Eon Reality, an Irvine-based company that takes users deep into the realms of extended reality, remains on course to go public by early next year, and will do so with a new executive setup.
The 23-year-old SaaS company, the creator of what it calls the Knowledge Metaverse and whose augmented reality and virtual reality software is used by customers in a variety of educational and business applications, this month disclosed more details about its operations, finances and plans to go public via a reverse merger with a special purpose acquisition company, or SPAC.
The deal with Florida-based Arogo Capital Acquisition Corp. (Nasdaq: AOGO) was initially announced in April, but at the time few specifics were given about the size of Eon’s global operations.
An Oct. 6 filing with the Securities and Exchange Commission shines light on a business that’s landed a number of new international contracts of late.
Eon projects it will see $96 million in revenue by 2024, well up from just under $20 million last year.
The over 200-page regulatory filing also indicates that Eon’s current president, Mats Johansson, is expected to take over as chief executive from current CEO and Chairman Dan Lejerskar upon completion of the public listing. Lejerskar will continue to be the company’s chairman and its largest shareholder after the public listing.
$100M+ in Funds
The reverse merger is expected be completed in the first half of 2023, subject to various conditions, Arogo Capital said in a statement.
Market conditions will no doubt play a large part in the timing of the deal’s completion. SPACs have been poorly received on Wall Street of late, as have most traditional initial public offerings.
Several local companies that have gone public via the SPAC route the past two years, including Irvine’s cannabis software platform WM Technology Inc. (Nasdaq: MAPS) and marketing firm Advantage Solutions Inc. (Nasdaq: ADV), as well as Tustin-based e-commerce marketing adviser Nogin Inc. (Nasdaq: NOGN), are all trading at a fraction of their sponsors’ $10 per share offering price.
Eon’s stock will trade on the Nasdaq under the ticker symbol “EOXR.”
The transaction provides Eon Reality a pro forma enterprise value of $655 million, while the listing is expected to provide over $103 million in cash for the company, factoring in funds previously raised by the Arogo SPAC. A separate $25 million private placement is also being considered, according to regulatory filings.
Johansson told the Business Journal that Eon’s headquarters will stay in Irvine after it goes public.
“As the business grows, we will plan to grow,” he said on Oct. 11. The company employs about 75 full-time workers.
Earnings Projections
Eon Reality is still on the road to profitability.
Filings indicate that Eon counted an accumulated deficit of $77 million as of mid-2022.
Last year, it earned $13 million in revenue; in 2020 that figure was $20.5 million. The decline was due to a switch from hardware-based contracts to SaaS deals that recognize revenue over a longer period of time, filings indicate.
Eon foresees revenue this year of $19.8 million with a net loss of $900,000.
Next year’s revenue is projected to jump to $57 million with a profit of $18.6 million. By 2024, revenue is projected to be $96 million, with a profit of $23.3 million.
New Wins
Johansson pointed to some of the “larger contracts” detailed in the SEC filings that Eon has concluded of late, which is fueling the company’s optimism:
• In May, Eon entered into a partnership agreement valued at $4.5 million with Cho Thavee Public Company Ltd., adding 57,500 users in Thailand.
• In June, Eon secured a contract for a $7.1 million regional rollout with 57,000 users in South Africa.
• In August 2022, Eon entered into an initial one-year partnership for $6 million in the UAE for a regional rollout to 50,000 students and 7,500 interns.
The filing with the SEC also gave an overview of EON’s international collaboration and expansion approach.
Eon intends to target 50,000 students and 7,500 interns per location, increasing its
revenue potential per rollout to between $3 million and $7.5 million in regional rollouts.
Metaverse Explainer
The Metaverse describes a fully realized digital world that exists beyond the one in which we live.
While much of the attention has focused so far on the social, professional and consumer aspects, proponents see nearly unlimited uses for the boundless digital landscape.
Eon Reality says its purpose is to “help democratize the Knowledge Metaverse by making content creation and sharing easy for purposes of learning, training, performing, and collaborating with code-free XR [extended reality] and AI.”
XR is essentially the combination of virtual reality and augmented reality.
Eon Reality’s business-to-business software lets people use electronic devices to visualize objects ranging from the parts of the human heart to component pieces of jet engines with full three-dimensional effect.
It says it has an XR library for the education industry “which provides users with access to over 4.4 million assets and interactive and immersive AR and VR lessons.”
Eon Reality’s global network now comprises more than 1.8 million licensees who are collectively building the Knowledge Metaverse in more than 75 locations.
—Kevin Costelloe
