🔋Greg🔋💎🤲

Final thoughts on the 3Q Eos earnings call. Joe was reading from a script (something he doesn't like to do) and talking very fast. He sounded stressed, fearful, and even angry at times. The emotion was palpable. But, I guess that's good. He is often in salesman mode, but he wasn't this time. He was being very careful about he said and what he was committing to going forward. He mentioned the 3.5 GWh of late-stage opportunities that we will apparently hear more about by EOY, but played it down in terms of probability of conversion after the experience of NYSERDA. To me, that marks a significant, but uncertain, and asymmetric inflection point that investors can act on. The cost out plan is proceeding on plan. Alessandro is doing a really good job of seeing things through. His focus and discipline are paying off, and I'm confident he will see Gross Margin to zero by EOY or sometime in January, by hook or by crook. The costs for DawnOS "upgrades" should not be understated. These costs aren't being booked as warranty claims; warranty claims presumably come after a system is commissioned, and the customer complains about a deficiency, and then the company has to come in after the fact to fix it. The upgrade costs instead are part of getting the battery systems to the various performance guarantees for a successful commissioning sign off . The "upgrade" costs are being captured in COGS and commissioning, and it's significant. In 2024/2025, the company was delivering cubes that really weren't commercially ready. I see it as R&D that the customer didn't sign up for. Are whole cubes being replaced in some cases? Yes. This is not necessarily a consequence of cubes having poor workmanship. Some older designs were simply inadequate, insofar as their ability to accommodate the connections and wiring required by DawnOS. And DawnOS is required for meeting the 75% RTE, and the capacity and reliability metrics. Some software updates were previously scheduled for October 26. I don't know how that actually went, but I think about it. Some circuit board updates were scheduled for later in the year. "Upgrades" for all this will continue into Q1 or even Q2. When they get all this behind them, the cost outs, imo, will be significant. They are currently manufacturing and delivering some cubes that aren't included in the revenue recognition. That will continue over the next 3 quarters. Production excellence does not completely equate to increased revenue right now. When they get all that behind them, and with 2 lines under one roof, and eventually filling out that building with 4 lines, those cost absorptions will be even more profound. At this point they have field data from smaller systems that are compelling. But larger systems have still not been commissioned with the latest tech and provably demonstrated that performance at larger scale. In the meantime, they are apparently seeking financing for some very large systems going into 2027. it's a difficult situation. I hope they can pull it off. I think they will.

$EOSE Operating leverage put simply: For every $1 of additional revenue in Q3 compared with Q2, they had $0.67 of additional COGS, improving gross profit by $0.33. Was a long time coming, but they are making progress.