the U.S. that represent large markets for us that have soils, that have the similar characteristics. Those of you who have been to Florida know that it's very flat. It's a giant sand bar. And so we find areas with a lot of sandy soil. And on that sandy soil are planted predominantly fruit crops. And so we are not in Florida now. We're not going to be in Florida in December, but this is another large potential market in agriculture in the States. And again, if you've been to Florida, you also know there are a lot of golf courses in Florida, and we are in contact with some of the people who manage many of those golf courses. So I think I spent a lot of time on this, but I think it's really important for the market to remember that where we are is a big opportunity. Next slide. So with that, I want to skip to the next session just to bring you up to kind of more what's going on over the last quarter or. So next slide. And we're going to have Marty and Jan get further into this. But what I want you to know is we've been very active. It's been another very active with very diverse customers. Some of those customers are expansion of existing projects like Cal State, Fullerton, Others are brand-new customers. And so we continue to see progress at the research and the commercial application and partner across all of this quarter. We're not going to spend a lot of time on it, but we've also been seeing progress in the lab. And some of that progress, while pretty nascent, is pretty interesting. And with that, I think I'm turning it over to you, Marty. Is that right?

That's great. Thank you, James. So thanks, we're very excited about all the activity we've had in the recent quarters, especially here in the second quarter. We continue our focus, as discussed in previous quarterly calls, around permanent crop agriculture, golf courses, ornamental landscapes, and have some really exciting opportunities there. I'll speak more on the next slide about Oasis Date, but we're excited to be on a path to almonds in California. That's a really massive permanent crop in the state of California, and we have a really good access to our membership and relationship with the Western Growers Association as their largest permanent crop contingent is in the almond category. With golf courses, we had a successful Phase 2 with Mesa Del Sol. They're quite excited to see their progress and outputs. They took a little bit on that. We previously only worked on some of their fairway spaces. They want to test on a few parts of some of their greens, which typically golf courses are very shy about doing much different on their greens. It's their most protected, most valuable piece of real estate in their -- but Mesa del Sol came to expand what they were beginning to see on the fairways and look at that on the greens in preparation for consideration of full course application there. Woodland Hills, we had actually a fantastic application at the time of application. While we're there, we produced millions of liters of product that went out through the system quite well, we didn't seem to have any clogging while we were there. And things went quite well. It was a great week or so of application work. The equipment work, great production work -- production equipment worked, great. We made a good product. It was only in the weeks later that we noticed some of their small number or percentage of their sprinklers were not fully functioning. They were functioning, just not fully functioning. We dug into that deeper and we're able to find both the specific challenge with their equipment and have gotten that all rectified now, we do believe, and course has continued to be open, very productive, and just looks beautiful, looks amazing, and we're beginning to see good results there in terms of some water conservation. Ornamental landscapes, this is we -- in the U.S., we've not leaned into this as much until recently, especially places like a Tempe Marketplace, we're very excited about. If you go look at it, it looks like it would not have that much of a water challenge. It's a large shopping center. But they'll spend almost $0.5 million a year in water, and we have an opportunity to help them save a significant part of that, and their water is quite expensive because they're irrigating with potable water. So we continue to see really exciting opportunities and new business opportunities as well. Next slide, please. But specific to Oasis Date, we're extremely excited about this relationship. They continue to be a really positive partner and the initial focus with Oasis Date was on a very challenged ranch in California that has a finite amount of water available to it. And that particular project that was applied last year is going quite well. The customer of Oasis Date, which is, to my knowledge, is the largest producer of commercial organic dates in the world. They are a massive operator and incredibly professional. They see a lot of good things that they are liking and at their suggestion, they wanted to do a commercial scale project that's focused on yield so that we can work towards the prospect of LNC being a foundational component of their farming activities program, whether water is compromised or not compromised, which most of their ranches have plenty of water, which is why they grow dates there. But they are keen to look at the business case for broad scale use of LNC as a foundational support to their nutrition programs. In order to give this as much scientific power as possible, we are actually doing about 1,000 trees. And we have 5 replicates and different treatment pattern -- algorithms. So the scientific power of this output will be really robust, and we have our University of Arizona relationship, which continues and not only continues, but it has expanded to include more and more researchers, principal investigators from the University of Arizona community. So we're excited that also as a part of this, we're working with some folks that we haven't worked with in the past as well as many that we had. So this is a really exciting project. Think of this as we're trying to take a commercial grower who is the equivalent of a Formula 1 car in date growing and trying to help them get more output from one of the most efficient, most productive date growing programs on the planet. So helping them improve yields and the grades of their particular date could have massive impact and tremendous opportunity and doing it on commercial scale with the world-class commercial grower is just a fantastic opportunity for us. So we're really quite excited about that. So with that, that completes what I wanted to share from the United States for this. I'll turn it over to Jan for the Middle East.

Thank you, Marty. I'll touch on some of the highlights from the Middle East. As James mentioned, our partners remain active, mainly focused on the UAE and Saudi Arabia. Starting off here, we'll touch on the Saudi Desert control. As indicated in our report, they actually achieved a big milestone this quarter, which was the first commercial project. Having been involved in our initial business in the Middle East. I know this is a big milestone coming in at less than 2 years after they started any activity in the Kingdom. So the application was a 3.7-hectare application at a commercial turf farm. This is Atlas Turf Arabia. They're actually the first internationally licensed golf and sports turf in the Middle East. And they are also a part of the Atlas Turf International, which is the largest supplier in the world of certified turf grasses. So it's exciting because there's huge interest and focus on sports in the Kingdom. And that got even more boosted when they won or got awarded the World Cup 2034. So the sports fields is a very big focus in the Kingdom and an interesting -- a very interesting market for us, right. And we also have a continued activities and new nurseries being added. So we've got several ongoing projects within 3 nurseries. So combined with the turf farm and a few strategic pilots within the landscaping sector, it really positions SDC and LNC as a product and service very well for the many urban and rural sort of large-scale greening tree-planting initiative that is ongoing and starting up in the Kingdom. Let's go to the next slide, Ari. On the UAE side, we are continuing our soil, our partner there is continuing to expand the footprint within the new residential communities landscaping sector. So we finished off the Dubai Hills project in the quarter. This is -- the majority of that was done actually second half of 2024. They also added a smaller project called the Greenview Residential Development in the Dubai South. Both these communities, although the volumes that we put into the ground in the recent quarter wasn't that big. Both communities are managed by Emaar properties, which is the leading real estate developer in Dubai. For those of you who have visited the city, you will see their signs everywhere, including on the Burj Dubai -- Burj Khalifa tower. Additional to the focus on the real estate, the -- we have also done a Stage 2 pilot within the golf course, it's the Trump International Golf Club in Dubai. And we are starting a new public park project for Masdar City, which is a developing -- sustainable development in Abu Dhabi. So we do hope to announce the focus remains very much on the landscape side. We do hope to announce some larger residential projects in Dubai and potentially other Emirates within the next quarters. And we see the varied activities within the residential communities mixed in with sport and public parks, strongly positioning soil for the sustainable development and the urban greening initiatives that are going on in the Emirates. So that's what I had on the -- very quickly on the Middle East. And we are then going to pass on to our CFO, Leo, to touch on the financial updates.

Thank you, Jan, and good afternoon to all. The figures are shared in detail in the financial report published earlier this morning. If we go to the next slide, Ari. These financial key figures will be covered in more detail in the following slides. In Q2, 2025, Desert Control completed a major U.S. LNC application under a performance-based PACE contract. Preparations were made to support future U.S. market growth. Turf applications in the Middle East continued under existing licensing, though market adoption remains early stage. Revenue decreased compared to Q2 2024, largely reflecting the impact of the PACE contract structure, where income is recognized over time rather than at project completion. EBITDA held steady compared to the same period last year and year-to-date. Higher activity in the U.S. was balanced by tight cost control and better delivery efficiency from our next-generation production system. The company closed the second quarter with a positive cash balance of NOK 25 million and has no interest-bearing debt. Next slide. Revenue from sales in Q2 also included some licensing royalties. For further details, please refer to Note 2. Licensing activities in the Middle East were below expectations this quarter, and further time will be needed before we see a meaningful pickup. Our operating results remained stable year-over-year, reflecting continued discipline in managing operational costs. We have maintained a lean cost base while focusing resources on core activities to support future growth. Next slide. At the end of Q2 2025, the company held NOK 25 million in cash and cash equivalents and equity of NOK 43.7 million, representing 89.4% of total assets. With no interest-bearing debt, our liquidity position is lean yet sufficient to support operations and planned initiatives. Last quarter, we guided for a financial runway into late Q3 '25. Through disciplined cost management and operational focus, we now expect this to extend into Q4 '25, maintaining stability while executing on our plans. Next slide. Operating cash flow now reflects only continued operations adjusted for depreciation and amortization, underscoring our disciplined cash-centric approach. In Q2, cash flow developed in line with both expectations and recent quarters with no significant variances and no new capital inbound. To get additional information about the Desert Control share and the top 20 shareholders, please visit our webpage, desertcontrol.com./investors. Then back to you, James.

Great. Thank you, Leo. And so let's get into the outlook as we see the next 12 to 18 months developing. Next slide, please. So I think it's important that we remember where this company really is on its journey. We're still a relatively young company. We are a company with a technology that started in a laboratory, and we've moved it into commercial operations. And so I think that where we are is we're on this inflection point. We have just completed 2 very large jobs and have developed the equipment to make us capable of developing those jobs. And we continue to accumulate the customer relations, the community kind of buzz and the scientific inputs to push the product further and further and further into our target markets. We are very focused on the small $0.5 billion to $5 billion market that we currently address. We are not giving up on the other markets. But as we pursue our growth path, we have lots of runway in our own marketplaces. One of the things that I like to think about both as an executive and as an investor is the wind in your face or is the wind at your back. And in our technologies case, whether the current American President lasts or doesn't last, the wind is at our back. Now one can produce more water, right? No one can produce more food by executive order. And the drivers of the opportunity for Desert Control remain the same and frankly, are accelerating. This is a technology that could support a much broader adoption in a much faster pace, but we are quite cognizant of the fact that we are a young company working with shareholder money. So we're trying to be very good stewards of your money. And as a result, we will focus our activities on what we see as the most valuable of those activities in the short run and activities which we think will provide the foundation and evidence for a broader expansion outside the U.S., outside the Middle East at the appropriate time. Next slide, Ari. So what are we looking at? What are we expecting to happen from where we sit today and our path towards that journey? I'm going to start this on the milestones. We had some hiccups this quarter. We're not running away from those hiccups. We need to get better on our execution. I think we know what went wrong and we're fixing it, and we're committed to getting better. We need to execute better in California. Arizona has historically been our home market. But as you saw from the prior slides, California is where the bigger current opportunity is, and we need to get better there. I do think there will be a long-term opportunity in Arizona, which is what took the company there originally because we are going to see significant changes in the Law of the River, the 100-year-old pact that allocates the Colorado River that I think will lead to changes in the price and importantly, volume of water available to some of our potential customers in Arizona. So this is not a -- we're running away from Arizona. We think Arizona does have long-term potential. It's just that we're going to build out further in California, where the need is obvious. You've heard us say this before about how important the new production units are, and they are really important. The prototype has proven that we can do large jobs, and we need to have both permanent equipment and more of it. And I think you will see us bring those machines to bear before the end of the year. As our press release said, we've had some issues in getting into final construction, but we are active with contract manufacturers. We have some quotes from contract manufacturers. And so I do expect that you will see those units, and I am very excited to get my hands on. Most of my presentation has focused on agriculture because by acreage, that is really the biggest market, but we are active in golf, remain active in golf and remain excited about golf. And we have pilots to do in golf, and I think we will continue to see more and more pilots in golf. Agriculture, I think, have beaten this drum pretty hard. This is the big market. Permanent agriculture is the big market for us. We have done a lot of work in agriculture on both sides of the border, but predominantly in Arizona, and we will do a bunch more work in California over the coming 12 months. Marty brought out that we have this trial that we plan to install in the almond market there in California. There are 200 million almond trees in California alone. They're not all for us, but that's a very big market, and they're very thirsty. So we have great hopes for there. On the full golf course applications, I think that we'll do at least 2 more over the course of this time. You know that we've talked about Berkeley and we have an MOU with Berkeley Country Club, up near San Francisco. I still think that's a real opportunity. We're in dialogue with them. As you know, with golf or at least you've heard all of us in golf. Your windows are narrow, you need to get in during the maintenance season. So I would expect that you're going to see a lot more activity in golf in the spring and in the fall from a full course basis that you can pilot year round. And I don't want to lump all of golf into kind of the Northern Hemisphere seasons. We've got some courses out there in Arizona, California, that are just playing hot all the time. And so they have to do the maintenance when they can, and we've seen opportunities to do that. I think -- and Jan has been with us since the beginning in the Middle East, and we've been telling you about the Middle East for a long time. I think the Middle East guys really are on the cusp of some large contracts. It's always been the case in the Middle East that this is elephants, right? In California, Arizona, all over the U.S., it's all about midsized, small, midsized kind of bang in and out a lot of times. In the Middle East, this is about big government contracts. And we are seeing activity both in the UAE with soil and with SEC in Saudi Arabia that says some of those big contracts are maturing. I don't think we're going to do 15 million trees next year in the Middle East because that's not how this works. We'll get signed up for a big contract, and it will start with what are sizable deployments, but not million tree kind of deployments. But I do think we'll see that activity. And I think that will drive conversations about production units because as we've tried to tell you in the past, the old equipment was good for doing pilots. It's hard to do big commercial jobs with them. The new equipment is much better. So I think we'll have conversations with our partners in the area. And we didn't spend much time in the presentation, but this is a science company. We are a science and technology company and we remain committed to being a science and technology company, and we continue to see interesting adjacencies is one way to talk about it around LNC with the kinds of other soil health factors we can support, whether that's nutrient use, nutrient retention, whether that's synergy with fungi or good microbials. We continue to see those things, and we continue to refine them. And we do that somewhat behind the curtain, but I assure you that we will continue to invest in our science and our technology. So from a milestone standpoint, that's how we view the business and how we would expect to be measured. From a revenue guidance point, this is -- we have not given guidance for 2026 yet. And I guess I would characterize this as initial guidance for 2026. We're obviously only halfway through 2025, and this is a company where things are pretty dynamic. But I believe the business will generate more than $3 million in next year and the 50%, 60% of it will come from the U.S. business, and the balance will come from licensing revenue and hardware sales in the Middle East. That's a very big number if you're doing $10,000 jobs at a time. It's a very small number, right, if you're doing 100-hectare jobs at a time. And I think what we will see is a combination of both because the small jobs lead to the big jobs, but I think we'll see a number of big jobs, including these 2 golf courses, including deployments in agriculture, et cetera, that will bring up that number. So that's what we're planning for in the next 12 to 18 months. And next slide. So I think this is -- you've seen this slide before. This is, in some ways, what we've been doing for the last 3 years, and we'll just keep doing, right? We don't think anything has changed in the market. And maybe I should leave it that way in the sense that we believe in the product. We have made tremendous strides in our ability to make the product, which allows us to be commercial. We have customers who believe in the product, as you've seen at Oasis Dates and other people, including Woodland Hills, who believes in the product, right? We have had a couple of hiccups. There -- we strongly believe they're operational, a.k.a. human and that they're all at the injection side. And Marty and his team are working very diligently on tightening up our processes at the injection side. We are doing tests in California -- or in Arizona, sorry, on our own sprinkler rigs to try and drive them to failure to recreate our problems. Our customers continue to proceed. Our customers perceive the value in the product and understand where we are technologically. And so we're not on hold. I want to communicate that quite clearly. We continue to move forward. And as Lars opened this, and I know many of us on the phone or on the video are interested, we are aware of our cash situation and our burn rate, and we are working quite diligently on that. And obviously, as a public company, around all of these points, whether they are the great markets, the success, the customer dynamics, the failures, the financing, there are things that we're allowed to tell you and things we're not. And I'd ask you in the questioning that you ask those questions. But if we have questions that we're unable to answer, I request that you understand that. And so next slide. Magic, Q&A.

Thank you, James. Thank you so much for your update. Now we will start the Q&A session, and we invite all of you to use the Q&A function for this. So we will start with the questions that we received this morning, and we can start with the first that is directed to our Chair of the Board, Lars Eismark. So there have been rumors about indicative offers for the company from a larger player. Can the company confirm whether there has been interest from any party to acquire the company?

So thank you for the question. And first of all, I think it's hard to respond on rumors. But let me emphasize that we would have and we will continue to report on anything that has relevance for the market in these matters. That's the short answer to that question there, Ari.

Thank you for your question, and Lars, and for your reply on this. Okay, we're having another question. [ What ] will you start getting shareholders confident about the share again and getting the share price up?

Ari, is that directed specifically to Lars?

James, you can go ahead.

Go ahead, Lars. Sorry, I should -- I just wasn't sure. We couldn't hear who it was directed to. Go ahead.