#1electriq power (NYSE: ELIQ) INVESTOR PRESENTATION November 2023 Questions? Contact us [email protected] electriq power electriq power electriq power#2DISCLAIMER electriq power This presentation (together with oral statements made in connection herewith, the "Presentation") is intended to provide summary information about the business of Electriq Power, Inc. ("we," "us," "our," "Electriq" or the "Company") for informational purposes only. The information in this Presentation is not complete, comprehensive, or exhaustive and remains subject to change. This Presentation is not an offer to sell securities, is not soliciting an offer to buy securities, or make an investment, nor shall there be any sale of securities, investment or other specific product in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. This Presentation does not constitute investment, tax or legal advice. No representation or warranty, express or implied, is given as to the accuracy or completeness of the information in this presentation. This information is not intended as the basis of any investment decision and may not contain all of the information that a recipient may desire, and each recipient should perform its own independent investigation and analysis with respect to any investment decision. The general explanations included in this Presentation cannot address, and are not intended to address, your specific investment objectives, financial situations or financial needs. Forward-Looking Statements This Presentation includes forward-looking statements based on the Company's current expectations and projections about future events. All statements other than statements of historical fact contained in this Presentation are forward-looking statements. Forward-looking statements herein generally relate to future events or the future financial or operating performance of the Company. In some cases, you can identify forward-looking statements by terminology such as "believe" "forecasted," "expected," "promotes," "plan," "projected," "estimated," "anticipated," "potential," "could," "exploring," or the negatives of these terms or variations of them or similar terminology. Forward- looking statements in this Presentation include statements regarding: (i) growth of the residential solar install capacity and U.S. battery storage unit installs, (ii) our business plans, strategies and measures, including our current and target customers, (iii) our expectations and projections regarding our revenue and cash flows, including sources of revenue, the timing of such revenue, milestones and the timing of achieving such milestones, (iv) our beliefs regarding our addressable market, including the size, scope and growth of such market, (v) our anticipated unit price and gross margins, (vi) our expectations regarding our business model, (vii) expectations regarding the growth, potential revenue, goals and timing of our Sustainable Community Networks and the benefits it provides, (viii) our position and ability to capitalize on market opportunities and the impacts to our results, (ix) our liquidity and capital resources, including plans to raise additional capital, (x) the impact and benefits of certain regulations and (xi) our expectations related to project financing. Such forward-looking statements are based on beliefs and assumptions and on information currently available to management of the Company and are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward- looking statements. For additional information regarding known material factors that could cause our actual results to differ from our projected result, please read (i) the section titled "Risk Factors" in the Appendix to this Presentation, (ii) the section titled "Risk Factors" in our quarterly report on Form 10-Q filed with the Securities and Exchange Commission (the "SEC") on November 14, 2023, (iii) our reports filed from time to time with the SEC and (iv) other public announcements we make from time to time. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future. Use of Projections This Presentation contains projected financial information with respect to the Company. Such projected financial information constitutes forward-looking information, is for illustrative purposes only and should not be relied upon as being predictive of future results. The assumptions and estimates underlying such financial forecast information are inherently uncertain and are subject to a wide variety of significant business, economic, competitive and other risks and uncertainties that could cause actual results to differ materially from those contained in such prospective financial information. These assumptions may not materialize and that current economic conditions render such assumptions, although believed reasonable at the time they were made, subject to greater uncertainty. See the section above titled "Forward-Looking Statements". While all financial projections, estimates and targets are necessarily speculative, the Company believes that the preparation of prospective financial information involves increasingly higher levels of uncertainty the further out the projection, estimate or target extends from the date of preparation. Accordingly, there can be no assurance that the prospective results are indicative of future performance of the Company or that actual results will not differ materially from those presented in the prospective financial information. The inclusion of financial forecast information in this Presentation should not be regarded as a representation by any person that the results reflected in such forecasts will be achieved. Neither the Company's independent auditors registered public accounting firms have audited, reviewed, compiled or performed any procedures with respect to the projections for the purpose of their inclusion in this Presentation or any other purpose, and accordingly, none of such independent auditors registered public accounting firms has expressed any opinion or provided any other form of assurance with respect to such projections. Industry and Market Data Certain information contained in this Presentation relates to or is based on studies, publications, surveys and the Company's own internal estimates and research. In addition, all of the market data included in this Presentation involves a number of assumptions and limitations, and there can be no guarantee as to the reasonableness, accuracy or reliability of such assumptions or the accuracy or completeness of any projections or modeling or any other information contained herein. Any comparison of the Company to the industry or to any of its competitors is based on this publicly available information and statistics and such comparisons assume the reliability of the information available to the Company. The Company obtained this information and statistics from third-party sources, including reports by market research firms and company filings. Finally, while the Company believes its research is reliable, such research has not been verified by any independent source and none of the Company, nor any of its affiliates nor any of its control persons, officers, directors, employees or representatives make any representation or warranty with respect to the accuracy of such information, including, but not limited to, any warranties of merchantability or fitness for a particular purpose or use, and they expressly disclaim any responsibility or liability for direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs expenses, legal fees or losses (including lost income or profits and opportunity costs) in connection with the use of the information herein. Any data on past performance or modeling contained herein is not an indication as to future performance. Trademarks This Presentation may contain trademarks, service marks, trade names and copyrights of other companies, which are the property of their respective owners. Solely for convenience, some of the trademarks, service marks, trade names and copyrights referred to in this Presentation may be listed without the TM, SM or symbols, but the Company will assert, to the fullest extent under applicable law, the rights of the applicable owners, if any, to these trademarks, service marks, trade names and copyrights. Strictly Confidential / Not for Redistribution 2#3ELECTRIQ POWER COMPANY OVERVIEW ELECTRIC POWER electriq power Electriq Power began in 2014 as a pioneer in residential battery storage systems and provides value to homeowners, installers, asset owners and the grid through Electriq's smart energy management software We passionately believe in distributed energy storage solutions to shape our world's environmental and economic future through equitable offerings Using the battery technology as a foundation, Electriq has unique go-to-market strategies partnering with local government entities and microgrid developers providing turnkey solutions including solar + battery + energy management software Electriq is intentional about deploying geographically dense energy storage solutions to create a foundation for future high-margin recurring revenue through the development of Virtual Power Plants ("VPP") Electriq's corporate headquarters is in West Palm Beach, FL with R&D in the San Francisco Bay Area Publicly-listed August 1, 2023 on the NYSE under ticker "ELIQ" Strictly Confidential / Not for Redistribution 3#4MANAGEMENT TEAM Supported by a Board of Directors with deep industry and leadership experience Maria Huusom SVP, Operations electriq power Frank Magnotti CEO Years of Experience: 38 years Founded Comverge, a pioneer of virtual power plant and virtual peaking capacity contracts with utilities and ISO's 6 GW of demand response to ~5MM homes; Believed to be the first pure play smart grid company to go public General manager of utility solutions at AT&T and program manager at Bell Labs comverge energy made better Ofluitec MEASURE. CONSULT. TREAT. AT&T Lucent Technologies Bell Labs Innovations Petrina Thomson CFO Years of Experience: 32 years Joined Electriq after successfully completing an exit transaction at Curvature working as VP & Chief Accounting Officer Formerly North American Controller at Tyco International and Senior Director, Finance at Sun Microsystems, Inc curvature tyco Sun microsystems Jan Klube Ozlem Fonda Chief Technology Officer Chief Human Resources Officer Troy Anatra Chief Commercial Officer Frank Evans Chief Services Officer ENPHASE. GENERAC Itron Representative Prior Experience Raytheon Technologies Pravin Bhagat Chief Marketing Officer Vestas® □ comverge Sun W WILLDAN energy made better microsystems Strictly Confidential / Not for Redistribution 4#5INVESTOR HIGHLIGHTS 1.Per BNEF. electriq power Giant Addressable Market Integrated Solution and Differentiated Go to Market Strategy Strong Customer and Partner Momentum Key Project Financing Secured Public Listing Leading Management Team Residential solar install annual capacity forecasted to grow at ~15% in the U.S. from 2020 2030(1) New battery attachment rate of 20% (2), increasing 2% - 4% each year Integrated solution seamlessly combines hardware, installation and software platform Electriq partners closely with local Municipalities ("Sustainable Community Networks") and Microgrids ("Sustainable Solutions") for a differentiated Go to Market strategy Secured agreement with Santa Barbara County in 2022 Expanded engagements with SEDC Solar and Barrio Electrico in 2023 Agreements with SLO Climate Coalition and City of Goleta in 2023 Expansion into New England with Derby, CT partnership announced November 2023 In discussions with additional Municipalities and Microgrid partners $300MM+ in expected project financing over a 30-month period secured from a major U.S. clean-energy company in March 2023 Announced completion of merger and listed on NYSE August 1, 2023 Generated over $45 million in equity through private placements, PIPES, loan conversions and non-redemptions Trading on NYSE under ticker "ELIQ” ELIQ's CEO led first smart grid company to go public (2007) with 6 gigawatts of demand response Pioneers in the Virtual Power Plant space with a diverse senior mgmt. team 2. Based on average attachment rates for 2022 per Sunrun, SunPower and Sunnova investor presentations and earnings calls. Strictly Confidential / Not for Redistribution 5#6GIANT ADDRESSABLE MARKET BUOYED BY REGULATORY SUPPORT electriq power The Inflation Reduction Act has bolstered the rapid expansion of residential solar installations and attachment rates U.S. Residential Solar Installed Capacity (GW) 2020-2030 Estimated CAGR: 15% 78.7 70.7 63.2 56.4 49.7 43.3 37.7 33.4 28.9 24.5 20.0 Federal Support (4) At the federal level, President Biden signed into law the Inflation Reduction Act on August 16, 2022, which includes $369 billion for Climate Change and Energy Security, including tax credits and grants to make homes energy efficient: 2020A 2021A 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E Total U.S. Battery Storage Unit Installs (000s) ► 2022 new battery attachment rate of 20% (1), with an estimated 2%-4% annual increase thereafter (2) Retrofit annual attachment rate of 1%(3) ■New Battery Storage Unit Installs ■Retrofit Battery Storage Unit Installs 2023-2025 CAGR: 21% 332 225 241 193 71 60 64 54 261 139 166 177 2022E 2023E 2024E New Install 20% 24% 27% 2025E 30% Attach Rate 30% ITC restored for solar and storage projects 10 years Extension of full PTC / ITC (or the equivalent) values to at least 2032 Stand Alone Storage Introduction of ITC for stand-alone storage installs for first time, a jolt to the retrofit market Up to 20% Bonus ITC for development in certain low-income communities Source: Bloomberg New Energy Finance ("BNEF"), Sunrun, SunPower and Sunnova company presentations and filings, Lawrence Berkeley National Laboratory. 1.Based on average attachment rates for 2022 per Sunrun, SunPower and Sunnova investor presentations and earnings calls. 2.Figures in chart represent midpoint of estimated range. 3.Based on Electriq management estimate. 4.Senate Democrat's Summary: The Inflation Reduction Act of 2022, SEIA Inflation Reduction Act Summary Report. Strictly Confidential / Not for Redistribution 6#7DIFFERENTIATED AND INTEGRATED SOLUTION PowerPod 2 奋 L Backup Self-Supply Time of Use Grid Solar Gr Configure System Mode System mode Reserve for Power Outages Battery A 0kW 100% electriq power PowerPod 2 Rechargeable home battery and home energy management solution Stores energy from solar or the grid Uses stored energy to lower energy costs and provide backup power Modular design to fit any size home Uses safer, more durable lithium- iron phosphate cell chemistry + Full Software Suite User experience and analytics & insights on energy production, consumption and storage data Multiple layers of Electriq developed software including: firmware, consumer, installer, fleet management, and grid services Simplified installation and system verification ► Proprietary algorithms use factors such as historic usage patterns, solar production and utility rates to optimize forecasting + Grid Services (Virtual Power Plant) Automated demand response (ADR) solutions to reduce implementation costs and improve interoperability ► OpenADR for access to any Automated Demand Response program ► PowerADR for aggregation of fleet storage systems ▶ Dense geographic deployments boost the transmission & distribution benefits for Virtual Power Plants Strictly Confidential / Not for Redistribution 7#8UNIQUE GO-TO-MARKET STRATEGY Electriq is focused on two primary go-to-market strategies to capture its large addressable market Customer Overview Sustainable Community Networks ("SCN") Residential customers in municipalities and townships Drives immediate savings for consumers and acceleration of renewable target goals for municipalities Focus on under-resourced communities CALIFORN SLO Climate Coalition Derby CITY OF City of Connecticut CARPINTERIA California GOLETA Sustainable Solutions Microgrid providers and homebuilders Focusing on clean installation and affordable price point ► Modular design intended to fit a wide range of homes SEDC SOLAR BARRIO ELECTRICO Anticipated Unit Economics (1) Projected 2024 Revenue / Gross Profit Mix ~$28,000 Unit Price ~22% Gross Margin ~$15,000 Unit Price ~27% Gross Margin FY24 Revenue FY24 Gross Profit FY24 Revenue FY24 Gross Profit 69% 64% 31% 36% electriq power Levels of Engagement Electriq partners with municipality and co-markets free solar + energy storage to homeowners Homeowner enters into long-term Power Purchase Agreement ("PPA") to pay a fixed rate for energy up to 20% below their existing utility rates ► Electriq sells each project (a home) to third-party project finance partner - Electriq receives upfront sale and ongoing software and grid services revenues 1.Sustainable Community Networks reflects expected average system size in FY2024. ► Electriq partners with microgrid developers and provides battery + installation services ► Microgrid partners pay Electriq upfront for sale ▸ Electriq can participate in grid services programs to monetize batteries Strictly Confidential / Not for Redistribution 8#9SUSTAINABLE COMMUNITY NETWORKS (SCN) OVERVIEW electriq power Electriq partners with local government to provide sustainable and resilient microgrids to historically underserved communities Electriq Partners with Local Govt's Addressable market of single-family, owner-occupied homes Homeowner Signup Electriq co-markets SCN program to homeowners with signups expected over a 3-year period Installation and Commissioning Electriq is responsible for the permitting, installation and commissioning of systems Electriq Sells Systems to Third-Party Financier Electriq Power sells the turnkey solar+storage systems to third-party for approximately $28,000 per home $300MM+ Financing Electriq announced solar+storage financing in March 2023 with a major U.S. clean-energy company to support the implementation of SCNS throughout California Local Government Wins Promotes renewable energy under climate action plans Provides social equity to constituents Gains revenue stream without out-of-pocket expense Homeowner Wins Solar + battery storage at no upfront cost and no FICO score Estimated savings of up to 20% from comparable utility rates Gains backup system in the event of a grid outage 20-year+ PPA helps to establish a predictable energy price Project Finance Partner Wins Economic benefits: Federal ITC, accelerated depreciation, state/local incentives Designed to provide recurring, stable cashflows over 20+ years Desirable risk-adjusted returns Electriq Wins Acts as developer and installation company Receives upfront revenue and cash for assets Deploys energy storage systems in geographic concentrations Retains rights to use batteries for demand response (VPP) Recurring revenue for fleet management services and software Strictly Confidential / Not for Redistribution#10SCN MILESTONES AND REVENUE LIFECYCLE Electriq has revenue visibility over the next two (2) quarters Milestone Description Revenue Recognition Cashflow Timeline Milestone 1 (PPA Signed) Milestone 2A (System Installed) Milestone 2B (System Inspected) Milestone 3 (PTO Granted) Revenue Recognition Cashflow electriq power Milestone 1 Milestone 2A Milestone 2B Milestone 3 PPA Signed System Installed 70% System Inspected 20% Permission to Operate (PTO) Granted 10% 20% 50% 20% 10% 2-6 Months after PPA Signed 1 Month after System Installed 1 Month after System Inspected Month 0 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 20% 70% 20% 10% 50% 20% 10% Strictly Confidential / Not for Redistribution 10#11SIGNIFICANT MOMENTUM BUILDING IN THE BUSINESS Electriq has had significant operational and financial milestones, including forging new major partnerships NTY OF Growing Partnerships Sustainable Community SANTA B BARB CALIFORNIA CITY OF GOLETA Cy of Derby SLO Climate Coalition CREATING A CANO Connecticut OP Sustainable Solutions BARRIO ELECTRICO SEDC H SOLAR 2015-2019 Beta EP system is deployed IQ ESS launches Accepted into Powerhouse Accelerator Frank Magnotti joins as CEO PowerPod 1 launches Greensoil Investment infuses series seed capital 2020 Electriq announces additional equity raise Announces LFP ESS (PowerPod 2) Adds to SunGage and Sunlight Financial Electriq becomes Open ADR 2.0 certified Electriq acquires LillyPad & Emergent Microgrid ► Electriq chosen for Marin Clean Energy ESS program 2021 PowerPod 2 launches with UL9540 ► Secures Sustainable Community Networks deal in Parlier, CA Secures 160 MWh of full battery system supply and ~140 MWh of battery cells ► Opens Florida headquarters and moves to larger facility in San Leandro, CA 2022 Signs SEDC Solar partnership for solar and battery installations in the Washington DC area Signs Barrio Electrico partnership for residential solar and battery systems in Puerto Rico Signs agreement with New Channel Partner in September, a leading owner and operator of distributed solar energy assets across the United States ► Secures Sustainable Community Networks agreement in October with Santa Barbara County to deliver affordable, sustainable and resilient energy to residents ► Welcomes Troy Anatra, Frank Evans and Pravin Bhagat to the executive team in November, bringing additional clean energy expertise Announces merger with TLG Acquisition One Corp. in November which would result in being listed on the NYSE under ticker "ELIQ" 2023 electriq power Signs agreement in March with a third-party project finance partner for Sustainable Community Networks projects for >$300MM of potential revenue expected to be earned over 30-month period ► Signs Sustainable Community Networks agreement with the San Luis Obispo Climate Coalition to help the community hit its carbon-neutral goal by 2035 ► Signs Sustainable Community Networks agreements with the California Cities of Goleta and Carpinteria ► Completes merger with TLG Acquisition Corp. and began trading on the NYSE on August 1 under ticker "ELIQ" ▸ Expands engagements with Barrio Electrico and SEDC Solarin September ► Signs Sustainable Community Networks agreement with Derby, CT, Electriq's first move out of California and into New England ▸ Validates capabilities with first Virtual Power Plant in California's new Demand Side Grid Support program ▸ Holds first quarterly earnings call as a public company on November 15 Strictly Confidential / Not for Redistribution 11#12STRATEGIC BUSINESS EVOLUTION electriq power Electriq has made a deliberate effort to move toward a solutions-based, higher-margin business model, supported by our Sustainable Community Networks Projected Shift in Revenue Mix Sustainable Solutions 11% Sustainable Solutions 31% 2022 Energy Storage Partners 89% 2022-2024 Higher Margin Sustainable Community Networks begin to scale 2024E Sustainable Community Networks 69% Expected Revenue Mix from Sustainable Community Networks Sales Upfront Solar, Installation, and Development 31% O Upfront Battery Revenue 25% Recurring Software & Services Revenue 44% Recurring Revenue Software and Services revenue in Sustainable Community Networks term sheet creates a potential $100MM stream of high margin revenue over time (1) Approximate Revenue Per Unit Sold Revenue Per Unit expected to increase as Sustainable Community Networks becomes a largershare $10,000 2022 Note: Annual actuals are audited through FY 2022. All other periods are estimates. 1.Illustrative revenue for ~8,000 units deployed under 25-year power purchase agreements. $20,000 2024E Strictly Confidential / Not for Redistribution 12#13BUSINESS EXECUTION Electriq Power is scaling and taking proactive measures to build a foundation for success as we enter 2024 electriq power 3Q23 Operating Momentum Capitalization (2) Revenue $0.8M 8x QoQ SCN Revenue Backlog ~$3M Class A Shares O/S ~41.7M Expected over next 2 qtrs(1) PPA Backlog Adjusted EBITDA 100+ Market Capitalization ~$25.0M $(3.3)M +$5.1M QOQ Balance Sheet $8.1 M Cash on Hand No Debt $20.9M Inventory Enterprise Value ~$16.9M Proactive Management Right-sizing cost structure Expect to reduce cash needs and extend runway Equitize and extinguish Forward Purchase Agreement ("FPA")(3) Binding term sheet to eliminate FPA for fixed number of shares and warrants, in lieu of any cash requirement Capital raising Exploring non-dilutive financing sources by leveraging existing assets Evaluating equity transactions based upon market conditions SCN Expansion Assessing strategic partnerships with solar sales & installation companies to complement our existing capabilities to help fuel signups and installations Honing marketing message to be more battery-centric Geographic diversity with signing of agreement in Derby, Connecticut Anticipate providing 2024 financial guidance in Electriq's YE 2023 earnings release March 2024 1.Approximate time for revenue to be recognized under our Sustainable Community Networks is between 4 to 9 months, with a midpoint of 6 months. This is an estimate of the time from signing a PPA through permission to operate of a system at a homeowner site. 2.Class A Common Stock issued and outstanding as per the Prospectus filed with the U.S. Securities and Exchange Commission on November 13, 2023. Market Capitalization assumes a share price of $0.60 per share, the closing price on November 27, 2023. Enterprise Value is the Market Capitalization plus outstanding debt less Cash as of September 30, 2023. 3.A copy of the binding term sheet was filed with the U.S. Securities and Exchange Commission on November 15, 2023. Strictly Confidential / Not for Redistribution 13#14NON-GAAP FINANCIAL MEASURES electriq power This Presentation contains certain non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. Reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure can be found in the accompanying tables. Our non-GAAP financial measures presented are EBITDA and Adjusted EBITDA. We define EBITDA as net loss plus interest expense, interest income (benefit), income tax expense, depreciation and amortization and Adjusted EBITDA as EBITDA plus the net change in the fair value of derivatives including the change in the fair value of outstanding notes and warrants, non-cash equity-based compensation expense and transactions costs. We use these non-GAAP financial measures to analyze our operating performance and future prospects, develop internal budgets and financial goals, and facilitate period-to- period comparisons. We believe that these non-GAAP financial measures reflect an additional way of viewing our operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business. However, these non-GAAP financial measures do not reflect a comprehensive system of accounting, differ from GAAP measures with the same captions and may differ from non-GAAP financial measures with the same or similar captions that are used by other companies. In addition, these non-GAAP measures have limitations in that they do not reflect all the amounts associated with our results of operations as determined in accordance with GAAP. As such, these non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. The following table reconciles net loss to EBITDA and Adjusted EBITDA for the three months ended September 30, 2023 and 2022, respectively (in thousands): Net loss Interest expense Interest income Income tax expense Three Months Ended September 30, 2023 2022 (19,953) 1,292 (10,163) 918 (116) $ Change % Change (9,790) NM 374 41% (116) NM Depreciation and amortization 42 31 11 35% EBITDA (18,735) (9,214) (9,521) NM Stock-based compensation 493 287 206 72% Unrealized fair value adjustments 14,895 5,170 9,725 NM Adjusted EBITDA (3,347) (3,757) 410 11% NM = Not Meaningful Strictly Confidential / Not for Redistribution#15NON-GAAP FINANCIAL MEASURES (Cont'd) The following table reconciles net loss to EBITDA and Adjusted EBITDA for the three months ended September 30, 2023 and June 30 2023, respectively (in thousands): electriq power Net loss Interest expense Interest income Income tax expense EBITDA Depreciation and amortization Stock-based compensation Unrealized fair value adjustments Adjusted EBITDA NM = Not Meaningful Three Months Ended September 30, 2023 June 30, 2023 16,522 (19,953) 1,292 (116) - 985 S Change (36,475) % Change (221%) 307 (116) 31% NM 42 (18,735) 493 40 2 5% 17,547 (36,282) 207% 1,280 (787) (61%) 14,895 (27,260) 42,155 (3,347) (8,433) $ 5,086 NM 60% Strictly Confidential / Not for Redistribution#16RISK FACTORS electriq power Any investment in our securities involves a high degree of risk. In connection with any actual or proposed investment in our securities, you should consider carefully all of the risks described below, together with the risks described under the section titled "Risk Factors" in our quarterly report on Form 10-Q filed with the SEC on November 14, 2023, our reports filed from time to time with the SEC and other public announcements we make from time to time. If any of the following risks occur, our business, financial condition or results may be materially and adversely affected. In that event, the trading price of our securities could decline, and you could lose all or part of your investment. The risk factors described below are not necessarily exhaustive and you are encouraged to perform your own investigation with respect to us and our business. ► Electriq is a relatively new company with a history of losses, and we expect to incur significant expenses for the foreseeable future. We cannot be certain that we will achieve or sustain profitability. ► Electriq's limited operating history and its rapidly evolving industry make it difficult to evaluate Electriq's business, the risks and challenges it may face and future prospects. ► Electriq's operating and financial results and growth forecast rely in large part upon assumptions and analyses developed by Electriq. If these assumptions or analyses prove to be incorrect, Electriq's actual operating results may be materially different from Electriq's forecasted results. Our independent registered public accounting firm's report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a "going concern." The energy storage industry is highly competitive and rapidly changing. Our business may be adversely affected if we cannot adapt quickly and effectively. If we are unable to recruit and retain key management, technical and sales personnel, our business would be negatively affected. Potential tariffs or a global trade war have increased our costs and could further increase the cost of our products. Our objective is to develop partnerships with municipalities, community choice aggregators and sustainable solutions developers. If we fail to develop those partnerships, our business and financial results would suffer. Our revenue depends on gaining new customers and purchase commitments from customers. Almost all of our revenues in 2020, 2021, and 2022 were derived from two customers, and one of our customers accounted for greater than 85% of our revenue in 2022. This customer has notified a supplier of ours that it is exiting the residential battery storage business and thus was ending their customer relationship with us. Accordingly, we do not expect to generate any revenues in 2023 and 2024 from that customer relationship. Electriq may not realize the full amount of revenue estimated to be potentially generated over a 30-month period under a project financing agreement entered into with a major U.S. clean-energy company. This revenue will be realized only after the clean-energy company approves particular project proposals; the clean-energy company may decline to approve projects in its sole discretion. If we do not propose projects with a sufficient value, or if the clean-energy company declines to approve projects we propose, there is a risk that we will not generate the revenue that we expect to generate from that financing agreement and that we will fail to meet our revenue and other projections. We rely on a small number of third party suppliers. This reliance on third parties increases the risk that necessary components of our products may not be delivered according to our schedule and at prices, quality levels and volumes acceptable to us. We have projected that the majority of our revenue in 2023 and 2024 will be derived from Sustainable Community Networks. We have not generated any revenue from Sustainable Community Networks in the past. There can be no assurances that we will meet our projections for Sustainable Community Networks in 2023 and 2024, or that we will be able to generate revenue from Sustainable Community Networks in the future. We expect to rely on project finance capital to fund installation of our products in the Sustainable Community Networks market, and that funding may be unavailable or expensive.#17electriq power RISK FACTORS (Cont'd) We expect to have one main source of financing for the Sustainable Community Networks in 2023 and 2024. If there is a breach of that financing arrangement, it could have an adverse effect on our liquidity and our revenue and results of operations may not meet our projections. A significant portion of our purchased components are sourced in a small number of foreign countries, exposing us to additional risks that might not exist if our suppliers were more geographically diversified or were located in the United States. Our business is concentrated in certain markets, putting us at risk of region-specific disruptions. Increases in costs, disruption of supply or shortage of materials, in particular for inverters and lithium iron phosphate cells, could harm our business. Our hardware and software integrated energy storage solution may not achieve broad market acceptance, which would prevent us from increasing our revenue and market share. If demand for energy storage solutions does not grow or grows at a slower rate than we anticipate, including as a result of the ongoing COVID-19 pandemic, our business will suffer. We depend on a small number of wholesale dealers and installers to assist in selling our products to customers. As our business grows, we will be required to find a significant number of additional dealers and installers. Loss of dealers or installers, the failure of dealers or installers to perform as expected or the inability to find additional dealers and installers could harm our business and impair our ability to meet our projections. The success of our energy storage system may depend in part upon our ability to continue to work closely with leading solar module manufacturers. Our success and future growth is dependent upon the market's willingness to adopt energy storage systems in general, and our energy storage system in particular. If we fail to scale our business operations and otherwise manage future growth and adapt to new conditions effectively as we grow our company, we may not be able to produce, market, sell and service our systems successfully. A drop in the retail price of electricity derived from the utility grid or from alternative energy sources may reduce demand for our products and impact our ability to meet our projections for growth, revenue and results of operations. The failure of energy storage costs to continue to decline would have a negative impact on our business and financial condition. The reduction, elimination or expiration of government subsidies and economic incentives for on-grid solar electricity applications and/or energy storage systems could reduce demand for solar photovoltaic systems and/or energy storage systems and harm our business. ▸ Market conditions, economic uncertainty, an economic downturn or a recession could reduce demand for our products and materially harm our business. ► We may, in the future, experience delays or other complications in the design, manufacture, launch and production ramp of our energy storage products which could harm our business, prospects, reputation, financial condition and operating results. Our planned expansion of our business could also subject us to additional business, financial and competitive risks. We may experience material disruptions to our operations, including, but not limited to, natural disasters, terrorist attacks or other catastrophic events. There can be no assurance that Electriq will continue to comply with the continued listing standards of the NYSE.