2025 H2 INVESTOR UPDATE 

Dear follower of Qnetic, 

This is a general business progress summary for the six months up to the end of 2025 intended for the general investor audience. Thank you for your interest. 

Summary 

• $5M funding closed via a private offering, bringing the total to $7.1M in 2025 

• We signed LOIs with two important customers for high-profile pilot projects in the US 

• The Shanghai-based team moved into the new Qnetic Technology Centre 

• The lease was signed on our Sacramento Production Centre, California 

• The Pulsar product design is mostly complete with many parts already made or on order 

• A test cell design is close to completion, with construction starting in Q1 

• The team has expanded with four full-time staff in the US, one new team member in Shanghai, and several important contractors joining our project 

• Three patents now published 

• Exciting new render images of our product were published 

• Reached 10,000 rpm on our Vega prototype after installing a safety enclosure 

• Partnered with ABB on our inverter technology, with many other supplier partnerships 

Lots to go through, so let’s dive in. 

Safe Harbor Statement  

This business update contains statements regarding matters that are not historical facts that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our technology development, expected performance, commercialization plans, and business objectives. 

Words such as “believes,” “anticipates,” “plans,” “expects,” “intends,” “will,” “goal,” “potential,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements include such identifying words. 

These forward-looking statements are based on management’s current expectations and assumptions and are subject to known and unknown risks, uncertainties, and other factors that could cause actual results or the timing of events to differ materially from those expressed or implied. 

Such risks and uncertainties include, without limitation, risks related to technology performance, development timelines, manufacturing scale-up, market adoption, regulatory matters, capital requirements, and our ability to successfully commercialize our products. 

Additional risks and factors are described in our filings with the Securities and Exchange Commission, including, without limitation, our annual Form CU. All forward-looking statements speak only as of the date of this update, and we undertake no obligation to update or revise any forward-looking statements as a result of new information, future events, or otherwise. 

1. Fundraising 

In May 2025, Qnetic closed an equity crowdfunding raise on the Wefunder platform which raised $2.1M gross, with the final amount exceeding our expectations. 

Also in May 2025, we entered a $5M capital investment agreement with a prominent Saudi investor. The investment was tranched over the course of 2025 and fully closed in December. This was a priced equity round, triggering the conversion of the SAFE notes issued in our first and second Wefunder raises (2023 and 2025), as well as the SAFE held by the venture capital firm SOSV, thereby establishing defined equity ownership for these investors. 

Since inception, Qnetic has raised $9.2M in capital, $7.1M of which was raised during 2025. In 2026, we anticipate raising around double this amount, with investor discussions already underway, and will continue to keep you informed as these efforts progress. 

2. Commercial Traction 

H2 2025 marked a major step forward for Qnetic, with two highcredibility pilot partnerships secured and acceptance into a technology assessment programme for energy storage run by a prominent power industry research group. That program is designed to advance and commercialize precommercial storage technologies that address market needs not met by lithiumion and involves direct participation from eight major U.S. utilities and IPPs. This positions Qnetic within one of the most respected validation pathways in the industry. 

First Pilot 

In late 2026 or early 2027 Qnetic will deploy one to two units for a 12–18month evaluation with one of the largest and most respected publicpower utilities in the U.S. Testing will follow defined usecase scenarios and focus on demonstrating core performance and reliability. The above mentioned research group will oversee testing under its standardized protocol and publish results to its global utility membership, amplifying the visibility and credibility of Qnetic’s early performance data. 

Second Pilot 

A major IPP focused on solar power and energy storage will sponsor a pilot hosted by a US national laboratory. The test site can emulate virtually any grid or load profile—including emerging AI datacenter loads—allowing Qnetic to validate performance across a broad range of realworld conditions. The national lab will conduct and publish the testing, providing another independent, authoritative assessment of Qnetic’s technology. 

Early discussions are also underway regarding a potential pilot in the Middle East, a fast-growing market, to demonstrate performance in hot, dusty environments. 

3. Product Development 

The team has been primarily working on our ‘Q500’ platform product design. The alpha prototype of this is codenamed Pulsar. The detailing is almost complete, with many parts already ordered, and some parts already delivered and under test. Here are some highlights: 

The general assembly continues to mature beyond the renders published early in 2025, with the 3D CAD model looking like this today—the additional visual complexity illustrating how far the engineering has come: 

3D CAD model of Pulsar 

We successfully built the rotor mandrel tool (below), which was done near Shanghai and air-freighted to California. This tells you the scale of Pulsar. 

Rotor mandrel tool rolling before welding and machining. 

Completed mandrel tool. 

The rotor itself will be manufactured over the coming few months and represents the most critical part of the assembly. In preparation we have taken delivery of a large proportion of the carbon fibre necessary to manufacture it. 

Several tonnes of Teijin carbon fibre delivered for our use. This gives an impression of the quantity of this material we will need in mass production. 

We have taken delivery of a customised vacuum chamber that allows us to test various subsystems of Pulsar. The first of these is the ESB (emergency shutdown bearing) electromechanical mechanism, which has undergone lifetime cycle testing under load and vacuum to prove its operation. 

View of the core part of the ESB mechanism with our novel engagement mechanism (redacted) driven by a bronze gearwheel shown with a roller thrust bearing on top. 

ESB test set-up showing vacuum chamber, vacuum pump, control systems and sensors. 

View inside the vacuum chamber showing an ESB (redacted) complete with drive mechanism (right) and housing, sensors (left) and instrumentation. 

The ESB testing was successful, which significantly derisks Pulsar in this respect. Our custom-designed AMBs (active magnetic bearings) have been built and are now being tested and prepared for assembly onto our shaft (below). 

Housing structure of AMBs. 

The actuator cores of the AMBs, in shipping crate. 

The upper shaft, which is a single mega-component that comprises the PMB structure, and connects that to the motor, to the AMB, and to the ESB, is part-way through production. Forging and rough machining is complete so far. 

Forged and rough-machined bearing shafts.

As can be seen, these are Ø530 x 1056mm—huge 

The power electrical systems and electronic control and software systems are being built up. We are partnered with ABB for the motor-side inverter. 

ABB’s HSE880 series inverter. 

Our earlier Vega prototype continues to be useful. Its Safety Cover has been installed, which is a containment that sits on top of Vega and enables safe and comfortable testing at Vega’s full speeds. It protects us (as well as the building and equipment) from the most extreme type of failure conceivable: a rotor burst. 

With this in place, I am delighted to announce that Vega has just recently passed the incredible threshold of reaching 10,000rpm. This is double the speed previously announced and a major milestone in technical proficiency, not just for the rotor itself, but for the dynamic controls of the whole system, especially the AMBs. 

Vega enters long-term cycle testing and continue to be a tool to pre-test Pulsar technologies and future technology iterations generally. 

Vega in place with the containment part of the safety cover being lifted into position. 

Final assembly step of the Vega Safety Cover, which comprises an inner and outer containment. 

Since 2023, we have been filing patents against our hardware and some of these have finally been published. You can now look up three of our four filings as follows: 

1. WO 2024/216543 A1 A BEARING SYSTEM FOR RADIALLY CONSTRAINING A ROTOR IN A KINETIC ENERGY STORAGE MACHINE https://patentscope.wipo.int/search/en/detail.jsf?docId=WO2024216543  

2. WO 2024/217546 A1 A KINETIC ENERGY STORAGE MACHINE https://patentscope.wipo.int/search/en/detail.jsf?docId=WO2024217546  

3. WO 2025/160954 A1 ROTOR FOR A KINETIC ENERGY STORAGE MACHINE https://patentscope.wipo.int/search/en/detail.jsf?docId=WO2025160954  

A fourth filing will reach publication in due course and we will be selectively authoring more protections as we proceed. We will combine patent filings with secrecy of know-how where we do not want to publish our work. 

4. People 

Five people have been hired full-time during H2 2025, four of whom are based in the US. We now have fifteen staff on the payroll with a further five specialists on contract (covering product compliance, HR, project management, electrical engineering, and composites design), and five advisors. 

We now have twenty people actively engaged in Qnetic’s projects across a range of disciplines, and through our partners, we have another ten or twenty people involved in long-term collaborations on Qnetic design and development tasks, from mechanical design, to civil engineering. Here are our recent hires: 

We continue to hire for talents in composites manufacturing, design engineering, business development, software and others. If you have a recommendation or are interested to work on highly challenging but rewarding work, then please reach out. 

5. Operations 

At the start of October, we moved into our dedicated Technology Centre in Minhang District of Shanghai. This comprises nearly 1,000m² (10,000sqft) of workshop and office space combined under one roof. We reconfigured and renovated the office space providing seating initially for 18, a meeting room, a conference room, a video conferencing booth, a mechanical/electrical lab, toilets and a shower, a kitchenette, and of course a large assembly and test space. 

The test space houses Vega and will be the site of the first assembly of Pulsar by the technical team. We are working on the design of a below-grade test cell which will enable full-speed testing of Pulsar within our own facility. 

Main design office at the Tech Centre 

Mechanical/electrical lab at the Tech Centre—this will become a hive of activity once all the Pulsar components arrive. 

Delivery of a new bridge crane last October, able to handle 20 tonnes. 

We installed a new custom-made bridge crane (on existing rails) enabling unrestricted assembly of Pulsar, which will be about 14 tonnes when fully assembled. 

Overview of the Tech Centre, with Vega visible on the right, the new bridge crane above our old red gantry crane that was used to assemble Vega, and the design office in the background. 

We are also building our public image with new branding at the TC. 

In Sacramento, we have signed a five-year lease on our first production centre and office build-out is ongoing. The site comprises 30,000sqft (2,800m²) of new warehouse space based near Sacramento International airport and about twelve minutes by car from downtown. 

Sacramento was chosen for several reasons including time-zone compatibility with Shanghai, the maturity of the California energy storage market, proximity to the Bay Area VC ecosystem and climate tech ecosystem, location of the CEC (California Energy Commission), location of potential customers and potential suppliers, and the availability of supportive grants and incentives. 

The SPC is located right next to the airport and only 15 minutes from downtown Sacramento. 

The building and all exterior elements such as parking and landscaping are complete. The demising wall is up, and the constructor is in the process of building our office space which is positioned at one end of the unit. 

Exterior of the Sacramento Production Centre. 

Interior of the SPC. We have four dock doors and one grade-level door at the far end and a ceiling height of 32'/9.75m. Our test cell will be located outside the dock doors. The office is located to the right end. 

View of the office portion under construction with building entrance at the glass wall towards the rear of the image. 

Initial layouts for test facilities at the SPC. These would be used for end of line tests as well as customer demonstration. 

6. And Finally… 

Last year we published a series of render images of a future ‘Q1’ product based on the Pulsar design. 

END.