There are a few things to call out here.
EOS had a stellar 2023:
- $219M revenue (historic record)
- $325M cash receipts (historic record)
- $100M+ asset contract conversion (again, record)
- 2023 Q1 - EOS achieved $29.5M in net operating cashflow
- 2023 Q2 - EOS achieved $1.26M in net operating cashflow
- 2023 Q3 - EOS achieved $47.9M in net operating cashflow
- 2023 Q4 - EOS achieved $34.5M in net operating cashflow
However, by the end of Q1 24, their overall cash was
really ~
$37.4M after paying out $50M+ of debt (not factoring in the $33.6M CR funds)
Which means - fr
om now until 11th Oct 25, EOS will be required to have paid down $19M in interest and fees and have over $52M in surplus cash (that is, not critical to OPEX) to remain solvent. I'm troubled by the fact that we have started Q1 with a rather steep negative operating cashflow, a 20% YoY reduction in customer cash receipts and a contract asset position that is likely not going to inject the volume it did in the previous year (not that it was an ideal position to begin with)
I acknowledge that others here have said EOS needs a big contract win. Where I am challenged is the timing and capital requirements involved. The bigger the contract, the more CAPEX required and whilst acknowledging upfront payment terms may exist, the overall probability is quite low and the capital demand may spark a further CR if it did eventuate. In addition, from what we've learned in previous large contracts - progress payments are often following training, maintenance and performance-ready criteria - which may take extended periods of time. Time that EOS just doesn't have.
To temper a rather negative post, I am still encouraged that there hasn't been any insider selling, the consistent upward trend in the company's customer receipt volume and the fact that EOS had a record-breaking year for 2023. This is following protracted supply chain crises brought on by COVID, the atomic bomb "Spacelink" which we've all largely forgotten and a very dramatic (and awkward) change in leadership. There is strong opportunity ahead as governments will need to replenish defense assets consumed by war efforts and EOS has the means to meet market demand.
That being said, I'm also optimistic that EOS may work out a commercially viable arrangement with WHSP when the final loan matures next year:
It makes more sense that WHSP continues to benefit from ongoing high-interest yielding income and EOS develops a working relationship with a financial partner. To take recourse over a company is a very expensive and time consuming process - esp if you are liquidating Defense IP/assets. It would not lead to a win-win situation for all.
Overall, it's not looking good but EOS has proven to be resilient. l will be eagerly waiting Q2 results
(20min delay)