points you may want to consider Dear AllIn the past two weeks, I...

points you may want to consider Dear All

In the past two weeks, I have had the benefit of lengthy discussions with both the Chairman and the MD and visited the factory in Queanbeyan.

I have also increased my shareholding by some 200,000 shares.

The key points for increasing my shareholding have been:

1. The company definitely does not see itself as having any sort of cash crises - it is close to the low point in terms of its available cash which will increase over the next year.

2. The forecast for the rest of 2006 and 2007 is the worst case scenario based on existing orders only - this was driven by the auditors. Accordingly, there is considerable upside in very likely new orders involving the US military and other countries.

3. The appointment of Jefferies Quarterdeck is no accident and may prove extremely significant from a corporate activity viewpoint. One option to extract maximum value for shareholders is to take the company private and to relist in the US in a couple years. JQ is well placed to do this as a major player in the private equity space.

4. Northrop is now far more engaged with EOS due in part to the return to Northrop of a key executive who was instrumental in the original Northrop placement - if I was Northrop I would be asking my staff to do a back door due diligence through the relationship. Remember these guys paid $4.50 to get into the space business and a lot of positive of things have happened in the space business since then.

5. A visit to the factory will tell you that this technology is absolutely world class. As the incumbent, EOS must be considered the front runner for the multi-billion CROWS order - do not discount this.

6. EOS is still in transition from a leading researcher to a manufacturer - there will be teething problems which may be resolved by the appointment of an appropriate COO.

7. While not free from risk, there is significant upside in this stock.

I trust that the above points may assist you in considering your shareholding decisions. I recommend that you do not give away your company for peanuts.

Regards Eos (definitely only a shareholder)