Key focus on EOS is to get its balance sheet in order. A lasting legacy of Doctor of Physics Green is that there are going concern issues for this company.
There are detailed notes in the Annual Report on the timing of borrowing repayments and converting their circa $160m contract asset to cash.
Managment have flagged that they obtained a contract amendment with their large middle east customer on cash receipts- Im assuming this means they get cash earlier (eg delivery of system) rather than on installation of system on vehicle post integration (which is then dependent on the customer being ready for integration).
EOS have forecasted "significant" cash receipts in April, May and June 23. They then need to pay down a $27m loan on 6 September 23 and $20.5m in April 24 or they are in breach of covenants and in default. Lenders are provided with rolling cash flow forecasts so the fact they havent called in the debt is at least a stay of execution. The notes show the directors are forecasting they will have the cash to pay down these loans and fund ongoing operations. EOS should be informing the market in real time on its ability to meet its debts.
The new, commercially non-incompetent, management team need to get this issue sorted as a first priority.
Future contract wins are good in diversifying the customer base but with the overhang of creditors it will limit upside imo. They also need to ensure this whole funding issue of building the gear first, funding suppliers, then waiting for months and months before they can convert this to cash from the customer is broken up front with contract structures that accelerate cash receipt. Something you think prior management should have been thinking about rather than having their heads literally in space.
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