Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

We have developed 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:

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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 flow, inventory management, supply chains, global regulatory approvals, purchasing trends, customer payment patterns, and the broader industry environment, as well as our employees.

Critical Accounting Estimates and Policies

The following discussion and analysis of financial condition and results of operations is based upon our financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States of America. Certain accounting policies and estimates are particularly important to the understanding of our financial position and results of operations and require the application of significant judgment by our management or can be materially affected by changes from period to period in economic factors or conditions that are outside of our control. As a result, they are subject to an inherent degree of uncertainty. In applying these policies, our management uses their judgment to determine the appropriate assumptions to be used in the determination of certain estimates. Those estimates are based on our historical operations, our future business plans and projected financial results, the terms of existing contracts, our observance of trends in the industry, information provided by our customers and information

available from other outside sources, as appropriate. Please see Note 3 to our financial statements for a more complete description of our significant accounting policies.

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 amounts of revenue and 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 our 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 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.

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:

Our revenue consists of its single segment of wireless charging system solutions. The wireless charging system revenue consists of revenue from product development projects and production-level systems.

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.

Inventory. We state inventory at the lower of cost, determined on a weighted average cost method, or net realizable value. Net realizable value is calculated at the end of each reporting period and an adjustment, if needed, is made. At the point of loss recognition, a new lower cost basis for that inventory is established and subsequent changes in facts and circumstances do not result in the restoration or increase in the new cost basis.

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 expense 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 the Years Ended December 31, 2025 and 2024

The following table sets forth selected Condensed Statements of Operations data (in thousands) and such data as a percentage of revenue:

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Revenues.During 2025 and 2024, we recorded revenue of $5.6 million and $0.8 million, respectively. The 633% year over year increase is primarily due to the expansion of commercial applications with multinational enterprise retailers, including two Fortune 10 companies (one of which accounted for 85% of our 2025 revenue), deploying our WPN technology in connection with their infrastructure modernization initiatives as well as a proof-of-concept deployment with a Fortune 500 customer, referred through the Company's participation in the Amazon Web Services ("AWS") Partner Network.

Cost of Revenue:

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Cost of revenue was $3.6 million and $0.8 million, respectively, for 2025 and 2024. The increase is primarily due to higher sales volume of PowerBridge Pro transmitters that were shipped during 2025. With the continued ramp up of our volume manufacturing during 2025 and other strategic efforts made to optimize operations, product margins improved significantly, transitioning from a gross profit in 2024 of $12,000 to a gross profit in 2025 of approximately $2.0 million.

Operating expenses and Loss from Operations.Operating expenses are made up of research and development, sales and marketing, general and administrative, severance expense, and expenses from an abandoned financing transaction. The loss from operations was $10.0 million and $18.4 million, respectively, for 2025 and 2024.

Research and Development Costs:

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Research and development costs for 2025 and 2024 were $4.1 million and $7.7 million, respectively. The decrease of $3.6 million is primarily due to a $2.0 million decrease in employee-related costs, consisting primarily of an approximately $1.9 million decrease in personnel-related expenses and a $0.2 million decrease in stock-based compensation, a $1.3 million decrease in engineering prototype related expenses, supplies, and software costs, and a $0.2 million decrease in miscellaneous office expenses.

Sales and Marketing Costs:

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Sales and marketing costs for 2025 and 2024 were $2.4 million and $3.1 million, respectively. The decrease of $0.7 million is primarily due to a $0.5 million decrease in consulting, public relations, and recruiting fees, a $0.1 million decrease in marketing and tradeshow expenses, and a $0.1 million decrease in trademark and promotional expenses.

General and Administrative Costs:

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General and administrative costs for 2025 and 2024 were $4.5 million and $6.3 million, respectively. The decrease of $1.8 million is primarily due to a $0.6 million decrease in legal fees, a $0.4 million decrease in corporate expenses primarily related to stock registration and annual meeting fees, a $0.3 million decrease in consulting, investor relations fees, a $0.2 million decrease in office rent, a $0.2 million decrease in insurance premiums, a $0.1 million decrease in supplies, a $0.1 million decrease in recruiting costs, and a $0.1 million decrease in stock-based compensation, partially offset by a $0.3 million increase in payroll costs accrued as a result of key milestones achieved during 2025 under the 2025 Bonus Plan and higher employee benefit costs.

Severance Expense:

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Severance expense for 2025 and 2024 was $0.4 million and $1.4 million, respectively. Severance expense during 2025 was related to separations with certain non-executive employees. Severance expense during 2024 was primarily due to the departure of our former CEO, representing approximately $1.2 million in recorded severance expense.

Expenses from Abandoned Financing Transaction:

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Expenses related to our abandoned financing transaction were $0.7 million during 2025, primarily attributable to our decision to terminate and refund the previously announced convertible preferred equity offering under Regulation A. There was no such expense during 2024.

Other income (expense), net:

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Other income resulting from the change in fair value of the warrant liability was approximately $0.3 million in both 2024 and 2025. The changes for both periods were due to a lower market value of our common stock. As of December 31, 2025, the 2023 Warrants were fully exercised, eliminating the related warrant liability.

Net interest income for 2025 was $0.2 million and $0 for 2024. During 2025, we earned $0.5 million in interest from our money market account, partially offset by $0.3 million in interest expense related to a short-term loan, originated in 2024 and paid off in 2025. During 2024, we earned $0.2 million in interest from our money market account, offset by $0.2 million in interest expense from a short-term loan.

Loss on extinguishment of short-term debt was $0.2 million during 2024. We did not incur such cost during 2025.

Net Loss.As a result of the factors described above, the net loss for 2025 was $9.6 million, compared to $18.4 million for 2024.

ATM Offering Program

On June 21, 2024, we entered into the At the Market Offering Agreement with H.C. Wainwright & Co., LLC ("Wainwright"), as sales agent, pursuant to which we could issue and sell of up to $3.45 million in shares of our common stock (as amended to date, the "ATM Program"). During the year ended December 31, 2024, we sold 228,392 shares of our common stock under the ATM Program for net proceeds of approximately $3.2 million (net of commissions and other related offering expenses of approximately $0.3 million).

Among other adjustments since June 2024, we filed a prospectus supplement on February 13, 2025, providing for the issuance and sale of up to an additional $80.0 million of shares of common stock under the ATM Program. The maximum capacity under this prospectus supplement was subsequently reduced to $70.0 million on September 10, 2025. During the three months ended December 31, 2025, we sold 25,093 shares of our common stock under the ATM Program for net proceeds of approximately $0.1 million. During the year ended December 31, 2025, we sold 555,155 shares of common stock pursuant to the February 2025 prospectus supplement, resulting in net proceeds of approximately $5.0 million (net of commissions and other related offering expenses of approximately $0.4 million). In total, during the year ended December 31, 2025, we sold an aggregate of 1,107,968 shares of common stock under all prospectus supplements to the ATM Program for net proceeds of approximately $18.4 million (net of commissions and other related offering expenses of approximately $1.2 million). As of December 31, 2025, approximately $64.6 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.

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.

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 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.

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.

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.

Agile Subordinated Loan Agreement

Effective October 1, 2024, we entered into a subordinated business loan agreement (the "Original Loan Agreement") with Agile Capital Funding, LLC and Agile Lending, LLC (collectively, the "Lender"), which provided for an initial term loan of $525,000, with the ability to receive additional term loans of up to $1.6 million, subject to certain conditions (such loans, the "Original Term Loan"). Principal and interest on the Original Term Loan in the aggregate amount of $756,000 was to be repaid in weekly payments of $27,000 commencing on October 14, 2024 and fully repaid on or before the maturity date of April 21, 2025.

Effective November 5, 2024, we entered into an amended subordinated business loan agreement with the Lender (the "Amended Loan Agreement") to refinance the Original Term Loan. The Amended Loan Agreement provided for a new term loan of $997,000, with the ability to receive additional term loans of up to $1.6 million, subject to certain conditions (such new loans, the "New Term Loan"). Principal and interest on the New Term Loan in the aggregate amount of $1,415,740 was repaid in weekly payments of approximately $39,000 and was fully repaid before the maturity date of July 17, 2025 on July 7, 2025. The proceeds of the New Term Loan were used to repay in full the Original Term Loan, which had a settlement value of $648,000 on November 5, 2024. The New Term Loan was expressly subordinated to our obligations on certain senior indebtedness of the Company as provided in the Amended Loan Agreement.

On July 7, 2025, we repaid all outstanding amounts owed to the lender under the Amended Loan Agreement. As a result, the Company has no remaining obligations under the Amended Loan Agreement, and no amounts were outstanding as of December 31, 2025.

Liquidity and Capital Resources

During 2025 and 2024, we recorded revenue of $5.6 million and $0.8 million, respectively. We incurred a net loss of $9.6 million and $18.4 million for 2025 and 2024, respectively. Net cash used in operating activities was $12.4 million and $17.6 million for 2025 and 2024, respectively. As of December 31, 2025, we had cash on hand of $10.4 million. We are currently meeting our liquidity requirements through the collection of accounts receivable and net proceeds of securities offerings through the at-the-market ATM Program. As of March 23, 2026, cash on hand was $39.4 million.

Based on current operating levels and continuation of cost reduction efforts implemented during 2025, we believe we have sufficient cash on hand to fund the next 12 months of operations.

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.

Accordingly, we expect 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 and strategic plans.

Cash Flows

Operating Activities - During 2025, cash flows used in operating activities were $12.4 million, consisting of a net loss of $9.6 million, less adjustments to reconcile net loss to net cash used in operating activities aggregating $0.2 million (principally stock-based compensation of $0.3 million and depreciation and amortization expense of $0.1 million, partially offset by change in fair value of warrant liability of $0.3 million), a $2.9 million increase in accounts receivable, a $1.0 million increase in inventory, a $0.9 million decrease in accounts payable and a $0.5 million increase in operating lease liabilities, partially offset by a $1.0 million increase in accrued liabilities, a $0.7 million decrease in prepaid expenses and other current assets, net of other assets, and a $0.6 million increase in operating lease right-of-use assets.

During 2024, cash flows used in operating activities were $17.6 million, consisting of a net loss of $18.4 million, less adjustments to reconcile net loss to net cash used in operating activities aggregating $1.1 million (principally stock-based compensation of $0.8 million, depreciation and amortization expense of $0.2 million, loss on extinguishment of short-term debt of $0.2 million, issuance of common stock to consultant of $0.1 million and accrued interest of $0.1 million, partially offset by change in fair value of warrant liability of $0.3 million), a $0.5 million decrease in operating lease liabilities, a $0.2 million decrease in accrued expenses, a $0.1 million decrease in accrued severance expense and a $0.1 million increase in inventory, partially offset by $0.7 million decrease in operating lease right-of-use assets.

Investing Activities - During both 2025 and 2024, cash flows used in investing activities were $0.1 million. The cash used in 2025 and 2024 was for the purchases of testing hardware and computer equipment.

Financing Activities - During 2025, cash flows provided by financing activities were $21.6 million, which primarily consisted of $18.4 million in net proceeds from the sale of shares of our common stock under the ATM Program, $4.0 million in net proceeds from the sale of stock and warrants and $0.4 million in proceeds from warrant exercises, partially offset by $0.9 million in repayments of a short-term loan and $0.3 million in repayments of financed insurance. During 2024, cash flows provided by financing activities were $5.1 million, which primarily consisted of $3.2 million in net proceeds from the sale of shares of our common stock under the ATM Program, $1.8 million in net proceeds from a registered direct offering that included the sale of common stock, pre-funded warrants and warrants and net borrowings of $0.8 million from a short-term loan, partially offset by $0.3 million in repayments of financed insurance and $0.3 million in repayments of a short-term loan.