ZOOZ Power Ltd.(ZOOZ) - 2023 Q4 - Annual Report

Customer Concentration and Risks - ZOOZ's customer base is highly concentrated, with single customers representing a significant portion of sales, increasing commercial negotiation leverage and potential negative impacts on prices, revenues, and gross margins[163] - ZOOZ faces increased credit risk due to potential liquidity issues among its customers, which could lead to reduced purchases, delayed deliveries, or customer consolidation[164] - Early-stage companies, which form a significant portion of ZOOZ's customer base, present higher risks due to lack of market acceptance, funding challenges, and greater vulnerability to supply chain disruptions[166] International Expansion and Operational Challenges - Expanding into regions without a local presence poses challenges such as customer service delays, regulatory compliance issues, and competitive disadvantages[167][168][169] - ZOOZ is subject to international business risks including economic instability, political unrest, pandemics, and adverse changes in governmental policies[172] Regulatory and Compliance Risks - Compliance with environmental, labor, health, and safety laws across multiple jurisdictions could result in significant costs and operational restrictions[171][178] - Violations of anti-corruption laws, such as the FCPA, could lead to fines, penalties, and reputational damage[176][177] Legal and Litigation Risks - ZOOZ may face securities litigation, which could result in substantial costs and diversion of management attention[174] - ZOOZ may face claims for additional remuneration or royalties from employees for assigned inventions, potentially leading to litigation or financial impact[209] Tax and Financial Risks - Changes in tax laws or regulations in Israel, the United States, and other jurisdictions could increase ZOOZ's effective tax rate and reduce cash flow[182][183] - Transfer pricing rules in various jurisdictions could lead to additional corporate income tax liabilities if challenged by tax authorities[185] Intellectual Property and Employee Relations - A significant portion of ZOOZ's intellectual property is developed by employees and classified as "service inventions" under Israeli Patent Law, belonging to the employer unless otherwise agreed[208] Corporate Governance and Shareholder Responsibilities - Shareholders of ZOOZ are governed by Israeli law and the company's articles of association, which impose duties such as acting in good faith and fairness, differing from U.S. shareholder responsibilities[211]