Zooz Power Ltd. To Become Publicly Traded On Nasdaq Through Proposed Business Combination With Keyarch Acquisition Corporation

ZOOZ Power Ltd. ("ZOOZ") (TASE: "ZOOZ"), a leading provider of flywheel-based power boosting solutions for the EV charging infrastructure market, and Keyarch Acquisition Corporation ("Keyarch") (NASDAQ: "KYCHU" units, "KYCH" Class A ordinary shares, "KYCHW" warrants and "KYCHR" rights), a special purpose acquisition company, today announced that they have entered into a business combination agreement (the "Business Combination Agreement") and certain ancillary agreements related thereto. Following the closing of the transaction, ZOOZ is expected to be publicly listed on Nasdaq under the symbol "ZOOZ", and will remain listed on the Tel Aviv Stock Exchange ("TASE"). After the closing, the merged company will continue to be called ZOOZ Power Ltd. The closing is expected to occur in the fourth quarter of 2023 and is subject to applicable closing conditions, including receipt of ZOOZ and Keyarch shareholder and regulatory approvals and a minimum of $10 million net cash at closing, along with other customary conditions.

●     Transaction values ZOOZ immediately prior to the closing at an agreed equity value of up to $100 million, which reflects $60 million at closing and up to $40 million of additional contingent consideration through issuance of Earnout Shares (as defined below) following the closing upon ZOOZ's achievement of the applicable earnout milestones as set forth in the Business Combination Agreement.

●     The transaction is expected to provide a minimum of $10 million in net proceeds from cash held in Keyarch's trust account and/or other sources.

●     ZOOZ is focused on the development, manufacturing and marketing of innovative Power Boosters aimed to support ultra-fast charging of electrical vehicles (EV).

●     ZOOZ pioneered an innovative flywheel-based power storage technology, allowing sustainable, long-lasting, reliable and cost-effective charging infrastructure, while avoiding performance degradation, recurring costs, sustainability issues and safety challenges associated with competing Li-Ion battery-based solutions.

●     ZOOZ (formerly known as Chakratec Ltd) was established in 2013 and is focused on the development and maturing of its innovative kinetic (flywheel-based) energy storage technology. With the rapid adoption of EVs, it became apparent that grid limitations are becoming a significant obstacle to deploying vast public fast-charging infrastructure. ZOOZ's flywheel technology was adapted to the unique challenges of this rapidly evolving market, and with the purpose of being the core building block of its kinetic Power Booster aimed to enable ultra-fast charging of EVs anywhere, despite the power-limitations of the electrical grid.

●     ZOOZ launched its first-generation kinetic Power Booster in 2018 and deployed it in several sites in the EU.

●     As the EV charging market is rapidly evolving and growing, ZOOZ has recently introduced its second generation innovative ZOOZTER™-100 Power Booster and is working with its customers and partners in Israel, the EU and the US to fulfill its vision to accelerate a scalable roll-out of ultra-fast charging infrastructure, while overcoming limitations of existing grid limitations and allowing reliable and efficient operation with minimal total cost of ownership, over more than 15 years.

●     ZOOZ is based in Israel, is led by a highly-experienced management team and enjoys a highly-talented employee team, empowered by Israel's strong start-up innovative culture.

"This transaction is an important phase for ZOOZ and comes at a perfect time. As we further develop our world-wide installed base and with the initiation of our US presence, we believe expanding from being traded on the TASE to being traded on Nasdaq as well, will provide us with enhanced geographic exposure and simpler access to working capital," stated Avi Cohen, Chairman of ZOOZ. "We are excited about the partnership with Keyarch and we look forward to working together with their experienced executives," he added.

Fang Zheng, Chairman of Keyarch, stated, "We believe that ZOOZ has leading technology that enables ultra-fast EV charging anywhere. Its environment-friendly, inherently safe, and lifetime cost effective power booster enjoys multiple advantages over alternative solutions. We are very excited at the opportunity to work with ZOOZ and grow the company into a significant player in accelerating EV revolution, where ultra-fast charging is a must and the existing grid has been a bottleneck."

Boaz Weizer, CEO of ZOOZ, stated, "These are exciting times for ZOOZ, as we move forward with the introduction and deployment of our new innovative product – the ZOOZTER™-100 Power Booster – and doing so in perfect timing, aligned with significant acceleration and growth of the EV ultra-fast charging infrastructure market. In view of these developments, we believe it is the right time for us to join forces with Keyarch and list on Nasdaq. We see that as a significant milestone in ZOOZ's journey to become a leading company in this rapidly evolving and exciting market of EV charging infrastructure."

  

Transaction Details

●     A newly formed wholly owned subsidiary of ZOOZ will merge with Keyarch, with Keyarch being the surviving entity and a wholly-owned subsidiary of ZOOZ, and with Keyarch shareholders and holders of Keyarch warrants receiving equivalent shares and warrants of ZOOZ as the successor company (ZOOZ, as the post-closing combined company, is referred to as the "Company").

●     The transaction values ZOOZ immediately prior to the closing at an agreed equity value of up to $100 million, which reflects $60 million at closing and up to $40 million of additional contingent consideration through issuance of Earnout Shares following the closing upon ZOOZ's achievement of the applicable earnout milestones as set forth in the Business Combination Agreement, such that following the closing, ZOOZ shareholders may receive up to 4,000,000 Earnout Shares (as described below) as additional consideration. Existing ZOOZ shareholders will receive no cash consideration, and will retain all of their current equity interests (after giving effect to a pre-closing recapitalization). It is estimated that, immediately following the closing of the proposed transaction, existing ZOOZ shareholders will own between 40% to 50% of the Company's issued share capital on an as-issued basis (estimated range is subject to various parameters, such as redemption by Keyarch's public shareholders and possible PIPE or other financing transactions and not including, for the avoidance of doubt, shares issuable upon exercise of Keyarch warrants).

●     In addition, ZOOZ shareholders will be issued rights (the "Earnout Rights") convertible into up to 4,000,000 ordinary shares of ZOOZ (the "Earnout Shares") as additional contingent consideration, subject to the Company achieving certain earnout milestones based on gross revenues or share price, as more particularly set forth in the Business Combination Agreement. The earnout rights, the conversion thereof and the issuance of the earnout shares will be subject to tax pursuant to applicable law.

●     As a condition to closing, the transaction is expected to deliver to ZOOZ a minimum of $10 million of net proceeds from cash held in Keyarch's trust account and other sources. Such proceeds will be used by ZOOZ for working capital and general corporate purposes.

●     The board of directors of each of ZOOZ and Keyarch have unanimously approved the transaction. The transaction will require the approval of the shareholders of each of ZOOZ and Keyarch, the effectiveness of a registration statement to be filed with the Securities and Exchange Commission (the "SEC") in connection with the proposed transaction, the effectiveness of an Israeli shelf offering report (which will cover the issuance of the Earnout Rights) to be filed with the Israel Securities Authority, and the satisfaction of other customary closing conditions, including the receipt of certain regulatory approvals. The transaction is expected to close in the fourth quarter of 2023.

●     Following the completion of the acquisition, the Company is expected to retain its experienced management team, with Boaz Weizer as CEO and Ruth Smadja as CFO.