JordanSolace

$EOSE 🧵 Was at a bach party this wknd and coincidentally sat next to someone very interesting in the casino… friend on the trip who worked for a PE firm specializing in financing renewable energy projects…. (with connects to Eos gen2.3) I know lots of folks are upset with the q4 miss and relative quiet on the order front but let me bring up a few things nobody ever talks about. Before a single Eos batt gets installed.. the developer buying it has to close project financing. This means getting a senior lender, a tax equity investor, and an offtake agreement all lined up simultaneously. Every party does their own DD and anyone can kill the deal. Here's who has a say before a project closes: Senior lender sizes the loan to contracted cash flows, tax equity investor claiming the federal tax credit, independent engineers certifying the tech works, offtaker signs l/term capacity agreement, insurer provider wraps project. Everyone has to be comfortable. Independently. The federal tax piece alone is huge.. under the IRA BESS projects can qualify for the 30-40% ITC depending on location + domestic content On a $60M project..thats about $24M claimed in year1. The feds are funding nearly half a project on day1. That’s why it gets built. The operational cash flows alone don’t justify it. The tax benefits are the engine. Here's the catch..a tax equity investor will only participate if it’s certified by an independent Engineer.. engineers review field performance, OEMs balance sheet, warranty terms, chemistry etc… then sign off. That’s the price of admission.. without it.. you wont close. This is why the “eos tech doesn’t work” has a logical problem. Mn8 energy is GS backed. The supply agreement is for 750mwh. They have institutional LPs, their own lenders, and a rigoruous DD process… goldman backed firms do not stake their reputation +capital on tech they think has no chance to be bankable. Same with talen.. a $17B IPP. They would not put their CEO name in a PR for tech they don’t believe in IMO. Talens play is pairing eos w existing generation in PA to serve AI DC. They have the land, the interconnection, and the hyperscaler relationships. Doesn’t sound like a favor… it’s a calculated infra bet. And then you have frontier power. UK developer that submitted Eos tech to OFGEM.. the UK regulator in a competitive bid for the cap n floor program. 11Gwh of projects to round two using Eos tech. Under the program.. ofgem provides a rev floor..essentially the govt backstops the cash flow the lender will underwrite against The 228mwh firm order isn’t just a sale. It makes eos look much more viable since it’s being considered within regulated lender-backed frameworks … NYSERDA plays a similar role domestically.. when NYSERDA selects its tech thru competitive solicitation.. it backstops revs that senior lenders will underwrite against… A govt backed offtake is the cleanest credit in project finance… that is in our pipeline.. 🔑 So why is conversion so slow? Maybe bc the chain I just described – lender approval, tax equity, independent engineer certification, offtake, insurance can take 12-24 months from contract signing to commercial operation .. then layer in first of a kind BESS chemistry that has never been financed or deployed at scale… 🤔 These counterparties engaging tells me the tech has cleared initial DD hurdles, but scaling risk remains Nobody signs a 750mwh as a favor. Cerbs involvement likely improves access to financing counterparties.. but execution risk still exists. But adding a 3rd BOD member isnt a move you make from a company you are about to walk away from. Talented finance execs tend to do DD before joining as well. The risks are real. Mfg execution, runway, order conversion- not dismissing any of it. But the project finance complexities are under appreicated. Just trying to close that gap.

@RektTargaryen 🤣 👏

$EOSE Joe, Nate and John let off some steam about the bearish commentary on X following the Frontier Power announcement.

@ACEdge Appreciate it 👍 I’ll take a look

@JordanSolace I like this and $usar. Thought this a good read too: x.com/ctindale/statu…

$UAMY Listened to the call this am.. still a good bit of execution risk but I will continue to add on dip for a few reasons.. Mkt overeacting to the loss where it’s mostly non cash.. the biz is just building/scaling. Mark to mkt from larvotto equity & Stock comp.. Gross margins dipped from 34% to 16% bc ore is flowing thru cogs at higher Rotterdam prices while sales were a bit softer. Domestic montana ore & DLA deliveries will fix this and 16% margins is likely the bottom. There were $12M in orders placed for DLA that were not recognized and once these ship in q2.. that will hit the income statement. Thompson falls is coming online in stages.. 80% nameplate targeted by July.. this will triple domestic processing capacity… Also I like the fact inventory is climbing… the feedstocks will be ready to run once Thompson falls gets up and running. Q2/Q3 are set for big operational inflections… Most important line of the call. The US govt wants more antimony than UAMY can currently produce. This co isn’t chasing demand.. demand is contracted, govt backed, and exceeding supply. They just need capacity. Gary broke down revs on the call. $75-$95M will be fed govt shipments of antimony ingots. Again. Demand is not the issue. Btw.. this isn’t only an antimony play. Cobalt. Gold. Tungsten. Zeolite. Tungsten gross in ground value at $9.3B.. even when you discount this… something worth watching. Hydromet facility is targeting half the entire US antimony mkt by 2028. Nolan Creek Alaska.. got that asset on the cheap Liquidity is solid.. market sees $3.2M in cash when they really have $118M pro forma liquidity. $19M credit line and $270M in govt grant applications pending. Look thru vs snapshot is very different. Overall… lots of non cash losses, no DLA revs, smelter is days/weeks away from being online.. govt needs more antimony than they can produce… and tungsten, cobalt, gold, zeolite are beginning to inflect… many of them not in the share price today.

@x_times_1 @OBGInvestments @xEBITDA Was that a backhanded joke about the Greek goddess of the dawn being hot Bc if so.. we are on the same level. And yes, she’s objectively a smoke

@OBGInvestments @JordanSolace @xEBITDA If there’s one thing we know Eos is good at, it’s sucking. 😏

I invested into $SPCX in early 2021 at a $74B valuation. Please market gods keep this market afloat.🙏🏻

@Cluster_6 Yep 👌

$EOSE Core signal. Insurance markets - especially long-duration, non-cancellable performance insurance tied to project finance - do not operate on optimism or marketing narratives. They operate on actuarial risk assessment, technical diligence, failure modeling, operational data, and survivability analysis. A 15-year non-cancellable TPI framework attached to institutional underwriting standards strongly implies: - extensive technical due diligence, - access to operational data, - confidence in degradation/performance assumptions, - confidence in serviceability and remediation pathways, - and confidence that the systems can meet lender-grade risk thresholds. Especially because this is not just a warranty enhancement. It is being explicitly positioned as a mechanism to unlock investment-grade financing. That moves it from “technology validation” into “financeability validation.” That is a major distinction. The market has spent years debating whether EOS technology works. This structure suggests sophisticated counterparties are now evaluating whether the technology is sufficiently predictable and insurable to support long-duration infrastructure financing at scale. That is a much more advanced stage of commercial maturity.

$EOSE The frontier capital structure. This is how the $1.25B of project capital & $1.5B TPI relate to each other The $1.5B is not debt, not equity, it’s the insurance coverage capacity that protects the debt. Three different things.. 3 diff layers. Here’s how they relate. $250M x 5x leverage = ~$1.25B in project capital $1B of that is senior debt that needs to be protected $1.5B is TPI framework = insurance sitting above debt. So ~$500m of excess coverage I think this is deliberately sized above Wave 1 for a couple reasons. 1-Lenders will be confident insurance wont be the bottleneck 2-Frontier has runway into wave2 without needing to negotiate more coverage Reminder.. Ariel green is a division of Ariel Re- a reinsurance group operating thru through Lloyds of London since 1910… Lloyds itself has been around since the 1600s.. some would say the gold standard of specialty reinsurance rate A+/AA. Not a startup insurer doing joe/cerb a favor. Shit is legit.. and they are insuring these cubes. Ha! If I had to guess.. the expected loss rate is probably in the low single digits.. they wrote the $1.5B framework because DawnOS gave the actuaries confidence to do it profitably. Premiums collected over 15yrs will exceed claims…. That’s the biz model. That’s why it was written. 🔑 Every new project will feed more info to AG and will make projects cheaper to insure, finance (bc of cheaper debt), and hopefully lead to more profits bc economics of the projects get better. Bottom line: $1.5B in coverage sitting above $1B wave 1 debt. AG expected losses a fraction of the capacity Three compounding mechanisms. Capital Recycling… data improvement… debt cost reduction as time goes on. BESS adoption isn’t just a tech issue.. it’s a cost of capital problem If frontier/AG can standardize performance insurance around LDES the mkt will become much more efficient. Therein lies the potential significance of this framework

$EOSE Good question ^ .. the whitepaper addresses this. The modules were not fundamentally failing they were being misread. When eos went to the z3 they used an off the shelf lithium BMS to get to mkt faster. Pragmatic decision. But zinc and lithium are VERY different chemistries Lithium operates at 3V per cell and zinc at 40V per module Lithium has20-80% depth of discharge and zinc is 0-100% Lithium BMS had no idea how to accurately read zinc modules. So it saw imbalances when there was none and when it detected imbalances it took entire strings offline to protect the weakest module 🔑 One weak module then 33% of the system gone. The modules were healthy but the control system couldn’t see them accurately. DawnOS fixes this Dawn will route around any imbalance keeping the entire string running. Less then 1% output loss instead of 30% Dawn will continuously monitor and reintegrate when module is ready. The self healing you mention was about the zinc chemistry . DawnOS can let the system take advantage of that chemistry The real key insight is the RTE st deviation collapsing from 20 points to 6.5…. That has nothing to do with chemistry Eos finally has software that can prove the chemistry is legit.. that’s the bet. That’s the hope & now … this shit is insurable…. 👌

@JordanSolace @DumbMoneyCapitl I'm a bit curious why individual modules were failing in the first place. They say they are self healing, but what causes the damage in the first place? Clearly that wasn't anticipated by them, otherwise using string based BMS would have been completely retarded to put it kindly

$EOSE Q1 quick reflection… Everyone wants to know where the order is…   Wrong question. Reframe. Eos just solved the reason big orders weren't converting in the first place.   The #1 barrier to LDES isn't technology. It isn't demand.   It's one question nobody could answer:   What happens to our loan if the batt stops working in year 8?   Before yesterday ..nobody could answer it.   So the loan didn't happen. Project didn't get built. Pipeline didn't convert.   To understand why Frontier Power USA is vital.. you need to understand how these projects get financed.   Think about this Illustration…   Frontier builds a $50M battery storage project. Puts in $15M of their own equity. Borrows $35M from an infra fund or pension. Utility pays $12M a yr for 15 yrs That contracted revenue pays back the loan.   The lender gets paid from the cash flows. Not from Eos's balance sheet.   Infra funds and pensions WANT to lend against contracted infrastructure cash flows. 🔑   Here's why:   They need steady predictable returns over 15-20 years to match their long-term obligations to retirees.   A 5.5%+ locked in return secured against a real physical asset with investment-grade offtakers (THE PROJECT) is exactly what they need.   They have billions ready to deploy.   They just needed one thing answered first.   What if the batteries fail in year 8?   If batteries fail .. revenue drops.. loan can't be repaid … lender loses money.   Banks don't lend against questions they can't answer.   This single unanswerable question has kept billions of infra capital on the sidelines.   Enter the room Ariel Green   Lloyd's of London. Rated AA- $1.5B framework… 15 yr NON-CANCELLABLE coverage..Sized at the project level.   Their job is simple:   If Z3 batteries underperform in year 8.. the Ariel Green insurance structure is designed to preserve project cash flows for the lender 🔑 Watch what just happened.   Before TPI: Lender asks: What if batteries fail in year 8? Answer- We don't know Result- No loan. Project dies.   After TPI: Lender asks: What if batteries fail in year 8? Answer: Lloyd's of London can pay the claim Result: Investment grade loan. Project gets built.   One substitution. Dynamic changes.   This is NOT a performance bond.   Performance bonds cover the project getting built…   They expire at completion. The TPI covers something completely different:   Will the batteries keep working for 15yrs   That's the question that killed LDES project finance. That's the question Ariel Green is addressing   Now let's talk about the capital stack   200 MWh Z3 system. $50M total cost   Layer 1 Equity: $15M Frontier Power USA (Cerberus + Eos) Layer 2. TPI wrap: $1.5B framework -Ariel Green / Lloyd's AA- Layer 3- Senior debt: $35M - Infrastructure fund at 5.5%   Every layer serves a purpose. Every layer is now filled.   Here's how the cash flows every single year:   Utility pays: $12M Operating costs: -$4M (includes Ariel Green premium + Eos O&M) Debt service to infra fund: -$3.4M Infra fund gets their 5.5% locked in. Every year. For 15 years.   What's left for equity: 3-4M With a small buffer probably between the infra fund and equity (escrow) but think bigger picture.   On $15M invested.   The power of leverage is unlocked by the TPI   And here's what happens if the batteries DO underperform in year 8:   Revenue drops $3M below projection.   Frontier files a claim with Ariel Green. Ariel Green pays $3M or xyz$ Revenue restored to $12M   The infra fund is not getting *as* impacted by the underperformance. That's insurance backed credit. That's why lenders will now show up for LDES. Why did ariel green write this? DawnOS The st. Dev around RTE = insuranble risk

@joceyreyes209 Well.. let’s see how the new guy does Made no sense to me when he said that

@JordanSolace I know right? Having done many earnings calls. Everything is scripted … even how to respond questions. We all heard it. He is either inept or a liar 🤷🏻‍♂️

“The biggest barrier to LDES is not tech. Not demand. It’s bankability.” Not my thesis.. that’s the CEO They have 3+Gwh in PJM queue. You don’t file interconnect applications without demand. That cost real money lol .. takes years also And on the insurance front… what existed before protected tax equity investors and hardware buyers. Not the senior lender.

Just a lot of words of bullshit. They already had insurance and your whole pt rests on insurance not the financing. Yes, the new vehicle can be used but you had no idea THAT was the bottleneck. Note: it wasn’t. It would have been solved already if so. There is no demand for their batteries/solution.

You cant insure what you have not proven… Ariel green wrote this policy because of 1.1m z3 cycles and 5 pt st.deviations around 75% RTE The data came from 700 people in the building, deploying and monitoring the systems No field data. No insurable performance distribution. No TPI. No frontier power. No project finance. The sequence matters here.

@JordanSolace Interesting take but then the company wasted hundreds of millions of dollars employing 700 people for a product that couldn’t be sold cause our new entity to sell it wasn’t created. They could have reduced staff considerably and saved a ton of operating cash flow?

$eose On the Q4 2024 call.. Eos had ITC bridge and ITC clawbacks covering tax equity investors. The warranty backstop covered the hardware buyer if Eos went bankrupt NONE of this answered the question regarding the senior lender What happens to my $35m if the batteries underperform in year 8 Warrant pays to fix the hardware. The lender needs the cash flow protected. Two different things. The warranty also expires in 3-10 years not 15+ Q4 24 tried to solve customer problems but it wasn’t enough. Q1 26 is solving the lender problem. 🔑 Vastly different.

@JordanSolace That’s a lot of words, I heard a year ago they had insurance available on the batteries 🤔

@DumbMoneyCapitl High level: No dawn OS St deviations around RTE were to high. Not insurable

@JordanSolace Why couldn’t they do this 2 years ago

Never said capacity wasn’t a constraint. It still is… L2 coming online addresses that But.. capacity without bankable project finance means you’re manufacturing hardware that can’t get deployed at scale. You need both. Two constraints being addressed at the same time… doesn’t sound like drift to me… sounds like the thesis is maturing Bing bong

@JordanSolace @0marginalreturn I’m old enough to remember when you said it was because they didn’t have enough capacity… 😉 Narrative drift… ⛵️

Here is what is in it for ALL stakeholders…   Ariel Green: Collects ~$15M in premiums over 15 years. Expected claims a fraction of that. Profitable uncorrelated risk. Plus performance data that makes every future policy cheaper to write   Infra fund: $35M deployed. Gets back $55M + over 15 years at 5.5%. Locked in. Secured. Insurance-backed.   Eos: Hardware revs+ $1.5M/yr.. O&M & ~$1.5M ish per yr in equity distributions from Frontier stake   Cerberus: ~$70M+ back on ~$7M project equity over 15 years. Plus EOSE equity appreciation. Now zoom out.   This isn't one project.   Frontier already has 3GWh in the PJM interconnect queue. A 2 GWh take or pay signed 👀   Each project that completes feeds DawnOS data back to Ariel Green.   Better data .. cheaper insurance.. cheaper debt.. better equity returns… more projects.   Each project compounds. And when you apply the 15-20x EBITDA multiple that institutional infra mkts pay for contracted assets… the math gets interesting. I’ll save that for a diff time   That value doesn't exist in a single analyst price target. 🔑   Now-> Cerberus.   Everyone says- Cerberus has Eos by the neck.   i think that narrative has run its course   A lender trying to maximize recovery: Keeps borrower alive long enough to collect, Commits NO new capital unless it improves recovery, and Exits at the first liquidity window   Cerberus is doing the exact opposite of all three. 🔑   A strategic partner maximizing upside: Deepens the relationship to control the upside Commits NEW capital to accelerate value creation Extends hold periods to capture equity appreciation 👀   Lock-up extended through year-end. $100M into Frontier Power USA $900M at stake (d+e)   That's not a lender. That's a partner.   Cerberus probably has far deeper operational visibility through due dili access, deployment data, mfg reviews, & direct involvement in Frontier… Their entire return is driven by EOSE equity appreciation -not debt recovery. Bottom line:   The bankability gap that kept a large % pipeline from converting is being addressed   Not because the tech changed. Not because demand changed Because we can now answer what happens in year 8 when the batteries fail/underperform Insurance transforms technical risk into financeable risk. Could be a game changer. All it takes is ☝️

Until you wake up one morning and they book an order. Then it will… that’s the binary bet. I made the bet on financing… now I’m making it on the order conversion. Ariel Green is not underwriting a battery system with 15% st. Dev on RTEs in the 40s Frontier US isnt possible without DawnOS data. Going to a bank and getting a loan just got wayyy easier. 🔑

@JordanSolace Unfortunately that does not translate into much.

$EOSE the stock is cratering because 1) there is no credible path to profitability, 2) clear evidence of accounting gimmicks & shenanigans