Energous Corp 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Statements As used in this Quarterly Report on Form 10-Q (this “Report”), unless the context otherwise requires the terms “we,” “us,” “our,” and “Energous” refer to Energous Corporation d/b/a Energous Wireless Power Solutions, a Delaware corporation. This Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are intended to be covered by the “safe harbor” created by those sections. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies, and expectations, can generally be identified by the use of forward-looking terms such as “believe,” “expect,” “may,” “will,” “would,” “should,” “could,” “seek,” “intend,” “plan,” “continue,” “estimate,” “anticipate” or other comparable terms. All statements other than statements of historical facts included in this report regarding our strategies, prospects, financial condition, operations, costs, plans and objectives are forward-looking statements. Examples of forward-looking statements include, among others, statements we make regarding expectations with respect to future financings; expectations for revenues, liquidity, cash flows and financial performance; and expectations regarding the release of additional wireless power-enabled products. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Forward-looking statements relate to the future and are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and generally outside of our control, so actual results and financial condition may differ materially from those indicated in the forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others: our ability to develop commercially feasible technology or commercialize such technology; timing of customer implementations of our technology in consumer products; timing and receipt of regulatory approvals in the United States and internationally; our ability to find and maintain contract manufacturing partners; market acceptance of our technology; competition in our industry; our ability to protect our intellectual property; our ability to maintain or improve our financial position, cash flows, and liquidity and our expected financial needs; the impacts of tariffs and other geopolitical conflicts; and other risks and uncertainties described in the Risk Factors and in Management’s Discussion and Analysis sections of our most recently filed Annual Report on Form 10-K and subsequently filed Quarterly Reports on Form 10-Q, including this Report. We undertake no obligation to publicly update any of our forward-looking statements, whether as a result of new information, future developments, or otherwise. Overview We pioneered the development of scalable, over-the-air WPN technology that integrates advanced semiconductor chipsets, software controls, hardware designs, and antenna systems to enable RF-based charging for ambient IoT devices, transforming supply chain capabilities from limited tracking to overall business intelligence. Our WPN technology consists of transmitter systems, receiver integrated circuits, and supporting software designed to deliver power and data to battery-free IoT devices across a range of operating distances and power levels. These capabilities support applications that require continuous operation without wired power connections or periodic battery replacement. With a patent portfolio exceeding 300 patents, our solutions support both near-field and at-a-distance wireless power transmission and include advanced receiver technology designed for use across multiple device categories. Applications include retail sensors, ESLs, asset trackers, air quality monitors, motion detectors, and other monitoring solutions. To date, we have developed and released multiple transmitter and battery-free receiver products. Our transmitters vary in form factors, power specifications, and operating frequencies, and our receivers are designed to support a range of wireless power-enabled device applications, including: Device Type Application RF Tags Cold Chain, Asset Tracking, Medical IoT Ambient IoT Sensors Cold Chain, Logistics, Asset Tracking Electronic Shelf Labels Retail and Industrial IoT ​ 24 Table of Contents The first WPN-enabled product featuring our technology entered the market in 2019. In the fourth quarter of 2021, we commenced shipments of at-a-distance PowerBridge transmitter systems for commercial IoT applications and proof-of-concept deployments. In the second quarter of 2025, we introduced the battery-free e-Sense tag and the e-Compass cloud-based software platform, which together supported the first end-to-end wireless power-enabled IoT device monitoring and management solution. As we continue to innovate our technology applications, we anticipate the release of additional wireless power-enabled products. Impact of Current Global Economic Conditions on Our Business Uncertainty in the global economy presents significant risks to our business. We are subject to ongoing exposure related to the current macroeconomic environment, including inflation, rising interest rates, geopolitical factors such as the ongoing conflict between Russia and Ukraine, tensions between the United States and China as well as China and Taiwan, conflicts in the Middle East, and supply chain disruptions. These conditions may affect various aspects of our business, including our operations, financial position, cash flows, inventory management, supply chains, global regulatory approvals, purchasing trends, customer payment patterns, and the broader industry environment, as well as our employees. Results of Operations Costs and Expenses Cost of revenue consists of direct materials, direct labor, and overhead for our production-level wireless charging systems. Research and development expenses include costs associated with our efforts to develop our technology, including personnel compensation, consulting, engineering supplies and components, regulatory expenses, and general office expenses specifically related to the research and development department. Sales and marketing expenses include costs associated with selling and marketing our technology to our customers, including personnel compensation, public relations, graphic design, tradeshow, engineering supplies utilized by the sales team, and general office expenses specifically related to the sales and marketing department. General and administrative expenses include costs for general and corporate functions, including personnel compensation, facility fees, travel, telecommunications, insurance, professional fees, consulting fees, general office expenses, and other overhead. Comparison of Three Months Ended June 30, 2026 and 2025 The following table sets forth selected Condensed Statements of Operations data (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended June 30, ​ ​ ​ ​ ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ $ Change ​ ​ ​ % Change Revenue ​ $ 3,089 ​ $ 975 ​ $ 2,114 ​ 217 % Cost of revenue ​ 2,995 ​ ​ 637 ​ ​ 2,358 ​ 370 % Gross profit ​ 94 ​ ​ 338 ​ ​ (244) ​ (72) % Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Research and development ​ 1,135 ​ ​ 1,100 ​ ​ 35 ​ 3 % Sales and marketing ​ 630 ​ ​ 704 ​ ​ (74) ​ (11) % General and administrative ​ 1,453 ​ ​ 1,286 ​ ​ 167 ​ 13 % Severance expense ​ 69 ​ ​ 23 ​ ​ 46 ​ 200 % Expenses from abandoned financing transaction ​ — ​ ​ 5 ​ ​ (5) ​ (100) % Total operating expenses ​ 3,287 ​ ​ 3,118 ​ ​ 169 ​ 5 % Loss from operations ​ (3,193) ​ ​ (2,780) ​ ​ (413) ​ (15) % Other income (expense), net: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest income (expense), net ​ 282 ​ ​ (7) ​ ​ 289 ​ 4,129 % Loss on retirement of property and equipment ​ — ​ ​ (1) ​ ​ 1 ​ 100 % Total other income (expense), net ​ 282 ​ ​ (8) ​ ​ 290 ​ 3,625 % Net loss ​ $ (2,911) ​ $ (2,788) ​ $ (123) ​ (4) % ​ 25 Table of Contents Revenue. During the three months ended June 30, 2026 and 2025, we recorded revenue of $3.1 million and $1.0 million, respectively. The 217% period-over-period increase is primarily due to accelerated U.S. and European demand from a Fortune 10 e-commerce technology customer during the second quarter of 2026. Additionally, a large scale proof of concept (“POC”) deployment with a U.S. government sector customer ramped up during the three months ended June 30, 2026. Additional incremental revenue generated during the second quarter 2026 was comprised of multiple POC’s, referred through the Company’s participation in the Amazon Web Services (“AWS”) Partner Network and other channel partners, for both our standard PowerBridge Pro WPN solutions and our End-to-End solution. Costs and Expenses and Loss from Operations. Costs and expenses are made up of cost of revenue, research and development, sales and marketing, general and administrative, and severance expenses. Loss from operations for the three months ended June 30, 2026 and 2025 was $3.2 million and $2.8 million, respectively. Cost of Revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended June 30, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ $ Change ​ ​ ​ % Change Cost of revenue ​ $ 2,995 ​ $ 637 ​ $ 2,358 ​ 370 % Percent of total revenue ​ 97 % ​ 65 % ​ ​ ​ ​ ​ Cost of revenue was $3.0 million and $0.6 million, respectively, for the three months ended June 30, 2026 and 2025, respectively. The increase was primarily due to a combination of higher sales volume of PowerBridge Pro transmitters shipped during the second quarter of 2026 and the short-term impact of a hardware upgrade requested by a Fortune 10 customer, which required retooling of our contract manufacturing lines. To meet the customer’s feature requirements and fulfill second quarter 2026 demand within the required timeframe, production of the PowerBridge Pro was concentrated at our U.S.-based contract manufacturer, which was able to rapidly implement the required production changes. This enabled us to meet customer delivery timelines but resulted in higher per-unit manufacturing costs compared with production at our overseas contract manufacturer. Research and Development Costs: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended June 30, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ $ Change ​ ​ ​ % Change Research and development ​ $ 1,135 ​ $ 1,100 ​ $ 35 ​ 3 % Percent of total revenue ​ ​ 37 % ​ 113 % ​ ​ ​ ​ ​ Research and development (“R&D”) costs were $1.1 million for both the three months ended June 30, 2026 and 2025. The slight increase is due to higher product development and engineering material costs. Sales and Marketing Costs: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended June 30, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ $ Change ​ ​ ​ % Change Sales and marketing ​ $ 630 ​ $ 704 ​ $ (74) ​ (11) % Percent of total revenue ​ 20 % ​ 72 % ​ ​ ​ ​ ​ Sales and marketing costs were $0.6 million and $0.7 million for the three months ended June 30, 2026 and 2025, respectively. The decrease of approximately $0.1 million is primarily due to a $0.1 million decrease in compensation from a lower bonus accrual and decreased stock-based compensation. General and Administrative Costs: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended June 30, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ $ Change ​ ​ ​ % Change General and administrative ​ $ 1,453 ​ $ 1,286 ​ $ 167 ​ 13 % Percent of total revenue ​ 47 % ​ 132 % ​ ​ ​ ​ ​ 26 Table of Contents General and administrative costs for the three months ended June 30, 2026 and 2025 were $1.5 million and $1.3 million, respectively. The increase of approximately $0.2 million was primarily due to an approximately $0.1 million increase in stock registration and annual meeting expenses and a $0.1 million increase in investor relations fees. Severance Expense: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended June 30, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ $ Change ​ ​ ​ % Change Severance expense ​ $ 69 ​ $ 23 ​ $ 46 ​ 200 % Percent of total revenue ​ 2 % ​ 2 % ​ ​ ​ ​ ​ Severance expense was approximately $69,000 and $23,000 for the three months ended June 30, 2026 and 2025, respectively, related to the separation of non-executive employees. Expenses from Abandoned Financing Transaction: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended June 30, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ $ Change ​ ​ ​ % Change Expenses from abandoned financing transaction ​ $ — ​ $ 5 ​ $ (5) ​ (100) % Percent of total revenue ​ 0 % ​ 1 % ​ ​ ​ ​ Expenses from the abandoned financing transaction were approximately $5,000 for the three months ended June 30, 2025, attributable to our decision not to pursue the convertible preferred equity offering under Regulation A. This decision was made because we were able to secure less dilutive financing through our ATM Program at a lower cost of capital. There was no such expense for the three months ended June 30, 2026. Other Income (expense), net: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended June 30, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ $ Change ​ ​ ​ % Change Interest income (expense), net $ 282 ​ $ (7) ​ $ 289 ​ 4,129 % Loss on retirement of property and equipment ​ — ​ ​ (1) ​ ​ 1 ​ 100 % Total other income (expense), net ​ $ 282 ​ $ (8) ​ $ 290 3,625 % ​ Net interest income (expense) for the three months ended June 30, 2026 was $0.3 million from interest earned in our money market account. Net interest expense for the three months ended June 30, 2025 was approximately $7,000 from short-term loan interest expense of $96,000, partially offset by interest income of $89,000 earned in our money market account. Net Loss. As a result of the above, net loss for the three months ended June 30, 2026 was $2.9 million as compared to $2.8 million for the three months ended June 30, 2025, primarily driven by the short-term negative impact of gross margins during the second quarter of 2026. 27 Table of Contents Comparison of Six Months Ended June 30, 2026 and 2025 The following table sets forth selected Condensed Statements of Operations data (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the six months ended June 30, ​ ​ ​ ​ ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ $Change ​ ​ ​ % Change Revenue ​ $ 6,171 ​ $ 1,318 ​ $ 4,853 368 % Cost of revenue ​ 4,982 ​ 887 ​ 4,095 462 % Gross profit ​ 1,189 ​ 431 ​ 758 176 % Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ Research and development ​ 2,149 ​ 2,292 ​ (143) (6) % Sales and marketing ​ 1,169 ​ 1,293 ​ (124) (10) % General and administrative ​ 2,841 ​ 2,181 ​ 660 30 % Severance expense ​ 69 ​ 395 ​ (326) (83) % Expenses from abandoned financing transaction ​ — ​ 661 ​ (661) (100) % Total operating expenses ​ 6,228 ​ 6,822 ​ (594) (9) % Loss from operations ​ (5,039) ​ (6,391) ​ 1,352 21 % Other income (expense), net: ​ ​ ​ ​ ​ ​ ​ ​ Change in fair value of warrant liability ​ — ​ 267 ​ (267) (100) % Interest income (expense), net ​ 472 ​ (29) ​ 501 1,728 % Loss on retirement of property and equipment ​ — ​ (1) ​ 1 100 % Total other income (expense), net ​ 472 ​ 237 ​ 235 99 % Net loss ​ $ (4,567) ​ $ (6,154) ​ $ 1,587 26 % ​ Revenue. During the six months ended June 30, 2026 and 2025, we recorded revenue of $6.2 million and $1.3 million, respectively. The 368% period-over-period increase is primarily due to accelerated U.S. and European demand from a Fortune 10 e-commerce technology customer during the first half of 2026. Additionally, a large scale POC deployment with a U.S. government sector customer ramped up during the six months ended June 30, 2026. Additional incremental revenue generated during the first half of 2026 was comprised of multiple POC’s, referred through the Company’s participation in the AWS Partner Network and other channel partners, for both our standard PowerBridge Pro WPN solutions and our End-to-End solution. Costs and Expenses and Loss from Operations. Costs and expenses are made up of cost of revenue, research and development, sales and marketing, general and administrative and severance expenses. Loss from operations for the six months ended June 30, 2026 and 2025 was $5.0 million and $6.4 million, respectively. Cost of Revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the six months ended June 30, ​ ​ ​ ​ ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ $Change ​ ​ ​ % Change Cost of revenue ​ $ 4,982 ​ $ 887 ​ $ 4,095 462 % Percent of total revenue ​ 81 % 67 % ​ ​ ​ ​ Cost of revenue was $5.0 million and $0.9 million, respectively, for the six months ended June 30, 2026 and 2025, respectively. The increase was primarily due to a combination of higher sales volume of PowerBridge Pro transmitters shipped during the second quarter of 2026 and the short-term impact of a hardware upgrade requested by a Fortune 10 customer, which required retooling of our contract manufacturing lines. To meet the customer’s feature requirements and fulfill second quarter 2026 demand within the required timeframe, production of the PowerBridge Pro was concentrated at our U.S.-based contract manufacturer, which was able to rapidly implement the required production changes. This enabled us to meet customer delivery timelines, but resulted in higher per-unit manufacturing costs compared with production at our overseas contract manufacturer. 28 Table of Contents Research and Development Costs: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the six months ended June 30, ​ ​ ​ ​ ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ $Change ​ ​ ​ % Change Research and development ​ $ 2,149 ​ $ 2,292 ​ $ (143) (6) % Percent of total revenue ​ 35 % 174 % ​ ​ ​ ​ R&D costs were $2.1 million and $2.3 million, respectively, for the six months ended June 30, 2026 and 2025. The decrease is primarily due to a $0.1 million decrease in third party services and a $0.1 million decrease in payroll costs, partially offset by a $0.1 million increase in engineering material and testing expense. Sales and Marketing Costs: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the six months ended June 30, ​ ​ ​ ​ ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ $Change ​ ​ ​ % Change Sales and marketing ​ $ 1,169 ​ $ 1,293 ​ $ (124) (10) % Percent of total revenue ​ 19 % 98 % ​ ​ ​ ​ Sales and marketing costs for the six months ended June 30, 2026 and 2025 were $1.2 million and $1.3 million, respectively. The decrease is primarily due to a $0.1 million reduction in consulting fees. General and Administrative Costs: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the six months ended June 30, ​ ​ ​ ​ ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ $Change ​ ​ ​ % Change General and administrative ​ $ 2,841 ​ $ 2,181 ​ $ 660 30 % Percent of total revenue ​ 46 % 165 % ​ ​ ​ ​ General and administrative costs for the six months ended June 30, 2026 and 2025 were $2.8 million and $2.2 million, respectively. The increase of approximately $0.7 million was primarily due to a $0.2 million increase in payroll costs, a $0.2 million increase in legal fees, a $0.1 million increase in stock registration and transfer expenses, and a $0.1 million increase in investor relations fees. Severance Expense: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the six months ended June 30, ​ ​ ​ ​ ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ $Change ​ ​ ​ % Change Severance expense ​ $ 69 ​ $ 395 ​ $ (326) (83) % Percent of total revenue ​ 1 % 30 % ​ ​ ​ ​ Severance expense was $0.1 million and $0.4 million for the six months ended June 30, 2026 and 2025, respectively, related to the separation of certain non-executive employees. Expenses from Abandoned Financing Transaction: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the six months ended June 30, ​ ​ ​ ​ ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ $Change ​ ​ ​ % Change Expenses from abandoned financing transaction ​ $ — ​ $ 661 ​ $ (661) (100) % Percent of total revenue ​ 0 % 50 % ​ ​ ​ ​ Expenses from the abandoned financing transaction were $0.7 million for the six months ended June 30, 2025, primarily attributable to our decision not to pursue the convertible preferred equity offering under Regulation A. This decision was made because we were able to secure less dilutive financing through our ATM Program at a lower cost of capital. There was no such expense for the six months ended June 30, 2026. 29 Table of Contents Other Income (expense), net: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the six months ended June 30, ​ ​ ​ ​ ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ $Change ​ ​ ​ % Change Change in fair value of warrant liability ​ $ — ​ $ 267 ​ $ (267) (100) % Interest income (expense), net ​ 472 ​ (29) ​ 501 1,728 % Loss on retirement of property and equipment ​ — ​ (1) ​ 1 100 % Total other income (expense), net ​ $ 472 ​ $ 237 ​ $ 235 99 % ​ Other expense resulting from the change in fair value of the warrant liability was $0.3 million for the six months ended June 30, 2025. On September 10, 2025, the 2023 Warrants were fully exercised, eliminating the related warrant liability. As of both December 31, 2025 and June 30, 2026, we no longer have warrants classified as a liability on our balance sheet. Net interest income for the six months ended June 30, 2026 was $0.5 million from interest earned in our money market account. Net interest expense for the six months ended June 30, 2025 was approximately $29,000 from short-term loan interest expense of $284,000, partially offset by interest income of $255,000 earned in our money market account. Net Loss. As a result of the above, net loss for the six months ended June 30, 2026 was $4.6 million as compared to $6.2 million for the six months ended June 30, 2025. Critical Accounting Policies and Estimates Use of Estimates. The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements as well as the reported expenses during the reporting periods. Some of these judgments can be subjective and complex, and, consequently, actual results may differ from these estimates. Although we believe that management’s estimates and assumptions are reasonable, they are based upon information available at the time the estimates and assumptions were made. Actual results could differ from those estimates. Going Concern . Accounting Standards Codification (“ASC”) 205-40 Presentation of Financial Statements - Going Concern , requires management to assess our ability to continue as a going concern. In accordance with this guidance, we have evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the financial statements are issued. We anticipate that cash flows generated from operations and our cash and cash equivalents will be sufficient to meet our liquidity needs for at least the next 12 months. Determining the extent to which conditions or events raise substantial doubt about our ability to continue as a going concern requires significant judgment and estimation by us. Our significant estimates related to this analysis may include identifying business factors used in the forecasted financial results and liquidity. We believe that the estimated values used in our going concern analysis are based on reasonable assumptions. However, such assumptions are inherently uncertain, and actual results could differ materially from those estimates. Warrants. We account for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, “Distinguishing Liabilities from Equity” (“ASC 480”), and ASC 815, “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as a liability at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations. The fair value of the warrants is estimated using an appropriate valuation model. Such warrant classification is also subject to re-evaluation at each reporting period. 30 Table of Contents Offering costs associated with warrants classified as liabilities are expensed as incurred and are presented as offering cost related to warrant liability in the statement of operations. Offering costs associated with the sale of warrants classified as equity are charged against proceeds received. Revenue Recognition. We follow ASC 606, “Revenue from Contracts with Customers” (“Topic 606”). In accordance with Topic 606, we recognize revenue using the following five-step approach: 1. Identify the contract with the customer. 2. Identify the performance obligations in the contract. 3. Determine the transaction price of the contract. 4. Allocate the transaction price to the performance obligations of the contract. 5. Recognize revenue when or as the performance obligations are satisfied. Our revenue consists of revenue from our single segment of wireless charging system solutions. The wireless charging system revenue consists of revenue from product development projects and production-level systems, including hardware and software. We record a majority of our revenue based on the shipment of products that we sell. Generally, there is a five-day return policy on our shipment of products. Additionally, we record revenue associated with product development projects that we enter into with certain customers. In general, these product development projects are complex, and we do not have certainty about our ability to achieve the project milestones. The achievement of a milestone is dependent on our performance obligation and requires acceptance by the customer. We recognize this revenue at the point in time at which the performance obligation is met. The payment associated with achieving the performance obligation is generally commensurate with our effort or the value of the deliverable and is nonrefundable. Any deferred revenue is recognized upon achievement of the performance obligation or expiration of a support agreement. During the three months ended June 30, 2026, management believes there have been no significant changes to the items that we disclosed within our critical accounting policies and estimates in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2025. Liquidity and Capital Resources During the six months ended June 30, 2026 and 2025, we recorded revenue of $6.2 million and $1.3 million, respectively. We incurred a net loss of $4.6 million and $6.2 million for the six months ended June 30, 2026 and 2025, respectively. Net cash used in operating activities was $10.9 million and $7.5 million for the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, we had cash on hand of $31.2 million. Based upon our cash on hand as of June 30, 2026 and anticipated collection of accounts receivable, we are currently meeting our liquidity requirements, and we anticipate that cash flows generated from operations and our cash and cash equivalents will be sufficient to meet our liquidity needs for at least the next 12 months. In accordance with ASC 205-40, Presentation of Financial Statements—Going Concern , management has evaluated whether conditions or events, considered in the aggregate, raise questions about our ability to continue as a going concern within one year after the date the financial statements are issued. Based on current operating levels and existing cash balances, management believes that we have sufficient liquidity to fund operations for at least the next twelve months. As we gain traction in the market with our new technology and continue to invest capital in transitioning and scaling the business from research and development of new technologies to commercial production, there can be no assurance that our available resources and revenue generated from our business operations will be sufficient to sustain our operations, as adoption of this emerging technology by enterprise customers may take longer than expected. Accordingly, we may decide to pursue additional financing, which could include offerings of equity or debt securities, bank financing, commercial agreements with customers or strategic partners, and other alternatives, depending upon market conditions. There is no assurance that such financing will be available on terms that we would find acceptable, or at all. If we are unsuccessful in implementing this plan, we will be required to make further cost and expense reductions or modifications to our on-going operations and strategic plans. The market for products using our technology is broad and evolving, so our success is dependent upon many factors, including customer acceptance of our existing products, technical feasibility of future products, regulatory approvals, the development of complementary technologies, competition and global market fluctuations. 31 Table of Contents Cash Flows Operating Activities - During the six months ended June 30, 2026, cash flows used in operating activities were $10.9 million, consisting of a net loss of $4.6 million, less adjustments to reconcile net loss to net cash used in operating activities aggregating $0.2 million (principally stock-based compensation of $112,000 and depreciation and amortization of $76,000), a $6.1 million increase in prepaid expenses and other current assets, a $1.0 million increase in inventory, a $0.3 million decrease in accrued expenses, a $0.3 million increase in accounts receivable, a $0.2 million decrease in operating lease liabilities and a $0.1 million increase in other assets, partially offset by a $1.3 million increase in accounts payable and a $0.2 million decrease in right-of-use lease assets. During the six months ended June 30, 2025, cash flows used in operating activities were $7.5 million, consisting of a net loss of $6.2 million, less adjustments to reconcile net loss to net cash used in operating activities aggregating $0.1 million (principally stock-based compensation of $0.2 million and depreciation and amortization of short-term loan fees totaling approximately $0.1 million, partially offset by a change in fair value of warrant liability of $0.3 million), a $1.1 million decrease in accounts payable, a $0.6 million increase in accounts receivable, a $0.3 million decrease in operating lease liabilities and a $0.2 million increase in inventory, partially offset by a $0.4 million decrease in operating lease right-of-use assets and a $0.3 million decrease in prepaid expenses and other current assets. Investing Activities - During the six months ended June 30, 2026 and 2025, cash flows used in investing activities were $0.3 million and $37,000, respectively. Cash used in investing activities during both periods primarily related to purchases of hardware and equipment. Financing Activities - During the six months ended June 30, 2026, cash flows provided by financing activities were $31.9 million, which primarily consisted of $31.8 million in net proceeds from the sale of shares of our common stock under the ATM Program and $0.2 million received from exercises of warrants, partially offset by $0.1 million in repayments of financed insurance. During the six months ended June 30, 2025, cash flows provided by financing activities were $14.9 million, which primarily consisted of $15.8 million in net proceeds from the sale of shares of our common stock under the ATM Program, partially offset by $0.8 million in repayments of a short-term loan and $0.1 million in repayments of financed insurance. Fundraising Activities ATM Offering Program On June 21, 2024, we entered into the At the Market Offering Agreement with H.C. Wainwright & Co., LLC, as sales agent, pursuant to which we could issue and sell up to $3.45 million in shares of our common stock (as amended to date, the “ATM Program”). On February 13, 2025, the Company filed a prospectus supplement for the issuance and sale of an additional $80.0 million in shares of common stock under the ATM Program, which ATM capacity was subsequently reduced to up to $70.0 million in shares of common stock on September 10, 2025. During the three months ended June 30, 2026, we did not sell any shares of common stock under the ATM Program. During the six months ended June 30, 2026, we sold 3,299,728 shares of our common stock under the ATM Program for net proceeds of approximately $31.8 million (net of commissions and other related offering expenses of approximately $1.1 million). As of June 30, 2026, approximately $31.7 million in shares of common stock remained available for issuance under the ATM Program, subject to availability of authorized shares. 2025 Offering On September 10, 2025, we entered into a securities purchase agreement with an institutional investor (the “Investor”), providing for the issuance and sale, in a registered direct offering (the “2025 Offering”), of (i) 120,000 shares of our common stock, (ii) pre-funded warrants to purchase up to 465,347 shares of common stock (the “2025 Pre-Funded Warrants”), and (iii) warrants to purchase up to an aggregate of 585,347 shares of common stock (the “2025 Warrants”). Each share of common stock and 2025 Pre-Funded Warrant was offered and sold together with an accompanying 2025 Warrant at a combined price of $7.92 per share of common stock or 2025 Pre-Funded Warrant and accompanying 2025 Warrant, as applicable. Each 2025 Pre-Funded Warrant and 2025 Warrant is exercisable at any time on or after the date of issuance to purchase one share of common stock at a price of either $0.00001 per share, in the case of the 2025 Pre-Funded Warrants, or $7.79 per share, in the case of the 2025 Warrants. The 2025 Pre-Funded Warrants expire when they are exercised in full and the 2025 Warrants expire five years from the date of issuance. As of June 30, 2026, no 2025 Pre-Funded Warrants and 585,347 2025 Warrants were outstanding. The 2025 Offering closed on September 11, 2025. We received net proceeds of approximately $4.0 million from the 2025 Offering, after deducting placement agent fees and estimated offering expenses. 32 Table of Contents Additionally, pursuant to the Engagement Letter, dated as of July 9, 2024, as amended on December 20, 2024 and August 20, 2025 (the “Original Engagement Letter”), between the Company and H.C. Wainwright & Co., LLC (“Wainwright”), and the Engagement Letter Joinder Agreement, dated as of September 10, 2025 (the “Joinder Agreement” and, together with the Original Engagement Letter, the “Engagement Letter”), by and among Energous, Wainwright and Rodman & Renshaw LLC (“Rodman & Renshaw” and, together with Wainwright, the “Placement Agents”), Energous, in connection with the closing of the 2025 Offering, agreed to issue to the Placement Agents or their respective designees warrants (the “Registered Direct Offering Placement Agent Warrants”) to purchase up to an aggregate of 40,974 shares of common stock. The Registered Direct Offering Placement Agent Warrants have substantially the same terms as the 2025 Warrants, except the Registered Direct Offering Placement Agent Warrants are exercisable at any time on or after the date of issuance to purchase one share of common stock at a price of $9.90 per share and the Registered Direct Offering Placement Agent Warrants expire on September 10, 2030. As of June 30, 2026, there were 18,848 of the Registered Direct Offering Placement Agent Warrants still outstanding. Warrant Inducement Offering On September 10, 2025, in connection with the 2025 Offering, we entered into a letter agreement (the “Letter Agreement”) with the Investor for the immediate exercise of certain of our 2023 Warrants and 2024 Warrants to purchase an aggregate of 47,764 shares of common stock and having exercise prices of $6.7595 and $55.20 per share, respectively (the “Concurrent Warrant Exercise Transaction”). The 2023 Warrants were exercised at the exercise price of $6.8845 and the 2024 Warrants were exercised at a reduced exercise price of $7.92 per share for aggregate gross proceeds to the Company of approximately $364,000. As consideration for the exercise of the 2023 Warrants and 2024 Warrants for cash, we issued new unregistered warrants (the “New Warrants”) to purchase up to an aggregate of 47,764 shares of common stock at an exercise price of $7.79 per share (the “New Warrant Shares”). The New Warrants are exercisable immediately upon issuance and will expire five years following the initial issuance date. Except as described herein, the New Warrants are substantially similar to the 2023 Warrants and 2024 Warrants. The closing of the Concurrent Warrant Exercise Transaction occurred on September 11, 2025. As of June 30, 2026, the New Warrant Shares were still outstanding. Also pursuant to the Engagement Letter, Energous, in connection with the closing of the Concurrent Warrant Exercise Transaction, agreed to issue to the Placement Agents or their respective designees warrants (the “Concurrent Warrant Exercise Transaction Placement Agent Warrants”) to purchase up to an aggregate of 3,343 shares of Common Stock. The Concurrent Warrant Exercise Transaction Placement Agent Warrants have substantially the same terms as the New Warrants, except the Concurrent Warrant Exercise Transaction Placement Agent Warrants are immediately exercisable to purchase one share of common stock at a price of $9.90 per share and the Concurrent Warrant Exercise Transaction Placement Agent Warrants expire on September 10, 2030. As of June 30, 2026, there were 1,538 of the Concurrent Warrant Exercise Transaction Placement Agent Warrants still outstanding. Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, we are not required to provide this information.