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Zapp(ZAPP) - 2023 Q4 - Annual Report
ZappZapp(US:ZAPP)2024-02-26 21:40

Explanatory Note Business Combination Details Zapp Electric Vehicles Group Limited completed a business combination with CIIG Capital Partners II, Inc. on April 28, 2023, leading to Zapp EV ordinary shares and warrants trading on Nasdaq from May 1, 2023 - Zapp EV completed its business combination with CIIG Capital Partners II, Inc. on April 28, 202310 - Post-merger, Zapp EV ordinary shares and warrants began trading on Nasdaq on May 1, 2023, under ticker symbols “ZAPP” and “ZAPPW”13 Business Combination Share Conversion | Category | Converted Quantity (Zapp EV Ordinary Shares) | | :--- | :--- | | Zapp UK Ordinary Shares | 41,296,259 | | Zapp UK Convertible Loan Notes | 871,428 | | Zapp UK Options (converted to Zapp EV Options) | 4,410,844 | | Zapp UK Warrants (converted to Zapp EV Warrants) | 3,412,469 | | CIIG II Class A Ordinary Shares | 28,750,000 | | CIIG II Class B Ordinary Shares | 7,187,500 | | CIIG II Warrants (converted to Zapp EV Public Warrants) | Same Quantity | Cautionary Note Regarding Forward-Looking Statements Forward-Looking Statements and Risks This report contains forward-looking statements about the company's future operations and financial condition, which are subject to significant risks and uncertainties - Forward-looking statements in this report concern future operations, financial condition, liquidity, and growth strategies, but are subject to significant risks and uncertainties1415 - Key risk factors include the need for additional capital for ongoing operations, ability to maintain Nasdaq listing, intense competition in the EV industry, Zapp brand building and consumer acceptance, vehicle development and production capabilities, limited operating history, growth management, supply chain disruptions, increased costs of lithium-ion batteries and electronic components, and market volatility16 Currency Presentation Currency Definitions This annual report defines USD, EUR, GBP, and THB, with all financial information presented in USD unless otherwise specified - This report clearly defines U.S. Dollars, Euros, Pounds Sterling, and Thai Baht19 - Unless otherwise stated, all financial information is presented in U.S. Dollars20 Definitions Key Terms and Entities This section defines key terms and entities used in the report, ensuring clear understanding of company names, business combination, regulations, market terms, and partners - "We," "Company," "Zapp EV," and "Zapp" refer to Zapp Electric Vehicles Group Limited and its subsidiaries Zapp Electric Vehicles Limited (Zapp UK), Zapp Electric Vehicles, Inc. (Zapp US), and Zapp Scooters (Thailand) Company Limited (ZTH)22 - The "Business Combination" refers to the transaction completed on April 28, 2023, involving Zapp EV, CIIG Capital Partners II, Inc., Zapp Electric Vehicles Limited, and Zapp Electric Vehicles, Inc.22 - "Summit" refers to a large Thai manufacturer of automotive parts and motorcycle structures and components, with whom the company has a contract manufacturing agreement29 Information About IFRS and Non-IFRS Financial Measures IFRS Compliance The company's financial statements are prepared in accordance with International Financial Reporting Standards (IFRS), with no non-IFRS financial measures mentioned in this annual report - Company financial statements are prepared in accordance with International Financial Reporting Standards (IFRS)26 - No non-IFRS financial measures are mentioned in this annual report26 Market and Industry Data Data Sources and Risks Industry and market data in this report are from independent third-party sources, but investors are cautioned against over-reliance due to the early stage of the EV industry and inherent investment risks - Industry and market data are derived from independent third-party surveys, market research, public information, and government agency reports28 - The electric vehicle industry is in its early stages, and investing in company securities involves high risks and uncertainties, with actual results potentially differing significantly from third-party data28 Part I Item 1. Identity of Directors, Senior Management and Advisers This section states that information regarding the identity of directors, senior management, and advisers is not applicable here, as it is disclosed elsewhere in the report - Information regarding the identity of directors, senior management, and advisers in Item 1 is not applicable313233 Item 2. Offer Statistics and Expected Timetable This section states that information regarding offer statistics and the expected timetable is not applicable - Information regarding offer statistics and the expected timetable in Item 2 is not applicable34 Item 3. Key Information This section provides key company information, including capitalization and debt, reasons for the offer, and use of proceeds (all not applicable), along with detailed risk factors related to the company's business, industry, and securities ownership - Item 3.B (Capitalization and Indebtedness) and 3.C (Reasons for the Offer and Use of Proceeds) are both not applicable3435 Item 3.D. Risk Factors This section details significant risks of investing in the company's securities, covering business and industry risks, and risks related to securities ownership - The company has incurred losses since inception, with net losses of $222 million and $4 million for fiscal years 2023 and 2022, respectively, and expects to continue incurring significant expenses and losses for the foreseeable future37 - The company faces severe liquidity constraints, requiring additional external capital to fund operations, debt service, and other obligations, and has adopted strategies like delaying vendor payments to conserve cash3839 - The report from the company's independent registered public accounting firm includes an explanatory paragraph regarding the company's ability to continue as a going concern, indicating significant uncertainty43 - The company is a new entrant in the electric two-wheeled vehicle (EVP2W) industry with limited operating history, has not yet delivered commercial vehicles, and faces intense competition from both traditional and electric vehicle manufacturers4445 - Future growth is highly dependent on consumer acceptance and demand for EVP2Ws and their battery solutions, with the market influenced by factors such as EV quality, safety, design, performance, cost, charging infrastructure, government regulations, and macroeconomic conditions464748 - The company relies on a contract manufacturing partnership with Summit and third-party suppliers for key components; any supply chain disruptions, cost increases, or inability of suppliers to meet demand could adversely affect the business536972 - The company has not established a distribution network and relies on authorized dealers and franchised service agents ("Zappers") for sales and after-sales service; failure to establish or maintain these relationships could adversely affect the business7982 - The company faces cybersecurity risks, and any system failures, security breaches, or data leaks could lead to legal liabilities, regulatory fines, reputational damage, and operational disruptions112114115 - The company's vehicles use lithium-ion batteries, which pose a risk of fire or smoke, potentially causing personal injury, property damage, and reputational harm, and leading to product liability claims118 - The company received Nasdaq notices for failing to meet minimum bid price, minimum market value, and minimum public float market value requirements, and may face delisting risk if it fails to regain compliance171172173 - As an "emerging growth company" and "foreign private issuer," the company enjoys simplified SEC reporting requirements, which may make its stock less attractive to some investors and impact financing and growth prospects183187 - The company's directors, senior management, and their affiliates collectively hold approximately 45.7% of the ordinary shares, giving them significant control over major corporate decisions, with founders having the right to nominate a majority of the board205206 Item 4. Information on the Company This section details the company's history, business overview, market opportunity, strategy, vehicle products, manufacturing approach, market entry, customer service, sustainability, intellectual property, cybersecurity, seasonality, and regulatory environment, focusing on its design-led urban personal mobility solutions and global expansion plans A. History and Development of the Company Zapp Electric Vehicles Group Limited was incorporated in the Cayman Islands on November 15, 2022, and listed on Nasdaq after completing its business combination on April 28, 2023, with its subsidiary Zapp UK having launched the i300 motorcycle concept in 2019 and secured multiple design awards and patents - Zapp Electric Vehicles Group Limited was incorporated in the Cayman Islands on November 15, 2022, and completed its business combination on April 28, 2023210 - The company's ordinary shares are listed on the Nasdaq Global Market under the ticker symbol “ZAPP”211 - Zapp UK, founded in 2017, launched the i300 electric motorcycle concept in 2019 and has since received eight design awards and related patents212 B. Business Overview Zapp is a UK electric vehicle brand focused on design-led urban personal mobility solutions, with its i300 electric city motorcycle combining high performance and urban convenience, manufactured through an asset-light model with Summit, emphasizing portable batteries, premium customer experience, and full-lifecycle sustainability for the global EVP2W market - Zapp is a UK electric vehicle brand dedicated to revolutionizing the market with design-led electric urban personal mobility solutions216 - Its flagship product, the i300 electric city motorcycle, combines high performance with scooter-like convenience and has received eight international design awards217225 - The company employs an asset-light manufacturing model, partnering with Summit, which is expected to scale annual production to 300,000 vehicles by 2026 without significant capital expenditure221 - The i300's portable battery pack eliminates the need for dedicated charging infrastructure, fully charging via a standard outlet in under an hour, effectively alleviating range anxiety227228 - The company provides a premium customer experience through an online configurator, a Direct-to-Customer (DSDTC) delivery process, and omnichannel marketing, including authorized dealers and online distributors231232233 - Zapp adheres to a "Green Manufacturing" philosophy, with the i300 featuring a low component count, simplified assembly, and sustainable materials such as recyclable alloys, carbon fiber composites, bio-flax composites, and ocean-recycled plastics235267268 Global P2W Market Size and EVP2W Penetration | Metric | 2022 | 2029 (Forecast) | | :--- | :--- | :--- | | P2W Market Size | $130 billion | $224 billion | | EVP2W Market Size | $27 billion | $64 billion | | EVP2W Penetration | 21% | 29% | | P2W Market CAGR (2022-2029) | - | 8% | | EVP2W Market CAGR (2022-2029) | - | 13% | - The company plans to first establish a premium brand presence in Europe (France, Spain, Italy, etc.), followed by expansion into Southeast Asian and Indian markets237246 - The i300 features include: stylish design (Z-shaped exoskeleton, high-performance components), superior performance (0-30mph in 2.3 seconds, 0-50mph in 5.0 seconds), charging convenience (portable battery pack), excellent handling, multi-layered safety, high customization options, and flexible storage space248 - The company has filed 37 patent, design patent, and utility model applications, with 16 already granted, including patents related to the Z-shaped exoskeleton and removable front fender271 - The company's operations in Europe and the UK are subject to data protection laws and regulations such as GDPR and UK GDPR, and measures have been taken to ensure compliance276 - The company anticipates sales to be seasonal, with higher sales during warmer months (March to September) and lower sales during colder months (October to February)279 - The company is undergoing European Whole Vehicle Type Approval (ECWVTA), has completed all vehicle tests, and expects to begin i300 deliveries in Europe in Summer 2024, while also seeking faster vehicle certification in Thailand285286 C. Organizational Structure This section presents a simplified diagram of the company's organizational structure as of the date of this annual report, though the diagram itself is not provided in the report - This section presents a simplified diagram of the company's organizational structure as of the date of this annual report291 D. Property, Plant and Equipment The company maintains corporate offices and a design and technology center in Bangkok, Thailand, and an experience center in Bicester Heritage Park, UK, for R&D, design, prototyping, testing, sales, and technical training, believing current and planned facilities are sufficient for near-term needs and anticipating future expansion space - The company leases approximately 2,023 square feet of office space in Bangkok, Thailand, for its principal administrative office292 - The company leases approximately 3,186 square feet of space in Bangkok, Thailand, for its design and technology center, used for R&D, design, prototyping, development, and testing292293 - The company leases approximately 969 square feet of space at Bicester Heritage Park in the UK for an experience center, offering a full-service workshop, retail store, and offices, serving as a global sales and technical training hub294 Item 4A. Unresolved Staff Comments This section states that the company has no unresolved staff comments - The company has no unresolved staff comments296 Item 5. Operating and Financial Review and Prospects This section provides an analysis of the company's operating results and financial condition for the fiscal years ended September 30, 2023, and 2022, highlighting its pre-revenue stage, significant net loss increase in FY2023 due to business combination expenses and financial instrument fair value changes, ongoing liquidity challenges, and strategic equity financing to support the i300 commercial launch and future growth through R&D investments A. Operating Results The company generated no revenue and incurred continuous losses in fiscal years 2023 and 2022, with a net loss of $222.1 million in FY2023, a substantial increase from $3.6 million in FY2022, primarily due to business combination-related expenses and fair value losses on forward purchase agreements, alongside increased sales and distribution, and general and administrative expenses reflecting market promotion and operational scaling efforts - The company has not yet commenced vehicle sales and thus has generated no revenue to date, with sales and deliveries expected to begin in Summer 2024306 Consolidated Operating Results Summary ($ million) | Metric ($ million) | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Revenue | — | — | — | | Sales and Distribution Expenses | (1.4) | (0.4) | (1.0) | | General and Administrative Expenses | (6.4) | (3.2) | (3.2) | | Operating Loss | (7.8) | (3.6) | (4.2) | | Finance Income | 0.009 | 0.003 | 0.007 | | Finance Expenses | (0.56) | (0.31) | (0.25) | | Other (Expenses)/Income | (213.7) | 0.3 | (214.1) | | Loss Before Tax | (222.1) | (3.6) | (218.5) | | Loss for the Year | (222.1) | (3.6) | (218.5) | - Sales and distribution expenses increased by $1 million to $1.4 million, primarily due to increased marketing efforts for the initial product launch307 - General and administrative expenses increased by $3.2 million to $6.4 million, mainly due to a $2.5 million increase in personnel costs, a $0.5 million increase in insurance costs, and a $0.2 million increase in professional service fees310 - Other expenses shifted from $0.3 million income in FY2022 to $213.7 million expense in FY2023, primarily reflecting $167.3 million in business combination-related expenses and $46.5 million in fair value losses (mainly from the revaluation of forward purchase agreements)316 B. Liquidity and Capital Resources The company primarily funds operations and working capital through debt and equity financing, reporting $0.8 million in cash and cash equivalents and $19.9 million in trade and other payables as of September 30, 2023, indicating significant liquidity constraints; however, it has secured $10 million in liquidity through an equity purchase agreement with Yorkville Advisors Global, LP and plans further securities issuance to support the i300's production and commercial launch, with management confident these measures will provide sufficient liquidity despite ongoing going concern uncertainties - The company's primary liquidity needs are for product launch, debt repayment, and general corporate purposes, expected to be financed through delayed payments, securities issuance, and operating cash flow318 Consolidated Cash Flow Summary ($ million) | Metric ($ million) | 2023 | 2022 | | :--- | :--- | :--- | | Net Cash Outflow from Operating Activities | (6.5) | (2.8) | | Net Cash Outflow from Investing Activities | (0.3) | (0.5) | | Net Cash Inflow from Financing Activities | 5.6 | 5.1 | | Net Increase/(Decrease) in Cash and Cash Equivalents | (1.1) | 1.8 | - Operating cash outflow in FY2023 was $6.5 million, primarily for personnel ($3.6 million), professional service fees ($1.6 million), marketing ($0.9 million), and inventory purchases ($0.6 million)323 - Financing cash inflow in FY2023 was $5.6 million, mainly from $7.6 million in loan financing, offset by $1.7 million in business combination-related professional fees328 - Non-cash transactions in FY2023 included $157.7 million in share-based payment expenses and $46.5 million in fair value losses329 Contractual Obligations and Commitments as of September 30, 2023 ($ million) | Obligation Type | Less than 1 Year | 1 to 5 Years | More than 5 Years | Total | | :--- | :--- | :--- | :--- | :--- | | Bank Loans | 0.015 | 0.024 | — | 0.039 | | Notes | 3.908 | 1.175 | — | 5.083 | | Lease Liabilities | 0.085 | 0.256 | 0.110 | 0.451 | | Trade and Other Payables | 19.755 | — | — | 19.755 | | Total | 23.762 | 1.455 | 0.110 | 25.327 | - Trade and other payables as of September 30, 2023, included $15.7 million in business combination-related professional service fees, all due for payment before April 2024335 - The company has entered into a Standby Equity Purchase Agreement (SEPA) with Yorkville Advisors Global, LP, providing up to $10 million in liquidity, and plans to raise additional funds through market offerings to support the i300's production and commercial launch347560561 C. Research and Development, Patents and Licenses The company continuously invests in research and development and technology to expand its vehicle product line and enhance customer experience, with R&D activities reviewed and adjusted based on business needs, and related costs and intangible asset information disclosed in the financial statement notes - The company continuously invests in research and development and technology to expand its vehicle product line and enhance customer experience340 D. Trend Information In fiscal year 2023, the company achieved several significant milestones, including design awards, patent grants, positive third-party reviews, and a financing partnership with Younited, all expected to drive strong demand for the i300 post-2024 launch; the company is actively pursuing European Whole Vehicle Type Approval (ECWVTA) and plans to commence deliveries in Q4 FY2024 upon certification, while also increasing staffing and public company operating costs, and securing funding through an equity purchase agreement with Yorkville Advisors Global, LP to initiate production and commercial rollout - In fiscal year 2023, the company achieved several significant milestones, including two design awards (including a Red Dot Product Design Award), the granting of patents related to the Z-shaped exoskeleton and removable front fender, positive third-party reviews from Electroheads (over 3 million views), and a partnership with Paris-based fintech Younited to offer instant credit payment solutions341 - As of September 30, 2023, the company is prepared to commence production and continues efforts to obtain European Whole Vehicle Type Approval (ECWVTA), with initial customer deliveries in Europe anticipated in Summer 2024342343 - The company plans to begin i300 sales in the UK and EU, with quantities of less than 1,000 vehicles, through single vehicle approvals from national testing agencies before obtaining ECWVTA, to support customer test rides and marketing343 - The company has entered into a Standby Equity Purchase Agreement with Yorkville Advisors Global, LP, planning to use the proceeds to initiate i300 production and commercial rollout347 E. Critical Accounting Estimates The company's consolidated financial statements are prepared in accordance with IFRS, requiring management to make critical estimates and assumptions that affect reported amounts, with actual results potentially differing significantly from these estimates, which are continuously reviewed and revised - Consolidated financial statements are prepared in accordance with IFRS, and management makes critical estimates and assumptions during preparation348 - Actual results may differ significantly from these estimates, which are continuously reviewed and revised348 Item 6. Directors, Senior Management and Employees This section provides detailed information on the company's directors and senior management, including their ages, positions, and biographies, along with board diversity and family relationships; it also discloses executive and director compensation structures, including cash and equity incentives, and outlines board practices, committee compositions, employee numbers, and the incentive compensation clawback policy A. Directors and Senior Management This section lists the company's directors and senior management as of September 30, 2023, including Chairman Anthony Posawatz, CEO Swin Chatsuwan, President Jeremy North, and other independent directors and executives, providing detailed biographies highlighting their extensive experience in automotive, finance, design, and legal fields Directors and Senior Management (as of September 30, 2023) | Name | Age | Position | | :--- | :--- | :--- | | Anthony Posawatz | 63 | Chairman of the Board | | Swin Chatsuwan | 60 | Chief Executive Officer and Director | | Jeremy North | 62 | President and Director | | Kenneth West | 65 | Independent Director | | Patricia Wilber | 62 | Independent Director | | Patchara Rattakul | 61 | Independent Director | | Edouard Meylan | 47 | Non-Executive Director | | Warin Thanathawee | 39 | Chief Design Officer | | David McIntyre | 51 | Chief Commercial Officer | | Kiattipong Arttachariya | 37 | Chief Strategy Officer | | David Sturgeon | 54 | Chief Financial Officer | | Theodore Allegaert | 59 | Chief Legal Officer | | Belinda Vinke | 54 | Chief Brand Officer | - Anthony Posawatz serves as Non-Executive Chairman, bringing extensive experience in the electric vehicle and automotive industries350 - Swin Chatsuwan is Zapp's founder and CEO, leading the company's operations since 2017351 Board Diversity The company discloses its board diversity statistics as of September 30, 2023, in accordance with Nasdaq rules, with the board comprising seven directors, including one female and six males, and believes it complies with Nasdaq's board diversity requirements - The company's board of directors consists of seven directors365 Board Diversity Matrix (as of September 30, 2023) | Category | Female | Male | Non-Binary | Undisclosed Gender | | :--- | :--- | :--- | :--- | :--- | | Directors | 1 | 6 | — | — | | Underrepresented Individuals in Home Jurisdiction | 1 | | | | | LGBTQ+ | — | | | | | Undisclosed Demographic Background | — | | | | - The company believes it complies with Nasdaq's board diversity requirements366 Family Relationships The company discloses that CEO Swin Chatsuwan and Chief Brand Officer Belinda Vinke are married, with no other family relationships among executives and directors - CEO Swin Chatsuwan and Chief Brand Officer Belinda Vinke are married367 B. Compensation Executive and director compensation includes base salaries, in-kind benefits, and equity incentives; as of September 30, 2023, total cash compensation and in-kind benefits for executives and directors amounted to $1,168,934, with some executives granted a total of 6,837,204 ordinary shares subject to specific share price conditions, and non-executive directors receiving cash fees and equity awards; the company also discloses terms of equity incentive plans, including option exercise prices, validity periods, and vesting conditions - As of September 30, 2023, total cash compensation and in-kind benefits for executives and directors amounted to $1,168,934, including $9,332 in pension payments and $4,567 in benefit payments369 - Some executives were granted a total of 6,837,204 ordinary shares, but the issuance conditions had not been met as of September 30, 2023370 - As of September 30, 2023, the company's executives and directors held a total of 3,535,517 unexercised options, including 1,995,857 shares for Swin Chatsuwan and 1,026,441 shares for Jeremy North373 - Options typically vest based on conditions such as successful listing, immediate vesting, or a two-to-three-year service period374 C. Board Practices The company's board of directors comprises seven members, including four independent directors, and operates under a classified board system; the board has established an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee, each with defined responsibilities and independent director members; founders retain the right to nominate directors under the Director Nomination Agreement, and the company has adopted a Code of Business Conduct and Ethics - The board of directors consists of seven directors, with four independent directors meeting Nasdaq corporate governance rules375 - The board operates under a classified system, divided into three classes, with each director serving a three-year term375376 - The board has an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee, each with independent director members377379382 - Founders retain the right to nominate directors to the board under the Director Nomination Agreement, as long as they hold a certain percentage of ordinary shares378 - The company has adopted a Code of Business Conduct and Ethics, applicable to all employees, contractors, executives, and directors384 D. Employees As of September 30, 2023, the company had 37 full-time employees, with 30 in Thailand and 7 in Europe; employees possess extensive experience in the automotive industry, and the company maintains good employee relations, with no work stoppages and no unionized workforce - As of September 30, 2023, the company had 37 full-time employees, with 30 in Thailand and 7 in Europe386 - As of September 30, 2022, the company had 22 full-time employees, with 18 in Thailand and 4 in Europe387 - The company's employees possess extensive experience in the automotive industry, and the company maintains good employee relations, with no work stoppages and no unionized workforce387 E. Share Ownership This section cross-references information on share ownership by the company's executives and directors to Item 7.A - Information on share ownership by the company's executives and directors is disclosed in Item 7.A388 F. Action to Recover Erroneously Awarded Compensation The company adopted an Incentive Compensation Clawback Policy on December 1, 2023, to recover erroneously awarded incentive compensation if the company is required to restate financial statements due to material non-compliance; as of or after September 30, 2023, no incentive compensation subject to this policy has been granted - The company adopted an Incentive Compensation Clawback Policy on December 1, 2023, to recover erroneously awarded incentive compensation389 - As of or after September 30, 2023, no incentive compensation subject to this policy has been granted390 Item 7. Major Shareholders and Related Party Transactions This section discloses the shareholdings of the company's major shareholders, including directors, executives, and their affiliates, as well as the total outstanding shares as of February 22, 2024; it also details related party transactions since October 1, 2022, such as asset transfers, share sales, and lease payments A. Major Shareholders As of February 22, 2024, the company had 59,893,327 ordinary shares issued and outstanding; the board and executive team collectively held approximately 45.7% of the ordinary shares, with Swin Chatsuwan holding 34.8%, Warin Thanathawee 4.5%, and Kiattipong Arttachariya 3.3% - As of February 22, 2024, the company had 59,893,327 ordinary shares issued and outstanding392 Major Shareholder Holdings (as of February 22, 2024) | Shareholder Name | Number of Ordinary Shares | Percentage of Ordinary Shares (%) | | :--- | :--- | :--- | | Swin Chatsuwan | 20,837,832 | 34.8 | | Jeremy North | 1,087,366 | 1.8 | | Warin Thanathawee | 2,720,068 | 4.5 | | Kiattipong Arttachariya | 1,971,907 | 3.3 | | All Directors and Executive Officers Combined | 27,394,831 | 45.7 | B. Related Party Transactions Since October 1, 2022, the company has engaged in several related party transactions, including asset transfers and debt settlements between Zapp Scooters (Thailand) Company Limited (ZTH) and Zapp Manufacturing (Thailand) Limited (ZMT, an affiliate), the sale of ZMT shares to Swin Chatsuwan (director and executive), and lease payments from ZTH to Paragon Partners Company Limited, controlled by Swin Chatsuwan - On March 28, 2023, Zapp Scooters (Thailand) Company Limited entered into an asset purchase agreement with Zapp Manufacturing (Thailand) Limited to transfer assets to settle debt395 - On March 30, 2023, Zapp Scooters (Thailand) Company Limited sold all its shares in Zapp Manufacturing (Thailand) Limited to Swin Chatsuwan, who paid the Thai Baht equivalent of $1,423396 - In FY2023, Zapp Scooters (Thailand) Company Limited paid a total of $30,549 in rent to Paragon Partners Company Limited, controlled by Swin Chatsuwan397 Item 8. Financial Information This section primarily references the consolidated financial statements and financial information found in other parts of the report (Item 18); additionally, it discloses an ongoing legal proceeding, a contract breach lawsuit filed by SPAC Advisory Partners LLC against Zapp UK, seeking $3,630,000 in consulting fees A. Consolidated Statements and Other Financial Information This section directs readers to Item 18 of this annual report for consolidated financial statements and other financial information - For consolidated financial statements and other financial information, please refer to Item 18 of this annual report399 Legal Proceedings Zapp UK is currently a defendant in a civil lawsuit filed by SPAC Advisory Partners LLC on October 19, 2023, in the Supreme Court of the State of New York, alleging non-payment of $3,630,000 in business combination consulting fees; the company believes Zapp UK has strong defenses to this claim and will vigorously contest it - Zapp UK is a defendant in a civil lawsuit filed by SPAC Advisory Partners LLC, involving $3,630,000 in business combination consulting fees401 - The company believes Zapp UK has strong defenses to this claim and will vigorously contest it401 B. Significant Changes This section states that the company has no significant changes - The company has no significant changes402 Item 9. The Offer and Listing This section outlines the listing of the company's ordinary shares and public warrants on Nasdaq, trading under "ZAPP" and "ZAPPW" since May 1, 2023, noting that prior to this, there was no public trading market for the company's securities; it also states that sub-items such as plan of distribution, markets, selling shareholders, and dilution are not applicable A. Offer and Listing Details The company's ordinary shares and public warrants have been listed on Nasdaq since May 1, 2023, trading under ticker symbols "ZAPP" and "ZAPPW"; prior to this date, there was no public trading market for the company's securities - The company's ordinary shares and public warrants have been listed on Nasdaq since May 1, 2023, trading under ticker symbols “ZAPP” and “ZAPPW”403 - Prior to this date, there was no public trading market for the company's securities403 B. Plan of Distribution This section states that the plan of distribution is not applicable - The plan of distribution is not applicable404 C. Markets This section directs readers to Item 9.A for information on markets - Market information can be found in Item 9.A405 D. Selling Shareholders This section states that selling shareholders are not applicable - Selling shareholders are not applicable406 E. Dilution This section states that dilution is not applicable - Dilution is not applicable407 F. Expenses of the Issue This section states that expenses of the issue are not applicable - Expenses of the issue are not applicable408 Item 10. Additional Information This section provides additional company information, including share capital (not applicable), memorandum and articles of association, material contracts (such as the EXIM revolving loan agreement, director nomination agreement, amended and restated sponsor agreement, investor exchange and support agreement, management exchange and support agreement, registration rights agreement, and assignment, assumption, and amendment agreement), as well as exchange controls, tax considerations (Cayman Islands and U.S. federal income tax, including PFIC rules), and dividend policy; the company does not intend to pay dividends in the foreseeable future A. Share Capital This section states that share capital is not applicable - Share capital is not applicable409 B. Memorandum and Articles of Association This section refers to the company's amended and restated memorandum and articles of association, a copy of which has been filed as Exhibit 1.2 and is incorporated by reference - The company's amended and restated memorandum and articles of association have been filed as Exhibit 1.2410 C. Material Contracts The company discloses several material contracts, including a revolving loan agreement with EXIM (up to 10 million Thai Baht), a director nomination agreement with founder Swin Chatsuwan (granting the right to nominate directors), an amended and restated sponsor agreement (transfer restrictions and vesting conditions for sponsor shares), investor exchange and support agreements (transfer restrictions and vesting conditions for additional shares for investors), management exchange and support agreements (transfer restrictions and vesting conditions for additional shares for management), a registration rights agreement (providing registration rights), and an assignment, assumption, and amendment agreement related to warrants - Zapp Scooters (Thailand) Company Limited entered into a revolving loan agreement with EXIM, providing up to 10 million Thai Baht (approximately $274,687) in short-term letters of credit and/or trust receipts412 - The company entered into a director nomination agreement with its founder, granting the right to nominate board members, including a majority of directors, as long as the founder holds a certain percentage of ordinary shares413 - The amended and restated sponsor agreement imposes transfer restrictions on 80% of ordinary shares held by sponsors and their insiders post-business combination, and sets vesting conditions for 754,687 sponsor earn-out shares (share price reaching $14.00)418419 - The investor exchange and support agreement imposes transfer restrictions on 80% of ordinary shares received by investors post-business combination and stipulates vesting conditions for additional ordinary shares (share price reaching $12.00, $14.00, and $16.00)421422 - The management exchange and support agreement imposes transfer restrictions on 80% of ordinary shares received by management shareholders post-business combination and stipulates vesting conditions for additional ordinary shares (share price reaching $12.00, $14.00, and $16.00)424425 - The registration rights agreement requires the company to file a registration statement within 45 calendar days of the business combination to register the resale of certain ordinary shares held by original and new holders427 D. Exchange Controls The Cayman Islands has no government laws, decrees, regulations, or other legislation that could affect the import or export of capital or the remittance of dividends; there are no restrictions under Cayman Islands law or the company's articles of association on the right to hold or vote shares - The Cayman Islands has no government laws, decrees, regulations, or other legislation that could affect the import or export of capital or the remittance of dividends429 - There are no restrictions under Cayman Islands law or the company's articles of association on the right to hold or vote shares429 E. Taxation This section outlines the Cayman Islands and U.S. federal income tax implications for the acquisition, ownership, and disposition of the company's ordinary shares and public warrants; the Cayman Islands currently imposes no taxes on profits, income, gains, or appreciation, nor any estate, inheritance, or gift taxes; for U.S. holders, it discusses dividend taxation, gains or losses from share and warrant sales, tax consequences of warrant exercise or expiration, and potential deemed dividends and rules for being considered a "passive foreign investment company" (PFIC) and its reporting requirements - The Cayman Islands currently imposes no taxes on profits, income, gains, or appreciation, nor any estate, inheritance, or gift taxes469 - The company has obtained a tax concession undertaking from the Cayman Islands government, guaranteeing no taxes on profits, income, gains, or appreciation for 30 years from November 18, 2022470471 - For U.S. holders, dividends are generally taxed as ordinary income, and gains or losses from selling shares or warrants are typically capital gains or losses436440 - The company believes it will not be classified as a PFIC once it begins selling motorcycles, but may have been classified as a PFIC in certain prior tax years (including the tax year of the business combination) and could still be classified as a PFIC in the future450 - If the company is deemed a PFIC, U.S. holders may face tax treatment under the "excess distribution regime," QEF regime, or mark-to-market regime, with the excess distribution regime resulting in higher tax rates and interest charges451452 - U.S. holders are required to file IRS Form 8621 annually to report their interest in a PFIC, otherwise they may face significant penalties461 F. Dividends and Paying Agents The company plans to allocate all available funds and future earnings to business development and growth, thus not expecting to pay cash dividends to ordinary shareholders in the foreseeable future; dividend payments will be at the discretion of the board of directors, based on factors such as the company's financial condition, operating results, and capital needs - The company does not expect to pay cash dividends to ordinary shareholders in the foreseeable future208474 - Dividend payments will be at the discretion of the board of directors, based on factors such as the company's financial condition, operating results, and capital needs209474 Item 11. Quantitative and Qualitative Disclosures About Market Risk The company faces market risks in its daily operations, primarily including credit risk, liquidity risk, foreign exchange risk, and interest rate risk; detailed information can be found in Note 21 to the consolidated financial statements in this annual report - The company faces primary market risks including credit risk, liquidity risk, foreign exchange risk, and interest rate risk479 - Detailed information can be found in Note 21 to the consolidated financial statements479 Item 12. Description of Securities Other Than Equity Securities This section describes the company's securities other than equity securities, primarily focusing on public warrants; each Zapp EV public warrant entitles the holder to purchase one Zapp EV ordinary share at an exercise price of $11.50 per share, valid until April 28, 2028 B. Warrants and Rights Each Zapp EV public warrant entitles the holder to purchase one Zapp EV ordinary share at an exercise price of $11.50 per share, valid until April 28, 2028, or earlier termination upon redemption or liquidation - Each Zapp EV public warrant entitles the holder to purchase one Zapp EV ordinary share481 - The exercise price is $11.50 per share, valid until April 28, 2028, or earlier termination upon redemption or liquidation481 Part II Item 13. Defaults, Dividend Arrearages and Delinquencies This section states that the company has no defaults, dividend arrearages, or delinquencies - The company has no defaults, dividend arrearages, or delinquencies485 Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds This section states that material modifications to the rights of security holders and the use of proceeds are not applicable - Material modifications to the rights of security holders and the use of proceeds are not applicable486 Item 15. Controls and Procedures This section discloses the company's assessment of disclosure controls and procedures as of September 30, 2023, with management concluding they were ineffective; due to the new public company transition period, this annual report does not include management's report on the effectiveness of internal control over financial reporting or an attestation report from an independent registered public accounting firm; no significant changes in internal control occurred during the reporting period A. Disclosure Controls and Procedures As of September 30, 2023, the company's management assessed its disclosure controls and procedures as ineffective, failing to ensure timely recording, processing, summarization, and reporting of required information - As of September 30, 2023, the company's management assessed its disclosure controls and procedures as ineffective488 B. Management's Report on Internal Control over Financial Reporting Due to the new public company transition period, this annual report does not include management's report on the effectiveness of internal control over financial reporting - Due to the new public company transition period, this annual report does not include management's report on the effectiveness of internal control over financial reporting489 C. Attestation Report of Registered Public Accounting Firm Due to the new public company transition period, this annual report does not include an attestation report from the company's registered public accounting firm - Due to the new public company transition period, this annual report does not include an attestation report from the company's registered public accounting firm490 D. Changes in Internal Control Over Financial Reporting No significant changes in the company's internal control over financial reporting occurred during the reporting period - No significant changes in the company's internal control over financial reporting occurred during the reporting period491 Item 16A. Audit Committee Financial Expert Kenneth West serves as the company's audit committee financial expert - Kenneth West serves as the company's audit committee financial expert492 Item 16B. Code of Ethics The company has adopted a Code of Business Conduct and Ethics, applicable to all employees, contractors, executives, and directors, designed to meet the SEC and Nasdaq definitions of a "code of ethics"; any amendments or waivers will be disclosed on the company's website - The company has adopted a Code of Business Conduct and Ethics, applicable to all employees, contractors, executives, and directors493 - This code is designed to meet the SEC and Nasdaq definitions of a "code of ethics," and any amendments or waivers will be disclosed on the company's website493 Item 16C. Principal Accountant Fees and Services This section discloses the audit fees paid to PKF Littlejohn LLP, the independent registered public accounting firm, with $206,000 in audit fees for FY2023 and $319,000 for FY2022, the latter including the audit of two years of financial information required for the business combination registration statement; the company paid no tax or other fees to the independent auditor, and the audit committee pre-approved all audit and permissible non-audit services Independent Registered Public Accounting Firm Fees ($) | Fee Type | 2023 | 2022 | | :--- | :--- | :--- | | Audit Fees | 206,000 | 319,000 | | Tax Fees | — | — | | Other Fees | — | — | | Total | 206,000 | 319,000 | - The 2022 audit fees included the audit of two years of financial information required for the business combination registration statement495 - The audit committee pre-approved all audit and permissible non-audit services500 Item 16D. Exemptions from the Listing Standards for Audit Committees This section states that exemptions from the listing standards for audit committees are not applicable - Exemptions from the listing standards for audit committees are not applicable501 Item 16E. Purchase of Equity Securities by the Issuer and Affiliated Purchasers This section states that the purchase of equity securities by the issuer and affiliated purchasers is not applicable - The purchase of equity securities by the issuer and affiliated purchasers is not applicable502 Item 16F. Change in Registrant's Certifying Accountant This section states that a change in the registrant's certifying accountant is not applicable - A change in the registrant's certifying accountant is not applicable503 Item 16G. Corporate Governance As a "foreign private issuer," the company may elect to follow home country corporate governance practices instead of fully complying with Nasdaq's corporate governance requirements; while currently adhering to Nasdaq standards, the company plans to rely on an exemption for equity incentive plans, not requiring shareholder approval, which may offer less protection to shareholders compared to companies fully complying with all Nasdaq requirements - The company is a "foreign private issuer" and may elect to follow home country corporate governance practices instead of fully complying with Nasdaq's corporate governance requirements504 - The company plans to rely on an exemption for equity incentive plans, not requiring shareholder approval, which may result in shareholders receiving less protection than those of companies fully complying with all Nasdaq requirements195505 Item 16H. Mine Safety Disclosure This section states that mine safety disclosure is not applicable - Mine safety disclosure is not applicable506 Item 16I. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections This section states that disclosure regarding foreign jurisdictions that prevent inspections is not applicable - Disclosure regarding foreign jurisdictions that prevent inspections is not applicable507 Part III Item 17. Financial Statements This section directs readers to Item 18 for financial statements - For financial statements, please refer to Item 18509 Item 18. Financial Statements This section directs readers to pages F-1 through F-29 of this annual report for the company's financial statements - For financial statements, please refer to pages F-1 through F-29 of this annual report510 Item 19. Exhibits This section lists the various exhibits filed by the company with the SEC, including corporate governance documents (e.g., incentive compensation clawback policy, articles of association), securities-related agreements (e.g., warrant agreement, sponsor agreement, investor and management exchange and support agreements, registration rights agreement), and other material contracts and certifications - Exhibits include the Zapp EV Incentive Compensation Clawback Policy and the Amended and Restated Memorandum and Articles of Association512 - Exhibits also include securities-related documents such as the Warrant Agreement, Sponsor Agreement, Investor Exchange and Support Agreement, Management Exchange and Support Agreement, and Registration Rights Agreement512 Index to Financial Statements Report of Independent Registered Public Accounting Firm PKF Littlejohn LLP issued an unqualified audit opinion, stating that the company's consolidated financial statements for the fiscal years ended September 30, 2023, and 2022, are fairly presented in all material respects in accordance with International Financial Reporting Standards; the report also includes an explanatory paragraph regarding the company's going concern uncertainty due to accumulated losses, net losses, and cash outflows from operations, with insufficient liquidity to support operations through mid-2024 - PKF Littlejohn LLP issued an unqualified audit opinion on the company's consolidated financial statements for the fiscal years ended September 30, 2023, and September 30, 2022524 - The audit report includes an explanatory paragraph regarding the company's going concern ability, noting accumulated losses, net losses, and cash outflows from operations, with insufficient liquidity to support operations through mid-2024525 Consolidated Statements of Profit or Loss and Other Comprehensive Income The company generated no revenue and incurred continuous operating losses in fiscal years 2023 and 2022, with the annual loss for FY2023 reaching $222.1 million, a significant increase from $3.6 million in FY2022, primarily driven by business combination-related expenses and fair value changes of financial instruments; basic and diluted loss per share was $4.65 in FY2023 and $0.09 in FY2022 Consolidated Statements of Profit or Loss and Other Comprehensive Income Summary ($ million) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Revenue | — | — | | Sales and Distribution Expenses | (1.425) | (0.423) | | General and Administrative Expenses | (6.373) | (3.187) | | Operating Loss | (7.798) | (3.610) | | Finance Income | 0.009 | 0.003 | | Finance Expenses | (0.561) | (0.305) | | Other (Expenses)/Income | (213.748) | 0.335 | | Loss Before Tax | (222.097) | (3.578) | | Loss for the Year | (222.097) | (3.578) | | Basic and Diluted Loss Per Share | (4.65) | (0.09) | - The annual loss for FY2023 significantly increased to $222.1 million, primarily due to business combination-related expenses and fair value changes of financial instruments530 Consolidated Statements of Financial Position As of September 30, 2023, the company reported total assets of $7.3 million and total liabilities of $25.8 million, resulting in a negative shareholder equity of $18.4 million; current assets primarily included cash and cash equivalents, inventories, and trade and other receivables, while current liabilities significantly increased to $23.7 million, mainly due to higher trade and other payables and borrowings; non-current assets comprised property, plant and equipment, right-of-use assets, and intangible assets Consolidated Statements of Financial Position Summary ($ million) | Metric | September 30, 2023 | September 30, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and Cash Equivalents | 0.823 | 1.963 | | Inventories | 0.566 | 0.112 | | Trade and Other Receivables | 1.262 | 0.195 | | Total Current Assets | 2.651 | 2.270 | | Property, Plant and Equipment | 0.591 | 0.481 | | Right-of-Use Assets | 0.359 | 0.323 | | Intangible Assets | 1.043 | 1.019 | | Derivative Assets - Non-Current | 2.661 | — | | Total Non-Current Assets | 4.691 | 1.955 | | Total Assets | 7.342 | 4.225 | | Liabilities | | | | Trade and Other Payables | 19.885 | 0.905 | | Loans and Borrowings - Current | 3.714 | 0.012 | | Lease Liabilities - Current | 0.100 | 0.062 | | Derivative Liabilities - Current | — | 0.324 | | Total Current Liabilities | 23.698 | 1.303 | | Loans and Borrowings - Non-Current | 1.023 | 0.035 | | Lease Liabilities - Non-Current | 0.297 | 0.271 | | Derivative Liabilities - Non-Current | 0.603 | — | | Total Non-Current Liabilities | 2.081 | 0.410 | | Total Liabilities | 25.779 | 1.713 | | Equity | | | | Share Capital | 0.006 | 0.001 | | Share Premium | 120.966 | 8.994 | | Merger Reserve | 12.839 | — | | Share Option Reserve | 77.316 | 1.300 | | Accumulated Deficit | (229.646) | (7.544) | | Total Equity | (18.438) | 2.512 | | Total Liabilities and Equity | 7.342 | 4.225 | - As of September 30, 2023, the company's cash and cash equivalents were $0.823 million, a decrease from $1.963 million as of September 30, 2022532 - As of September 30, 2023, trade and other payables significantly increased to $19.885 million, compared to $0.905 million as of September 30, 2022532 - As of September 30, 2023, the company's accumulated deficit was $229.6 million, and total equity was negative $18.4 million532 Consolidated Statements of Changes in Equity As of September 30, 2023, the company's total equity was negative $18.4 million, compared to positive $2.5 million as of September 30, 2022; this change primarily resulted from the **$2