Zapp electric Vehicles Group Limited (Nasdaq: ZAPP) (“Zapp EV” or the “Company”), owner of “Zapp”, the British electric vehicle brand on a mission to revolutionise personal urban mobility, today announced it has entered into a standby equity purchase agreement (the “SEPA”) with an affiliate of Yorkville Advisors Global, LP (the “Investor”). Zapp EV will use proceeds from the transaction primarily to start the production and commercial rollout of the i300, the brand’s high-performance electric urban motorcycle. The Company anticipates making initial deliveries of the i300 in Europe in the months ahead, followed by commercial launch of the i300 in Asian markets in late 2024.

Per the SEPA, the Investor has agreed to advance $1.5 million to Zapp in two tranches once conditions precedent have been met, including the filing of the Company’s Annual Report on Form 20-F for the fiscal year ended September 30, 2023 and the filing and effectiveness of an SEC registration statement registering the resale of shares issuable under the SEPA.

Thereafter, subject to certain limitations, Zapp EV will have the right, but not the obligation, in its sole discretion, to issue and sell to the Investor up to a further $8.5 million worth of its ordinary shares, based on the Company’s funding requirements and evolving share price during the three-year period following effectiveness of an applicable SEC registration statement.

Swin Chatsuwan, Founder and Chief Executive Officer of Zapp EV, said: “Our design and engineering teams have delivered an exceptional product. With this vote of confidence from a renowned investor, we have the financial resources for the expected rollout of i300s this year.”

Chatsuwan continued: “Consumer appeal is a key differentiator in this space, and we think the i300’s eight-time award winning design, high-performance specifications, and sustainability, all at an affordable price, give Zapp the key ingredients for success. We aim to achieve a positive gross margin from the start of an anticipated ramp-up in customer deliveries. Zapp needs very little capital by industry standards to achieve our goals due to our balance sheet light business model leveraging contract manufacturing. We look forward to the first i300 deliveries in Europe, receipt of European Community Whole Vehicle Type Approval now that all requisite vehicle tests have been successfully completed, and capitalising on this progress to expedite our commercial rollout across key Asian markets.”

The Company anticipates that sales of electric two-wheelers will grow significantly in most parts of the world in the years ahead, especially in emerging markets. Among other key competitive advantages and product differentiation, Zapp’s i300 rollout will not be impeded by investments in dedicated charging infrastructure since its two lightweight portable batteries can be taken indoors and charged at any wall socket. The Company believes that, after starting production, its asset-light business model, employing contract manufacturing in tandem with receivables financing arrangements through the Export Import Bank of Thailand, will enable the rapid scaling up of its business.