Zooz Power Ltd.

Company Overview

Business Model: ZOOZ Power Ltd. develops, produces, markets, and sells systems designed to manage and optimize power delivery to clusters of ultra-fast electric vehicle (EV) chargers. Its core technology is based on proprietary flywheel kinetic energy storage and advanced energy management software. The ZOOZ Power Ltd. solution, primarily the ZOOZTER™-100, overcomes electricity grid limitations by providing additional "boosting energy" to enable high-power EV charging, especially in areas with limited grid capacity. The company also offers standard energy storage solutions that facilitate price arbitrage by storing energy during off-peak rate periods. ZOOZ Power Ltd. aims to accelerate the mass adoption of EVs by enabling widespread, sustainable, and cost-effective ultra-fast charging infrastructure.

Market Position: ZOOZ Power Ltd. is an early-stage company operating in the rapidly evolving EV charging infrastructure market, specifically focusing on ultra-fast charging. The company positions its flywheel-based technology as a superior alternative to chemical battery-based solutions for high-power, multi-cycle applications due to its longevity (up to 200,000 charge-discharge cycles), environmental friendliness (a "green system" without polluting chemicals or complex recycling needs), and enhanced safety (laminated steel design for above-ground installation). ZOOZ Power Ltd. states it is the first company in the market to introduce and commercialize a mature flywheel-based system in serial production for this segment. Competition includes standalone battery-based energy storage systems, ultra-fast chargers with integrated battery storage, and other early-stage flywheel technology providers.

Recent Strategic Developments:

• Business Combination & Listing: Completed a business combination with Keyarch Acquisition Corporation on April 4, 2024, leading to its ordinary shares and public warrants commencing trading on the Nasdaq Capital Market on April 5, 2024.
• Product Introduction & Market Penetration: Introduced its second-generation product, the ZOOZTER™-100, in late 2022. Initiated market penetration efforts in 2023 with deliveries to customers and partners in Israel, Europe (Germany), and the U.S.
• Key Deployments & Pilots:
  • Israel: A pilot site in Zikhron Yaakov commenced commercial operation in January 2023 in collaboration with Afcon e-mobility and Dor-Alon. Two ZOOZTER™-100 systems were installed and became operational at Dor-Alon gas stations along Highway 6 in May and June 2024; one system has been purchased, and the second is expected to be purchased following successful evaluation.
  • Germany: Two charging sites in Herrenberg, in cooperation with Mer, started commercial operation in Q2 2023. Two additional ZOOZTER™-100 systems were installed and commissioned in Reiskirchen and Weiterstadt (Greater Frankfurt) in Q4 2023, commencing commercial operation in Q2 2024, with one additional purchase order received in July 2024.
  • U.S.: A pilot site at Scotchman Gas Station in Rock Hill, South Carolina, with ARKO Corp, started commercial operation in October 2023 but the trial was terminated in June 2024. A ZOOZTER™-100 system was delivered to La-Guardia airport in NYC in Q3 2023 for a joint pilot with a major car rental company, but the site is not yet operational.
  • U.K.: A ZOOZTER™-100 system was delivered in January 2024 for a first site built in collaboration with Osprey Charging Network, becoming operational in Q3 2024 and currently under evaluation for purchase.
  • China: Received a purchase order from SMYZE Intelligent Technology (Shanghai) Co., Ltd. (controlled by a ZOOZ Power Ltd. director) in January 2025 for one ZOOZTER™-100 for demo purposes, shipped in February 2025.
• Financing: Entered into a Standby Equity Purchase Agreement (SEPA) with Yorkville on November 11, 2024, providing the right, but not the obligation, to sell up to $12 million in ZOOZ Power Ltd. ordinary shares over a two-year period.

Geographic Footprint: ZOOZ Power Ltd.'s headquarters and research and development facilities are located in Lod, Israel. The company has gained limited operational experience in Israel, Germany, the U.K., and the U.S., with several deployments in these territories. ZOOZ Power Ltd. has initiated steps to commence limited operations in the Asia Pacific region, primarily China, and expects to continue these efforts.

Cross-Border Operations:

• International Subsidiaries: Keyarch Acquisition Corporation, a Cayman Islands exempted company, became a direct wholly-owned subsidiary of ZOOZ Power Ltd. following the business combination.
• Joint Ventures & Partnerships: ZOOZ Power Ltd. engages in collaborations with various entities across its operational regions, including Afcon e-mobility and Dor-Alon in Israel, Mer and Parkstorm GmbH in Germany, ARKO Corp (trial terminated) and a major car rental company (pilot not operational) in the U.S., and Osprey Charging Network in the U.K. It also has a non-exclusive distribution agreement with Blink Charging Co. for the U.S. market and a joint research and development project partially financed by the BIRD Foundation with Blink Charging Co.
• Licensing Agreements: ZOOZ Power Ltd. has received government grants from the Israel Innovation Authority (IIA), the BIRD Foundation, and the Israeli Ministry of Energy, which impose royalty payment obligations on revenues from products developed with this funding. These grants also include restrictions on transferring IIA-funded know-how or manufacturing activities outside of Israel without prior approval and potential additional payments.
• Regulatory Compliance: The company is subject to environmental, labor, safety, and other laws and regulations in Israel, the United States, the E.U., and the U.K. It must comply with differing standards and practices of regulatory, tax, judicial, and administrative bodies across these jurisdictions.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin: -46.69% (2024)
• Operating Margin: -1012.10% (2024)
• Net Margin: -1055.71% (2024)

Investment in Growth:

• R&D Expenditure: $5,062 thousand (486.26% of revenue in 2024)
• Capital Expenditures: $67 thousand (2024)
• Strategic Investments:
  • NYPA Cooperation Agreement: $970 thousand in financing for a U.S. pilot, with $885 thousand received by December 31, 2024.
  • BIRD-Funded Project: $900 thousand in funding for a joint R&D project with Blink Charging Co., with $411 thousand received by December 31, 2024.
  • Standby Equity Purchase Agreement (SEPA) with Yorkville: Up to $12,000 thousand in equity financing over two years, entered into November 2024.

Currency Impact Analysis:

• ZOOZ Power Ltd. prepares its financial statements in U.S. dollars, but a significant portion of its expenditures is denominated in Israeli new shekels (NIS) and other currencies. Sales are substantially denominated in EURO or USD.
• Fluctuations in the value of NIS and other foreign currencies relative to the U.S. dollar can negatively or positively affect the value of reported income and loss.
• For the year ended December 31, 2024, ZOOZ Power Ltd. reported a $267 thousand gain from reporting currency translation in other comprehensive income (loss), compared to an $819 thousand loss in 2023.
• ZOOZ Power Ltd. does not currently use derivative financial instruments, such as foreign exchange forward contracts, to mitigate foreign currency risk.

International Operations & Geographic Analysis

Revenue by Geography:

• The filing does not provide a detailed breakdown of revenue by specific geographic region or country. It notes that ZOOZ Power Ltd. initiated market penetration efforts with deliveries of the ZOOZTER™-100 to customers and partners in Israel, Europe, and the U.S. starting in 2023.

International Business Structure:

• Subsidiaries: Keyarch Acquisition Corporation (Cayman Islands) is a direct, wholly-owned subsidiary of ZOOZ Power Ltd.
• Joint Ventures: ZOOZ Power Ltd. has engaged in various collaborations:
  • Israel: Joint pilot projects with Afcon Electric Transportation Ltd. and Dor-Alon gas stations for ultra-fast charging infrastructure.
  • Germany: Cooperation agreements with EES GmbH and Mer for setting up EV fast charging stations.
  • U.S.: Joint pilot with ARKO Corp (terminated) and a pilot with a major car rental company at La-Guardia airport (not yet operational). A joint research and development project with Blink Charging Co. is partially financed by the BIRD Foundation.
  • U.K.: Collaboration with Osprey Charging Network for a first charging site.
• Licensing Agreements: ZOOZ Power Ltd. has received grants from the Israel Innovation Authority (IIA), the BIRD Foundation, and the Israeli Ministry of Energy. These grants impose royalty payment obligations on revenues from products developed with the funding and include restrictions on transferring the funded know-how or manufacturing activities outside of Israel without prior approval and potential additional payments.

Cross-Border Trade:

• Export Markets: ZOOZ Power Ltd. has delivered its ZOOZTER™-100 systems to customers and partners in Israel, Germany, the U.K., and the U.S. A system was shipped to SMYZE Intelligent Technology (Shanghai) Co., Ltd. in China in February 2025 for demo purposes.
• Import Dependencies: The company's supply chain, particularly for materials and components, is sourced in the Asia Pacific region (e.g., China, India). This exposes ZOOZ Power Ltd. to risks from geopolitical situations, such as the Red Sea conflict and tensions between the People’s Republic of China and Taiwan, which can cause delays and increased costs.
• Transfer Pricing: ZOOZ Power Ltd. is subject to Israeli transfer pricing rules, which require cross-border transactions with related parties to be conducted on an arm's length basis and documented accordingly.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: Not disclosed.
• Dividend Payments: ZOOZ Power Ltd. has never paid cash dividends on its ordinary shares and does not anticipate paying any in the foreseeable future, as its current policy is to retain any earnings for business use.
• Dividend Yield: Not applicable.
• Future Capital Return Commitments: Not disclosed.

Balance Sheet Position:

• Cash and Equivalents: $7,532 thousand as of December 31, 2024.
• Total Debt: $3,041 thousand as of December 31, 2024, consisting of a promissory note to EarlyBirdCapital, Inc. of $890 thousand and a promissory note to Keyarch Global Sponsor Limited (related party) of $2,151 thousand.
• Net Cash Position: $4,491 thousand as of December 31, 2024.
• Credit Rating: Not disclosed.
• Debt Maturity Profile: The promissory notes mature on April 4, 2026, and accrue interest at an annual rate of 8% (increasing to 15% if not paid when due). ZOOZ Power Ltd. is required to make mandatory cash prepayments equal to 25% of gross proceeds from equity or equity-linked financings, with the EarlyBirdCapital, Inc. note prioritized. Keyarch Global Sponsor Limited may elect to satisfy its note with Sponsor Earnout Shares.

Cash Flow Generation:

• Operating Cash Flow: $(9,928) thousand for the year ended December 31, 2024.
• Free Cash Flow: Not explicitly stated, but given negative operating cash flow and capital expenditures, it is also negative.
• Cash Conversion Metrics: Not disclosed.

Currency Management:

• Cash holdings by major currencies: Not explicitly detailed, but ZOOZ Power Ltd.'s functional currency is NIS, and its presentation currency is USD.
• Natural hedging through operational diversification: Not explicitly stated.
• Financial hedging instruments and strategies: ZOOZ Power Ltd. does not currently use derivative financial instruments to hedge foreign currency exchange risk.

Operational Excellence

Production & Service Model: ZOOZ Power Ltd. develops, produces, markets, and sells its power-boosting systems. The company has commenced the process of outsourcing the manufacturing of its ZOOZTER™-100 product to partners who are responsible for procurement, manufacturing, integration, and testing. This strategy is intended to scale manufacturing capacity to meet market demand. ZOOZ Power Ltd. also provides maintenance services and utilizes a remote monitoring system to proactively identify and analyze potential issues, aiming to ensure optimal system availability at charging sites.

Global Supply Chain Architecture: Key Suppliers & Partners:

• Components & Sub-systems: ZOOZ Power Ltd. relies on a limited number of suppliers, including single-source providers for some custom-designed components and sub-systems. The supply chain is in its early stage of development.
• Manufacturing Partners: ZOOZ Power Ltd. is outsourcing the serial production of the ZOOZTER™-100 to partners. The company is continuously working to expand its supplier network and aims to establish local production capabilities in certain territories, potentially through collaboration with local manufacturing partners, to meet government funding eligibility, incentives, and accelerated demand.
• Geographic Sourcing: Materials and components are sourced globally, with a notable dependency on the Asia Pacific region (e.g., China, India). This exposes the supply chain to geopolitical risks, including the Red Sea conflict and tensions between the People’s Republic of China and Taiwan, which can lead to delays and increased costs.

Facility Network:

• Manufacturing: Initial production activities are conducted at ZOOZ Power Ltd.'s operational site in Lod, Israel. The company plans to establish local manufacturing capabilities in key international markets.
• Research & Development: R&D activities are primarily carried out at the company's headquarters in Lod, Israel.
• Distribution: Not explicitly detailed, but products are delivered to customers in Israel, Germany, the U.K., and the U.S.

Operational Metrics:

• ZOOZ Power Ltd. states that its ZOOZTER™-100 product is designed for longevity, capable of serving for up to 200,000 charge-discharge cycles. Specific capacity utilization, efficiency measures, or quality indicators are not otherwise disclosed.

Market Access & Customer Relationships

Go-to-Market Strategy: ZOOZ Power Ltd.'s strategy focuses on accelerating the mass adoption of EVs by enabling widespread ultra-fast charging infrastructure.

• Geographical Spread: In the coming years, ZOOZ Power Ltd. plans to expand its market penetration in Israel, Germany, the U.K., and the U.S., with future expansion targeted for the Asia Pacific region (China, Japan, South Korea).
• Product and Value Proposition: The company emphasizes the unique advantages of its flywheel-based kinetic power-boosting products, highlighting sustainability, safety, and cost-effectiveness compared to battery-based alternatives.
• Customer Diversity: ZOOZ Power Ltd. targets a diverse customer base, including Charge Point Operators (CPOs), Fleet Operators, Business Operators/Real-Estate Asset Owners, Engineering, Procurement, and Construction (EPC) firms, and Utilities.
• Business Models: The primary business model is direct sales of its products, with potential future revenue streams from leasing or renting products and software-based add-on services.

Distribution Channels:

• Direct Sales: ZOOZ Power Ltd. relies on its direct sales force, which it plans to expand both domestically and internationally.
• Channel Partners: The company has established partnerships, including a non-exclusive distribution agreement with Blink Charging Co. in the U.S. and collaborations with Mer and Parkstorm GmbH in Germany, and Osprey Charging Network in the U.K.
• Digital Platforms: ZOOZ Power Ltd. utilizes a remote monitoring system that transmits critical data via a cellular network to cloud-based platforms for data visualization and analysis, supporting preemptive maintenance.

Customer Portfolio:

• Enterprise Customers: Key relationships include Afcon e-mobility and Dor-Alon in Israel, Mer and Parkstorm GmbH in Germany, and Osprey Charging Network in the U.K. A pilot with ARKO Corp in the U.S. was terminated, and another U.S. pilot with a major car rental company is not yet operational.
• Customer Concentration: Historically, ZOOZ Power Ltd. has had a small customer base, which has comprised a significant portion of its commercial open orders. The company aims to significantly diversify its customer base in the near future.
• Regional Market Penetration: ZOOZ Power Ltd. has several deployments in Israel, Germany, the U.K., and the U.S. Growth markets in Asia Pacific are being explored.

Competitive Intelligence

Global Market Structure & Dynamics

Industry Characteristics: The EV charging market is in its early stages of development and is rapidly evolving. There is a growing demand for public ultra-fast charging infrastructure to support the mass adoption of EVs and alleviate "range anxiety." The market is characterized by a learning phase for players regarding technical challenges and technological solutions, as well as the development of viable business models to manage significant upfront investments and operational costs. The anticipated increase in EV charging demand is expected to strain existing electrical grids, necessitating grid upgrades or power-boosting solutions.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors: ZOOZ Power Ltd. faces competition from three main categories of solutions:

• Standalone battery-based energy storage systems (BESS): Competitors include BYD, Alfen, Kreisel, and Tesvolt. These systems offer substantial storage capacity and relatively low upfront costs. However, they typically have slow response times, low C-rates (prolonged charge-discharge periods), limited charging cycles, shorter lifespans, higher total cost of ownership over time due to battery replacement, significant sustainability challenges (polluting chemicals, recycling), and elevated fire risks, especially with high-power rapid-cycling.
• Ultra-fast chargers with integrated battery-based energy storage: Competitors include FreeWire, ADS-Tec, L-Charge, X-Charge, and Kreisel Electric. These integrated solutions offer simplicity by combining functions in a single unit. However, they can lead to vendor lock-in, restrict the booster's functionality to a single charger, and render the charger inoperative if the booster malfunctions. Their ability to recharge from the grid at high power may be limited, potentially impacting return on investment for chargers with low utilization.
• Flywheel-based power boosters: Competitors include Teraloop, Adaptive Balancing Power, Levistor, and Revterra. ZOOZ Power Ltd. believes these competitors are in early stages of development for the EV charging market. Key differentiators among these companies lie in flywheel design, materials (e.g., carbon fiber, solid steel, laminated steel), production processes, and solution maturity. ZOOZ Power Ltd. highlights its laminated steel design for safety and cost advantages, and its position as the first to market a mature system in serial production.

Risk Assessment Framework

Strategic & Market Risks

• Global Market Dynamics: ZOOZ Power Ltd. operates in an early-stage market where widespread market awareness and education regarding the concept and value of power boosters are still developing. Its success is highly dependent on the continued rapid adoption of EVs and the timely deployment of ultra-fast charging infrastructure. Competition from alternative charging methods (e.g., wireless charging, widespread slow chargers) or changes in fuel economy standards could diminish demand for its solutions. Delays in fast charging infrastructure deployment due to regulatory hurdles, permitting issues, or budget constraints could hinder EV adoption and ZOOZ Power Ltd.'s growth.
• Technology Disruption: The EV market is characterized by rapid technological changes, including advancements in battery technology and potential decreases in EV battery prices, which could intensify competition and adversely affect demand for ZOOZ Power Ltd.'s solutions.
• Customer Concentration: Historically, ZOOZ Power Ltd. has had a small customer base, exposing it to concentration risks. Relationships with early-stage companies or customers without a local presence in their territory may present additional risks due to limited operating experience, funding challenges, and difficulties in providing prompt, effective service.

Operational & Execution Risks

• Global Supply Chain Vulnerabilities: ZOOZ Power Ltd. relies on a limited number of suppliers, some of which are single-source, for custom-designed components. Its supply chain is in an early stage of development. Increases in costs, supply disruptions, or material shortages (e.g., from Asia Pacific due to geopolitical conflicts like the Red Sea situation or China-Taiwan tensions) could adversely impact production capacity and ability to meet demand.
• Regional Disruptions: Operations are subject to risks from natural disasters (earthquakes, hurricanes, wildfires), localized utility outages (public safety power shut-offs), and extreme weather events, which could disrupt operations, damage facilities, or reduce EV demand.
• Trade Restrictions: Changes in government trade policies, including tariffs (e.g., U.S. tariffs on imports from Mexico, Canada, China) and export restrictions, could increase costs, reduce competitiveness, or limit ZOOZ Power Ltd.'s ability to sell products in certain markets.
• Product Defects: ZOOZ Power Ltd.'s technology, including the ZOOZTER™-100, could have undetected defects, design or manufacturing errors, or software bugs, potentially affecting functionality, reliability, and safety. This could lead to product liability claims, increased replacement/maintenance costs, and reputational damage.
• IT Systems & Cybersecurity: Reliance on complex IT systems and third-party providers exposes ZOOZ Power Ltd. to risks of system failures, security breaches, cyber-attacks (including ransomware and nation-state actors), and data loss. Such incidents could disrupt business, lead to regulatory investigations, litigation, fines, and reputational harm.

Financial & Regulatory Risks

• Currency & Financial Risks: ZOOZ Power Ltd. is exposed to foreign exchange risk due to expenses in NIS and other currencies, and sales in EUR/USD. It does not currently use hedging instruments. The company has a history of losses and negative operating cash flows, raising substantial doubt about its ability to continue as a going concern, necessitating additional financing. Future equity issuances (e.g., under the SEPA) or debt could lead to shareholder dilution or increased interest costs.
• Regulatory & Compliance Risks: ZOOZ Power Ltd. is subject to a complex and evolving multi-jurisdictional regulatory framework covering environmental, labor, safety, corporate governance, public disclosure, consumer protection, anti-corruption, and trade control laws. Non-compliance could result in fines, sanctions, and legal proceedings. Changes in electricity tariffs or government incentive plans (e.g., NEVI program suspension in the U.S.) could impact demand or profitability.
• Tax Regulations: Changes to tax laws or regulations in Israel, the U.S., and other jurisdictions, or in their interpretation (e.g., transfer pricing rules, OECD initiatives), could significantly increase tax liabilities. The company has not applied for certain Israeli tax benefits (e.g., Preferred Technological Enterprise regime).

Geopolitical & External Risks

• Country-Specific Risks: Operations in Israel are directly influenced by political, economic, and military conditions, including ongoing armed conflicts ("Swords of Iron" war, Hezbollah, Houthi movement, Iran), which could disrupt business, affect supply chains, and impact employee availability (military service). Boycott movements against Israeli businesses and recent credit rating downgrades for Israel also pose risks.
• Economic Risk: Continuing inflationary pressures and associated changes in monetary policy (e.g., interest rate increases by the Bank of Israel, U.S. Federal Reserve) could raise operating costs, depress economic growth, and adversely affect financial results.
• Geopolitical Conflicts: The ongoing Russia-Ukraine conflict, or any expansion thereof, could disrupt global operations and supply chains.
• ESG Matters: Failure to meet evolving environmental, social, and governance (ESG) expectations from investors, partners, or employees could adversely affect brand, reputation, and business opportunities.

Innovation & Technology Leadership

Research & Development Focus: ZOOZ Power Ltd. maintains a data and technology-focused R&D organization in Israel, with deep expertise in flywheel development and complex power booster systems.

• Global R&D Network: R&D activities are primarily conducted in Israel.
• Innovation Pipeline: ZOOZ Power Ltd. is focused on:
  • ZOOZTER™-100 Improvement: Enhancing the current ZOOZTER™-100 model for better performance, reduced cost, and additional features. This includes developing a new motor driver and achieving CE certification for the European configuration and UL certification for the U.S. configuration.
  • Next-Generation (ZOOZTER™-NG) System: Developing a next-generation system with higher power output, a smaller footprint, and lower costs.
  • Supporting Products: Developing complementary software-based products and add-ons to enhance its power-boosting solutions.

Intellectual Property Portfolio:

• Patent Strategy: ZOOZ Power Ltd. owns 26 granted patents in the U.S., Europe, China, and India. Additionally, 5 patent applications are pending in the U.S., Canada, Japan, China, and India.
• Licensing Programs: ZOOZ Power Ltd. has received royalty-bearing grants from the Israel Innovation Authority (IIA), the BIRD Foundation, and the Israeli Ministry of Energy. These grants impose obligations to pay royalties on revenues from products incorporating the funded know-how and restrict the transfer of such know-how or manufacturing activities outside of Israel without prior approval and potential payments.
• IP Litigation: ZOOZ Power Ltd. faces inherent risks of third-party intellectual property infringement claims and potential litigation, which could be costly and divert resources.
• Trade Secrets: The company relies on unpatented proprietary technology, trade secrets, designs, and know-how, protected through confidentiality agreements and internal procedures.

Technology Partnerships: ZOOZ Power Ltd. has engaged in a joint research and development project with Blink Charging Co., partially financed by the BIRD Foundation, for an energy storage system to accelerate EV charging in the U.S. market.

Leadership & Governance

Executive Leadership Team

International Management Structure: ZOOZ Power Ltd. plans to expand its direct sales force internationally and establish local presence, including local partners for sales, technical, and service support, to acquire and retain customers in target territories.

Board Composition: The Board of Directors consists of seven members and is staggered into three classes. Five of the directors meet Nasdaq independence requirements.

• Audit Committee: Composed of Mrs. Naama Zeldis (Chairperson), Mr. Dan Weintraub, and Mrs. Christine Y. Zhao. All members are financially literate, audit committee financial experts, and independent under SEC rules and Nasdaq Listing Rules.
• Compensation Committee: Composed of Mr. Dan Weintraub (Chairperson), Ms. Christine Y. Zhao, and Mrs. Naama Zeldis. All members are independent under Nasdaq listing standards.
• Nomination and Corporate Governance Committee: Composed of Mr. Fang Zheng (Chairman), Mr. Avi Cohen, and Mr. Doron Meir Vadai. All members are independent.
• Internal Auditor: Ms. Dana Gottesman of Ziv Haft Certified Public Accountants (a member of BDO International Limited).

Regulatory Environment & Compliance

Multi-Jurisdictional Regulatory Framework:

• Primary Regulatory Environments: ZOOZ Power Ltd. operates under the laws and regulations of Israel, the United States, the E.U., and the U.K.
• Key Regulations: These include environmental, labor, safety, consumer protection, online messaging, advertising, anti-corruption, anti-bribery, trade control, and income tax laws. The regulatory landscape is complex and evolving, with differing standards across jurisdictions.
• Cross-Border Compliance: The company must obtain various governmental approvals and permits for its operations and intellectual property protection globally.

Cross-Border Compliance:

• Export Controls: Products developed and manufactured in Israel and other locations are subject to export controls, requiring licenses that can be difficult, costly, and time-consuming to obtain. Non-compliance can lead to investigations, penalties, and reputational harm.
• Sanctions Compliance: ZOOZ Power Ltd. is subject to U.S. and other applicable trade control regulations, including sanctions enforced by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), which restrict business with certain countries, governments, and persons.
• Anti-Corruption: The company is subject to the U.S. Foreign Corrupt Practices Act (FCPA), Israeli anti-corruption laws, and local anti-bribery laws in countries where it operates. ZOOZ Power Ltd. maintains policies and internal controls to promote compliance.

International Tax Strategy:

• Transfer Pricing: ZOOZ Power Ltd. is subject to Israeli transfer pricing regulations, which require cross-border transactions with related parties to adhere to arm's length principles and be contemporaneously documented. Challenges to these policies by tax authorities could result in additional corporate income tax, penalties, and interest.
• Tax Treaties: The company's non-Israeli resident shareholders may be subject to Israeli capital gains tax on the disposition of shares, though exemptions or reduced rates may apply under applicable tax treaties (e.g., the United States-Israel Tax Treaty), subject to specific conditions and documentation.
• Corporate Tax Rate: The corporate tax rate in Israel is 23%. ZOOZ Power Ltd. has not applied for tax benefits under the Israeli Investment Law's "Preferred Enterprise" or "Technological Enterprise" regimes.
• U.S. Tax Considerations: ZOOZ Power Ltd. assesses its status as a Passive Foreign Investment Company (PFIC) annually, which could have adverse U.S. federal income tax consequences for U.S. Holders. U.S. Holders owning 10% or more of ZOOZ Power Ltd. ordinary shares may be subject to adverse U.S. federal income tax consequences if ZOOZ Power Ltd. or its non-U.S. subsidiaries are treated as "controlled foreign corporations."

Environmental & Social Impact

Global Sustainability Strategy: ZOOZ Power Ltd. is committed to addressing the climate crisis by accelerating the global transition to electric transportation.

• Environmental Commitments: Its power-boosting products and solutions are designed with longevity and environmental considerations in mind. The flywheel kinetic storage system is characterized as a "green system" due to its environmentally friendly nature, absence of polluting chemicals, and lack of complicated recycling processes, contrasting with battery-based energy storage solutions.
• Climate Strategy: ZOOZ Power Ltd.'s mission directly supports climate goals by enabling the widespread deployment of ultra-fast EV charging infrastructure, which is essential for mass EV adoption.
• Renewable Energy: While not explicitly stated as a direct strategy, the company's solutions can support grid stability, which is crucial for integrating increased electricity demand from EV charging, potentially including renewable energy sources.

Regional Sustainability Initiatives:

• Supply Chain: There is an increasing focus on corporate environmental, social, and governance (ESG) responsibility in the EV industry. ZOOZ Power Ltd. faces requirements from customers and investors regarding ESG policies, practices, and metrics, including global supplier ESG requirements and sustainability standards.
• Social Impact by Region:
  • Labor Standards: ZOOZ Power Ltd. has 38 employees, with 37 based in Israel and one in the U.K. It complies with Israeli labor laws, which cover minimum employment standards, and provides benefits beyond the required minimums. Employees are not represented by labor unions.
  • Community Investment: Not explicitly detailed in the filing.

Currency Management & Financial Strategy

Multi-Currency Operations: Currency Exposure:

Hedging Strategies:

• Transaction Hedging: ZOOZ Power Ltd. does not currently use derivative financial instruments, such as foreign exchange forward contracts, to mitigate short-term foreign exchange risk.
• Translation Hedging: The company does not currently engage in financial hedging to mitigate balance sheet currency exposure.
• Economic Hedging: ZOOZ Power Ltd. does not currently engage in financial hedging for long-term competitive exposure.

Additional Context:

• ZOOZ Power Ltd.'s functional currency is the NIS, while its presentation currency is the U.S. dollar. This exposes the company to foreign exchange risk, as fluctuations in exchange rates can impact reported income and loss.
• For the year ended December 31, 2024, ZOOZ Power Ltd. reported a $267 thousand gain from reporting currency translation in other comprehensive income (loss).
• The appreciation (devaluation) of the U.S. dollar against the NIS was 0.6% in 2024, 3.1% in 2023, and 13.2% in 2022. A 10% devaluation of the dollar against the NIS in 2024 would have increased net loss by approximately $0.8 million, while a 10% appreciation would have decreased net loss by approximately $0.8 million.
• The company's cash surplus is mostly invested in short-term bank deposits, which typically carry fixed interest rates, making financial income less sensitive to interest rate changes over the holding period.