Okay, everybody, good morning. It is just one or two minutes to the hour. I can see a lot of people joining. We're just going to give it a minute for people to join, and then we will start the call. Okay, everybody, good morning, everyone, and good evening to people in the Northern Hemisphere. My name is Clive Cuthell, and I'm the CFO and COO at EOS . On Tuesday, we announced a new contract for a 100 kW high-energy laser weapon for counter-drone usage. We published an announcement on Tuesday, and about 12 or 14 hours ago, we also published some materials that we're going to use this morning. Today, we have on the call Dr. Andreas Schwer, who I will hand over to in a minute. Andreas is our CEO and our Managing Director.
Also helping host the call is David Bert, who helps with Corporate Development and Investor Relations. The subjects today we will review as we go through this session are: we're going to review the market need for this product, we're going to review the market characteristics, we're going to look at the high-energy laser weapon product that EOS has created, the contract that we announced on Tuesday, and our plans for growing the business. Andreas will step through that. I will cover a little bit of the financial information, and then we will have Q&A. We have the ability for people to submit questions. If you have a question today, please type it into the chat box on the side, and we, the presenters, will be able to see the question.
We've also received a number of questions in advance through our investor hub website, and we will be working to try and cover these questions as we go through the presentation. With that introduction, I'm going to pass over to Andreas, who will lead us through the material, and then we'll come back to questions at the end. Andreas?
Thank you very much, Clive. Ladies and gentlemen, today was a historic day, not only a historic day for EOS, it was a historic day for the entire laser weapon industry. It was a day where, for the first time in history, a 100 kW laser weapon was announced as being designed within a NATO country. The first time in history, a laser weapon will see its operations in the battlefield, which is groundbreaking for EOS, and again, groundbreaking also for operations, for military operations in today's battlefield scenarios. This contract, which has a size of AUD 125 million , which was signed with a Western European NATO country, is the first of its kind, and it will change the situation in the anti-drone warfare. This system, which is predominantly made for the anti-drone warfare, is also usable for other types of applications.
We can also use it to some extent for CRAM type of applications, and obviously against other targets and drones only, but predominantly it's made for the anti-drone warfare. Why is that so much of importance? The anti-drone warfare is the kind of warfare which we've seen since the Ukraine war has started, and today it has reached the kind of dimension where more than 70% of all armored vehicles in the battlefield are being taken out by loitering ammunition and drones. It's not anymore the ground-to-ground warfare, which is the dominating effect. It's the really anti-drone warfare. This kind of asymmetric warfare is causing a threat to the defenders, which is almost impossible to defeat.
This kind of threat is requiring multi-layered air defense systems, air defense systems which are composed of different types of effectors, and so far those kinds of effectors were a mixture of, first of all, soft kill, which we call jamming and spoofing types of effectors. It's made up of hard kill effectors such as kinetic kill, our world-known Slinger kinetic kill system. It's meant to be rockets, it's meant to be missiles, and now in the mix now is also the laser system, the high-energy laser system. The high-energy laser system is a groundbreaking innovation which is changing the way how you can defeat against drones. It comes with certain advantages which I will discuss with you a little bit later on, which are quite unique and which give you as the defending party many more opportunities to defeat those kinds of drones.
Drones which are attacking in single units, but also in larger swarms, are really causing huge problems to any defending party. Let's move on, please. If you look to this drone warfare, you can see on this graphic here on the right side how much the warfare scenario has changed towards the application of drones. Drones which are not the classical drones, the class four and five drones, very sophisticated militarized drones with large diameter, with large scale, coming in for a very large price. No, the drone threat today is characterized by commercial drones, militarized drones which everybody can produce in its own garage, at its own backyard, for a cost of less than AUD 1,000. Drones which you can easily harden against jamming and against spoofing, and drones which you can operate easily in large quantities.
Drones which you can easily equip with explosives, with any other kind of weapon system, and which you can easily fly over the front line into the backyard of your enemy and destroy people and their assets quite easily, with a very, very limited amount of personal engagement, with a very minimum amount of personal risk. That's the reason why both parties in the Ukraine war, as other parties also in other conflicts like in the Gaza war, are more and more moving towards the anti-drone and the drone warfare. This kind of new threat, and you can see it on the left side, drones are being produced now in hundred thousands. The actual usage of the drones on each side in the Ukraine warfare is more than 200,000 drones per year, and the number of units is steadily increasing.
Those kinds of drones are meanwhile operated by fiber optic cables, which makes them quite resistant against jamming and spoofing. Effectively, those kinds of systems are almost impossible to be defeated by jamming anymore. Those kinds of systems are now operated by fiber optic cables, very thin fibers. You can see that on one of the pictures here on the left side. Those fibers are contained in small boxes hanging below the drones, fibers which can be up to 50 km in length, being able to operate those drones far behind the front line and making them again absolutely hard to be shot down. That's the kind of situation in the field. That's the kind of situation where today there's not any appropriate response, and that's the reason why everybody is extremely scared of those kinds of attacks.
Only a kind of extremely clever setup, multi-layered air defense system is able to defeat most of those drones. A perfect solution today is still not in place. The laser weapon will make a big, big change to this scenario, and I will show you in the next few minutes why that's going to happen. The laser weapons, depending on the power level, are defeating different types of drones. EOS is the first company being able now to sell commercialized 100 kW drones, 100 kW laser weapons. Those kinds of laser weapons are in a position to defeat drones in the class one, two, and three. To give you one example, a Shahed drone, as we experience them in thousands per day in Ukraine, a Shahed drone is a class two drone.
Our laser can defeat not only those drones, it can also defeat the drones of the next higher class. Those drones are used by more than 95% of the overall drone attacks. With our laser weapon system and offering, we can defeat more than 95% of all drones being impacting on the battlefield. If you go higher in our power level, and our laser family can be scaled up to 150 kW, we expect the higher power level lasers also to be able to shoot on other kinds of unmanned aerial systems other than drones, systems like artillery shells, mortars, and other kinds of threats. The targets which we have to protect with our laser systems, maybe you can switch back for a second, are of different nature. First of all, the predominant usage will be the protection of critical infrastructure, military infrastructure, but also civilian infrastructure.
On the military side, obviously high-value assets such as naval vessels, military camps, rocket and missile launching pads, radar stations, but also military bases, forward bases. On the civilian side, it's any kind of energy power plant, any kind of oil and gas refinery. It's about palace protection, military sites protection, football and other kinds of sports stadium protection, major cities, capital cities, and other high-value assets. It has a very, very broad level of applications. As the recent attack of the Ukrainians in the backyard of the Russians has shown, you remember the attack which was impacting dozens of Russian airports, air bases thousands of kilometers away from the front line, has shown that even your own air bases far away from any kind of conflict zone need some kind of proper protection in the future. The lasers are made also for those kinds of protective measures.
Please move on. The problem in the field is now that those kinds of attacking units, those kinds of small drones, are coming at very, very low costs. There is no point in defeating them with missiles or rockets which come in for a price tag of AUD 500,000 up to AUD 2 million. Obviously, you will run out of budget pretty soon. It is not something which you can sustain for a very long period of time. You need to find a solution, an effector, where the cost per kill, the cost per shot, is very much affordable. With our laser weapon, the cost per kill is between AUD 1 and AUD 10 depending on the power level and the length of engagement. It is close to zero, which makes it extremely affordable and versatile in its usage in the future. Our system needs to be highly agile.
Those kinds of small drones have very high, hard to predict flight dynamics. They follow certain flight patterns which are not only pre-programmed, but can be dictated by artificial intelligence. This kind of upcoming swarm intelligence needs highly sophisticated, highly agile defense systems. Our laser is highly agile. We can turn the laser within 0.7 seconds from any position to any other position over 360 degrees. We can lock on the target with less than 0.5 seconds, and by that, our system is able to shoot down more than 20 drones per minute, 20 kills per minute. If you compare this with any kind of other effector like a missile or even kinetic kill, it is at least a factor of 5 - 10 higher than any other effector, which makes it extremely effective and obviously interesting for any kind of party on the field.
I just mentioned the swarms. The swarm threat is becoming the kind of standard threat in the field. Swarms are not only in a way that the enemies are attacking from a very small angle. Enemies are attacking from almost 180 degrees from both sides, even from behind, which makes it extremely challenging to defeat them. Also, from that perspective, you need to have multi-layered defense systems with lots of killing capabilities and with a highly effective combination of effectors, including laser weapons, being able to defeat per laser weapon 20 drones per minute. You need to have autonomy in the field. The man in the loop sometimes is taking simply too much time in decision-making.
You need to be able to have a kind of intelligent solution, being able to operate and to control your system without having any human being in the loop in order to be able to shoot on as many drones in a short period of time. Sometimes the window of opportunity or the kind of period of notice is only about two, three seconds. You have to act extremely quickly in your engagement. The last point I was mentioning before, today, the Russians as well as the Ukrainians have learned the lessons from the first months of the war. They have all hardened their aircraft. They've hardened their drones in a very simplistic way. They put Faraday cages around electronics to make them non-susceptible against electromagnetic jamming. They have pre-programmed the drones, so they went away from controlling the drone by GPS signals. They're following now inertial navigation systems.
They put very small fiber optic gyro on board, which you can buy for AUD 10 a piece. Pre-programmed, they're flying into their pre-programmed targets, and again, it's very hard to defeat them. Last but not least, the appearance of fiber optic controlled drones, which happened only over the last three, four months, is now increasing. Even the complexity of shooting drones, in particular spoofing and jamming, is becoming almost obsolete in the military context because of this kind of technology, which is not a new innovation. We had already fiber optic controlled and monitored rockets and anti-tank missiles in the 1970s and 1980s. Now it's coming back in an application in context with the drones. All that requires, again, a very economical solution, a cost per shot in a few dollars, in the range of a few dollars only.
You have to be extremely accurate because of the speed and the agility of those drones. You have to be layered. You have to be in a position to shoot on drones over long distance with rockets and affordable missiles. Obviously, there's a limit in terms of quantity because you don't have an unlimited magazine of missiles, and also the budgets are limited. For any kind of lower range attack, you need to have a clever combination, a very smart combination of kinetic kill and laser. All that has to be coordinated by a very sophisticated command and control system, being able to operate in two modes, with man in the loop, but also without any person in the loop, fully robotic, fully autonomous, driven and controlled by artificial intelligence. Let's move on, please. This is the kind of effector mix shown over different ranges.
Typically, electronic warfare is going up to 1 km , but again, becoming less and less effective in the military context. On the EOS side, we have concentrated on three types of effectors. First of all, on kinetic kill, cannon-based air defense, where we are the world market standard with our famous Slinger system. It's a 30 mm system with which we can engage against drones of up to 3 km in range. We have also in the field rocket-based systems. It's here under the acronym APKWS. It's 70 mm rocket systems, which have an effective final range up to eight kilometers. The cost per shot here is about AUD 15,000 - AUD 20,000. It's much more expensive, but quite effective as well. We mount those kinds of systems in our weapon stations. We can mount it also on the side arms.
There's also a combination possible between cannon-based weapon stations and rocket carrying weapon stations. What is coming new to the mix, and that's again the first time in history that a 100 kW class laser weapon will become operational, it's our laser weapon family, which we have defined in a way that we can scale it from 50 - 150 kW. To shoot down a drone, a class one, two, or even a class three drone, you need about two to three seconds of engagement time with a 100 kW system over a range of 2 km, 3 km . Obviously, if you go to higher power levels, such as 150 kW, either the engagement time goes back to less than one second, or you can engage at higher ranges. It is highly versatile. In the drone warfare, 100 kW is more than what you need today.
With our range up to 150 kW, EOS is prepared also for the next generation of drones, being able to defeat them successfully in the field over the next decade or even 20 years to come. That is our mix. That's the EOS mix with which we are very confident to position EOS as one of the world market leaders in the counter-drone, in the anti-drone defense business. Obviously, for very long range engagement, you still have the missile component. All the missiles we can mount on our system, they have a range of 10 km and above and beyond, but obviously coming in for very high prices per shot. Please move on. We discussed already the aspects of accuracy, speed, our magazine. That's a very important point. We will never run out of ammunition because our ammunition is electricity.
We have two sources of electricity of how we generate the power for our system. First of all, our system comes with a battery rack. The battery rack allows you to have up to 300 engagements embedded in the system where you don't need to have connectivity to an external power source. 300 kills without being connected is really a huge magazine. If you're connected to an onboard power generator, which is the case, we have an onboard power generator, or if you're connected to a stationary grid, and that's in most of the cases possible because whenever you protect critical infrastructure, usually there's a kind of network around you. It is infinite. You have an infinite number of shots embedded in your system. You can never run out of ammunition. There's no supply chain problem in any kind of warfare scenario. It is extremely economic.
The cost per shot is in the AUD 1 range. It's extremely affordable. We have concentrated now on the range of, let's say, 50- 100 kW because of the effectiveness against drones. If you go for lower power levels, you are very much reduced in the range, or you can only go for drone dazzling. We as EOS, we also have products for drone dazzling in a very low power range. What we are discussing here today is all about the high power laser in order not only to dazzle the drones, not only to dazzle the sensor heads and the optical cameras, but really to kill the drones, to burn through them by thermal energy and to get them off the sky. It's an anti-drone system. It can also be used as a so-called CRAM system. That means it's counter rocket, artillery shells, and mortars.
It has some effectiveness also against missiles and rockets. Obviously here we should go then rather to the 150 kW product, which is offering you more power and more effectiveness against those kinds of targets. EOS can serve all that one. Important is really that we are positioned with our family in a scalable and modular way to customize our products to the actual customer needs and to the threat scenario in the field. Please move on. The drivers again are the customer needs. If you look backwards three, five, 10 years ago, there was already the dream of having laser weapons to defeat against unmanned aerial systems. It was never reaching the kind of maturity level where militaries were ready to say it's now the time to commercialize them. It's now the time to make them operational.
Governments like the U.S. government have spent multi-billion dollar budgets per year in order to develop those systems with different objectives. The American government wanted always to have a weapon system in place which is able to defeat missiles, even hypersonic missiles. That is not where EOS is looking at. We want to defeat drones. Again, the drone threat is the dominating threat in the field. That's where the big market is. That's the reason why we will concentrate on those kinds of threats. That's the reason why we are at the sweet spot of 50 -150 kW [audio distortion] but also from a homeland security standpoint. We expect that in the middle and long term, all kinds of civil airports, all kinds of civil infrastructure need to be fully protected with such kinds of systems.
That gives us a market which is much, much bigger than even the military market, if you look to that alone. That is, from an overall perspective, extremely promising for EOS. We as EOS are 100% sure that this makes this kind of first contract, the first of its kind, a groundbreaking change for EOS, a historic moment. We believe with that one, many more customers will follow. We believe that this will be a very, very strong business segment, a strong business line of EOS in the short and mid term. There are only very few competitors with us on the marketplace. There's an Israeli company offering a similar type of product. They're also offering 100 kW systems to the market. They don't own all IP because all IP is coming from different companies. It's complicated to transfer IP, to transfer, and to localize production in another country.
This Israeli collaboration, which is mainly between the two companies, Rafael and Elbit , obviously are our only competitor in the 100 kW range today on the marketplace. We believe from a political standpoint, and by the fact that our IP is located in Singapore, where we are supported by a very liberal and stable export regime, we believe that also from a political perspective, we are better positioned than our competitor from Israel. The American companies are working on similar products, even at a higher power level, but they won't be able to export because of U.S. export restrictions. The U.S. Congress is not allowing any export beyond 30 kW into any other country. That gives us the confidence that the American companies will take care of the U.S. market. We as EOS will take care of the rest of the world. That is big enough for us.
It's a multi-billion dollar business, and we believe that this is where we as EOS should concentrate on. If you look to France, there's a French consortium working on today a 2 - 5 kW solution. EOS has been invited to participate to become a French company to that respect, to localize the IP in France, and to help France also to be part of this 100 kW laser weapon industry. That is a very promising option for us to go into this market together with partners like Safran and MBDA. In Germany, there's a company or consortium composed of Rheinmetall and MBDA working also on laser weapons today at a range of 20 - 30 kW. That has happened after the German government has spent almost EUR 200 million into the development over the last 15 years.
I would say that EOS is at least five years ahead of them. We will also localize and offer the German government the production of our systems in Germany for the German and to the German markets. There's also a consortium in the U.K. working on laser weapons. It's a consortium around MBDA, Leonardo, and QinetiQ. Three quite significant players have teamed up to develop a system which is called DragonFire. DragonFire is a 50 kW system. It's half of the power level which we have already offered today, which we have signed today. Their objective is to make this 50 kW system ready for qualification and for distribution by 2028. I would say at least three years of headwind for us here, of tailwind for us in the U.K. market, three years of advantage at least for EOS.
That means in the Western world, there's only one competitor to EOS, which is this Israeli consortium. There's nobody else for the non-EOS Western market. There's one competitor from China offering 50 kW systems with a very poor beam quality. We have seen those kinds of systems. We are not too much afraid of. If you look to the majority of our clients, which are Western clients, they do not want to have Chinese systems embedded in their multi-layered air defense systems because of potential software backdoors and security risks. Here, we don't think that the Chinese are a true competitor to EOS and to our new upcoming high-energy laser weapon business. In summary, there are only very, very few players in the market. Even if you look far into the future, into the time horizon 2030 and beyond, there will be only a handful of players in the market.
That is a very promising business and commercial scenario for EOS. We believe that we can make good revenues. We can build a revenue line which is much bigger than what we have today. This business line should be highly profitable because of the very limited competition. Please move on. That's an image which we have taken by night, one of our lasers being active. Coming to our key unique differentiators on the marketplace, first of all, our technology is modular. We can scale it. We can offer it in different stages between 30 and 150 kW based on our unique and proprietary spectral beam combination. This is a system which is not only highly modular, it's also extremely ruggedized.
That means it can easily sustain harsh environments, whether it's temperature or vibration, in a much better way than the so-called CBC, the coherent beam forming technology, is allowing you to do. That means if you look at the perspective into the integration of our systems into small mobile platforms, being active at the front line, that gives us a competitive advantage because it's more ruggedized, more robust, has a higher survivability ratio. We talked already about the localization. We are the only company owning 100% of the IP, and we are ready by 100% to transfer those IPs to our clients' countries, allowing them to have, again, this kind of fully autonomous solution, which is absolutely key.
We have done demonstrations in the past over many years. We have done a very significant one in 2023, where I think it was the first time that a 36 kW system was demonstrated in front of 10 international delegations. We are planning some other demonstrations to happen by the end of this year in Australia and during the first half of next year in the Middle East. We will invite any kind of interested party to those kinds of demonstrations to maximize our market access and our probability for all the intake in the course of 2026. We are very optimistic in that respect. On the right side, you can see a typical configuration of our laser. It comes in standardized industrial containers. That is very important.
They can be very easily moved around by trucks, and our beam director can even be hiding below the surface, below the top surface of the container, making them quite invisible and non-detectable from above, from loitering ammunition and from satellites, because you hardly can distinguish those kinds of containers from other containers which are only used for logistic transport, for example. That is very effective. Let's move on, please. This is a kind of schematic showing you what a laser system is composed of.
Let's start on the left side of the screen. We have obviously the power generation, the power generation battery packs, power distribution systems. We cannot buy them from the market, but we have lots of partners who have customized solutions which we have developed together, and we buy those kinds of systems from one of those players from the market. What is key, obviously, are the seed lasers. We are doing the seed lasers by ourselves. That is a key discriminator. That is the core of a laser system. It's the heart. Then you have amplifiers to amplify the laser signal. Those amplifiers, we are using commercial off-the-shelf amplifiers from the market. There are different sources from the market, and we customize them for our purpose.
The next significant element is the beam combining, the beam conditioning, and then the beam director. That's the kind of element which is directing the beam on the target, following the target in the highly agile, highly dynamic mode. All what you can see here, which is colored in dark blue, is EOS technology. We own all the key aspects in-house. We only buy from the outside what is a kind of commercial off-the-shelf and where we have multiple potential suppliers. That, again, makes us very different from anybody else. Let's move on, please. This is an image of our 100 kW laser system. We can see it is highly ruggedized. It comes in this standard container. Our deliverable items, being part of this first contract, is not only the laser. It is also the integration of our laser into a multi-layered air defense system of our client.
That means that underlines that it's not only a kind of lab model, a kind of demonstrator, a kind of precursor or prototype. No, it is the first time that the laser system will go into the battlefield. It's the first operational system. Our client was quite clear in saying that if it proves to be as good as we all believe it is, we will purchase more, many more of those systems. That's the logic of procurement. You start with the procurement of one, two, three items. You test them, and then you go out and you purchase them in company, battalion, or brigade level. We are extremely optimistic that we will receive over the course of the next two or three years multiple order intakes, not only with one or two systems, but with a higher quantity of systems behind.
Maybe to the financial side, I hand over to Clive to give us some little bit more feedback and information on the commercial terms of this very important contract for EOS. Clive?
Thank you, Andreas. Just as a reminder to people, if you have questions, please put them in the chat box, and we will review them on the way through. This new contract, as Andreas just said, is very significant. It's significant because it's a new contract, but it also represents a new product and a new business for EOS. Very significant to us. The strategy at EOS, as you might recall, is to grow in two particular areas: in counter-drone and in space control. In the area of counter-drone, this is exactly aligned with our strategy. As we've said before, our strategy is to grow by commercializing our existing IP, and that's what we've done here. The contract that we've signed today has taken some time to get to this point. That's not an accident.
It's very important to us that we sign contracts that are profitable and that are cash positive and that have manageable execution risks. In our industry, if you don't set up these contracts correctly at the start, you can get into difficulties down the line. We have taken time to make sure that the arrangements work for EOS and, of course, work for the customer as well. In our industry, the lead time for sales, as people know, is not short. With determination and tenacity, you can, in our industry, attract significant customers and become a very embedded supplier. That's what we aim to do with this business. Turning to the financials, this is a EUR 71 million contract or AUD 125 million roughly with a Western European NATO member, as Andreas said.
The revenue profile, we would expect to earn a small amount of that revenue in 2025, perhaps AUD 5 million- AUD 10 million. That is not going to provide anything other than an underpinning of our existing outlook for 2025. It's not an uplift to this year's revenue. We would expect to earn most or the majority of the revenue in 2026 and 2027 and a bit in 2028. In terms of margin, in our existing business, we look for a gross margin on materials of 45% - 50%. On this project, we would expect to earn a 50% gross margin on materials or perhaps just a little bit higher. In terms of impact on operating expenses, we would expect to incur additional operating expenses, including people and property and other costs of approximately AUD 5 million or AUD 6 million per annum.
It's not expected to provide us a significant increase in the existing AUD 95 million overhead or OpEx base, sorry, that the company has. Overall, we would look for an EBITDA margin in our projects that we do in our existing business of 20%. It can be 15% up to 20% on existing projects. On this project, we would expect the incremental margin to be potentially 20% or a little bit higher. From a cash perspective, as I said, the cash flow profile on a project like this is very important. The contract that we have signed is broadly neutral from a cash flow perspective in the first half of the project, and then the profit turns into cash as we get through the second half of this three-year project.
It has been very important to us that we develop this project to be financially attractive both to us and to the customer. There is no additional capital required for this project. We do not expect a significant uplift in working capital. The project itself is funding a low-volume production facility being set up at EOS in Singapore. We are not expecting any significant additional investment in CapEx on the part of the company for this project that isn't funded by the customer. As I said, it does take time to get these financial characteristics right, and we intend to execute this project in the way that we've been executing projects in the company previously, with discipline and attention to make sure we meet the customer's requirements on time.
Finally, how do we grow this business? As Andreas has said, the market need is real, and the company has some real differentiators. I'm going to hand back to Andreas now, who's going to talk a little bit about the business growth opportunity for EOS.
Thank you very much, Clive. Let's talk a little bit about the growth perspectives. I was mentioning before that we expect first clients to order lower quantities to get used to the system, to integrate them into the CONOPS, the mode of operation in military context, to see the effectiveness, and then to go into the procurement of larger quantities. Even if that's the predominant way of procurement, we already have been approached by two clients who clearly told us they want to field more than 100 systems, 100 kW each at least, over the next 10 years. You see there's lots of potential. Those kinds of countries want to protect their air bases, the military air bases, but they also want to protect the civil airports with that one. Just by those two types, they need more than 100 systems. There's nothing else included in the equation.
That should give us a clear indication of how many systems we can expect over the midterm to be positioned in any kind of medium or top-level kind of country. Those kinds of opportunities will obviously not come tomorrow into fruition, but maybe at the end of next year and beyond in larger quantities. Those kinds of quantities will urge us to go into industrialization in a way which we have not thought about so far. That means we have to look into high-volume production in cost takeout actions, which will be possible because of economy of scale, which will bring down the price tag of such a system by 20%, 30%, 40%, which makes it even more attractive for the clients to buy in. Those kinds of systems will be produced not only in our facility in Singapore, as Clive was mentioning.
In our facility in Singapore, we can handle at the same time four or five projects. As I mentioned before, most of our projects are expected to happen in our client's country because of their localization needs and their IP transfer needs. We expect that EOS will build up with partners fully funded by our clients' facilities in their countries. We will see EOS France, EOS Germany, EOS Italy, EOS Korea. We will see those kinds of companies popping up over the next coming years as a need and as a demand from the market and as a big opportunity for EOS to do because there is only almost nobody else who can offer this kind of transformation and transfer of IP. Again, all that will be fully customer funded. We don't need any money from EOS to do this kind of investment.
That's a game changer, and that's quite abnormal if you compare it with other types of weapon systems. Nobody would do that for a remote weapon system or for ammunition for a tank or another type of vehicle, but for laser weapons, clients are insisting because it is very strategic. That makes a big difference. We will remain with our Singapore production facility in the game. We remain our kind of major hub for laser weapon technology. We will develop the next generation of laser weapons, and we have plans to go up to 200, 300 kW customer funded. We will have those kinds of satellite centers around the world that we produce in our clients' countries accordingly. We will also continue with our laser test facility, which is Canberra based in Australia.
It's a very important facility for us to characterize the effectiveness of our lasers in a controlled environment against any kind of material. That is very strategic. We still will have at our Australian-based facility another laser team, which is not going against the anti-drone business, but which is going after the so-called space control business, to engage against objects in space for which we need a different type of laser. EOS has multiple or has a wide footprint of lasers, laser experts, predominantly now in the two centers in Australia and in Singapore, and tomorrow, very, very likely in other countries around the globe. That is the kind of outlook. We expect further clients to follow soon. We have one advanced negotiation ongoing with one client and many inquiries from around the world, not only since yesterday, already before.
We expect this business to become a very promising business for EOS, if not the most promising and dominant business of EOS over the next few years to come. We are very optimistic, very bullish, and we are best positioned in this new upcoming market segment. I think we can move to the last page. All the kind of ticks are given. We have the tick on the market need. It has never been better than today. We are now best positioned. We are in a pole position because we are the first company worldwide who has ever sold a 100 kW laser into an export business, into an export market. As the market now is extremely demanding because of the drone threat, we believe that this kind of weapon system will become very dominating in the anti-drone business.
I would like to leave it with that and invite everybody to raise questions, and we are very happy to answer any kind of question from now on.
Okay. Just as a reminder, everybody, if you have questions, please post them in the chat box, and they will be visible to Andreas, David, and I, and we're going to work through these. We have received a number of questions. Some of the questions we received in advance through our investor hub and some we've just received just now. We're going to go through these questions, and we'll go through them in the order we received them. Otherwise, we'll get lost and miss some out. Forgive us if we jump around a little bit, and one or two of the questions are duplicative. The first question, Andreas, we've got is for Andreas: how many similar orders, and we've touched on this a little, how many other orders are we being pitched for and over what time? If we did receive orders, what's our ability to fulfill them?
Before I pass to Andreas on that, I might just note our previous comments in investor releases. We have one. We've previously announced that we had two orders that were advanced. We've obviously just signed one of them. There's another opportunity that's reasonably advanced, although that would be more likely to be signed in 2026 than in 2025. There 's a number of other orders that are at a very early stage of dealing with, but in some cases, they're moving quite quickly. I might ask Andreas just to comment a little bit more on these and talk about our ability to meet such orders.
Yeah. I mean, Clive, thanks for more or less answering the question, at least 50% of it. Yes, I can only attest that's correct. We have one very much advanced negotiation which we expect to materialize into a contract beginning of next year. That is a very promising prospect. We have lots of discussions and negotiations ongoing in an earlier stage. Obviously, after the announcement of yesterday, we expect a significant number of countries now to wake up and also to ring our bell and to get in touch with us because most of the countries are not aware of the fact that this kind of product is now commercialized and ready for distribution. The market will wake up, and we expect many more inquiries. In terms of production capacity, we can handle four or five contracts in our Singapore facility at the same point in time.
That should give you a kind of flavor on the kind of local capacity there. We can expand it. Our new facility has lots of spare capacity, which we have not activated yet. We might be able to double that. I expect that most of the clients will request a local production. That is one key why EOS is better positioned than anybody else. That is one reason why we are not too much concerned about running into a kind of capacity limit with our Singapore facility, as we rather believe in this kind of distributed network of production centers across the world.
Thanks, Andreas. Next question from John is, will our 100 kW anti-drone device be enough to bring down a swarm of 1,000 drones over Kyiv?
No, I have to disappoint you, John. That won't be possible. One laser weapon can kill about 20 drones per minute. If you have an attack of 1,000 drones, obviously, there will be 980 drones going through the network unless you have a number of laser weapons and other effectors at the same time. Whatever you have, 1,000 drones is far beyond what you can handle. That's a so-called oversaturation of airspace, which you cannot handle. There is no system on Earth which can defeat 1,000 drones at the same point in time. It's impossible.
Thanks, Andreas. We've got questions from Ryan and Jonathan about the financial profile, about what cash will be received, what's the three-year forecast for the business segment, and the revenue recognition. We've touched on that earlier. As I said, a small amount of revenue this year. Most of the revenue in this contract will be earned in 2026 and 2027, and we've touched on the margin impact. Like most companies, we're a little bit cautious about providing very specific forward-looking statements, but I think that gives people a feel for what we're looking at here. Another question from Jonathan, Andreas, is, can you please discuss how customers perceive the capability of a 100 kW laser as compared to the 20 - 30 kW programs from Turkey, France, U.K., South Korea, et cetera, that one reads about?
Yeah. Obviously, our clients are fully aware of the capability of a 100 kW system compared to a 20 or 30 kW system. First of all, there were a couple of tests and demonstrations, most notably our own test in 2023. Meanwhile, some other tests have been conducted by various countries around the world. It was quite apparent what the limitations of a 20 or 30 kW system is compared to a 100 kW system. Yes, the clients are quite aware of the fact. If somebody is not completely aware, we can help them out because we can show them with our system by modulating the power level what the effectiveness is against certain types of targets over certain ranges very easily. It's a quite linear relationship between range and power.
Thanks, Andreas. Another question from the Northern Hemisphere. The company made a significant bet on cannon availability for counter-drone earlier, for cannon availability this year and next when it did a pre-order with Northrop Grumman. Can we provide an update on our views on the effectiveness? I might answer that, Andreas. Many people will know we ordered cannons from Northrop under a $70 million order that we placed last year. That strategy has proven to be very effective indeed. The cannons that we ordered last year, some of these are being received in the second half of this year. That is one of the things that allowed us to deliver very, very quickly on the counter-drone kinetic sale that we did, that we announced at the end of May. It is unrelated to this laser weapon contract, but that strategy has been very effective.
The next question is, sorry, that's a duplicate, so I'll just go back to the top. Can we explain, Andreas, what does customary cancellation and termination clauses mean for this contract? What does that mean?
I mean, that is quite standard in any kind of military contract. You have contracts of, there are two types of contracts. There are conditional contracts where the client or where you have to fulfill certain requirements to make the contract unconditional and effective. That's the kind of weaker type of contract. Then there's the kind of stronger type of contract, an unconditional one. This contract here, our 100 kW laser contract, is an unconditional, a strong one. In those kinds of contracts, you still have terms which allow the clients to cancel or terminate a contract in case of a change in the threat scenario, in case of political eruptions, in case of, let's say, a change in government. Those kinds happen very, very seldomly.
If it happens, as per the contract, the client is completely obliged to pay you all your kind of expenses which you have incurred so far. There's no commercial risk coming with it. This kind of theoretical termination or cancellation risk, again, it is a very, very unlikely scenario. I've only seen it very seldomly happen over time. There was one, maybe some of you might remember. There was an Israeli company holding a contract in Australia for a battle management system which was canceled a few years ago for a very particular reason. Those are those kinds of reasons. I leave it up to you to go to the net, to the web, to find out what the background for that one was. It happens extremely rarely. It's not a threat for us.
Thanks, Andreas. The next question is, I'm just scrolling back up to the top. We've got one from Tim just clarifying. The question is, is the contract that we've just announced to supply a system over three years, or is it multiple standalone systems in batches? I think we've covered that. This is for a single system that will be delivered over a three-year period. Next question.
Yeah. It comes with lots of extras, which are going much beyond the kind of normal procurement modes. It comes with a very customized, localized cooling and power system solution, which is obviously much more expensive than otherwise. We could deliver at much lower cost if we would have the full freedom in all kinds of subsystems. It comes with the integration of a very complicated multi-layered air defense system, which is also not a part of a standard package. The AUD 71 million is not the recurring price for a 100 kW laser of EOS.
Next question, Andreas, from Raphael is, the U.K. Ministry of Defense has recently disclosed a projected investment in laser weapons of GBP 1 billion for the next five years. Would other NATO members have similar investment strategies for laser weapon systems?
The other countries in Europe have not, to that extent, declared their readiness to go into laser weapons. We know from the French government that they want to release a similar amount of budget, but it was not identified so far. They're running behind the Brits. The Germans want to invest a similar amount of money, but not only for lasers against drones. That's also covering laser against satellites and other objects in space.
A follow-up.
We know from other governments like the South Korean government, yes, they are planning multi-billion dollar budgets for high-energy laser weapons. It is not only South Korea, also other ones beyond Europe.
The follow-up question that we've received on that from Raphael, Andreas, is, what market share-wise, what would we say about the market share that EOS could achieve realistically for these opportunities?
If you look to the non-EOS market and to the non-Chinese or Russian-dominated market, which we cannot serve anywhere, this kind of market, I believe we can easily make 50% of market share, five-zero.
Thanks, Andreas. Patents is the next question. Andreas, do we have patents on this technology, and until when are the patents valid?
Some parts of the technology are patented. That's correct. In military context, usually you do not go for patents. Why? Because in military context, nobody is suspecting patents, and you can never prove that somebody has infringed your patents. Making a patent is more or less writing a book and giving it for free to your adversaries. You don't do that because you have no control over it. You better keep it to your heart, to your chest, and don't talk about it.
Thanks, Andreas. The next question is a financial question. Are we looking to be cash flow positive anytime soon? As outlined, this contract is expected to be broadly cash flow neutral in the first half of the project and generating cash in the second half of the project. From a business perspective, EOS has been working to make sure all contracts are signed on a cash flow positive basis and to turn that into a consistent positive cash flow for the business as a whole. In the last couple of years, we've had a year that was exceptionally strong on cash flow positivity, and we've had other years where our quarters or halves where we've been slightly negative. That's more attributable to the lumpiness of the business at the moment. When you have one or two larger projects, you can get timing differences.
Overall, we expect to continue to work to be cash flow positive. The next question is, when you are engaging with drones, which is similar technology, can the drones shoot our system from the drone? Can a drone that's attacking shoot our system is the question it's asking, Andreas?
Yeah. In theory, yes. The larger drones, class four and five, attack drones like the U.S. Reaper, yes, they have missiles and rockets. They obviously can shoot against any target over a very long range. The kind of battlefield application we are looking at against smaller drones, class one, two, three, those kinds of drones do not have long-range weapon systems on board. Usually, they have attached to the drone an explosive device which they can drop, or the drone itself is used as a kamikaze drone flying into the target, the laser weapon in this case. Yes, that could happen, but only about short ranges. Obviously, we need to be simply quicker and more agile to shoot them down before they reach us, physically reach us.
Thanks, Andreas. Another question from Dave. What are the constraints on the weapon in terms of overheating, atmospheric impacts such as rain, land deployment versus water deployment, and so on?
Laser weapons, as any other optical device, are suffering from atmospheric disturbances. Heavy rain or fog is reducing the effectiveness of the laser. In terms of heating, I can tell you that our laser has been designed in a way that we can operate it in a 24/7 mode. That means we can continuously fire. We do not need to switch off our laser as most of our competitors need to do to cool it down. We can keep the laser beam, in theory, we can keep it on, operating and active 24/7.
Thanks, Andreas. The next one I will take is, is there the possibility for EOS to be acquired by a larger European defense sector entity like Rheinmetall or Leonardo or these people? The answer to that is that EOS is listed on the Australian Exchange. There is no golden share, for example, held by the government in the company. In some jurisdictions, it's the kind of thing that is used to manage takeovers. There's no golden share. Any investment of size in EOS would be subject to Foreign Investment Review Board approval. However, Australia is a nation that desires close ties, particularly with friendly nations, including the Europeans and others.
There's no obvious impediment, and that's as far as we can comment, other than, of course, if there was to be an approach, that would be a matter for the board to assess in working out the best interests of shareholders. The next question, Andreas, is an operational question from Dave. For the operators of our laser weapon system, how many operators or how many people per weapon system are required? What are the training requirements, the expected useful life, and the maintenance requirements for a laser weapon system like this?
Yeah. First of all, the system itself does not need any person being involved. In a kind of ideal world, the command and control system will simply do sensor f usion of any kind of optical, radar, acoustic sensor information would create the kind of battlefield image where, based on those sensor fusion data, would allocate various effectors on various drones flying in and would automatically be able to shoot down those drones without any person in the loop. That is what will happen in some cases in the future. Militaries are ready to go for a fully automated mode because those kinds of targets do not have a human being on board like an aircraft. There is little collateral damage risk coming with it.
That's the reason why we believe automatism will come into play very much. If not, it can be operated by a single operator. It's the same kind of user interface as we have it for our weapon stations. It's very simplistic. The system is modest, doing all what it needs to do, and the operator just needs to press the button whenever the system tells him, "Now I'm locked on the target." He can decide to shoot or not to shoot. That's all. The training is very simplistic. It's a training course of one to two weeks. That's it. Clive? Is there any more question? Clive, you're on mute.
I'm live. [Audio distortion]
It looks like your signal is jammed, Clive.
It's time to close the call.
Okay. No problem. I think we covered most of the questions. This will not be the last webinar we do on the subject. I'm very optimistic that we will have another good reason pretty soon to go for another webinar on the subject. This will give everybody on our investor side the opportunity to raise further questions. We are happy to answer all those ones. We are also happy if you write us emails, to answer those kinds of emails. We are reachable. For today, I think we leave it with that. I want to thank everybody for your interest in EOS, for your interest in this webinar. We are very happy to have achieved this groundbreaking contract. We will execute it as per plan.
This will be a door opener into another future of EOS, into the next generation, future of EOS, EOS 2.0, with a significantly uplifted revenue and earning profile. Thank you very much for your interest in EOS. Have a good day.