10-Q

Large accelerated filer

Accelerated filer

Non-accelerated
filer

Smaller reporting company

Emerging growth company

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Electriq Power Holdings, Inc.

(Exact name of registrant as specified in its charter)


Delaware	001-39948	85-3310839
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(IRS Employer Identification No.)


625 North Flagler Drive, Suite 1003 West Palm Beach, FL		33401
(Address Of Principal Executive Offices)		(Zip Code)

(833)

462-2883

Registrant’s telephone number, including area code

TLG Acquisition One Corp.

515 North Flagler Drive, Suite 520

West Palm Beach, FL

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, par value $0.0001 per share	ELIQ	New York Stock Exchange
Warrants, each exercisable for one share of Class A common stock at an exercise price of $6.57 per share	ELIQ WS	NYSE American LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T

(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule

12b-2

of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule

12b-2

of the Exchange Act). Yes ☐ No

☒

As of August 9, 2023, 38,120,937

shares of

Class A common stock, par value $0.0001 per share, were issued and outstanding

ELECTRIQ POWER HOLDINGS, INC.

(F/K/A TLG ACQUISITION ONE CORP.)

Form 10-Q

For the Quarter Ended June 30, 2023


		Page
PART I. FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements		1
	Condensed Consolidated Balance Sheets as of June 30, 2023 (Unaudited) and December 31, 2022		1
	Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2023 and 2022		2
	Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Deficit for the Three and Six Months Ended June 30, 2023 and 2022		3
	Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022		4
	Notes to Unaudited Condensed Consolidated Financial Statements		5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		27
Item 4.	Controls and Procedures		27

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings		28
Item 1A.	Risk Factors		28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities		28
Item 3.	Defaults Upon Senior Securities		28
Item 4.	Mine Safety Disclosures		28
Item 5.	Other Information		28
Item 6.	Exhibits		29
	Signature		31

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

ELECTRIQ POWER HOLDINGS, INC.

(F/K/A TLG ACQUISITION ONE CORP.)

CONDENSED CONSOLIDATED BALANCE SHEETS


	June 30, 2023			December 31, 2022
	(Unaudited)
Assets:
Current assets:
Cash	$	105,457		$	19,750
Prepaid expenses		112,099			108,156

Total current assets		217,556			127,906
Cash and investments held in Trust Account		85,098,433			80,945,242

Total Assets	$	85,315,989		$	81,073,148

Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Deficit:
Current liabilities:
Accounts payable	$	246,388		$	276,917
Accrued expenses		6,326,892			4,472,261
Working capital loan- related party		5,408,857			2,330,370
Income tax payable		1,556,523			1,055,680
Franchise tax payable		20,050			50

Total current liabilities		13,558,710			8,135,278
Derivative warrant liabilities		800,000			800,000
Deferred underwriting commissions		—			14,000,000

Total Liabilities		14,358,710			22,935,278
Commitments and Contingencies
Class A common stock subject to possible redemption, $0.0001 par value; 7,948,405 shares at redemption value of approximately $10.50 and $10.03 per share as of June 30, 2023 and December 31, 2022, respectively		83,461,641			79,739,786
Stockholders’ Deficit:
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding as of June 30, 2023 and December 31, 2022		—			—
Class A common stock, $0.0001 par value; 200,000,000 shares authorized; no non-redeemable shares issued and outstanding as of June 30, 2023 and December 31, 2022 (excluding 7,948,405 shares subject to possible redemption)		—			—
Class F common stock, $0.0001 par value; 20,000,000 shares authorized; 5,000,000 and 10,000,000 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively		500			1,000
Additional paid-in capital		—			—
Accumulated deficit		(12,504,862	)		(21,602,916	)

Total stockholders’ deficit		(12,504,362	)		(21,601,916	)

Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Deficit	$	85,315,989		$	81,073,148

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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ELECTRIQ POWER HOLDINGS, INC.

(F/K/A TLG ACQUISITION ONE CORP.)

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2023			2022			2023			2022
General and administrative expenses	$	1,666,324		$	84,749		$	3,051,026		$	158,982
General and administrative expenses - related party		21,000			21,000			42,000			41,500
Franchise tax expenses		50,000			50,000			100,000			138,844

Loss from operations		(1,737,324	)		(155,749	)		(3,193,026	)		(339,326	)
Gain on forgiveness of deferred underwriting fee payable		1,113,200			—			1,113,200			—
Change in fair value of working capital loan - related party		428,594			—			886,513			—
Change in fair value of derivative warrant liabilities		600,000			2,400,000			—			9,000,000
Income from cash and investments held in Trust Account		759,391			568,143			1,371,765			600,790

Net income (loss) before income taxes		1,163,861			2,812,394			178,452			9,261,464
Income tax expense		(382,744	)		(57,686	)		(500,843	)		(57,686	)

Net income (loss)	$	781,117		$	2,754,708		$	(322,391	)	$	9,203,778

Weighted average shares outstanding of Class A common stock		7,948,405			40,000,000			7,948,405			40,000,000

Basic and diluted net income (loss) per share, Class A common stock	$	0.06		$	0.06		$	(0.02	)	$	0.18

Weighted average shares outstanding of Class F common stock, basic		5,000,000			10,000,000			5,801,105			10,000,000

Basic and diluted net income (loss) per share, Class F common stock	$	0.06		$	0.06		$	(0.02	)	$	0.18

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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ELECTRIQ POWER HOLDINGS, INC.

(F/K/A TLG ACQUISITION ONE CORP.)

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023


	Common Stock										Additional Paid-In Capital			Accumulated Deficit			Total Stockholders’ Deficit
	Class A				Class F
	Shares		Amount		Shares			Amount
Balance - December 31, 2022		—	$	—		10,000,000		$	1,000		$	—		$	(21,602,916	)	$	(21,601,916	)
Increase in redemption value of Class A common stock subject to possible redemption		—		—		—			—			(500	)		(1,874,487	)		(1,874,987	)
Forfeiture of Class F shares						(5,000,000	)		(500	)		500
Net loss		—		—		—			—			—			(1,103,508	)		(1,103,508	)

Balance - March 31, 2023 (unaudited)		—	$	—		5,000,000		$	500		$	—		$	(24,580,911	)	$	(24,580,411	)
Increase in redemption value of Class A common stock subject to possible redemption		—		—		—			—			—			11,294,932			11,294,932
Net income		—		—		—			—			—			781,117			781,117

Balance - June 30, 2023 (unaudited)		—	$	—		5,000,000		$	500		$	—		$	(12,504,862	)	$	(12,504,362	)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022


	Common Stock													Total
	Class A				Class F				Additional Paid-In		Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Capital		Deficit			Deficit
Balance - December 31, 2021		—	$	—		10,000,000	$	1,000	$	—	$	(27,942,377	)	$	(27,941,377	)
Net income		—		—		—		—		—		6,449,070			6,449,070

Balance - March 31, 2022 (unaudited)		—		—		10,000,000		1,000		—		(21,493,307	)		(21,492,307	)
Increase in redemption value of Class A common stock subject to possible redemption		—		—		—		—		—		(117,010	)		(117,010	)
Net income		—		—		—		—		—		2,754,708			2,754,708

Balance - June 30, 2022 (unaudited)		—	$	—		10,000,000	$	1,000	$	—	$	(18,855,609	)	$	(18,854,609	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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ELECTRIQ POWER HOLDINGS, INC.

(F/K/A TLG ACQUISITION ONE CORP.)

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	For The Six Months Ended June 30,
	2023			2022
Cash Flows from Operating Activities:
Net (loss) income	$	(322,391	)	$	9,203,778
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Change in fair value of derivative warrant liabilities		—			(9,000,000	)
Gain on forgiveness of deferred underwriting fee payable		(1,113,200	)		—
Change in fair value of working capital loan - related party		(886,513	)		—
Income from investments held in Trust Account		(1,371,765	)		(600,790	)
Changes in operating assets and liabilities:
Prepaid expenses		(3,943	)		(604,006	)
Accounts payable		(30,529	)		(44,404	)
Accrued expenses		2,109,631			(810,222	)
Income tax payable		500,843			57,686
Franchise tax payable		20,000			(101,425	)

Net cash used in operating activities		(1,097,867	)		(1,899,383	)

Cash Flows from Investing Activities
Investment income released from Trust Account to pay for taxes		80,000			—
Cash deposited in Trust Account		(2,861,426	)		—

Net cash used in investing activities		(2,781,426	)		—

Cash Flows from Financing Activities:
Proceeds received from working capital loan- related party		3,965,000			1,900,000

Net cash provided by financing activities		3,965,000			1,900,000

Net change in cash		85,707			617
Cash - beginning of the period		19,750			48,491

Cash - end of the period	$	105,457		$	49,108

Supplemental Disclosure of Non-cash Financing Activities:
Forgiveness of deferred underwriting fee payable allocated to Class A common stock	$	13,141,800		$	—

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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ELECTRIQ POWER HOLDINGS, INC.

(F/K/A TLG ACQUISITION ONE CORP.)

Notes to Unaudited Condensed Consolidated Financial Statements

June 30, 2023

Note 1 — Description of Organization and Business Operations

Electriq Power Holdings, Inc. (formerly known as TLG Acquisition One Corp. “TLG” prior to July 31, 2023, the “Closing Date,” and on and after the Closing Date, the “Company”) was a blank check company incorporated in Delaware on October 2, 2020, for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (a “Business Combination”). The Company was not limited to a particular industry or sector for purposes of consummating a Business Combination. The Company is an emerging growth company and, as such, the Company is subject to all of the risks associated with emerging growth companies.

Business Combination

On the Closing Date, the Company consummated the previously announced merger (the “Business Combination”) pursuant to certain Agreement and Plan of Merger, dated November 13, 202

(as amended by the First Amendment to Merger Agreement dated December 23, 2022, the Second Amendment to Merger Agreement dated March 22, 2023, and the Third Amendment to Merger Agreement dated June 8, 2023), among the Company, Eagle Merger Corp., a Delaware corporation and wholly-owned subsidiary of TLG, and Electriq Power, Inc. (“Electriq”).

In connection with TLG’s special meeting of stockholders in lieu of the 2023 annual meeting of stockholders held to, among other things, approve the Business Combination, holders of TLG’s Class A common stock, par value $0.0001 per share

(“TLG

common stock”), had the right to elect to redeem all or a portion of their TLG common stock for a per share price calculated in accordance with Amended and Restated Certificate of Incorporation of TLG. As previously disclosed on July 26, 2023, holders of approximately 97.3% or 7,736,608 shares of TLG common stock had validly elected to redeem their shares of TLG common stock for a pro rata portion of the trust account holding the proceeds from TLG’s initial public offering and the sale of private placement warrants, or approximately $10.63 per share and $82.2 million in the aggregate as of July 25, 2023.

Business Prior to the Business Combination

As of June 30, 2023, the Company had not commenced any operations. All activity for the period from October 2, 2020 (inception) through June 30, 2023, relates to the Company’s formation and the initial public offering (the “Initial Public Offering”) described below and, after the Initial Public Offering, identifying a target company for a Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate

non-operating

income in the form of interest income on investments from the proceeds derived from the Initial Public Offering.

The Company’s sponsor

was

TLG Acquisition Founder LLC, a Delaware limited liability company (the “Sponsor”). The registration statement for the Company’s Initial Public Offering was declared effective on January 27, 2021. On February 1, 2021, the Company consummated its Initial Public Offering of 40,000,000 units (the “Units” and, with respect to the Class A common stock included in the Units being offered, the “Public Shares”), including 5,000,000 additional Units to cover over-allotments (the “Over-Allotment Units”), at $10.00 per Unit, generating gross proceeds of $400.0 million, and incurring offering costs of approximately $22.7 million, of which $14.0 million was for deferred underwriting commissions (Note 5).

Simultaneously with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 4,666,667 and 2,000,000 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) to

the Sponsor and RBC Capital Markets, LLC (“RBC”), in its capacity as a purchaser of Private Placement Warrants, respectively

, at a price of $1.50 per Private Placement Warrant, generating total proceeds of $10.0 million (Note 4).

Upon the closing of the Initial Public Offering and the Private Placement, $400.0 million ($10.00 per Unit) of the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement was placed in a trust account (“Trust Account”), and invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less or in money market funds investing solely in U.S. Treasuries and meeting certain conditions under

Rule2a-7

under the Investment Company Act of 1940, as amended (the “Investment Company Act”), as determined by the Company.

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ELECTRIQ POWER HOLDINGS, INC.

(F/K/A TLG ACQUISITION ONE CORP.)

Notes to Unaudited Condensed Consolidated Financial Statements

June 30, 2023

Trust Account Redemptions and Extension of Combination

Peri

On December 19, 2022, the Company held a special meeting of stockholders

which such stockholders approved the proposal to amend the Amended and Restated Certificate of Incorporation giving the Company the right to extend the business combination deadline on a monthly basis up to six times from February 1, 2023 to August 1, 2023, by depositing into the Trust Account the lesser of (i) an aggregate of $600,000 or (ii) $0.06

for each issued and outstanding Public Share that has not been redeemed for each

one-month

extension (the “Extension”). On each of January 30, 2023, February 24, 2023, March 29, 2023, May 1, 2023, May 31, 2023 and June 30, 2023 the Company deposited $

476,904

into the Trust Account in order to extend the business combination deadline to March 1, 2023, April 1, 2023, May 1, 2023, June 1, 2023, July 1, 2023 and August 1, 2023 respectively.

In connection with such vote, the holders of an aggregate of 32,051,595 Public Shares exercised their right to redeem their shares for an aggregate of approximately $324.4 million in cash held in the Trust Account. Additionally, upon shareholder approval of the Extension, the Sponsors agreed that they would forfeit for no consideration 5,000,000 shares of Class F common stock in connection with the Extension, which shares of Class F common stock will be cancelled (the “Forfeiture”). The Forfeiture occurred on January 30, 2023.

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ELECTRIQ POWER HOLDINGS, INC.

(F/K/A TLG ACQUISITION ONE CORP.)

Notes to Unaudited Condensed Consolidated Financial Statements

June 30, 2023

Registration Rights Agreement

The Merger Agreement contemplates that, at the Closing, the Company, the Sponsor, certain of its affiliates, RBC and certain former stockholders of Electriq will enter into an amended and restated registration rights agreement (the “Registration Rights Agreement”), pursuant to which, among other things, the Company will agree to register for resale, pursuant to Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), certain shares of the Company’s Class A common stock that are held by, or issuable pursuant to other securities held by, the parties thereto from time to time.

If the transactions contemplated by the Merger Agreement are completed (the “Transactions”), Electriq will survive such merger as a wholly owned subsidiary of the Company (the “Merger”). As a result of the Merger, and upon consummation of the Merger and the other Transactions contemplated by the Merger Agreement (together with the Merger, the “Proposed Business Combination”), the separate corporate existence of Electriq will cease and the holders of Electriq common stock, preferred stock, options and warrants will become equityholders of the Company, which will change its name to “Electriq Power Holdings, Inc.” in connection with the Proposed Business Combination.

For additional information regarding the Merger Agreement and the Transactions described therein, see the Current Reports on Form

8-K

as filed with the SEC by the Company on November 14, 2022, December 23, 2022, March 23, 2023, June 14, 2023, July 24, 2023 and August 4, 2023..

Liquidity and Going Concern

As of June 30, 2023, the Company had approximately $105,457 in its operating bank account and a working capital deficit of approximately $11.8 million, not including taxes payable of approximately $1.4 million.

The Company’s liquidity needs prior to the consummation of the Initial Public Offering were satisfied through the payment of $25,000 from the Sponsor on behalf of the Company to cover certain offering costs in exchange for issuance of Founder Shares (as defined in Note 4), and a loan from the Sponsor of approximately $192,000 under the Note (as defined in Note 4). The Company repaid the Note in full upon consummation of the Private Placement.

Subsequent from the consummation of the Initial Public Offering, the Company’s liquidity has been satisfied through the net proceeds from the consummation of the Initial Public Offering and the Private Placement, held outside of the Trust Account, and Working Capital Loan from affiliates. In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor, or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Working Capital Loan (as defined in Note 4) as may be required. The Company has drawn approximately $7.0 million and $3.0 million under such loans as of June 30, 2023 and December 31, 2022, respectively.

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ELECTRIQ POWER HOLDINGS, INC.

(F/K/A TLG ACQUISITION ONE CORP.)

Notes to Unaudited Condensed Consolidated Financial Statements

June 30, 2023

On July 31, 2023, the Company completed a Business Combination with Electriq and closed the related financing agreements in connection therewith. As a result, management believes that the Company will have sufficient liquidity to fund its operations through one year from the date of this filing.

Note 2 — Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and Article 8 of Regulation

S-X.

Accordingly, certain disclosures included in the annual financial statements have been condensed or omitted from these unaudited condensed consolidated financial statements as they are not required for interim financial statements under GAAP and the rules of the SEC. In the opinion of management, all adjustments (consisting of normal accruals) considered for a fair presentation have been included. Operating results for the three and six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023 or any future period.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form

10-K

for the year ended December 31, 2022, as filed with the SEC on March 20, 2023, which contains the audited financial statements and notes thereto. The financial information as of December 31, 2022, is derived from the audited financial statements presented in the Company’s Annual Report on Form

10-K

for the year ended December 31, 2022.

Principles of Consolidation

The consolidated financial statements of the Company include its wholly-owned subsidiary, Eagle Merger Corp., that was formed in connection with a potential Business Combination. All inter-company accounts and transactions are eliminated in consolidation.

Emerging Growth Company

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Furthe

r, S

ection 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to

non-emerging

growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s unaudited condensed consolidated financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

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ELECTRIQ POWER HOLDINGS, INC.

(F/K/A TLG ACQUISITION ONE CORP.)

Notes to Unaudited Condensed Consolidated Financial Statements

June 30, 2023

Use of Estimates

The preparation of financial statements in conformity with

GAAP

requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of income and expenses during the reporting period. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited condensed consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.

Concentration of Credit Risk

The Company has significant cash balances at financial institutions which throughout the year regularly exceed the federally insured limit of $250,000. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company’s financial condition, results of operations, and cash flows.

Cash and Cash Equivalents

The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company had no cash equivalents as of June 30, 2023 and December 31, 2022, held outside of the Trust Account.

Investments Held in Trust Account

Prior to December 28, 2022, the Company’s portfolio of investments held in the Trust Account was comprised of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or investments in money market funds that invest in U.S. government securities and generally have a readily determinable fair value, or a combination thereof. When the Company’s investments held in the Trust Account are comprised of U.S. government securities, the investments are classified as trading securities. When the Company’s investments held in the Trust Account are comprised of money market funds, the investments are recognized at fair value. Trading securities and investments in money market funds are presented in the condensed consolidated balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities are included in income from cash and investments held in Trust Account in the accompanying unaudited condensed consolidated statements of operations. The estimated fair values of investments held in the Trust Account are determined using available market information.

Fair Value of Financial Instruments

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC Topic 820, “Fair Value Measurement,” approximates the carrying amounts represented in the condensed consolidated balance sheets, primarily due to their short-term nature, except for the derivative warrant liabilities (see Note 9).

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ELECTRIQ POWER HOLDINGS, INC.

(F/K/A TLG ACQUISITION ONE CORP.)

Notes to Unaudited Condensed Consolidated Financial Statements

June 30, 2023

Fair Value Measurements

Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy,

which

prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:

•

Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;

•

Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

•

Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

In some circumstanc

es,

the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.

Derivat

e Warrant Liabilities

The Company does not use derivative instruments to hedge exposures to cashflow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is

re-assessed

at the end of each reporting period.

The warrants issued in connection with the Initial Public Offering (the “Public Warrants”) and the Private Placement Warrants are recognized as derivative liabilities in accordance with ASC 815. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The liabilities are subject to

re-measurement

at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s unaudited condensed consolidated statements of operations. The initial fair values of the Public Warrants and Private Placement Warrants have each been measured at fair value using a modified Black-Scholes option pricing model. The fair value of the Public Warrants and Private Placement Warrants have subsequently been determined using listed prices in an active market for such warrants. Derivative warrant liabilities are classified as

non-current

liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities.

Working Capital Loan-Related Party

The Company has elected the fair value option to account for borrowings under the Working Capital Loan with its affiliates that are subject to conversion, as defined and more fully described in Note 4. As a result of applying the fair value option, the Company records each convertible tranche, when drawn, at fair value with a gain or loss recognized at issuance, and subsequent changes in fair value are recorded as change in the fair value of Working Capital Loan-related party on the unaudited condensed consolidated statements of operations. The fair value is based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own estimates about the assumptions a market participant would use in pricing the liability.

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ELECTRIQ POWER HOLDINGS, INC.

(F/K/A TLG ACQUISITION ONE CORP.)

Notes to Unaudited Condensed Consolidated Financial Statements

June 30, 2023

Offering Costs Associated with the Initial Public Offering

Offering costs consisted of legal, accounting, underwriting fees and other costs incurred through the Initial Public Offering that were directly related to the Initial Public Offering. Offering costs were allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering costs associated with derivative warrant liabilities were expensed as incurred and presented as

non-operating

expenses in the unaudited condensed consolidated statements of operations. Offering costs associated with the Class A common stock issued were charged against the carrying value of the Class A common stock subject to possible redemption upon the completion of the Initial Public Offering. The Company classifies deferred underwriting commissions as

non-current

liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities.

Class A Common Stock Subject to Possible Redemption

The Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in ASC 480. Class A common stock subject to mandatory redemption (if any) is classified as liability instruments and is measured at fair value. Conditionally redeemable Class A common stock (including Class A common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, Class A common stock is classified as stockholders’ equity. The Company’s Class A common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, as of June 30, 2023 and December 31, 2022, 7,948,405 shares of Class A common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ deficit section of the Company’s condensed consolidated balance sheets.

Immediately upon the closing of the Initial Public Offering, the Company recognized the accretion from initial book value to redemption amount. The change in the carrying value of redeemable shares of Class A common stock resulted in charges against additional

paid-in

capital and accumulated deficit.

Income Taxes

The Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes” (“ASC 740”). Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. As of June 30, 2023 and December 31, 2022, the Company had deferred tax assets aggregating approximately $297,000 and $349,000, which are subject to a full valuation allowance, respectively.

ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of June 30, 2023 and December 31, 2022.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties as of June 30, 2023 and December 31, 2022.

The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.

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ELECTRIQ POWER HOLDINGS, INC.

(F/K/A TLG ACQUISITION ONE CORP.)

Notes to Unaudited Condensed Consolidated Financial Statements

June 30, 2023

Net (Loss) Income Per Share of Common Stock

The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” The Company has two classes of shares, which are referred to as Class A common stock and Class F common stock. Income and losses are shared pro rata between the two classes of shares. Net (loss) income per common share is calculated by dividing the net (loss) income by the weighted average shares of common stock outstanding for the respective period. This presentation assumes a business combination as the most likely outcome.

The calculation of diluted net (loss) income does not consider the effect of the warrants underlying the Units sold in the Initial Public Offering (including the consummation of the

ver-allotment) and the private placement warrants to purchase an aggregate of 20,000,000 shares

of Class A common stock in the calculation of diluted (loss) income per share because their inclusion would be anti-dilutive under the treasury stock method. As a result, diluted net income (loss) per share is the same as basic net (loss) income per share for the three and six months ended June 30, 2023 and 2022. Accretion associated with the redeemable Class A common stock is excluded from earnings per share as the redemption value approximates fair value.

The tables below present a reconciliation of the numerator and denominator used to compute basic and diluted net (loss) income per share for each class of common stock:


	For the Three Months Ended June 30,
	2023				2022
	Class A		Class F		Class A		Class F
Basic and diluted net income per common stock:
Numerator:
Allocation of net income, basic and diluted	$	479,490	$	301,627	$	2,203,766	$	550,942
Denominator:
Basic and diluted weighted average common stock outstanding		7,948,405		5,000,000		40,000,000		10,000,000

Basic and diluted net income per common stock	$	0.06	$	0.06	$	0.06	$	0.06


	For the Six Months Ended June 30,
	2023						2022
	Class A			Class F			Class A		Class F
Basic and diluted net (loss) income per common stock:
Numerator:
Allocation of net (loss) income, basic and diluted	$	(186,370	)	$	(136,021	)	$	7,363,022	$	1,840,756
Denominator:
Basic and diluted weighted average common stock outstanding		7,948,405			5,801,105			40,000,000		10,000,000

Basic and diluted net (loss) income per common stock	$	(0.02	)	$	(0.02	)	$	0.18	$	0.18

Recent Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s unaudited condensed consolidated financial statements.

Note 3 — Initial Public Offering

On February 1, 2021, the Company consummated its Initial Public Offering of 40,000,000 Units, including 5,000,000 Over-Allotment Units, at $10.00 per Unit, generating gross proceeds of $400.0 million, and incurring offering costs of approximately $22.7 million, of which $14.0 million was for deferred underwriting commissions.

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ELECTRIQ POWER HOLDINGS, INC.

(F/K/A TLG ACQUISITION ONE CORP.)

Notes to Unaudited Condensed Consolidated Financial Statements

June 30, 2023

Each Unit consists of one share of Class A common stock and

one-third

of one Public Warrant. Each whole Public Warrant will entitle the holder to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 8).

Note 4 — Related Party Transactions

Founder Shares

On October 13, 2020, the Sponsor paid $25,000 to cover certain

offering

costs of the Company in exchange for 8,625,000 shares of the Company’s Class F common stock, par value $0.0001 per share (the “Founder Shares”). Subsequently, in October 2020, 431,250 Founder Shares were transferred to an affiliate of the Sponsor. In January 2021, the Sponsor transferred 40,000 Founder Shares to each of the independent directors at their original purchase price. On January 27, 2021, the Company effected a stock dividend of 0.15942029 of a share of Class F common stock for each outstanding share of Class F common stock, resulting in an aggregate of 10,000,000 shares of Class F common stock outstanding. The Initial Stockholders agreed to forfeit up to 1,250,000 Founder Shares to the extent that the over-allotment option was not exercised in full by the underwriters, so that the Founder Shares would represent 20.0% of the Company’s issued and outstanding shares after the Initial Public Offering. The underwriter exercised its over-allotment option in full on February 1, 2021; thus, these 1,250,000 Founder Shares are no longer subject to forfeiture.

The Initial Stockholders agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (A) one year after the completion of the initial Business Combination; (B) subsequent to the initial Business Combination, if the last reported sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within

any 30-trading day

period commencing at least 150 days after the initial Business Combination; and (C) the date following the completion of the initial Business Combination on which the Company completes a liquidation, merger, stock exchange, reorganization or other similar transaction that results in all of the Public Stockholders having the right to exchange their shares of common stock for cash, securities or other property.

In connection with the Extension, the Sponsor agreed that it would forfeit for no consideration 5,000,000 shares of Class F common stock in connection with the Extension, which shares of Class F common stock were cancelled. The Forfeiture occurred on January 30, 2023.

Private Placement Warrants

Simultaneously with the closing of the Initial Public Offering, the Company consummated the Private Placement of 4,666,667 and 2,000,000 Private Placement Warrants to the Sponsor and RBC, respectively, at a price of $1.50 per Private Placement Warrant, generating total proceeds of $10.0 million.

Each whole Private Placement Warrant is exercisable for one whole share of Class A common stock at a price of $11.50 per share. A portion of the proceeds from the sale of the Private Placement Warrants to the Sponsor was added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the Private Placement Warrants will expire worthless. The Private Placement Warrants will be

non-redeemable

for cash and exercisable on a cashless basis so long as they are held by the Sponsor, RBC, or their permitted transferees.

SEC Form 10-Q filed by TLG Acquisition One Corp.