| Organization and Business Operation | Note 1 – Organization and Business Operation Keyarch Acquisition Corporation (the “Company”)
was incorporated in Cayman Islands on April 23, 2021. The Company was formed for the purpose of effecting a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (a “Business
Combination”). Although the Company is not limited to a particular industry or sector for purposes of consummating a Business Combination,
the Company intends to focus its search on global disruptive technology and innovative services companies. However, the Company’s
Amended and Restated Memorandum and Articles of Association, as amended (the “Amended and Restated Memorandum and Articles of Association”)
provides that it shall not undertake its initial Business Combination with any entity that is based in, located in or with its principal
business operations in China (including Hong Kong and Macau). The Company is an emerging growth company and, as such, the Company is subject
to all of the risks associated with emerging growth companies.
As on June 30, 2023, the Company had not
commenced any operations. All activity for the period from April 23, 2021 (inception) through June 30, 2023, relates to the Company’s
formation and the initial public offering (“IPO”) described below, and following the IPO, the search for a target to consummate
a Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination,
at the earliest. The Company will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds
derived from the IPO. The Company has selected December 31 as its fiscal year end. The Company’s sponsor is Keyarch Global
Sponsor Limited, a Cayman Islands limited liability company (the “Sponsor”). Financing The registration statement for the Company’s
IPO was declared effective on January 24, 2022 (the “Effective Date”). On January 27, 2022, the Company consummated
the IPO of 10,000,000 units (the “Units” and, with respect to the Class A ordinary shares included in the Units being
offered, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $100,000,000, which is discussed in Note 3. Simultaneously with the closing of the IPO, the
Company consummated the sale of 500,000 private placement units (“Private Placement Units”) (450,000 Private Placement Units
purchased by the Sponsor and 50,000 Private Placement Units purchased by EarlyBirdCapital, Inc., the representative of the underwriters
of the IPO (“EarlyBirdCapital”)) at a price of $10.00 per Private Placement Unit, for an aggregate purchase price of $5,000,000,
in a private placement. On February 8, 2022, the underwriters purchased
an additional 1,500,000 Units by exercising its over-allotment option in full at a purchase price of $10.00 per Unit, generating gross
proceeds of $15,000,000. Simultaneously with the closing of the full exercise of the over-allotment option, the Company completed the
private sale of an aggregate of 45,000 Private Placement Units (40,500 Private Placement Units purchased by the Sponsor and 4,500 Private
Placement Units purchased by EarlyBirdCapital) at a price of $10.00 per Private Placement Unit, generating gross proceeds of $450,000. Offering costs amounted to $3,471,734 consisting
of $2,300,000 of underwriting discount and $1,171,734 of other offering costs. During the year ended December 31, 2022, the Company received
discount amounting to $131,420 on outstanding offering costs included within accounts payable and accrued expenses. This has been treated
as an adjustment to offering costs. As on June 30, 2023, cash of $13,779 was
held outside of the Trust Account (as defined below) and is available for the payment of offering costs and for working capital purposes. Trust Account Following the closing of the IPO and the sale
of over-allotment Units, an aggregate of $116,150,000 ($10.10 per Unit) from the net proceeds and the sale of the Private Placement Units
was held in a trust account (“Trust Account”), and invested in U.S. government securities, within the meaning set forth in
Section 2(a)(16) of the Investment Company Act, having a maturity of 185 days or less or in money market funds meeting certain
conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations.
Except with respect to income earned on the funds held in the Trust Account that may be released to the Company to pay income tax obligations,
the proceeds from the IPO will not be released from the Trust Account until the earlier of the completion of a Business Combination or
the Company’s liquidation.
The Company’s management has broad discretion
with respect to the specific application of the net proceeds of the IPO and the sale of Private Placement Units, although substantially
all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the
Company will be able to complete a Business Combination successfully. Extension On July 25, 2023, the Company’s shareholders
approved an extension of the date by which the Company must consummate an initial Business Combination (such date, the “Termination
Date”) from July 27, 2023 (the “Original Termination Date”) to October 27, 2023 and to allow the Company’s board
of directors, without another shareholder vote, to elect to further extend the Termination Date on a monthly basis up to three (3) times
until January 27, 2024, or for a total of up to six (6) months after the Original Termination Date or such earlier date as determined
by the Company’s board of directors (the “Extension”). In connection with the Extension, holders of 9,122,682 Public
Shares properly exercised their right to redeem their shares for cash at a redemption price of approximately $10.50 per share, for an
aggregate redemption amount of approximately $95,826,230. Following such redemptions, the Company has 2,377,318 Public Shares issued and
outstanding. On July 25, 2023, the
Company issued a promissory note (the “Extension Note”) in the aggregate principal amount of up to $180,000 to the Sponsor
or its registered assigns or successors in interest (the “Payee”) pursuant to which the Payee agreed to loan to the Company
up to $180,000 to deposit into the Company’s Trust Account for the Public Shares that were not redeemed in connection with the Extension.
The Extension Note bears no interest and is repayable in full upon the earlier of (a) date of the consummation of an initial Business
Combination by the Company and (b) the Company’s liquidation. On July 25, 2023,
the Sponsor deposited an aggregate of $90,000 into the Trust Account in connection with the initial 3-month extension period from July
27, 2023 to October 27, 2023 and will deposit an additional $30,000 for each month (commencing October 28, 2023 and ending on the 27 th The Company must complete one or more initial
Business Combinations by January 27, 2024 or such earlier date as determined by the Company’s board of directors (the “Combination
Period”), with one or more target businesses that together have an aggregate fair market value of at least 80% of the assets held
in the Trust Account (excluding taxes payable on income earned on the Trust Account) at the time of the definitive agreement for the initial
Business Combination. The Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more
of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to
be required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”).
The Company will provide the holders of its outstanding
Public Shares (the “public shareholders”) with the opportunity to redeem all or a portion of their Public Shares upon the
completion of a Business Combination either (i) in connection with a shareholder meeting called to approve the Business Combination
or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a Business Combination
or conduct a tender offer will be made by the Company, solely in its discretion, subject to applicable law. The public shareholders will
be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account. The per-share amount to be distributed
to public shareholders who redeem their Public Shares will not be reduced by the cash fee payable to EarlyBirdCapital for services performed
in connection with the initial Business Combination (as discussed in Note 6). In such case, the Company will proceed with a Business
Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination and a majority
of the shares voted are voted in favor of the Business Combination. If a shareholder vote is not required by law and the Company does
not decide to hold a shareholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Memorandum
and Articles of Association, conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission
(“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, shareholder
approval of the transactions is required by law, or the Company decides to obtain shareholder approval for business or legal reasons,
the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to
the tender offer rules. Additionally, each public shareholder may elect to redeem their Public Shares irrespective of whether they vote
for or against the proposed transaction. If the Company seeks shareholder approval in connection with a Business Combination, the initial
shareholders (as defined below) have agreed to vote its Founder Shares (as defined below in Note 4) and any Public Shares purchased
during or after the IPO in favor of a Business Combination.
Subsequent to the consummation of the IPO, the
Company adopted an insider trading policy which requires insiders to: (i) refrain from purchasing shares during certain blackout
periods and when they are in possession of any material non-public information and (ii) to clear all trades with the Company’s
legal counsel prior to execution. In addition, the initial shareholders have agreed to waive their redemption rights with respect to their
Founder Shares and Public Shares in connection with the completion of a Business Combination. Notwithstanding the foregoing, the Amended and
Restated Memorandum and Articles of Association provides that a public shareholder, together with any affiliate of such shareholder or
any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect
to more than an aggregate of 15% or more of the Class A ordinary shares sold in the IPO, without the prior consent of the Company. The Company’s Sponsor, officers and directors
(the “initial shareholders”) have agreed not to propose an amendment to the Amended and Restated Memorandum and Articles of
Association that would affect the substance or timing of the Company’s obligation to redeem 100% of its Public Shares if the Company
does not complete a Business Combination, unless the Company provides the public shareholders with the opportunity to redeem their Class A
ordinary shares in conjunction with any such amendment. Liquidation If the Company is unable to complete a Business
Combination within the Combination Period (refer Note 9), the Company will (i) cease all operations except for the purpose of winding
up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the Trust Account including income earned on the funds held in the Trust
Account and not previously released to us to pay the Company’s franchise and income taxes, divided by the number of then outstanding
Public Shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive
further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of the Company’s remaining shareholders and the Company’s board of directors, dissolve and liquidate,
subject in each case to the Company’s obligations under Cayman Islands law to provide for claims of creditors and the requirements
of other applicable law.
The initial shareholders have agreed to waive
their liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination
Period. However, if the initial shareholders should acquire Public Shares in or after the IPO, they will be entitled to liquidating distributions
from the Trust Account with respect to such Public Shares if the Company fails to complete a Business Combination within the Combination
Period. EarlyBirdCapital has agreed to waive its rights to the cash fee payable to EarlyBirdCapital for services performed in connection
with the initial Business Combination (see Note 6) held in the Trust Account in the event the Company does not complete a Business
Combination within in the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust
Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the
per share value of the residual assets remaining available for distribution (including Trust Account assets) could be less than $10.10
per share initially held in the Trust Account. In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be
liable to the Company if and to the extent any claims by a vendor for services rendered or products sold to the Company, or a prospective
target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account.
This liability will not apply with respect to any claims by a third party who executed a waiver of any right, title, interest or claim
of any kind in or to any monies held in the Trust Account or to any claims under the Company’s indemnity of the underwriters of
the IPO against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”).
Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible
to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have
to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers, prospective target businesses
or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim
of any kind in or to monies held in the Trust Account. Going Concern and Management Liquidity Plans As on June 30, 2023 and December 31, 2022, the
Company had cash of $13,779 and $115,171, respectively and working (deficit)/capital of $(1,003,498) and $116,657, respectively. The Company’s
liquidity needs prior to the consummation of the IPO had been satisfied through proceeds from notes payable and advances from related
party and from the issuance of ordinary shares. Subsequent to the consummation of the IPO, the Company expects that it will need additional
capital to satisfy its liquidity needs beyond the net proceeds from the consummation of the IPO and the proceeds held outside of the Trust
Account for paying existing accounts payable, identifying and evaluating prospective business combination candidates, performing due diligence
on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring,
negotiating and consummating the initial Business Combination. Although certain of the Company’s initial shareholders, officers
and directors or their affiliates have committed to loan the Company funds from time to time or at any time, in whatever amount they deem
reasonable in their sole discretion, there is no guarantee that the Company will receive such funds. On April 18, 2023, the Company issued a promissory note (the “First
Working Capital Loan Note”) in the principal amount of up to $250,000 to the Company’s Sponsor. The First Working Capital
Loan Note was issued in connection with advances the Payee has made, and may make in the future, to the Company for working capital expenses.
The First Working Capital Loan Note bears no interest and is due and payable upon the earlier to occur of (i) the date on which the Company
consummates its initial Business Combination and (ii) the date that the winding up of the Company is effective (Refer Note 5). On July 25, 2023,
the Company issued a second promissory note (the “Second Working Capital Loan Note”) in the principal amount of up to
$1,000,000 to the Payee. The Second Working Capital Loan Note was issued in connection with advances the Payee may make in the
future to the Company for working capital expenses. The Second Working Capital Loan Note bears no interest and is due and payable
upon the earlier to occur of (i) the date on which the Company consummates a Business Combination and (ii) the date that the winding
up of the Company is effective. Accordingly, the accompanying unaudited
condensed financial statements have been prepared in conformity with U.S. GAAP, which contemplates continuation of the Company as a
going concern and the realization of assets and the satisfaction of liabilities in the normal course of business. The financial
statements do not include any adjustments that might result from the outcome of this uncertainty. Further, the Company has incurred
and expects to continue to incur significant costs in pursuit of its financing and acquisition plans. On July 30, 2023, the Company
entered into a Business Combination Agreement with Zooz (as defined below), but the Company cannot provide any assurance that its plan to
consummate an initial Business Combination within the relevant period will be successful. Based on the foregoing, management
believes that the Company will not have sufficient working capital and borrowing capacity to meet its needs through the earlier of
the consummation of the initial Business Combination or one year from this filing. These factors, among others, raise
substantial doubt about the Company’s ability to continue as a going concern. Proposed Business Combination On July 30, 2023,
the Company entered into a Business Combination Agreement (as the same may be amended, supplemented and/or restated from time to
time, the “Business Combination Agreement”) with Zooz Power Ltd., an Israeli company listed on the Tel Aviv Stock
Exchange (“Zooz”), Zooz Power Cayman, a Cayman Islands exempted company and wholly owned subsidiary of Zooz
(“Merger Sub”) and Keyarch Global Sponsor Limited, a Cayman Islands exempted company, in the capacity as representative
of the shareholders of the Company as specified in the Business Combination Agreement. Pursuant to the Business
Combination Agreement, at the closing (the “Closing”) of the transactions contemplated thereunder (collectively, the “Transactions”),
and following the Recapitalization (as such term is defined and described below), (i) Merger Sub will merge with and into the Company,
with the Company continuing as the surviving entity in such merger and a wholly owned subsidiary of Zooz; (ii)
the outstanding ordinary shares of the Company (including Class A ordinary shares and Class B ordinary shares) will be converted into
ordinary shares of Zooz on a one-for-one basis; (iii) each outstanding Company warrant
exercisable for one Company ordinary share will be converted into an equivalent warrant to purchase Zooz ordinary shares on a one-for-one
basis; (iv) Zooz, as the
sole shareholder of Merger Sub, will become the sole shareholder of the Company; and (v) the Amended and Restated Memorandum and Articles
of Association of the Company shall be amended and restated in form and substance appropriate for a private entity to be mutually agreed
by Zooz and the Company. Prior to the Closing,
but subject to the completion of the Closing, Zooz will consummate a recapitalization of its outstanding equity securities (the “Recapitalization”),
pursuant to which (i) each outstanding Zooz warrant (except for certain continuing warrants) will be exercised in accordance with their
respective terms and (ii) each then-outstanding Zooz ordinary share will be converted into such number of Zooz ordinary shares as is
determined by dividing $60,000,000 by $10.00 per share, which is in turn divided by the number of Zooz ordinary shares and specified
Zooz continuing warrants and options, resulting in the Zooz ordinary shares valued at $10.00 per share having a total value of $60,000,000,
on a fully-diluted basis. In addition, as a result of the Recapitalization, each Zooz continuing warrant and each Zooz option to purchase
Zooz ordinary shares which has not been exercised prior to the Recapitalization will be adjusted to reflect the foregoing applicable
conversion ratio. The Business Combination Agreement does not provide for any purchase price adjustments. Up to an additional
4,000,000 Zooz ordinary shares (the “Earnout Shares”) will be issuable to the Zooz shareholders who were Zooz shareholders
as of immediately prior to the Closing at a record date to be determined by Zooz in coordination with the Tel Aviv Stock Exchange (“Pre-Closing
Zooz Shareholders”) as earnout consideration, contingent on the achievement of certain earnout milestones based on the price of
Zooz ordinary shares or Zooz’s gross revenue during the five-year period following the Closing (the “Earnout Period”).
The Earnout Shares will be allocated on a pro rata basis among the Pre-Closing Zooz Shareholders upon conversion of non-tradable, non-assignable
rights (the “Earnout Rights”) to be issued by Zooz pro rata among such Pre-Closing Zooz Shareholders as soon as reasonably
practicable following Closing and the receipt of all required approvals for such issuance from applicable governmental authorities, including
the Israel Securities Authority and the Tel Aviv Stock Exchange. Subject to the combined company following the consummation of the Transactions
achieving the applicable milestone(s) during the Earnout Period in accordance with the terms detailed in the Business Combination Agreement,
each such Earnout Right will be convertible into Zooz ordinary shares on a one-for-one basis (with the number of issuable Earnout Shares
subject to adjustment based on share splits, reorganizations, recapitalizations and similar adjustments). For additional
information regarding the Transactions, the Business Combination Agreement and Zooz, see the Current Reports on Form 8-K filed by
the Company with the SEC on July 31, 2023 and August 3, 2023. Risks and Uncertainties Management evaluated the impact of the COVID-19
pandemic on the industry and concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s
financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable. The
unaudited condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty. In the beginning of February 2022, the Russian
Federation and Belarus commenced a military action against the country of Ukraine. As a result of this action, various nations, including
the United States, had instituted economic sanctions against the Russian Federation and Belarus. The impact of this action and related
sanctions on the world economy continue to remain indeterminable. On August 16, 2022, the Inflation Reduction
Act (“IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1% excise
tax on certain repurchases (including redemptions) of stock by publicly traded domestic (i.e., U.S.) corporations and certain
domestic subsidiaries of publicly traded foreign corporations. The excise tax is imposed on the repurchasing corporation itself, not
its shareholders from which shares are repurchased. The amount of the excise tax is generally 1% of the fair market value of the
shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are
permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the
same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury has been given
authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax. The IR Act
applies only to repurchases that occur after December 31, 2022. Any redemption or other repurchase that occurs after December 31,
2022, in connection with a Business Combination, extension vote or otherwise, may be subject to the excise tax. Whether and to what
extent the Company would be subject to the excise tax in connection with a Business Combination, extension vote or otherwise would
depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the
Business Combination, extension or otherwise, (ii) the structure of a Business Combination, (iii) the nature and amount of any
“PIPE” or other equity issuances in connection with a Business Combination (or otherwise issued not in connection with a
Business Combination but issued within the same taxable year of a Business Combination) and (iv) the content of regulations and
other guidance from the Treasury. In addition, because the excise tax would be payable by the Company and not by the redeeming
holder, the mechanics of any required payment of the excise tax have not been determined. The foregoing could cause a reduction in
the cash available on hand to complete a Business Combination and in the Company’s ability to complete a Business
Combination. |
