Mr. Ron McDonald reports

ZINC8 ENERGY SOLUTIONS ANNOUNCES SECOND QUARTER FINANCIAL RESULTS AND PROVIDES CORPORATE UPDATE

Zinc8 Energy Solutions Inc. has filed its financial results for the second quarter ended June 30, 2022. For further information on the results, please see Zinc8's condensed interim consolidated financial statements and management's discussion and analysis as filed on SEDAR on Aug. 26, 2022.

Second quarter 2022 highlights include:

• Ended the second quarter ended June 30, 2022, with a working capital balance of $4.5-million;
• On June 7, 2022, the company announced that it added Storm Boswick to its board of directors; Mr. Boswick has considerable experience in the investment sector and capital markets holding senior positions with various firms, and operates as a venture capitalist, a long/short portfolio manager, and an adviser in public and private equity;
• Selected as a best-in-class solution in the energy storage category for the Real Estate Board of New York's 2022 proptech challenge;
• On April 7, 2022, the company announced that it had named Bernard Pinsky, QC, to the board of directors; Mr. Pinsky is currently the chair of the board and a founding director of the Ronald S. Roadburg Foundation, one of the largest philanthropic foundations in British Columbia; additionally, he practised law for over 34 years at the firm Clark Wilson LLP in Vancouver, B.C., where he was a senior partner and the co-head of the corporate finance and securities group up until Dec. 31, 2021; he was lead counsel for the company at the time of his retirement from public practice, a role that he held since November of 2019.

Subsequent to June 30, 2022:

• On July 8, 2022, the company announced the support from the U.S. Senate Majority Leader Charles E. Schumer (D-NY) for Zinc8 to establish a manufacturing facility in Ulster, New York's former TechCity site location.

"We're seeing a great deal of interest in our company and related technology, and remain focused on building out our future," said Ron McDonald, president and chief executive officer of Zinc8. "We've completed some early product tests that have given us take-aways, and we continue to work on the geographical expansion news featuring Zinc8 in the press. We have a great and hard-working team focused on delivering the next steps in product development in anticipation of our commercial product launch over the next 12 to 18 months."

Corporate update

The company has been in an early-stage development program of an advanced energy storage system with a major North American cloud service provider. Having completed the testing phase, Zinc8 highlights the following:

• Steady recharge and discharge demonstration: The zinc-air energy storage system (ZESS) was cycled repeatedly and achieved multiple long-duration discharges of six-plus hours, fundamentally illustrating the long-duration technology.
• Standby and transition to discharge: The ZESS has demonstrated the ability to completely discharge at the 100-per-cent internally targeted rate from a state of transition, demonstrating the ZESS's responsiveness and reliability to provide power on demand.
• Step-up and step-down transient response and start-up time to discharge: The battery's response time to increasing and decreasing the load on the circuit achieved the desired outcome.
• Standby loss characterization: Parasitic power loss due to maintaining the ZESS in standby mode was tested and used as a measure of the efficiency of the complete system.
• Power electronic controls: The ZESS has been integrated with power electronic systems, allowing for a greater understanding of pertinent factors that the power electronics may have on the development of a reliable, cost-effective and energy-efficient product.
• Fluidizer core system: The Fluidizer core system's design, which is one of the three key components of the ZESS, was validated.
• Zinc regeneration system: The system was built with a high yield to achieve the unique functionality of zinc generation and removal in a fully sealed multicell stack.
• Cell stack characteristics: Improvements to the design of the cell stacks were implemented to achieve higher output. Furthermore, the company's proprietary cathode, which is fundamentally critical to the power rating and energy efficiency of the system, achieved the projected performance.

The completion of this project allowed Zinc8 to validate core system components, gain knowledge of power electronic integration, develop a pathway to commercialization success, and demonstrate the fundamental performances of the fuel cell and regenerators and the entire energy storage system, for instance, transient responses, long-duration discharge, standby and transition to discharge.

Zinc8's engineering team will utilize the learnings from this project as it moves to the next phase of development of having a commercialized product ready for manufacturing in a new manufacturing facility. Testing substations are under construction at the new Canadian facility with additional materials and components being sourced as the company is in the process of evaluating suitable manufacturing and production sites in locations including New York.

"Over the course of 14 months working with our partner, Zinc8 had designed, procured and built a series of batteries that were integrated with power electronics to form a complete energy storage system," said Dr. Simon Fan, chief technology officer and vice-president of product management of Zinc8. "The opportunity to showcase the technology to our partner and internally identify any room for engineering improvement has been instrumental to the success of building both the business relationship and technical core competency. Putting these batteries to the test has allowed Zinc8's engineering team to gain confidence in forming a scalable energy storage system for manufacturing and receive affirmation in eventually providing a unique energy solution to our potential customers in the pipeline worldwide. Zinc8 and the cloud service provider will continue to work together and share developmental information."

"On behalf of the executive team and all other employees of Zinc8, I would like to express our sincerest appreciation for the efforts of our engineering team," said Mr. MacDonald. "The development work that was undertaken over the last 14 months is significant, and everyone who has been involved in this project should be proud of the accomplishments that have been achieved."

The market outlook

On Aug. 16, 2022, U.S. President Joe Biden signed the Inflation Reduction Act, bringing with it tax incentives and other measures widely expected to significantly boost prospects for energy storage deployment. The act will take the most aggressive action ever by directing the investment of an estimated $369-billion (U.S.) toward initiatives that confront climate change and strengthen energy security. The investment in energy security and climate change mitigation targets a 40-per-cent reduction in greenhouse gas (GHG) levels by 2030, supporting electric vehicles (EVs) and energy efficiency and building electrification, wind, solar photovoltaic, green hydrogen, battery storage and other technologies.

Most directly relevant to the downstream energy storage industry is the introduction of an investment tax credit for stand-alone energy storage. That can lower the capital cost of equipment by about 30 per cent although, under some existing conditions, it will be more or less, depending on, for example, the use of local unionized labour. For the upstream battery and energy storage system value chains, there are also tax incentives for siting production within the United States, much like the incentives that exist for wind and solar PV manufacturers that source or manufacture their products domestically.

Battery storage growth in the United States remains strong as the U.S. Energy Information Administration highlighted storage capacity more than tripling in 2021 over 2020 to reach over 4,600 megawatt-hours as more than 100 utility-scale projects were brought on-line last year. In market research group Mercom Capital's most recent quarterly report, energy storage companies raised almost as much corporate funding in the first half of 2022 as in all of 2021. The $15.8-billion (U.S.) in funding was raised through first half 2022 versus the $17-billion (U.S.) total for full-year 2021, which continues to highlight the significant role of battery storage in the energy transition.

About Zinc8 Energy Solutions Inc.

Zinc8 focuses on developing and commercializing its low-cost, long-duration ZESS for utilities, microgrid, and commercial and industrial markets. By using the patented ZESS as a stand-alone or an enabling technology, it allows opportunities for peak demand reduction, time-of-use arbitrage, and participation in both the value stacking programs and the distributed long-duration energy storage space, all in conjunction with the opportunity for a significant reduction in carbon footprint. The long-duration (eight to 100-plus hours) ZESS has no fire and explosion risk, has no capacity fade over extensive lifetime, and offers complete charge operational flexibility.

Zinc8 has assembled an experienced team to execute the development and commercialization of a dependable low-cost zinc-air battery. This mass storage system offers both environmental and efficiency benefits. Zinc8 strives to meet the growing need for secure and reliable power.

We seek Safe Harbor.