WATT

Financial Performance Context

• Lower Q2 2026 gross margin was driven by three temporary, growth-aligned factors, not structural issues: 1) One-time retooling and production costs from shifting volume to a U.S.-based contract manufacturer after the overseas manufacturer could not retool in time for Q2 delivery of customer-requested product upgrades; 2) Higher component costs from alternative sourcing, caused by AI-driven supply chain constraints that redirected critical component supply to hyperscalers; 3) A deliberate strategic decision to absorb higher input costs to meet delivery commitments for large strategic customers, rather than delaying shipments.
• The company's long-term gross margin target remains 40%+, and management expects margins to progressively improve as temporary headwinds subside.

Commercial Deployment Updates

• The largest active deployment, with a leading national retailer, is 90% complete across the planned 4,700 U.S. retail locations, and the customer is already testing additional use cases beyond the original cold chain compliance scope. A separate cold chain program for the customer's 50 membership warehouse locations is underway, with plans to expand to 550 locations in early 2027 and a broader rollout later that year.
• A second Fortune 10 deployment (with an e-commerce, technology, and cloud services enterprise) has expanded significantly from 14 international installations in Q1 to active deployment across multiple new markets and five distinct use cases, with a total opportunity many multiples of the original initial scope.
• A proof of concept program with a major U.S. federal logistics agency, enabled by the company's domestic manufacturing capability that meets federal procurement requirements, generated meaningful Q2 2026 revenue and is one of the company's top five customers. A multi-stage deployment across up to 500 sites over two to three years is under discussion, with near-term plans to ramp to more active sites within 12 months.

Technology and Product Updates

• The new PowerBridge Pro Plus adds integrated cloud data routing capability, eliminating the need for separate Bluetooth gateway hardware, simplifying deployment, reducing site complexity and maintenance, and lowering total cost for enterprise customers. Demand for this new product has been strong from both new and existing customers.
• The PowerBridge Pro Plus received SPC certification for U.S. commercial deployment in July 2026, clearing the way for active deployments in the second half of 2026.
• Effective July 1, 2026, the company implemented a product-wide price increase.
• The company has recorded zero product returns since commercial production of PowerBridge Pro began in 2024, maintaining a perfect quality record.

Pipeline and Commercial Development

• The enterprise sales cycle has shortened to 6-9 months for new programs, down from 18-24 months two years ago, reflecting growing market familiarity with the technology and clearer value propositions.
• The current proof of concept pipeline is exponentially larger in aggregate opportunity size than 12 months ago, with average individual opportunity size many multiples of 2025 levels. A single large commercial decision could be transformative for the company's revenue trajectory.
• An initial proof of concept with a leading national quick service restaurant (QSR) operator has been completed, with active discussions for a full network rollout across thousands of potential locations, plus additional opportunities with the QSR's suppliers and ecosystem partners. An active proof of concept is underway with a national grocery chain across hundreds of stores.
• The partnership with Wiliot remains strong: Energist provides the persistent RF wireless power infrastructure that enables reliable, continuous operation of Wiliot's battery-free sensors for enterprise AI deployments, a complementary value relationship that grows as physical AI deployments scale.
• The company's AWS co-selling partnership continues to generate high-quality enterprise opportunities, with multiple mature programs advancing toward commercial decisions. The fluctuating customer launch count on the AWS partner profile is a normal top-of-funnel dynamic, not a sign of slowing commercial momentum.

Financial Position

• The company has not made any use of its at-the-market (ATM) equity facility since the Q1 2026 call, and maintains its commitment not to use the ATM facility in 2026. Management believes its current $31.2 million cash position is sufficient to fund all planned commercial activities without additional equity financing.

• Management reaffirms its long-term target of achieving 40%+ gross margins, and expects gross margins to progressively improve in Q3 2026, Q4 2026, and into 2027 as temporary cost headwinds from Q2 2026 subside.
• Overseas contract manufacturing line upgrades are in progress, with limited volume production planned for Q3 2026 and volume expansion planned for Q4 2026. Extraordinary component sourcing costs are expected to moderate over time.
• The recently implemented July 2026 product price increase, combined with production normalization and revenue scaling, is expected to support margin recovery in the second half of 2026.
• The PowerBridge Pro Plus is expected to become a meaningful contributor to second half 2026 revenue.
• Management expects to report meaningful commercial advances across multiple large pipeline programs over the remainder of 2026 and through 2027.
• The company's core focus remains on delivering sustained quarterly revenue growth to demonstrate accelerating market adoption, though no specific numerical revenue guidance is provided.

The company does not break out performance across multiple distinct product segments in this call. Aggregate consolidated financial results are as follows: Q2 2026 revenue was $3.1 million, a 217% increase year-over-year (YoY) from $1 million in Q2 2025. First half (H1) 2026 revenue was $6.2 million, a 368% YoY increase from $1.3 million in H1 2025. Trailing 12-month revenue surpassed $10 million, a new historic milestone, and H1 2026 revenue already exceeded full-year 2025 total revenue of $5.6 million. H1 2026 gross profit was $1.2 million, a 176% YoY increase, with a 19% gross margin for the period. Q2 2026 gross margin was below recent historical levels due to temporary factors. GAAP operating expenses for Q2 2026 totaled $3.3 million, compared to $3.1 million in Q2 2025. GAAP net loss for Q2 2026 was $2.9 million (53 cents per basic/diluted share), compared to a $2.8 million net loss ($2.35 per share) in Q2 2025. As of June 30, 2026, the company held $31.2 million in cash and $6.3 million in prepaid expenses to contract manufacturers. In Q2 2026, five customers accounted for 74% of total revenue, down from 94% of revenue concentrated with two customers in Q2 2025, showing significant customer base diversification.

• Forward-looking statements are inherently subject to risks and uncertainties, as detailed in the company's SEC filings, and actual results may differ materially from current expectations. The company does not undertake an obligation to update forward-looking statements unless required by law.
• Persistent global supply chain constraints for critical electronic components, exacerbated by AI-driven demand from hyperscalers that redirects available supply, could continue to create cost pressure or impact delivery timelines if not properly managed.
• Enterprise sales cycles for new infrastructure technology remain deliberate (6-9 months for current programs), and commercial decisions for large-scale opportunities can take extended time, which may impact the timing of revenue recognition even as pipeline quality grows.
• Large opportunity concentration means that delays or negative commercial decisions for top pipeline programs would have a material impact on near-term revenue growth.

Q: Did supply chain issues in Q2 push any customer shipments into later quarters, and can you share pipeline deal count and your outlook for revenue trajectory? / A: All Q2 purchase orders from strategic customers were fully delivered on time, so no shipments were pushed to later quarters; supply chain issues only created cost pressure, not delivery delays. The company does not disclose raw pipeline numbers, and will provide updates as opportunities progress to meaningful commercial discussions. Management declined to give specific revenue guidance, and reaffirmed the company's ongoing focus on delivering sustained quarterly revenue growth to demonstrate market adoption.

Q: How does the new PowerBridge Pro Plus end-to-end solution impact average selling price and margin mix, and is it on track to contribute to second half 2026 revenue? / A: The PowerBridge Pro Plus end-to-end solution bundles the transmitter, battery-free eSense tags, and recurring revenue eCompass software, with incremental additional PowerBridge standard units added based on use case and facility layout. The PowerBridge Pro Plus has higher margins than older products, and SaaS software also carries high margins, so broader deployment of this solution will gradually lift overall company margins. It is on track to be a meaningful revenue contributor in the second half of 2026, as expected.

Q: Do new expanded use cases for the Fortune 10 customer require additional product engineering that would increase near-term R&D costs? / A: New use cases for the existing Fortune 10 customer only require additional infrastructure (transmitters) to be installed, not new product engineering or rework. All product upgrades requested by this customer were already completed and implemented in Q2 2026.

Q: What is your channel partner and reseller strategy, and when will it contribute to growth? / A: The company is selectively working with high-caliber value-added resellers and system integrators, which are critical for accelerating deployment speed and extending the company's sales reach to end customers. AWS is a key existing channel partner, and a few additional unannounced partners are currently being evaluated for onboarding. Public announcements for new partners are expected in Q3 or Q4 2026.