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REE Automotive Ltd.

REE Automotive Ltd.REEEarnings & Financial Report

Nasdaq · Industrials

REE Automotive, Ltd. is an automotive software developer. The company previously developed an electric vehicle platform featuring independent interchangeable corner modules, dubbed REECorners. The corner modules are positioned directly adjacent to each wheel, and they encapsulate all of the vehicle's drive systems such as the motor, inverter, steering, brakes, and suspension. They are controlled electronically, by-wire, allowing for a completely flat platform chassis onto which custom chassis...

What changed in REE Automotive Ltd.'s 20-F — 2022 vs 2023

Top changes in REE Automotive Ltd.'s 2023 20-F

527 paragraphs added · 350 removed · 260 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

26 edited+1 added−10 removed77 unchanged
REE believes these factors include: • the difference in the initial purchase prices of EVs with comparable vehicles powered by internal combustion engines, both including and excluding the effect of government and other subsidies and incentives designed to promote the purchase of EVs; • the TCO of the vehicle over its expected life, which includes the initial purchase price and ongoing operating and maintenance costs • the availability and terms of financing options for purchases of vehicles and, for EVs, financing options for battery or fuel cell systems; • the availability of tax and other governmental incentives to purchase and operate EVs and future regulations requiring increased use of nonpolluting vehicles; • government regulations and economic incentives promoting fuel efficiency and alternate forms of energy; • fuel prices, including volatility in the cost of diesel or a prolonged period of low gasoline and natural gas costs that could decrease incentives to transition to EVs; • the cost and availability of other alternatives to diesel fueled vehicles, such as vehicles powered by natural gas; • corporate sustainability initiatives; • EV quality, performance and safety (particularly with respect to lithium-ion battery packs or fuel cells); • the quality and availability of service for the vehicle, including the availability of replacement parts; • the limited range over which EVs may be driven on a single charge; • increased competition with other companies also developing zero-emission electric and autonomous vehicles; • access to charging stations and related infrastructure costs, and standardization of EV charging systems; 12 Table of Contents • electric grid capacity and reliability; and • macroeconomic factors.
REE believes these factors include: • the difference in the initial purchase prices of EVs with comparable vehicles powered by internal combustion engines, both including and excluding the effect of government and other subsidies and incentives designed to promote the purchase of EVs; • the TCO of the vehicle over its expected life, which includes the initial purchase price and ongoing operating and maintenance costs; • the availability and terms of financing options for purchases of vehicles and, for EVs, financing options for battery or fuel cell systems; • the availability of tax and other governmental incentives to purchase and operate EVs and future regulations requiring increased use of nonpolluting vehicles; • government regulations and economic incentives promoting fuel efficiency and alternate forms of energy; 12 Table of Contents • fuel prices, including volatility in the cost of diesel or a prolonged period of low gasoline and natural gas costs that could decrease incentives to transition to EVs; • the cost and availability of other alternatives to diesel fueled vehicles, such as vehicles powered by natural gas; • corporate sustainability initiatives; • EV quality, performance and safety (particularly with respect to lithium-ion battery packs or fuel cells); • the quality and availability of service for the vehicle, including the availability of replacement parts; • the limited range over which EVs may be driven on a single charge; • increased competition with other companies also developing zero-emission electric and autonomous vehicles; • access to charging stations and related infrastructure costs, and standardization of EV charging systems; • electric grid capacity and reliability; and • macroeconomic factors.
In addition, whether actual operating and financial results and business development will be consistent with REE’s expectations and assumptions as reflected in forecasts depends on a number of factors, many of which are outside REE’s control, including, but not limited to: • the extent to which projections of operating expense and unit sales will reflect the actual operating expense and sale of REE products in the future; • the extent to which REE can actualize the value proposition of REE products including, but not limited to, cost efficiencies related to its business model with limited capital expenditure requirements and projected total cost of ownership, and the availability of mission-specific vehicles that maximize cabin and storage space on a smaller overall footprint; • there is no guarantee that REE will be able to successfully outsource manufacturing and utilize future Integration Centers for the assembly of REE products beyond our first Integration Center in Coventry, United Kingdom, or the UK Integration Center; • the extent to which growth of e-mobility markets and continued shift in consumer preference will conform with projections; • although REE is focusing on Class 3 through 5 platform models for the P7 EV platform, REE’s ability to validate, verify and test other REE products compatible with the Class 1 through Class 6 platform, which the failure to do so with respect to any class would reduce REE’s projected total addressable market; • the extent to which REE’s projected bill of materials conform with the actual bill of materials upon start of production, deviation from which could negatively impact the projected total cost of ownership or projected gross margin; • supply chain disruptions and shortages of raw materials, parts, components and systems used in our production process; • the projected total cost of ownership is based upon a number of projected factors based on management expectations, the deviation from which could negatively impact the actual total cost of ownership offered to potential customers; • homologation of full vehicles; • certification of X-by-Wire technology; • top-hat partnerships to build full EVs; • whether REE can obtain sufficient capital to sustain and grow its business; and • the timing and costs of new and existing marketing and promotional efforts, including with respect to the “Powered by REE TM ” brand.
In addition, whether actual operating and financial results and business development will be consistent with REE’s expectations and assumptions as reflected in forecasts depends on a number of factors, many of which are outside REE’s control, including, but not limited to: • the extent to which projections of operating expense and unit sales will reflect the actual operating expense and sale of REE products in the future; • the extent to which REE can actualize the value proposition of REE products including, but not limited to, cost efficiencies related to its business model with limited capital expenditure requirements and projected total cost of ownership, and the availability of mission-specific vehicles that maximize cabin and storage space on a smaller overall footprint; • there is no guarantee that REE will be able to successfully outsource manufacturing and utilize future Integration Centers for the assembly of REE products beyond our first Integration Center in Coventry, United Kingdom, or the UK Integration Center; • the extent to which growth of e-mobility markets and continued shift in consumer preference will conform with projections; • although REE is focusing on Class 3 through 5 platform models for the P7 EV platform, REE’s ability to validate, verify and test other REE products compatible with the Class 1 through Class 6 platform, which the failure to do so with respect to any class would reduce REE’s projected total addressable market; • the extent to which REE’s projected bill of materials conform with the actual bill of materials upon start of production, deviation from which could negatively impact the projected total cost of ownership or projected gross margin; • supply chain disruptions and shortages of raw materials, parts, components and systems used in our production process; • the projected total cost of ownership is based upon a number of projected factors based on management expectations, the deviation from which could negatively impact the actual total cost of ownership offered to potential customers; 11 Table of Contents • homologation of full vehicles; • certification of X-by-Wire technology; • top-hat partnerships to build full EVs; • whether REE can obtain sufficient capital to sustain and grow its business; and • the timing and costs of new and existing marketing and promotional efforts, including with respect to the “Powered by REE TM ” brand.
Should such a model fail to achieve market acceptance, REE may not be able to achieve profitability. REE plans to conduct product marketing and sales directly to OEMs, delivery and logistic fleets, dealers, e-commerce retailers, new mobility players, MaaS providers and autonomous drive companies by its internal business development and marketing teams.
Should such a model fail to achieve market acceptance, REE may not be able to achieve profitability. REE plans to conduct product marketing and sales directly to delivery and logistic fleets, dealers, e-commerce retailers, new mobility players, MaaS providers and autonomous drive companies by its internal business development and marketing teams.
These risks include: • conforming REE’s products to various international regulatory requirements where its products are sold, or homologation; • development and construction of its future Integration Center network; • maintenance and ability to produce REE’s products in REE’s UK Integration Center; • difficulty in staffing and managing foreign operations; • difficulties securing customers in new jurisdictions; • foreign government taxes, regulations and permit requirements, including foreign taxes that REE may not be able to offset against taxes imposed upon it in Israel, and foreign tax and other laws limiting REE’s ability to repatriate funds to Israel; 13 Table of Contents • fluctuations in foreign currency exchange rates and interest rates, including risks related to any interest rate swap or other hedging activities REE undertakes; • interruptions in shipments; • Israel and foreign government trade restrictions, tariffs and price or exchange controls; • foreign labor laws, regulations and restrictions; changes in diplomatic and trade relationships; • political instability, natural disasters, war or events of terrorism; and • the strength of international economies.
These risks include: • conforming REE’s products to various international regulatory requirements where its products are sold, or homologation; • development and construction of its future Integration Center network; • maintenance and ability to produce REE’s products in REE’s UK Integration Center; • difficulty in staffing and managing foreign operations; • difficulties securing customers in new jurisdictions; • foreign government taxes, regulations and permit requirements, including foreign taxes that REE may not be able to offset against taxes imposed upon it in Israel, and foreign tax and other laws limiting REE’s ability to repatriate funds to Israel; • fluctuations in foreign currency exchange rates and interest rates, including risks related to any interest rate swap or other hedging activities REE undertakes; • interruptions in shipments; • Israel and foreign government trade restrictions, tariffs and price or exchange controls; • foreign labor laws, regulations and restrictions; changes in diplomatic and trade relationships; • political instability, natural disasters, war or events of terrorism; and • the strength of international economies.
If, in weighing these factors, OEMs, ldelivery and logistic fleets, dealers, e-commerce retailers, new mobility players, MaaS providers and autonomous drive companies determine that there is not a compelling business justification for purchasing EVs, particularly those built on products by REE, then the market for EVs may not develop as REE expects or may develop more slowly than REE expects, which would adversely affect REE’s business, prospects, financial condition and operating results.
If, in weighing these factors, OEMs, delivery and logistic fleets, dealers, e-commerce retailers, new mobility players, MaaS providers and autonomous drive companies determine that there is not a compelling business justification for purchasing EVs, particularly those built on products by REE, then the market for EVs may not develop as REE expects or may develop more slowly than REE expects, which would adversely affect REE’s business, prospects, financial condition and operating results.
However, there can be no guarantee that the testing of REE’s products will proceed according to schedule or that the REE products will withstand rigorous testing.
However, there can be no guarantee that the testing of REE’s products will proceed according to schedule or that the REE products will withstand rigorous additional testing.
There can be no assurance, therefore, that there will not be some components sourced from suppliers subject to sanctions against Russia nor that the resulting disruption to the supply chain will not have an adverse impact on our business and results of operations.
There can be no assurance, therefore, that there will not be some components sourced from suppliers subject to sanctions against Russia nor that the resulting disruption to the supply chain will not have an adverse impact on REE’s business and results of operations.
Nevertheless, the uncertain geopolitical conditions, sanctions, and other potential impacts on the global economic environment resulting from Russia’s invasion of Ukraine may impact customer behavior and disrupt the manufacturing, delivery and overall supply chain or our ability to commercialize REE’s products, which could make it difficult for REE to forecast its financial results.
Nevertheless, the uncertain geopolitical conditions, sanctions, and other potential impacts on the global economic environment resulting from Russia’s invasion of Ukraine may impact customer behavior and disrupt the manufacturing, delivery and overall supply chain or our ability to commercialize REE’s products, which could make it difficult for REE to forecast its financial 14 Table of Contents results.
However, such expansion would require REE to make significant expenditures, including the hiring of local employees and establishing facilities, in advance of generating any revenue. REE is subject to a number of risks associated with international business activities that may increase its costs, impact its ability to sell its products and require significant management attention.
However, such expansion would require REE to make significant expenditures, including the hiring of local employees and establishing facilities, in advance of generating any revenue. REE is subject to 13 Table of Contents a number of risks associated with international business activities that may increase its costs, impact its ability to sell its products and require significant management attention.
If other banks and financial institutions enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, our ability to access our existing cash, cash equivalents and investments may be threatened and could have a material adverse effect on our business and financial condition.
If other banks and financial institutions enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, REE’s ability to access its existing cash, cash equivalents and investments may be threatened and could have a material adverse effect on its business and financial condition.
If REE is unable to achieve this, it could have a material adverse effect on its business, prospects, financial results and results of operations. 15 Table of Contents Certain of REE’s agreements with potential customers, suppliers, dealers and strategic partners are preliminary in nature.
If REE is unable to achieve this, it could have a material adverse effect on its business, prospects, financial results and results of operations. Certain of REE’s agreements with potential customers, suppliers, dealers and strategic partners are preliminary in nature.
Customers, suppliers, dealers and strategic partners may be less likely to purchase REE’s products if we do not timely deliver products in accordance with the technical specifications or they do not believe that its business will succeed or that its operations, including providing such partners with maintenance and service through qualified supplier support operations, which has yet to be established, for many years.
Customers, suppliers, dealers and strategic partners may be less likely to purchase REE’s products if it does not timely deliver products in accordance with the technical specifications or if the customers do not believe that REE’s business will succeed or that its operations, including providing such partners with maintenance and service through qualified supplier support operations, which has yet to be established, for many years.
Our business model is unique because we can market and sell our products individually or as “Powered by REE™” in a full vehicle solution.
REE’s business model is unique because REE can market and sell our products individually or as “Powered by REE™” in a full vehicle solution.
In addition, although REE intends to be involved in material decisions in the supply chain and manufacturing process, given that REE also will rely on its current and potential suppliers, dealers and strategic partners to meet its quality standards, there can be no assurance that REE will be able to maintain high quality standards for its products.
In addition, although REE intends to be involved in material decisions in the supply chain and manufacturing process, given that REE also will rely on its current and potential suppliers, dealers and strategic partners to meet its quality standards, there can be no assurance that REE will be 16 Table of Contents able to maintain high quality standards for its products.
In the event that actual results differ from REE’s projected financial information or if REE adjusts its projections in future periods, REE’s share price could be materially adversely affected. 11 Table of Contents REE may not succeed in controlling the costs associated with its operations.
In the event that actual results differ from REE’s projected financial information or if REE adjusts its projections in future periods, REE’s share price could be materially adversely affected. REE may not succeed in controlling the costs associated with its operations.
The principal factors and uncertainties that make investing in our ordinary shares risky, include, among others: • REE’s limited operating history may make evaluation of its business and future prospects difficult, increasing the risk of investment in REE. • Projecting REE’s operational or financial performance relies in large part upon assumptions and analyses that are inherently uncertain and subject to risk, and that if proven incorrect could result in significantly lower actual results. • REE may not succeed in controlling the costs associated with its operations. • If the market for commercial EVs does not develop as REE expects or develops slower than REE expects, its business prospects, financial condition, and operating results may be adversely affected. • Adverse conditions in the automotive industry could have adverse effects on REE’s results of operations. • REE’s business model has not been proven and any failure to obtain significant orders for its products would have an adverse effect on its operating results, business, or reputation, resulting in substantial liabilities that may exceed its resources. • REE’s marketing and sales model may fail to achieve market success or acceptance, which may cause REE not to achieve profitability. 8 Table of Contents • REE’s agreements with potential customers, suppliers, dealers and strategic partners are preliminary in nature. • Our ability to make additional sales following sales of test vehicles to customers depends in part on our ability to prove that REE’s products are to the full satisfaction of such customers and to establish and maintain confidence in REE’s business prospects among such customers and others within its industry. • REE may not succeed in establishing, maintaining and strengthening the “Powered by REE TM ” brand. • REE is subject to risks associated with strategic alliances. • REE operates in a highly competitive market and may not be able to compete successfully in the market as a result of rapid changes in EV technology and the entrance of new and existing, larger manufacturers into the EV space. • REE is subject to risks associated with the anticipated timing of REE’s initial commercial production and subsequent increased commercial production. • REE’s development of an outsourced manufacturing business model may not be successful. • REE is reliant on its UK Engineering Center and REE’s Integration Center at Coventry, UK for the design, validation, verification, testing and homologation of its products. • REE will depend on its suppliers and the inability of such suppliers to deliver the components of REE’s products in a timely manner or at all and at prices and volumes acceptable to it could have a material adverse effect on its business, prospects and operating results. • REE’s business could be harmed by increases in costs, disruption of supply or shortage of materials, in particular for lithium-ion battery cells. • REE targets customers, some which are large corporations with substantial negotiating power, exacting product, quality and warranty standards and potentially competitive internal solutions. • Discontinuation, lack of commercial success, or loss of business with respect to a particular product model for which REE is a significant supplier could reduce REE’s sales and adversely affect its profitability. • Pricing pressures, automotive OEM cost reduction initiatives and the ability of automotive OEMs to re-source or cancel vehicle or technology programs may result in lower than anticipated margins, or losses, which may adversely affect REE’s business. • REE may become subject to product liability claims. • REE does not currently have extensive experience servicing its products. • REE may be subject to risks associated with autonomous driving and EV technology. • REE is dependent on its founders Daniel Barel and Ahishay Sardes. • REE’s success depends, in part, on its ability to attract and recruit key employees and hire qualified employees and management. 9 Table of Contents • Financial results may vary significantly from period to period due to fluctuations in REE’s operating costs and other factors, which may or may not be foreseeable. • REE will need to improve its operational and financial systems to support its expected growth. • REE expects that it will need to raise additional funds. • REE’s financial and operational projections rely in part on existing and future regulations and incentive programs supporting EV adoption. • REE may encounter obstacles outside of its control that slow the adoption of EVs in the market, including but not limited to regulatory requirements or infrastructure limitations. • REE is subject to various environmental laws and regulations that could impose substantial costs on its business and cause delays in building its manufacturing facilities. • REE may become involved in legal and regulatory proceedings and commercial or contractual disputes. • REE’s management has limited experience operating a public company, and thus its success in such endeavors cannot be guaranteed. • If REE is unable for any reason to meet the continued listing requirements of Nasdaq, such action or inaction could result in a delisting of the Class A Ordinary Shares. • REE is subject to cybersecurity risks to its various systems and software and any material failure, weakness, interruption, cyber event, incident or breach of security could prevent REE from effectively operating its business, or may cause harm to its business that may or may not be reparable • REE may incur significant costs and expenses in connection with the protection and enforcement of its intellectual property rights, including but not limited to litigation costs. • Lawsuits alleging infringement or misappropriation of intellectual property rights of third parties could be both costly and time consuming and could prevent REE from developing or commercializing its future products. • The dual class structure of our ordinary shares has the effect of concentrating voting power. • Political, economic and military conditions in Israel could adversely affect REE’s business.
The principal factors and uncertainties that make investing in our Ordinary Shares risky, include, among others: • REE’s limited operating history may make evaluation of its business and future prospects difficult, increasing the risk of investment in REE. • Projecting REE’s operational or financial performance relies in large part upon assumptions and analyses that are inherently uncertain and subject to risk, and that if proven incorrect could result in significantly lower actual results. • REE may not succeed in controlling the costs associated with its operations. • If the market for commercial EVs does not develop as REE expects or develops slower than REE expects, its business prospects, financial condition, and operating results may be adversely affected. • Adverse conditions in the automotive industry could have adverse effects on REE’s results of operations. • REE’s business model has not been proven, and any failure to obtain significant orders for its products would have an adverse effect on its operating results, business, or reputation, resulting in substantial liabilities that may exceed its resources. • REE’s marketing and sales model may fail to achieve market success or acceptance, which may cause REE not to achieve profitability. 8 Table of Contents • REE’s agreements with potential customers, suppliers, dealers and strategic partners are preliminary in nature. • REE’s ability to make additional sales following sales of demo vehicles to customers depends in part on REE’s ability to prove that REE’s products are to the full satisfaction of such customers and to establish and maintain confidence in REE’s business prospects among such customers and others within its industry. • REE may not succeed in establishing, maintaining and strengthening the “Powered by REE TM ” brand. • REE is subject to risks associated with strategic alliances. • REE operates in a highly competitive market and may not be able to compete successfully in the market as a result of rapid changes in EV technology and the entrance of new and existing, larger manufacturers into the EV space. • REE is subject to risks associated with the anticipated timing of REE’s initial commercial production and subsequent increased commercial production. • REE’s development of an outsourced manufacturing business model may not be successful. • REE is reliant on its UK Engineering Center and REE’s Integration Center at Coventry, UK for the design, validation, verification, testing and homologation of its products. • REE will depend on its suppliers, and the inability of such suppliers to deliver the components of REE’s products in a timely manner or at all and at prices and volumes acceptable to it could have a material adverse effect on its business, prospects and operating results. • REE’s business could be harmed by increases in costs, disruption of supply or shortage of materials, in particular for lithium-ion battery cells. • REE’s production targets are subject to a variety of risks, including the completion of REE’s production tooling investment plan, sourcing materials and components from its suppliers on its agreed upon deadlines and securing sufficient funding. • REE targets customers, some which are large corporations with substantial negotiating power, exacting product, quality and warranty standards and potentially competitive internal solutions. • Discontinuation, lack of commercial success, or loss of business with respect to a particular product model for which REE is a significant supplier could reduce REE’s sales and adversely affect its profitability. • Pricing pressures, automotive OEM cost reduction initiatives and the ability of automotive OEMs to re-source or cancel vehicle or technology programs may result in lower than anticipated margins, or losses, which may adversely affect REE’s business. • REE may become subject to product liability claims. • REE does not currently have extensive experience servicing its products. • REE may be subject to risks associated with autonomous driving and EV technology. • REE is dependent on its founders Daniel Barel and Ahishay Sardes. 9 Table of Contents • REE’s success depends, in part, on its ability to attract and recruit key employees and hire qualified employees and management. • Financial results may vary significantly from period to period due to fluctuations in REE’s operating costs and other factors, which may or may not be foreseeable. • REE will need to improve its operational and financial systems to support its expected growth. • REE expects that it will need to raise additional funds. • REE may not be able to continue as a going concern based on REE’s business plan to start mass production in late 2024 and early 2025 if REE is unable to obtain sufficient additional funding or does not have access to capital to finance its current business plan, and REE may be forced to change its business plan as a result. • REE’s financial and operational projections rely in part on existing and future regulations and incentive programs supporting EV adoption. • REE may encounter obstacles outside of its control that slow the adoption of EVs in the market, including but not limited to regulatory requirements or infrastructure limitations. • REE is subject to various environmental laws and regulations that could impose substantial costs on its business and cause delays in building its manufacturing facilities. • REE may become involved in legal and regulatory proceedings and commercial or contractual disputes. • REE’s management has limited experience operating a public company, and thus its success in such endeavors cannot be guaranteed. • If REE is unable for any reason to meet the continued listing requirements of Nasdaq, such action or inaction could result in a delisting of the Class A Ordinary Shares. • REE is subject to cybersecurity risks to its various systems and software, and any material failure, weakness, interruption, cyber event, incident or breach of security could prevent REE from effectively operating its business or may cause harm to its business that may or may not be reparable. • REE may incur significant costs and expenses in connection with the protection and enforcement of its intellectual property rights, including but not limited to litigation costs. • Lawsuits alleging infringement or misappropriation of intellectual property rights of third parties could be both costly and time consuming and could prevent REE from developing or commercializing its future products. • The dual class structure of our Ordinary Shares has the effect of concentrating voting power. • Conditions in Israel, including the recent attack by Hamas and other terrorist organizations from the Gaza Strip and Israel’s war against them, may affect REE’s operations. 10 Table of Contents Risks Related to REE’s Business REE’s limited operating history may make evaluation of its business and future prospects difficult, increasing the risk of investment in REE.
The development of REE’s products is and will be subject to risks including, but not limited to, with respect to: • REE’s ability to validate final marketable products; • REE’s ability to complete the final marketable product design process on time, if at all; • the ability for REE’s products to meet the stringent level of functional safety required for X-by-Wire; 17 Table of Contents • the ability for REE’s products to withstand rigorous testing and validation; • the ability for REE’s products to satisfy testing and validation standards set by external assessors; • the ability of REE’s products to meet existing or future automotive industry standards; • REE’s ability to successfully develop and validate true X-by-Wire Control capabilities; and • the ability of X-by-Wire Control technology to obtain regulatory approval and achieve widespread market acceptance.
The development of REE’s products is and will be subject to risks including, but not limited to, risks associated with: • REE’s ability to validate final marketable products; • REE’s ability to complete the final marketable product design process on time, if at all; • the ability for REE’s products to meet the stringent level of functional safety required for X-by-Wire; • the ability for REE’s products to withstand rigorous testing and validation; • the ability for REE’s products to satisfy testing and validation standards set by external assessors; • the ability of REE’s products to meet existing or future automotive industry standards; • REE’s ability to successfully develop and validate true X-by-Wire Control capabilities; and • the ability of X-by-Wire Control technology to obtain additional regulatory approval and achieve widespread market acceptance. 17 Table of Contents REE is subject to risks associated with the anticipated timing of REE’s initial commercial production and subsequent increased commercial production.
REE is subject to risks associated with strategic alliances. 16 Table of Contents REE’s existing agreements and REE’s ability to engage with definitive agreements with current and potential suppliers, dealer or strategic partners are and will be subject to a number of risks with respect to operations that are outside REE’s control, any of which may materially and adversely affect REE’s business and prospects.
REE’s existing agreements and REE’s ability to engage with definitive agreements with current and potential suppliers, dealer or strategic partners are and will be subject to a number of risks with respect to operations that are outside REE’s control, any of which may materially and adversely affect REE’s business and prospects.
While we understand that REE products does not have any “Tier 1” suppliers from Russia, vehicle production is a complex process, with thousands of components sourced from all over the world.
While REE understands that its products do not have any “Tier 1” suppliers from Russia, vehicle production is a complex process, with thousands of components sourced from all over the world.
Market conditions, many of which are outside of REE’s control and subject to change, including general economic conditions, the availability and terms of financing, the impacts and ongoing uncertainties created by the COVID-19 pandemic, civil discourse throughout the globe, effects and impact of climate change and global warming, 10 Table of Contents regulatory requirements and incentives, competition and the pace and extent of vehicle electrification generally, could impact demand for REE’s products and ultimately REE’s success.
Market conditions, many of which are outside of REE’s control and subject to change, including general economic conditions, the availability and terms of financing, civil discourse throughout the globe, effects and impact of climate change and global warming, regulatory requirements and incentives, competition and the pace and extent of vehicle electrification generally, could impact demand for REE’s products and ultimately REE’s success.
We recently started receiving initial orders for both Proxima Powered by REE as well as the P7-B. Such orders present an opportunity for potentially receiving additional orders in the future that could be more meaningful and impactful from a financial perspective.
REE recently started receiving initial orders for both the P7-C. Such orders present an opportunity for potentially receiving additional orders in the future that could be more meaningful and impactful from a financial perspective.
If REE does not develop and maintain a strong brand, its business, prospects, financial condition and operating results will be materially and adversely impacted.
If REE does not develop and maintain a strong brand, its business, prospects, financial condition and operating results will be materially and adversely impacted. REE is subject to risks associated with strategic alliances.
REE has a limited operating history in the automotive industry on which investors can base an evaluation of its business, operating results and prospects. Since REE is in the early stages of commercializing its automotive products, it is difficult to predict REE’s future revenues and expenses, and REE has limited insight into trends that may emerge and affect its business.
Since REE is in the early stages of commercializing its automotive products, it is difficult to predict REE’s future revenues and expenses, and REE has limited insight into trends that may emerge and affect its business.
There can be no guarantee that any of REE’s strategic collaborations, suppliers or strategic partners will become customers and failure to do so would have a material adverse effect on REE’s business, prospects, financial results and results of operations.
There can be no guarantee that any of REE’s strategic collaborations, suppliers or strategic partners will become customers and failure to do so would have a material adverse effect on REE’s business, prospects, financial results and results of operations. 15 Table of Contents REE’s ability to make additional sales following sales of test vehicles to customers depends in part on its ability to prove that REE’s products are to the full satisfaction of such customers and to establish and maintain confidence in REE’s business prospects among such customers and others within its industry.
Risks Related to REE’s Business REE’s limited operating history may make evaluation of its business and future prospects difficult, increasing the risk of investment in REE. REE faces risks and challenges as an early stage company with a limited operating history.
REE faces risks and challenges as an early stage company with a limited operating history. REE has a limited operating history in the automotive industry on which investors can base an evaluation of its business, operating results and prospects.
Risk Factors – Risks Related to REE’s Incorporation and Location in Israel – Political, economic and military conditions in Israel could adversely affect REE’s business. ” In addition, we may not be able to access a portion of our existing cash, cash equivalents and investments due to market conditions.
Risk Factors – Risks Related to REE’s Incorporation and Location in Israel – Political, economic and military conditions in Israel could adversely affect REE’s business; REE conducts certain operations in Israel.
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REE is subject to risks related to health epidemics and pandemics, including the ongoing COVID-19 pandemic, which could adversely affect REE’s business and operating results. 14 Table of Contents REE faces various risks related to public health issues, including epidemics, pandemics, and other outbreaks, including the COVID-19 pandemic.
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Conditions in Israel, including the recent attack by Hamas and other terrorist organizations from the Gaza Strip and Israel’s war against them, may adversely affect its operations. ” In addition, REE may not be able to access a portion of its existing cash, cash equivalents and investments due to market conditions.
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The effects and potential effects of COVID-19, including, but not limited to, its impact on general economic conditions, trade and financing markets, changes in customer behavior and continuity in business operations creates significant uncertainty.
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The COVID-19 pandemic may cause a decrease in demand for REE’s products if OEMs, delivery and logistic fleets, dealers, e-commerce retailers, new mobility players, MaaS providers and autonomous drive companiesdelay purchases of vehicles or if fuel prices for internal combustion engine vehicles remain low, an increase in costs resulting from REE’s efforts to mitigate the effects of COVID-19, delays in REE’s schedule to full commercial production of the REEcorner TM and disruptions to REE’s supply chain, among other negative effects.
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During 2020, we implemented business continuity plans designed to address and mitigate the impact of the COVID-19 pandemic on our employees and business. In addition, we implemented remote working and workplace protocols for employees in accordance with government requirements and other measures to minimize such impact.
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Moreover, there has recently been and may continue to be an increase in COVID-19 cases in China.
Removed
While we will continue to navigate the financial, operational, and personnel challenges presented by the COVID-19 pandemic, the full impact of COVID-19 on our operational and financial performance will depend on future developments, including the duration and spread of the pandemic, the potential uncertainty related to (and proliferation of) new strains, and related actions taken by federal, state, local and international government officials, to prevent and manage the spread of COVID-19.
Removed
All of these efforts are uncertain, out of our control, and cannot be predicted at this time. Any future disruption in the operations of our employees, contractors, suppliers, customers, manufacturers or access to customers would likely impact our operating results.
Removed
We are continuing to monitor and assess the effects of the COVID-19 pandemic on our operations; however, we cannot at this time accurately predict what effects these conditions will ultimately have on our operations due to uncertainties relating to the evolution of new variants, the duration of the outbreak, effectiveness of vaccinations, and the length of any travel restrictions and business closures that may be imposed by the governments of impacted countries.
Removed
Our ability to make additional sales following sales of test vehicles to customers depends in part on our ability to prove that REE’s products are to the full satisfaction of such customers and to establish and maintain confidence in REE’s business prospects among such customers and others within its industry.
Removed
REE is subject to risks associated with the anticipated timing of REE’s initial commercial production and subsequent increased commercial production.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

88 edited+38 added−26 removed316 unchanged
REE’s reliance on its suppliers and strategic partners, as well as the establishment and operation of REE’s current and future Integration Centers, exposes it to a number of risks that are outside its control, including: • the manufacture of certain components that will require significant costs related to non-recurring engineering and tooling costs incurred by REE’s suppliers and strategic partners the extent of which is currently unknown; • its inability to control manufacturing yield and unexpected increases in manufacturing costs; • interruptions in shipments if a suppliers or strategic partners are unable to complete production in a timely manner; 18 Table of Contents • its inability to control quality of finished products; • its inability to control delivery schedules; • its inability to control production levels and to meet minimum volume commitments to REE’s potential customer base; • its inability to maintain adequate manufacturing capacity; • its inability to secure adequate volumes of acceptable components at suitable prices or in a timely manner; • its inability to establish new Integration Centers at the projected cost of $15 million to $30 million (based on whether such Integration Center is only producing REEcorners™ or is also producing the REEplatform TM ) per Integration Center or due to lack of market demands; • inability to accurately assemble products within specified design tolerances; • delays by REE in delivering final component designs to its suppliers and strategic partners; • its inability to implement a sufficient number of future Integration Centers in order to meet demand for REE products in time; • inability to implement a network of future integration; • inability to effectively manage a global network of Integration Centers; and • other delays, backlog in manufacturing and research and development of new models, and cost overruns.
REE’s reliance on its suppliers and strategic partners, as well as the establishment and operation of REE’s current and future Integration Centers, exposes it to a number of risks that are outside its control, including: • the manufacture of certain components that will require significant costs related to non-recurring engineering and tooling costs incurred by REE’s suppliers and strategic partners the extent of which is currently unknown; • its inability to control manufacturing yield and unexpected increases in manufacturing costs; • interruptions in shipments if a suppliers or strategic partners are unable to complete production in a timely manner; • its inability to control quality of finished products; • its inability to control delivery schedules; • its inability to control production levels and to meet minimum volume commitments to REE’s potential customer base; • its inability to maintain adequate manufacturing capacity; • its inability to secure adequate volumes of acceptable components at suitable prices or in a timely manner; 18 Table of Contents • its inability to establish new Integration Centers at the projected cost of $15 million to $30 million (based on whether such Integration Center is only producing REEcorners™ or is also producing the REEplatform TM ) per Integration Center or due to lack of market demands; • inability to accurately assemble products within specified design tolerances; • delays by REE in delivering final component designs to its suppliers and strategic partners; • its inability to implement a sufficient number of future Integration Centers in order to meet demand for REE products in time; • inability to implement a network of future integration; • inability to effectively manage a global network of Integration Centers; and • other delays, backlog in manufacturing and research and development of new models, and cost overruns.
For example, in December 2022, a lawsuit was filed alleging that the REE and its U.S. based subsidiaries have stolen certain trade secrets and requested, inter alia , monetary damages in an amount of no less than US$2.6 billion and exemplary damages in the amount of no less than US$5.2 billon. For more information, see “Item 8: Financial Information—Legal Proceedings”.
For example, in December 2022, a lawsuit was filed alleging that the REE and its U.S. based subsidiaries have stolen certain trade secrets and requested, inter alia , monetary damages in an amount of no less than US$2.6 billion and exemplary damages in the amount of no less than US$5.2 billion. For more information, see “Item 8: Financial Information—Legal Proceedings”.
As a public company, REE operates in an increasingly demanding regulatory environment, which requires it to comply with the Sarbanes-Oxley Act of 2002, or the(the “Sarbanes-Oxley Act, the regulations of Nasdaq, the rules and regulations of the SEC, expanded disclosure requirements, accelerated reporting requirements and more complex accounting rules.
As a public company, REE operates in an increasingly demanding regulatory environment, which requires it to comply with the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, the regulations of Nasdaq, the rules and regulations of the SEC, expanded disclosure requirements, accelerated reporting requirements and more complex accounting rules.
Among other things: • Israeli corporate law regulates mergers and requires that a tender offer be effected when more than a specified percentage of shares in a company are purchased; • Israeli corporate law requires special approvals for certain transactions involving directors, officers or significant shareholders and regulates other matters that may be relevant to these types of transactions; • Israeli corporate law does not provide for shareholder action by written consent for public companies, thereby requiring all shareholder actions to be taken at a general meeting of shareholders; • the Amended and Restated Articles generally require a vote of a simple majority of the voting power represented at a general meeting of shareholders in person or by proxy and voting thereon, as one class; • the Amended and Restated Articles generally do not permit a director to be removed except by a vote of the holders of (i) so long as any Class B Ordinary Shares remain outstanding, a simple majority of the voting power represented at a general meeting of shareholders in person or by proxy and voting thereon, as one class, and (ii) if no Class B Ordinary Shares remain outstanding, a supermajority of at least sixty-five percent (65%) of the voting power represented at a general meeting of shareholders in person or by proxy and voting thereon; and • the Amended and Restated Articles generally provide that director vacancies may be filled by REE’s board of directors.
Among other things: • Israeli corporate law regulates mergers and requires that a tender offer be effected when more than a specified percentage of shares in a company are purchased; • Israeli corporate law requires special approvals for certain transactions involving directors, officers or significant shareholders and regulates other matters that may be relevant to these types of transactions; • Israeli corporate law does not provide for shareholder action by written consent for public companies, thereby requiring all shareholder actions to be taken at a general meeting of shareholders; • the Amended and Restated Articles generally require a vote of a simple majority of the voting power represented at a general meeting of shareholders in person or by proxy and voting thereon, as one class; 38 Table of Contents • the Amended and Restated Articles generally do not permit a director to be removed except by a vote of the holders of (i) so long as any Class B Ordinary Shares remain outstanding, a simple majority of the voting power represented at a general meeting of shareholders in person or by proxy and voting thereon, as one class, and (ii) if no Class B Ordinary Shares remain outstanding, a supermajority of at least sixty-five percent (65%) of the voting power represented at a general meeting of shareholders in person or by proxy and voting thereon; and • the Amended and Restated Articles generally provide that director vacancies may be filled by REE’s board of directors.
Because REE qualifies as a foreign private issuer under the Exchange Act, it is exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including (1) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act, (2) the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time and (3) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, although it is subject to Israeli laws and regulations with regard to certain of these matters and intends to furnish comparable quarterly information on Form 6-K.
Because REE qualifies as a foreign private issuer under the Exchange Act, it is exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including (1) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act, (2) the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time and (3) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, although it is subject to Israeli laws and regulations with regard to certain of these matters and intends to furnish comparable quarterly information 39 Table of Contents on Form 6-K.
In addition, if REE is determined to have infringed upon a third party’s intellectual property rights, it may be required to do one or more of the following: • cease selling, licensing, or incorporating certain components into, or using products or offering goods or services that incorporate or use the challenged intellectual property; • pay substantial damages; • seek a license from the holder of the infringed intellectual property right, which license may not be available on reasonable terms, or at all; • redesign its products or other goods or services; or 34 Table of Contents • establish and maintain alternative branding for its products and services.
In addition, if REE is determined to have infringed upon a third party’s intellectual property rights, it may be required to do one or more of the following: • cease selling, licensing, or incorporating certain components into, or using products or offering goods or services that incorporate or use the challenged intellectual property; • pay substantial damages; • seek a license from the holder of the infringed intellectual property right, which license may not be available on reasonable terms, or at all; • redesign its products or other goods or services; or • establish and maintain alternative branding for its products and services.
Any non-Israeli citizen, resident or entity that, among other things, (i) becomes a holder of 5% or more of REE’s share capital or voting rights, (ii) is entitled to appoint one or more of REE’s directors or our chief executive officer or (iii) serves as one of REE’s directors or as its chief executive officer (including holders of 25% or more of the voting power, equity or the right to nominate directors in such direct holder, if 36 Table of Contents applicable) is required to notify the IIA and undertake to comply with the rules and regulations applicable to the grant programs of the IIA, including the restrictions on transfer described above.
Any non-Israeli citizen, resident or entity that, among other things, (i) becomes a holder of 5% or more of REE’s share capital or voting rights, (ii) is entitled to appoint one or more of REE’s directors or our chief executive officer or (iii) serves as one of REE’s directors or as its chief executive officer (including holders of 25% or more of the voting power, equity or the right to nominate directors in such direct holder, if applicable) is required to notify the IIA and undertake to comply with the rules and regulations applicable to the grant programs of the IIA, including the restrictions on transfer described above.
In addition, REE’s U.S. counsel expresses no opinion with respect to REE’s PFIC status for 2022, current, or future taxable years. If REE is a PFIC for any taxable year, a U.S. Holder of Class A Ordinary Shares and/or Warrants may be subject to adverse tax consequences and may incur certain information reporting obligations.
In addition, REE’s U.S. counsel expresses no opinion with respect to REE’s PFIC status for 2023, current, or future taxable years. If REE is a PFIC for any taxable year, a U.S. Holder of Class A Ordinary Shares and/or Warrants may be subject to adverse tax consequences and may incur certain information reporting obligations.
REE’s actual or perceived failure to comply with such obligations could harm its business. Such legal requirements are evolving, uncertain and may require improvements in, or changes to, REE’s policies and operations. REE expects to face significant challenges with respect to information security and privacy, including the storage, transmission and sharing of confidential information.
REE’s actual or perceived failure to comply with such obligations could harm its business. Such legal requirements are evolving, uncertain and may require improvements in, or changes to, REE’s policies and operations. REE expects to face significant challenges with respect to information security and privacy, including the storage, transmission and sharing of confidential inform ation.
REE’s utilization of its UK Integration Center and the UK Engineering Center are and will be subject to risks, including with respect to: • REE’s ability to maintain arrangements on reasonable terms with third parties for the provision of testing facilities and testing services with respect to REE products; 19 Table of Contents • REE’s ability to attract, recruit, hire, retain and train a sufficient number of skilled employees to effectively staff the UK Integration Center and the UK Engineering Center; and • REE’s reliance on outside contractors for the provision of certain services and associated risks related to monitoring and protecting IP, contractual disputes and certain inherent cybersecurity risks.
REE’s utilization of its UK Integration Center and the UK Engineering Center are and will be subject to risks, including with respect to: • REE’s ability to maintain arrangements on reasonable terms with third parties for the provision of testing facilities and testing services with respect to REE products; • REE’s ability to attract, recruit, hire, retain and train a sufficient number of skilled employees to effectively staff the UK Integration Center and the UK Engineering Center; and • REE’s reliance on outside contractors for the provision of certain services and associated risks related to monitoring and protecting IP, contractual disputes and certain inherent cybersecurity risks.
Although REE is incorporated and tax resident in Israel, the IRS may assert that it should be treated as a U.S. corporation for U.S. federal income tax purposes pursuant to Section 7874 of the Internal Revenue Code of 1986, as amended (the “ Code ”). For U.S. federal income tax purposes, a corporation is generally considered a U.S.
Although REE is incorporated and tax resident in Israel, the IRS may assert that it should be treated as a U.S. corporation for U.S. federal income tax purposes pursuant to Section 7874 of the Internal Revenue Code of 1986, as amended (the “Code”). For U.S. federal income tax purposes, a corporation is generally considered a U.S.
On November 10, 2022, the Company announced that it received an initial notification letter from Nasdaq’s Listing Qualifications Department notifying the Company that it had 180 days to regain compliance with the minimum bid price requirement set forth in Nasdaq’s continued listing rules.
On November 10, 2022, REE announced that it received an initial notification letter from Nasdaq’s Listing Qualifications Department notifying REE that it had 180 days to regain compliance with the minimum bid price requirement set forth in Nasdaq’s continued listing rules.
REE’s issuance of additional Class A Ordinary Shares or other equity securities of equal or senior rank would have the following effects: • REE’s legacy shareholders’ proportionate ownership interest in REE may decrease; • the amount of cash available per share, including for payment of dividends in the future, may decrease; • the relative voting strength of each previously outstanding Class A Ordinary Share may be diminished; and • the market price of Class A Ordinary Shares may decline.
REE’s issuance of additional Class A Ordinary Shares or other equity securities of equal or senior rank would have the following effects: • REE’s legacy shareholders’ proportionate ownership interest in REE may decrease; • the amount of cash available per share, including for payment of dividends in the future, may decrease; 41 Table of Contents • the relative voting strength of each previously outstanding Class A Ordinary Share may be diminished; and • the market price of Class A Ordinary Shares may decline.
Based on the current and anticipated composition of the income, assets and operations of REE and its subsidiaries, there is a significant risk that REE was a PFIC for U.S. federal income tax purposes for 2022, and REE may be a PFIC for U.S. federal income tax purposes for the current or future taxable years.
Based on the current and anticipated composition of the income, assets and operations of REE and its subsidiaries, there is a significant risk that REE was a PFIC for U.S. federal income tax purposes for 2023, and REE may be a PFIC for U.S. federal income tax purposes for the current or future taxable years.
The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter, and, accordingly, the next determination will be made with respect to REE on June 30, 2023.
The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter, and, accordingly, the next determination will be made with respect to REE on June 30, 2024.
As a result, if they act together, they will be able to control matters submitted to REE’s shareholders for approval, including the election of directors, amendments of its organizational documents and any merger, consolidation, sale of all or substantially all of its assets or other major corporate transactions (although neither Founder individually has a majority of the voting power).
As a result, if they act together, they will be able to control matters submitted to REE’s shareholders for approval, including the election 36 Table of Contents of directors, amendments of its organizational documents and any merger, consolidation, sale of all or substantially all of its assets or other major corporate transactions (although neither Founder individually has a majority of the voting power).
Holder may be subject to U.S. federal income tax at the then prevailing maximum rates on ordinary income and possibly an “interest” charge, in respect of “excess distributions” and upon any gain from the disposition of Class A Ordinary Shares and/or Warrants, as if the excess distribution or gain had been recognized ratably over such U.S.
Holder may be subject to U.S. federal income tax at the then prevailing maximum rates on ordinary income and possibly an “interest” charge, in respect of “excess distributions” and upon any gain from the disposition of 43 Table of Contents Class A Ordinary Shares and/or Warrants, as if the excess distribution or gain had been recognized ratably over such U.S.
These laws can give rise to liability for administrative oversight costs, cleanup costs, property damage, bodily injury, fines and penalties. Capital and operating expenses needed to comply with environmental laws and regulations can be significant, and violations may result in substantial fines and penalties, third-party damages, suspension of production or a cessation of REE’s operations.
These laws can give rise to liability for 26 Table of Contents administrative oversight costs, cleanup costs, property damage, bodily injury, fines and penalties. Capital and operating expenses needed to comply with environmental laws and regulations can be significant, and violations may result in substantial fines and penalties, third-party damages, suspension of production or a cessation of REE’s operations.
Although the Israeli government currently covers the reinstatement under the Property Tax and Compensation Fund Law, 1961, the reinstatement is limited and partial compensation value of direct damages that are caused by terrorist attacks or acts of war, REE cannot assure you that this government coverage will be maintained or that it will sufficiently cover REE’s potential damages.
Although the Israeli government currently covers the reinstatement under the Property Tax and Compensation Fund Law, 1961, the reinstatement is limited and partial compensation value of direct damages that are caused by terrorist attacks or 37 Table of Contents acts of war, REE cannot assure you that this government coverage will be maintained or that it will sufficiently cover REE’s potential damages.
REE has limited control over the protection of trade secrets used by its suppliers and strategic partners and could lose future trade secret protection if any unauthorized disclosure of such information occurs. In addition, REE’s proprietary information may otherwise become known or be independently developed by its competitors or other third 35 Table of Contents parties.
REE has limited control over the protection of trade secrets used by its suppliers and strategic partners and could lose future trade secret protection if any unauthorized disclosure of such information occurs. In addition, REE’s proprietary information may otherwise become known or be independently developed by its competitors or other third parties.
To the extent compliance with new regulations is cost prohibitive, REE’s business, prospects, financial condition and operating results would be adversely affected. 26 Table of Contents Internationally, there may be laws in jurisdictions REE has not yet entered or laws it is unaware of in jurisdictions it has entered that may restrict its sales or other business practices.
To the extent compliance with new regulations is cost prohibitive, REE’s business, prospects, financial condition and operating results would be adversely affected. Internationally, there may be laws in jurisdictions REE has not yet entered or laws it is unaware of in jurisdictions it has entered that may restrict its sales or other business practices.
As a result, REE’s business plan could be significantly impacted and REE may incur significant liabilities under warranty claims which could adversely affect its business, prospects, and results of operations. REE is subject to stringent and changing privacy laws, regulations and standards, information security policies and contractual obligations related to data privacy and security.
As a result, REE’s 30 Table of Contents business plan could be significantly impacted and REE may incur significant liabilities under warranty claims which could adversely affect its business, prospects, and results of operations. REE is subject to stringent and changing privacy laws, regulations and standards, information security policies and contractual obligations related to data privacy and security.
Any failure to comply with applicable regulations could also result in regulatory enforcement actions against REE, and misuse of or failure to secure personal information could also result in violation of data privacy laws and regulations, proceedings against REE by 31 Table of Contents governmental entities or others, and damage to its reputation and credibility, and could have a negative impact on revenues and profits.
Any failure to comply with applicable regulations could also result in regulatory enforcement actions against REE, and misuse of or failure to secure personal information could also result in violation of data privacy laws and regulations, proceedings against REE by governmental entities or others, and damage to its reputation and credibility, and could have a negative impact on revenues and profits.
Compliance with any applicable privacy and data security laws and regulations is a rigorous and time-intensive process, and REE may be required to put in place additional mechanisms to comply with such laws and regulations. REE publishes privacy policies and other documentation regarding its collection, processing, use and disclosure of personal information and/or other confidential information.
Compliance with any applicable privacy and data security 31 Table of Contents laws and regulations is a rigorous and time-intensive process, and REE may be required to put in place additional mechanisms to comply with such laws and regulations. REE publishes privacy policies and other documentation regarding its collection, processing, use and disclosure of personal information and/or other confidential information.
In recent years, 37 Table of Contents Israel has been engaged in sporadic armed conflicts with Hamas, an Islamist terrorist group that controls the Gaza Strip, with Hezbollah, an Islamist terrorist group that controls large portions of southern Lebanon, and with Iranian-backed military forces in Syria. In addition, Iran has threatened to attack Israel and may be developing nuclear weapons.
In recent years, Israel has been engaged in sporadic armed conflicts with Hamas, an Islamist terrorist group that controls the Gaza Strip, with Hezbollah, an Islamist terrorist group that controls large portions of southern Lebanon, and with Iranian-backed military forces in Syria. In addition, Iran has threatened to attack Israel and may be developing nuclear weapons.
Bribery Act 2010 prohibit REE and its officers, directors, employees and business partners acting on its behalf, including agents, from corruptly offering, promising, authorizing or providing anything of value to a “foreign official” for the purposes of influencing official decisions or obtaining or retaining business or otherwise obtaining favorable treatment.
Bribery Act 2010 prohibit REE and its officers, directors, employees and business 27 Table of Contents partners acting on its behalf, including agents, from corruptly offering, promising, authorizing or providing anything of value to a “foreign official” for the purposes of influencing official decisions or obtaining or retaining business or otherwise obtaining favorable treatment.
These provisions may be interpreted to impose additional obligations and liabilities on REE’s shareholders that are not typically imposed on shareholders of U.S. corporations. 38 Table of Contents Provisions of Israeli law and REE’s Amended and Restated Articles may delay, prevent or make undesirable an acquisition of all or a significant portion of its shares or assets.
These provisions may be interpreted to impose additional obligations and liabilities on REE’s shareholders that are not typically imposed on shareholders of U.S. corporations. Provisions of Israeli law and REE’s Amended and Restated Articles may delay, prevent or make undesirable an acquisition of all or a significant portion of its shares or assets.
A successful product liability claim against REE could require REE to pay a substantial monetary award. Moreover, a product liability claim could generate substantial negative publicity about REE’s products and business and inhibit or prevent commercialization of other future product, which would have a material adverse effect on REE’s brand, business, prospects and operating results.
A successful product liability claim against REE could require REE to pay a 22 Table of Contents substantial monetary award. Moreover, a product liability claim could generate substantial negative publicity about REE’s products and business and inhibit or prevent commercialization of other future product, which would have a material adverse effect on REE’s brand, business, prospects and operating results.
This is a factual determination that depends on, among other things, the composition of REE’s income and assets, and the market 42 Table of Contents value of its shares and assets, including the composition of income and assets and the market value of shares and assets of its subsidiaries, from time to time, and thus a complete determination can only be made annually after the close of each taxable year.
This is a factual determination that depends on, among other things, the composition of REE’s income and assets, and the market value of its shares and assets, including the composition of income and assets and the market value of shares and assets of its subsidiaries, from time to time, and thus a complete determination can only be made annually after the close of each taxable year.
REE intends to use its in-vehicle services and functionality to log information about each vehicle’s use in order to aid REE 32 Table of Contents in vehicle diagnostics and servicing. REE’s potential customer base may object to the use of this data, which may increase REE’s vehicle maintenance costs and harm its business prospects.
REE intends to use its in-vehicle services and functionality to log information about each vehicle’s use in order to aid REE in vehicle diagnostics and servicing. REE’s potential customer base may object to the use of this data, which may increase REE’s vehicle maintenance costs and harm its business prospects.
Any disruption could affect’s REE’s ability to deliver products and could increase REE’s costs and negatively affect its liquidity and financial performance. REE’s business could be harmed by increases in costs, disruption of supply or shortage of materials, in particular for lithium-ion battery cells.
Any disruption could affect’s REE’s ability to deliver products and could increase REE’s costs and negatively affect its liquidity and financial performance. 20 Table of Contents REE’s business could be harmed by increases in costs, disruption of supply or shortage of materials, in particular for lithium-ion battery cells.
Delays or problems associated with any improvement or expansion of REE’s operational and financial systems and controls could adversely affect REE’s relationships with its 24 Table of Contents potential customer base, cause harm to its reputation and brand and could also result in errors in its financial and other reporting.
Delays or problems associated with any improvement or expansion of REE’s operational and financial systems and controls could adversely affect REE’s relationships with its potential customer base, cause harm to its reputation and brand and could also result in errors in its financial and other reporting.
REE may not be able to secure additional product liability insurance coverage on commercially acceptable terms or at reasonable costs when needed, particularly if it does face liability for its products and is forced to make a claim under its policy. 22 Table of Contents REE does not currently have extensive experience servicing its products.
REE may not be able to secure additional product liability insurance coverage on commercially acceptable terms or at reasonable costs when needed, particularly if it does face liability for its products and is forced to make a claim under its policy. REE does not currently have extensive experience servicing its products.
REE currently has subsidiaries in the UK, Germany, the US and Japan. If REE succeeds in growing its business, REE expects to conduct increased operations through its subsidiaries in various countries and tax jurisdictions, in part through intercompany service agreements between REE and its subsidiaries.
REE currently has subsidiaries in the UK, Germany, the U.S. and Japan. If REE succeeds in growing its business, REE expects to conduct increased operations through its subsidiaries in various countries and tax jurisdictions, in part through intercompany service agreements between REE and its subsidiaries.
Risks Related to Ownership of the Class A Ordinary Shares 40 Table of Contents REE may issue additional Class A Ordinary Shares or other securities without shareholder approval, which would dilute existing ownership interests and may depress the market price of Class A Ordinary Shares.
Risks Related to Ownership of the Class A Ordinary Shares REE may issue additional Class A Ordinary Shares or other securities without shareholder approval, which would dilute existing ownership interests and may depress the market price of Class A Ordinary Shares.
Risks Related to REE’s Finances REE is an early stage company with a history of losses, and expects to incur significant expenses and continuing losses for the foreseeable future. Since inception, REE has incurred, and REE expects it will continue to incur, losses and negative cash flow, either or both of which may be significant.
REE is an early stage company with a history of losses, and expects to incur significant expenses and continuing losses for the foreseeable future. Since inception, REE has incurred, and REE expects it will continue to incur, losses and negative cash flow, either or both of which may be significant.
Competition for individuals with experience designing, manufacturing and servicing EVs or their related technology, parts and products is intense, and REE may not be able to attract, integrate, train, motivate or retain additional highly qualified personnel in the future.
Competition for individuals with experience designing, manufacturing and servicing EVs or their related 23 Table of Contents technology, parts and products is intense, and REE may not be able to attract, integrate, train, motivate or retain additional highly qualified personnel in the future.
Commencing with its fiscal year ended December 31, 2022, REE performed system and process evaluation and testing of its internal controls over financial reporting to allow management to report on the effectiveness of its internal controls over financial reporting in its Form 20-F filing for that year, as required by Section 404 of the Sarbanes-Oxley Act.
Commencing with its fiscal 29 Table of Contents year ended December 31, 2021, REE performed system and process evaluation and testing of its internal controls over financial reporting to allow management to report on the effectiveness of its internal controls over financial reporting in its Form 20-F filing for that year, as required by Section 404 of the Sarbanes-Oxley Act.
However, the measures REE takes to protect its intellectual property from unauthorized use by others may not be effective for various reasons, including the following: • as noted below, some of the patent applications REE files may not result in the issuance of patents at least in some of the applicable jurisdictions; • the scope of REE’s patents that may subsequently be granted may not be broad enough to protect its proprietary rights; • patents are territorial and provide rights only in jurisdictions in which patents are granted; • REE’s issued patents may be challenged or invalidated by third parties; • REE’s employees or business partners may breach their confidentiality, non-disclosure and non-use obligations to REE; • third parties may independently develop technologies that are the same or similar to REE’s; • the costs associated with enforcing patents, confidentiality and invention agreements or other intellectual property rights may make enforcement impracticable; and • current and future competitors may circumvent or otherwise design around REE’s patents.
However, the measures REE takes to protect its intellectual property from unauthorized use by others may not be effective for various reasons, including the following: • as noted below, some of the patent applications REE files may not result in the issuance of patents at least in some of the applicable jurisdictions; • the scope of REE’s patents that may subsequently be granted may not be broad enough to protect its proprietary rights; • patents are territorial and provide rights only in jurisdictions in which patents are granted; • REE’s issued patents may be challenged or invalidated by third parties; • REE’s employees or business partners may breach their confidentiality, non-disclosure and non-use obligations to REE; • third parties may independently develop technologies that are the same or similar to REE’s; • the costs associated with enforcing patents, confidentiality and invention agreements or other intellectual property rights may make enforcement impracticable; and • current and future competitors may circumvent or otherwise design around REE’s patents. 33 Table of Contents Patent, trademark, and trade secret laws vary significantly throughout the world.
This exclusive forum provision is intended to apply to claims arising under 39 Table of Contents Israeli Law and would not apply to claims brought pursuant to the Securities Act or the Exchange Act or any other claim for which federal courts would have exclusive jurisdiction.
This exclusive forum provision is intended to apply to claims arising under Israeli Law and would not apply to claims brought pursuant to the Securities Act or the Exchange Act or any other claim for which federal courts would have exclusive jurisdiction.
Numerous patents and pending patent applications owned by others exist in the fields in which REE has developed and are developing its technology. These patents and patent applications might have priority over REE’s patent applications and could subject its patent applications to invalidation.
Numerous patents and pending patent applications owned by others exist in the fields in which REE has 34 Table of Contents developed and are developing its technology. These patents and patent applications might have priority over REE’s patent applications and could subject its patent applications to invalidation.
Moreover, REE expects these rules and 30 Table of Contents regulations to substantially increase its legal and financial compliance costs and to make some activities more time-consuming and costly. The increased costs will increase REE’s net loss.
Moreover, REE expects these rules and regulations to substantially increase its legal and financial compliance costs and to make some activities more time-consuming and costly. The increased costs will increase REE’s net loss.
REE has designed, implemented and tested security measures intended to prevent cybersecurity breaches or unauthorized access to its information technology networks, its products and their systems, and intends to implement additional security measures as necessary.
REE has designed, implemented and tested security measures intended to prevent cybersecurity breaches or unauthorized access to its information technology networks, its products and their systems, and intends to implement 32 Table of Contents additional security measures as necessary.
Additionally, there were 3,843,240 Class A Ordinary Shares underlying outstanding RSUs under its equity incentive plan Future sales of large amounts of shares into the public markets may adversely affect the market price of Class A Ordinary Shares.
Additionally, there were 822,241 Class A Ordinary Shares underlying outstanding RSUs under its equity incentive plan Future sales of large amounts of shares into the public markets may adversely affect the market price of Class A Ordinary Shares.
In addition, 177,132,079 shares held by REE’s legacy shareholders became eligible for sale under Rule 144 of the Securities Act upon the expiration of a 180-day lock-up agreement on January 18, 2022.
In addition, 5,904,403 shares held by REE’s legacy shareholders became eligible for sale under Rule 144 of the Securities Act upon the expiration of a 180-day lock-up agreement on January 18, 2022.
In particular, a global semiconductor supply shortage has had, and is continuing to have, wide-ranging effects across multiple industries, particularly the automotive industry. Any such increase, supply interruption or shortage could materially and negatively impact REE’s business, prospects, financial condition and operating results.
In particular, a global semiconductor supply shortage has had, and is continuing to have, wide-ranging effects across multiple industries, particularly the automotive industry. Any such increase, supply interruption or shortage could materially and negatively impact REE’s business, prospects, financial condition and operating results. REE’s production plan is focused on scaling up production in two phases.
As a U.S. listed public company that is not a foreign private issuer, REE would incur significant additional legal, accounting and other expenses that it will not incur as a foreign private issuer.
As a U.S. listed public company that is not a foreign private issuer, REE would incur significant additional legal, accounting and other expenses that it will not incur as a foreign private issuer. REE conducts its operations in Israel.
The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC using its EDGAR system. Capital Expenditures For a description of our capital expenditures, see “ Item 5.B . Operating and Financial Review and Prospects-Liquidity and Capital Resources. ”
The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC using its EDGAR system. Capital Expenditures For a description of our capital expenditures, see “
For example, in December 2022, a lawsuit was filed alleging that REE and its U.S. based 27 Table of Contents subsidiaries stole certain trade secrets and requested, inter alia , monetary damages in an amount of no less than US$2.6 billion and exemplary damages in the amount of no less than US$5.2 billion.
For example, in December 2022, a lawsuit was filed alleging that REE and its U.S. based subsidiaries stole certain trade secrets and requested, inter alia , monetary damages in an amount of no less than US$2.6 billion and exemplary damages in the amount of no less than US$5.2 billion. For more information, see “Item 8: Financial Information—Legal Proceedings”.
Following the acquisition of a U.S. corporation by a foreign corporation, Code Section 7874 can limit the ability of the acquired U.S. corporation and its U.S. affiliates to use U.S. tax attributes (including net operating losses and certain tax credits) to offset U.S. taxable income resulting from certain transactions, as well as result in certain other adverse tax consequences, even if the acquiring foreign corporation is respected as a foreign corporation for purposes of Code Section 7874.
Code Section 7874 may limit the ability of 10X Capital to use certain tax attributes following the Merger, increase REE’s U.S. affiliates’ U.S. taxable income or have other adverse consequences to REE and REE’s shareholders. 42 Table of Contents Following the acquisition of a U.S. corporation by a foreign corporation, Code Section 7874 can limit the ability of the acquired U.S. corporation and its U.S. affiliates to use U.S. tax attributes (including net operating losses and certain tax credits) to offset U.S. taxable income resulting from certain transactions, as well as result in certain other adverse tax consequences, even if the acquiring foreign corporation is respected as a foreign corporation for purposes of Code Section 7874.
Compliance with these regulations could be burdensome, time consuming, and expensive. However, to the extent the laws change, new laws are introduced, or if REE introduces new products in the future, some or all of its products may not continue to comply with applicable international, federal, state or local laws, and require change.
However, to the extent the laws change, new laws are introduced, or if REE introduces new products in the future, some or all of its products may not continue to comply with applicable international, federal, state or local laws, and require change.
Accordingly, there can be no assurance that the IRS will not challenge the status of REE as a foreign corporation under Code Section 7874 or that such challenge would not be sustained by a court. 41 Table of Contents If the IRS were to successfully challenge under Code Section 7874 REE’s status as a foreign corporation for U.S. federal income tax purposes, REE and certain REE shareholders could be subject to significant adverse tax consequences, including a higher effective corporate income tax rate on REE and future withholding taxes on certain REE shareholders, depending on the application of any income tax treaty that might apply to reduce such withholding taxes.
If the IRS were to successfully challenge under Code Section 7874 REE’s status as a foreign corporation for U.S. federal income tax purposes, REE and certain REE shareholders could be subject to significant adverse tax consequences, including a higher effective corporate income tax rate on REE and future withholding taxes on certain REE shareholders, depending on the application of any income tax treaty that might apply to reduce such withholding taxes.
REE will transmit and store confidential and private information of its customers, such as personal information, including names, accounts, user IDs and passwords, and payment or transaction related information.
In the future, REE plans to transmit and store confidential and private information of its business customers, such as personal information, including names, accounts, user IDs and passwords, and payment or transaction related information.
If REE underestimates its requirements, its suppliers may have inadequate inventory, which could interrupt manufacturing of its products and result in delays in shipments and revenues.
If REE overestimates its requirements, its suppliers may have excess inventory, which indirectly would increase REE’s costs. If REE underestimates its requirements, its suppliers may have inadequate inventory, which could interrupt manufacturing of its products and result in delays in shipments and revenues.
On rare occasions, lithium-ion cells can rapidly release the energy they contain by venting smoke and flames in a manner that can ignite nearby materials as well as other lithium-ion cells.
The fuel source for REE products will make use of lithium-ion cells. On rare occasions, lithium-ion cells can rapidly release the energy they contain by venting smoke and flames in a manner that can ignite nearby materials as well as other lithium-ion cells.
As of the date of this Annual Report, we have not sold any of our Class A Ordinary Shares under the ATM Sales Agreement. The IRS may not agree that REE should be treated as a non-U.S. corporation for U.S. federal income tax purposes.
As of the date of this Annual Report, we have sold 120,880 of our Class A Ordinary Shares under the HCW Agreement for total gross proceeds of approximately $908,509. The IRS may not agree that REE should be treated as a non-U.S. corporation for U.S. federal income tax purposes.
While REE believes that it may be able to establish alternate supply relationships and can obtain or engineer replacement components for its single source components, REE may be unable to do so in the short term, or at all, at prices or quality levels that are favorable to REE, which could have a material adverse effect on its business, prospects, financial condition and operating results. 20 Table of Contents REE expects to purchase various types of equipment, raw materials and manufactured component parts from its suppliers or strategic partners.
While REE believes that it may be able to establish alternate supply relationships and can obtain or engineer replacement components for its single source components, REE may be unable to do so in the short term, or at all, at prices or quality levels that are favorable to REE, which could have a material adverse effect on its business, prospects, financial condition and operating results.
REE’s Founders, Daniel Barel and Ahishay Sardes, hold all Class B Ordinary Shares granting each of them, when combined with each of their holdings of Class A Ordinary Shares, approximately 42.5% of voting power and together approximately 85.0% of the voting power of REE as of February 28, 2023. See “Item 7A. Major shareholders”.
REE’s Founders, Daniel Barel and Ahishay Sardes, hold all Class B Ordinary Shares granting each of them, when combined with each of their holdings of Class A Ordinary Shares, approximately 38.2% of voting power and together approximately 76.4% of the voting power of REE as of March 12, 2024. See “Item 7A. Major shareholders”.
If these tax benefits are reduced, cancelled or discontinued, REE’s Israeli taxable income from the approved enterprise would be subject to regular Israeli corporate tax rates. The standard corporate tax rate for Israeli companies in 2016 was 25% of their taxable income and was reduced to 24% in 2017 and 23% in 2018 and thereafter.
If these tax benefits are reduced, cancelled or discontinued, REE’s Israeli taxable income from the approved enterprise would be subject to regular Israeli corporate tax rates. The current standard corporate tax rate for Israeli companies is 23%.
Patent, trademark, and trade secret laws vary significantly throughout the world. For example, a number of countries do not protect intellectual property rights to the same extent as the laws of the United States.
For example, a number of countries do not protect intellectual property rights to the same extent as the laws of the United States.
Under the research and development agreements with the IIA and pursuant to applicable laws, REE is required to pay royalties at the rate of 3-5% sales of products that incorporate know-how developed with the IIA-funded, royalty-bearing grants.
Under the research and development agreements with the IIA and pursuant to applicable laws, REE is required to pay royalties at the rate of 3-5% sales of products that incorporate know-how developed with the IIA-funded, royalty-bearing grants. Such royalties are due up to an amount equal to 100% of the IIA grants received, linked to the U.S. dollar plus interest.
Therefore, even if REE is successful in obtaining design wins and the systems into which its products are integrated are commercialized, the discontinuation of, the loss of business with respect to, or a lack of commercial success of a particular vehicle model for which REE is a significant supplier could mean that the expected sales of REE’s products will not materialize, which may materially and adversely affecting its business.
Therefore, even if REE is successful in obtaining design wins and the systems into which its products are integrated are commercialized, the discontinuation of, the loss of business with respect to, or a lack of commercial success of a particular vehicle model for which REE is a significant supplier could mean that the expected sales of REE’s products will not materialize, which may materially and adversely affecting its business. 21 Table of Contents Pricing pressures, automotive OEM cost reduction initiatives and the ability of automotive OEMs to re-source or cancel vehicle or technology programs may result in lower than anticipated margins, or losses, which may adversely affect REE’s business.
Such changes may nevertheless be ineffective in avoiding an increase in its consolidated tax liability, which could adversely affect its financial condition, results of operations and cash flow. 28 Table of Contents If taxing authorities in any of these countries were to successfully challenge REE’s transfer prices as not reflecting arm’s length transactions, they could require REE to adjust its transfer prices and thereby reallocate its income to reflect these revised transfer prices, which could result in a higher tax liability to REE.
If taxing authorities in any of these countries were to successfully challenge REE’s transfer prices as not reflecting arm’s length transactions, they could require REE to adjust its transfer prices and thereby reallocate its income to reflect these revised transfer prices, which could result in a higher tax liability to REE.
Risks Related to Being a Public Company REE’s management has limited experience operating a public company, and thus its success in such endeavors cannot be guaranteed. REE’s executive officers have limited experience managing a publicly traded company, interacting with public company investors and complying with the complex laws pertaining to public companies in the United States.
REE’s executive officers have limited experience managing a publicly traded company, interacting with public company investors and complying with the complex laws pertaining to public companies in the United States.
As of December 31, 2022, REE had 20,593,770 Class A Ordinary Shares available for future grant under the 2021 Plan and 4,628,524 shares available under the Employee Stock Purchase Plan.
As of December 31, 2023, REE had 346,883 Class A Ordinary Shares available for future grant under the 2021 Plan and 154,284 shares available under the Employee Stock Purchase Plan.
Despite REE’s efforts to protect its proprietary rights, third parties may attempt to copy or otherwise obtain and use REE’s intellectual property or seek court declarations that they do not infringe upon its 33 Table of Contents intellectual property rights.
Despite REE’s efforts to protect its proprietary rights, third parties may attempt to copy or otherwise obtain and use REE’s intellectual property or seek court declarations that they do not infringe upon its intellectual property rights. Monitoring unauthorized use of REE’s intellectual property is difficult and costly, and the steps REE has taken or will take will prevent misappropriation.
If taxing authorities were to allocate income to a higher tax jurisdiction, subject REE’s income to double taxation or assess interest and penalties, it would increase REE’s consolidated tax liability, which could adversely affect its financial condition, results of operations and cash flow.
If taxing authorities were to allocate income to a higher tax jurisdiction, subject REE’s income to double taxation or assess interest and penalties, it would increase REE’s consolidated tax liability, which could adversely affect its financial condition, results of operations and cash flow. 28 Table of Contents Risks Related to Being a Public Company REE’s management has limited experience operating a public company, and thus its success in such endeavors cannot be guaranteed.
On August 16, 2022, we entered into an offering agreement, or the ATM Sales Agreement, with BofA Securities, Inc., or BofA, pursuant to which we may offer and sell, at our option, up to $75.0 million of our Class A Ordinary Shares through an “at-the-market” equity program under which BofA agreed to act as sales agent.
Wainwright & Co., LLC, or HCW, pursuant to which we may offer and sell, at our option, up to $35.0 million of our Class A Ordinary Shares through an “at-the-market” equity program under which HCW agreed to act as sales agent.
There were 105,487,688 Class A Ordinary Shares underlying outstanding options under its equity incentive plans, at a weighted average exercise price of $0.19 per share, 101,146,134 of which were vested and exercisable.
There were 3,525,594 Class A Ordinary Shares underlying outstanding options under its equity incentive plans, at a weighted average exercise price of $5.02 per share, 3,288,211 of which were vested and exercisable.
The availability of such a significant number of securities for trading in the public market may have an adverse effect on the market price of REE’s Class A Ordinary Shares.
The availability of such a significant number of securities for trading in the public market may have an adverse effect on the market price of REE’s Class A Ordinary Shares. On July 14, 2023, we entered into an At the Market Offering Agreement, or the HCW Agreement, with H.C.
The successful assertion of one or more large claims against REE that exceeds its available insurance coverage, or results in changes to its insurance policies (including premium increases or the imposition of large deductible or co-insurance requirements), could have an adverse effect on its business.
A loss that is uninsured or exceeds policy limits may require REE to pay substantial amounts, which could adversely affect REE’s financial condition and operating results. 25 Table of Contents The successful assertion of one or more large claims against REE that exceeds its available insurance coverage, or results in changes to its insurance policies (including premium increases or the imposition of large deductible or co-insurance requirements), could have an adverse effect on its business.
In the event of a delisting, REE can provide no assurance 29 Table of Contents that any action taken by it to restore compliance with listing requirements would allow its Class A Ordinary Shares to become listed again, stabilize the market price or improve the liquidity of its Class A Ordinary Shares, prevent its Class A Ordinary Shares from dropping below the Nasdaq minimum bid price requirement or prevent future non-compliance with Nasdaq’s listing requirements.
In the event of a delisting, REE can provide no assurance that any action taken by it to restore compliance with listing requirements would allow its Class A Ordinary Shares to become listed again.
REE’s business may be adversely impacted by the labor and union activities of its own employees, as well of those of any of its potential affiliates, business partners, suppliers, or otherwise related entities. 23 Table of Contents Although none of REE’s employees are currently represented by a labor union, it is common throughout the automobile industry for many employees to belong to a union, which can result in higher employee costs and increased risk of work stoppages.
Although none of REE’s employees are currently represented by a labor union, it is common throughout the automobile industry for many employees to belong to a union, which can result in higher employee costs and increased risk of work stoppages.
As a result, REE may face criminal liability and other serious consequences for violations of such laws, which could harm its business. REE is or will be subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws and regulations in various jurisdictions in which it conducts or in the future may conduct activities, including the U.S.
REE is or will be subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws and regulations in various jurisdictions in which it conducts or in the future may conduct activities, including the U.S. Foreign Corrupt Practices Act, or FCPA, the U.K. Bribery Act 2010, and other anti-corruption laws and regulations. The FCPA and the U.K.
Monitoring unauthorized use of REE’s intellectual property is difficult and costly, and the steps REE has taken or will take will prevent misappropriation. From time to time, REE may have to resort to litigation to enforce its intellectual property rights, which could result in substantial costs and diversion of its resources.
From time to time, REE may have to resort to litigation to enforce its intellectual property rights, which could result in substantial costs and diversion of its resources. The protection of REE’s intellectual property rights is important to its future business opportunities.
Automotive OEMs also possess significant leverage over their suppliers, including REE, because the automotive 21 Table of Contents component supply industry is highly competitive, serves a limited number of customers and has a high fixed cost base.
In addition, REE’s automotive OEM customers are expected to reserve the right to terminate their supply contracts for convenience, which enhances their ability to obtain price reductions. Automotive OEMs also possess significant leverage over their suppliers, including REE, because the automotive component supply industry is highly competitive, serves a limited number of customers and has a high fixed cost base.
For more information, see “Item 8: Financial Information—Legal Proceedings”. This lawsuit, if successful, would have a material adverse impact on REE’s operating results and consolidated financial position. REE is subject to U.S. and foreign anti-corruption and anti-money laundering laws and regulations.
This lawsuit, if successful, would have a material adverse impact on REE’s operating results and consolidated financial position. REE is subject to U.S. and foreign anti-corruption and anti-money laundering laws and regulations. As a result, REE may face criminal liability and other serious consequences for violations of such laws, which could harm its business.
The inability to validate, verify and test REE products or the resulting delay to REE’s commercialization schedule if the testing facilities are inoperable for even a short period of time may result in the loss of potential customers or harm REE’s reputation.
The inability to validate, verify and test REE products or the resulting delay to REE’s commercialization schedule if the testing facilities are inoperable for even a short period of time may result in the loss of potential customers or harm REE’s reputation. 19 Table of Contents REE’s products will make use of lithium-ion battery cells, which can be dangerous in certain circumstances, including but not limited to the possibility that such cells may catch fire or vent smoke and flame.
Additionally, the policies that REE does have may include significant deductibles, and REE cannot be certain that its insurance coverage will be sufficient to cover all future claims against REE. A loss that is uninsured or exceeds policy limits may require REE to pay substantial amounts, which could adversely affect REE’s financial condition and operating results.
Additionally, the policies that REE does have may include significant deductibles, and REE cannot be certain that its insurance coverage will be sufficient to cover all future claims against REE.
Moreover, REE’s financial results may not meet expectations of equity research analysts, ratings agencies or investors, who may be focused only on quarterly financial results. If any of this occurs, the trading price of our Class A Ordinary Shares could fall substantially, either suddenly or over time.
Moreover, REE’s financial results may not meet expectations of equity research analysts, ratings agencies or investors, who may be focused only on quarterly financial results.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Mr. Barel is an entrepreneur and businessperson who founded several startups in the fields of medical devices, cyber security and software applications. He serves as chairman of SpecterX, an Israeli data management company he co-founded in 2019 1 . Mr. Barel holds a Bachelor of Arts in Economics and Business Administration from the Hebrew University.
Barel is an entrepreneur and businessperson who founded several startups in the fields of medical devices, cyber security and software applications. He serves as chairman of SpecterX, an Israeli data management company he co-founded in 2019 1 . Mr. Barel holds a Bachelor of Arts in Economics and Business Administration from the Hebrew University.
Critical Accounting Estimates REE’s financial statements have been prepared in accordance with U.S. GAAP. The preparation of the consolidated financial statements in conformity with U.S. GAAP requires REE’s management to make estimates, judgments and assumptions.
E. Critical Accounting Estimates REE’s financial statements have been prepared in accordance with U.S. GAAP. The preparation of the consolidated financial statements in conformity with U.S. GAAP requires REE’s management to make estimates, judgments and assumptions.
Such purchase orders often represent authorizations to purchase rather than binding agreements. In addition, REE enters into agreements in the normal course of business with vendors to perform various services, which are generally cancellable upon written notice. These payments are not included in this table of contractual obligations. C. Research and development, patents and licenses, etc.
Such purchase orders often represent authorizations to purchase rather than binding agreements. In addition, REE enters into agreements in the normal course of business with vendors to perform various services, which are generally cancellable upon written notice. These payments are not included in this table of contractual obligations. 62 Table of Contents C. Research and development, patents and licenses, etc.
For a discussion of our consolidated statements of operations for the years ended December 31, 2021 and 2020 and our cash flows for the years then ended, see the section “Operating and Financial Review and Prospects” in our Annual Report on Form 20-F (File No. 001-40649), as filed with the SEC on March 28, 2022.
For a discussion of our consolidated statements of operations for the years ended December 31, 2022 and 2021 and our cash flows for the years then ended, see the section “Operating and Financial Review and Prospects” in our Annual Report on Form 20-F (File No. 001-40649), as filed with the SEC on March 28, 2023.
The facility is approximately 130,000 square feet (approximately 12,077 square meters), under a lease agreement that expires in 2032. REE utilizes this facility for engineering, process validation activities, along with product assembly operations. In addition, REE has a lease in Warwickshire with MIRA Technology Park which REE utilizes as a testing facility.
The facility is approximately 130,000 square feet (approximately 12,077 square meters), under a lease agreement that expires in 2032. REE utilizes this facility for engineering, process validation activities, along with product assembly operations. In addition, REE has a lease in Warwickshire with MIRA Technology Park which REE utilizes as a testing facility, the agreement expires in April 2025.
If REE were to require additional funding or otherwise determined it was beneficial to seek additional sources of financing, REE believes that its debt-free balance sheet would enable REE to access financing on reasonable terms. However, there can be no assurance that such financing would be available to REE on favorable terms or at all.
If REE were to require additional funding or otherwise determined it was beneficial to seek additional sources of financing, REE believes that its balance sheet would enable REE to access financing on reasonable terms. However, there can be no assurance that such financing would be available to REE on favorable terms or at all.
Key Factors Affecting Operating Results REE is an early-stage growth company in the early commercialization stage and believes that its performance and future success depend on several factors that present significant opportunities for it, but also pose risks and challenges, including those discussed in the section of this Annual Report titled “Item 3.D. Risk Factors”.
Key Factors Affecting Operating Results 54 Table of Contents REE is an early-stage growth company in the early commercialization stage and believes that its performance and future success depend on several factors that present significant opportunities for it, but also pose risks and challenges, including those discussed in the section of this Annual Report titled “Item 3.D. Risk Factors”.
Item 5. Operating and Financial Review and Prospects The following discussion and analysis should be read in conjunction with the section titled “Key Components of Statements of Operations” of this Annual Report and our consolidated financial statements and the related notes contained elsewhere in this Annual Report.
Operating and Financial Review and Prospects The following discussion and analysis should be read in conjunction with the section titled “Key Components of Statements of Operations” of this Annual Report and our consolidated financial statements and the related notes contained elsewhere in this Annual Report.
As EV sales grow, EV components become more prevalent, allowing automakers to purchase parts at greater availability and lower costs, further accelerating the switch to electric. Additionally, the continuing improvement in battery technology and continuing build-out of electric charging infrastructure are decreasing range anxiety, increasing comfort with EV range capabilities and facilitating EV adoption.
As EV sales grow, EV components become more prevalent, allowing automakers to purchase parts at greater availability 55 Table of Contents and lower costs, further accelerating the switch to electric. Additionally, the continuing improvement in battery technology and continuing build-out of electric charging infrastructure are decreasing range anxiety, increasing comfort with EV range capabilities and facilitating EV adoption.
Additionally, any funding raised through the issuance of equity or equity-linked securities may result in the issuance of securities with have rights, preferences or privileges senior to those of our Class A Ordinary Shares or the dilution of our existing shareholders.
Additionally, any funding raised through the issuance of equity or equity-linked securities may result in the issuance of securities that have rights, preferences or privileges senior to those of our Class A Ordinary Shares or the dilution of our existing shareholders.
Research and Development Expenses, Net Research and development expenses consist of costs associated with the employment of REE’s engineering staff, including share based compensation, third-party engineering consultants, development projects such as corners programs and component programs and program consumables, costs associated with REE’s properties, and depreciation of REE’s fixed assets.
Research and Development Expenses, Net Research and development, or R&D, expenses consist of costs associated with the employment of REE’s engineering staff, including share based compensation, third-party engineering consultants, development projects such as corners programs and component programs and program consumables, costs associated with REE’s properties, and depreciation of REE’s fixed assets.
Recently Issued Accounting Pronouncements See Note 2 to REE’s consolidated financial statements included elsewhere in this annual report for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of the date of this annual report. Item 6. Directors, Senior Management and Employees A.
Recently Issued Accounting Pronouncements See Note 2 to REE’s consolidated financial statements included elsewhere in this annual report for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of the date of this annual report. 64 Table of Contents Item 6. Directors, Senior Management and Employees A.
Operating Results — Key Factors Affecting Operating Results ” and elsewhere in this Annual Report, we are not aware of any trends, uncertainties, demands, commitments or events for the period from January 1, 2022 to December 31, 2022 that are reasonably likely to have a material effect on our total revenues, income, profitability, liquidity or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial condition. 61 Table of Contents E.
Operating Results — Key Factors Affecting Operating Results ” and elsewhere in this Annual Report, we are not aware of any trends, uncertainties, demands, commitments or events for the period from January 1, 2023 to December 31, 2023 that are reasonably likely to have a material effect on our total revenues, income, profitability, liquidity or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial condition.
Cash Flows from Investing Activities REE’s cash flows used in investing activities to date have been primarily comprised of short term investments and cash outflows for tangible fixed assets (plant and equipment). REE expects investing activities to include cash inflows from maturities of short term investments offset by costs related to our Integration Centers.
Cash Flows from Investing Activities REE’s cash flows used in investing activities to date have been primarily comprised of short-term investments and cash outflows for tangible fixed assets (plant and equipment). REE expects investing activities to include cash inflows from maturities of short-term investments offset by costs related to production related tangible fixed assets..
In 2022, research and development costs accounted for approximately 61% of our total operating expenses. Israeli tax law allows, under certain conditions, a tax deduction for expenditures related to scientific research and development projects, including capital expenditures, for the year in which they are incurred.
In 2023, research and development costs accounted for approximately 70% of our total operating expenses. Israeli tax law allows, under certain conditions, a tax deduction for expenditures related to scientific research and development projects, including capital expenditures, for the year in which they are incurred.
If the carrying amount of an asset or asset group exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset or asset group exceeds the fair value of the asset or asset group.
If the carrying amount of an asset or 63 Table of Contents asset group exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset or asset group exceeds the fair value of the asset or asset group.
REE has a strong combination of engineers with automotive and technology industry experience from Israel, the UK, Germany and the United States who together combine innovative thinking with a common goal of developing a superior EV product for the automotive market. Our research and development department is comprised of approximately 216 employees and external consultants as of March 16, 2023.
REE has a strong combination of engineers with automotive and technology industry experience from Israel, the UK, Germany and the United States who together combine innovative thinking with a common goal of developing a superior EV product for the automotive market. Our research and development department is comprised of approximately 183 employees and external consultants as of December 31, 2023.
On August 16, 2022, we entered into the ATM Sales Agreement with BofA pursuant to which we may offer and sell, at our option, up to $75.0 million of our Class A Ordinary Shares through an “at-the-market” equity program under which BofA agreed to act as sales agent.
ATM Agreements On August 16, 2022, REE entered into the ATM Equity Offering Sales Agreement , or the BofA Agreement, with BofA Securities Inc., or BofA, pursuant to which we may offer and sell, at our option, up to $75.0 million of our Class A Ordinary Shares through an “at-the-market” equity program under which BofA agreed to act as sales agent.
Since inception, REE has incurred losses and generated negative cash flows from operations and has funded its operations, capital expenditure and working capital requirements through capital contributions, private placements of equity securities, investments from certain strategic partners, and from the consummation of the Merger.
Since inception, REE has incurred losses and generated negative cash flows from operations and has funded its operations, capital expenditure and working capital requirements through capital contributions, private placements of equity securities, issuance of private warrants, convertible promissory notes, investments from certain strategic partners, and from the consummation of the Merger.
The information contained in this section should be read in conjunction with our audited financial statements for the years ended December 31, 2022 and 2021 and related notes and the information contained elsewhere in this Annual Report. Our financial statements have been prepared in accordance with US GAAP.
The information contained in this section should be read in conjunction with our audited financial statements for the years ended December 31, 2023 and 2022 and related notes and the information contained elsewhere in this Annual Report. Our financial statements have been prepared in accordance with U.S. GAAP.
REE expects to continue incurring expenses on operating activities until it begins to generate sufficient cash flows from its business. During the year ended December 31, 2022, operating activities used $112.6 million in cash.
REE expects to continue incurring expenses on operating activities until it begins to generate sufficient cash flows from its business. During the year ended December 31, 2023, operating activities used $89.3 million in cash.
REE expects its capital expenditures and working capital requirements to continue in the near future, as it seeks to produce the REE products, develop its customer support and marketing infrastructure and continue its R&D efforts. As of December 31, 2022, REE’s cash and cash equivalents were $56.8 million and its short term investments were $96.9 million.
REE expects its capital expenditures and working capital requirements to continue in the near future, as it seeks to produce the REE products, develop its customer support and marketing infrastructure and continue its R&D efforts. As of December 31, 2023, REE’s cash and cash equivalents were $41.2 million and its short term investments were $44.4 million.
The lease is for a two year period commencing on November 27, 2021 with the option to extend the lease for a period of two additional years. In the United Kingdom, REE entered into a lease agreement for its UK Engineering Centre and Launch Factory, which is located in Coventry, UK.
The lease is for a five-year term with the option to extend the lease period for an additional period of five years. In the United Kingdom, REE entered into a lease agreement for its UK Engineering Centre and Launch Factory, which is located in Coventry, UK.
If the financing is not available, or if the terms of financing are less desirable than REE expects, REE may be forced to decrease its level of investment in product development, renegotiated development agreements with collaboration partners or scale back its operations, which could have an adverse impact on its business and financial prospects.
If the financing is not available, or if the terms of financing are less desirable than REE expects, REE will be forced to change its business plan, including, among other changes, decreasing its level of investment in product development, renegotiating development agreements with collaboration partners and/or scaling back its operations, which could have an adverse impact on its business and financial prospects.
Liquidity and Capital Resources. 58 Table of Contents As of the date of this Annual Report, REE has yet to generate significant revenues from its principal business operations and has generated minimal revenues and we do not expect to generate significant revenues from the sale of our products in the near future.
As of the date of this Annual Report, REE has yet to generate significant revenues from its principal business operations and has generated minimal revenues and does not expect to generate significant revenues from the sale of products in the near future.
REE has observed increase support for EVs in recent years as Tesla has become a dominant player in a once insular automotive industry. Additionally, in 2021 traditional OEMs have announced that they will transition their resources to producing EVs.
Market Trends REE’s strategic plan is based on what it believes is a market shift to electric vehicles. REE has observed increase support for EVs in recent years as Tesla has become a dominant player in a once insular automotive industry. Additionally, in 2021 traditional OEMs have announced that they will transition their resources to producing EVs.
The primary factors affecting operating cash flows during this period were a net loss of $107.4 million before deducting non-cash charges of $13.2 million, consisting primarily of share-based compensation of $26.9 million and depreciation, amortization, and accretion expense of $4.3 million, offset by the change in warrant valuation of $17.9 million and a change in operating right of use asset and liability, net, of $7.9 million. 59 Table of Contents During the year ended December 31, 2021, operating activities used $59.1 million in cash.
The primary factors affecting operating cash flows during this period were a net loss of $107.4 million before deducting non-cash charges consisting primarily of share-based compensation of $26.9 million and depreciation, amortization, and accretion expense of $4.3 million which was offset by the change in warrant valuation of $17.9 million and a decrease in operating working capital of $10.0 million and a change in operating right of use asset and liability, net, of $7.9 million.
The agreement is for a two-year term commencing in April 2021 and has been resigned for another two year period which expires in April 2025. In the United States, REE entered into a lease agreement for its Austin, Texas headquarters. The facility is approximately 118,132 square feet (10,975 square meter), under a lease agreement that expires in 2032.
In the United States, REE entered into a lease agreement for its Austin, Texas headquarters. The facility is approximately 118,132 square feet (10,975 square meter), under a lease agreement that expires in 2032.
We expect interest income to vary depending on our average investment balances and market interest rates during each reporting period.
We expect interest income to vary depending on our average investment balances and market interest rates during each reporting period. Derivative liabilities at fair value are related to the Company’s convertible promissory notes.
Income from Warrants Remeasurement Income from warrants remeasurement, increased by $6.9 million, or 63%, from net financial income of $11.0 million for the year ended December 31, 2021 to income of $17.9 million for the year ended December 31, 2022.
Income from Warrants Remeasurement Income from warrants remeasurement, decreased by $17.5 million, or 98%, from income of $17.9 million for the year ended December 31, 2022 to income of $0.4 million for the year ended December 31, 2023.
This decrease was primarily due to decreased share-based compensation expense of $13.6 million and warrant transaction costs of zero incurred during the year ended December 31, 2022 compared to $238.7 million and $2.9 million during the year ended December 31, 2021.
This decrease was primarily due to decreased share-based compensation expense of $7.9 million incurred during the year ended December 31, 2023 compared to $13.6 million during the year ended December 31, 2022, as well as a decrease in marketing costs, salaries and related expenses related to a decrease in non-R&D employee headcount and transaction costs related to the Warrant Exchange incurred in the year ended December 31, 2022.
Cash Flows Summary Presented below is a summary of REE’s operating, investing and financing cash flows: December 31, 2022 December 31, 2021 USD in thousands Net cash provided by (used in) Operating activities $ (112,585) $ (59,139) Investing activities (106,835) (748) Financing activities 2,430 291,295 Net change in cash and cash equivalents and restricted cash $ (216,990) $ 231,408 Cash Flows from Operating Activities REE’s cash flows used in operating activities to date have primarily resulted from costs related to development of its products, payroll, fluctuations in accounts payable and other current assets and liabilities.
REE will continue to incur net losses in accordance with its operating plan as REE continues to expand its operations to meet anticipated demand. 60 Table of Contents Cash Flows Summary Presented below is a summary of REE’s operating, investing and financing cash flows: December 31, 2023 December 31, 2022 USD in thousands Net cash provided by (used in) Operating activities $ (89,273) $ (112,585) Investing activities 49,617 (106,835) Financing activities 23,971 2,430 Net change in cash and cash equivalents and restricted cash $ (15,685) $ (216,990) Cash Flows from Operating Activities REE’s cash flows used in operating activities to date have primarily resulted from costs related to development of its products, payroll, fluctuations in accounts payable and other current assets and liabilities.
Cash Flows from Financing Activities Net cash provided by financing activities was $2.4 million for the year ended December 31, 2022, which was primarily due to proceeds from the exercise of options and warrants in the amount of $2.4 million.
Net cash provided by financing activities was $2.4 million for the year ended December 31, 2022, which was due to proceeds from exercise of options and warrants. 61 Table of Contents Credit Facility On August 14, 2023, the Company entered into the Credit Facility in the amount of $15 million which the bank is committed to until December 31, 2024.
Excluding share-based compensation and warrant transaction costs, selling, general and administrative expenses increased by $15.1 million, or 74%, from $20.5 million for the year ended December 31, 2021 to $35.6 million for the year ended December 31, 2022.
Excluding share-based compensation, selling, general and administrative expenses decreased by $7.9 million, or 22%, from $35.6 million for the year ended December 31, 2022 to $27.7 million for the year ended December 31, 2023.
The primary factors affecting operating cash flows during this period were a net loss of $505.3 million before deducting non-cash charges of $440.4 million, consisting primarily of share-based compensation of $448.1 million and warrant transaction costs of $2.9 million, offset by the change in warrant valuation of $11.0 million and an increase in working capital of $5.6 million.
The primary factors affecting operating cash flows during this period were a net loss of $114.2 million before deducting non-cash charges consisting primarily of share-based compensation of $16.3 million and depreciation, amortization, and accretion expense of $5.1 million, offset by a change in fair value of financial liabilities of $0.6 million and a change in operating right of use asset and liability, net, of $1.4 million.
Foreign currency exchange gains or losses related to changes in the value of our non-U.S. denominated financial assets, primarily cash and cash equivalents. As of December 31, 2022, we did not have any indebtedness for borrowed amounts. Interest income consists of interest earned on our cash, cash equivalents, and short-term investments.
Foreign currency exchange gains or losses are related to changes in the value of our non-U.S. denominated financial assets and liabilities, primarily cash and cash equivalents and operating lease liabilities related to our leased properties in Israel and the UK. Interest income consists of interest earned on our cash, cash 56 Table of Contents equivalents, and short-term investments.
Goldberg holds a Bachelor of Business Administration from the University of Western Ontario. Yaron Zaltsman has been appointed as REE’s Chief Financial Officer effective March 29, 2023. Mr.
Sardes holds a Bachelor of Science in Mechanical Engineering from the Afeka Tel Aviv Academic College of Engineering. Yaron Zaltsman has been appointed as REE’s Chief Financial Officer effective March 29, 2023. Mr.
As of December 31, 2022, we had not sold any of our Class A Ordinary Shares under the ATM Sales Agreement. As an early-stage growth company in the early commercialization stage, the net losses REE has incurred since inception are consistent with REE’s strategy and budget.
As an early-stage growth company in the early commercialization stage, the net losses REE has incurred since inception are consistent with REE’s strategy and budget.
These requirements create additional costs and possibly production delay in connection with design, testing and assembling of REE’s platforms. See “ Item 4.B. Business Overview – Government Regulations” for a more detailed discussion. COVID-19 During the last two years and going into the third year, COVID-19 has plagued the globe.
These requirements create additional costs and possibly production delay in connection with design, testing and assembling of REE’s platforms. See “ Item 4.B. Business Overview – Government Regulations” for a more detailed discussion. Key Components of Statements of Operations Revenue REE has not begun significant commercial operations and currently has no significant revenues.
Directors and senior management The following table sets forth the name, age and position of each of our executive officers and directors as of March 28, 2023: 62 Table of Contents Name Age Position Executive Officers Daniel Barel 44 Co-Founder, Chief Executive Officer and Director Ahishay Sardes 41 Co-Founder, Chief Technology Officer and Director David Goldberg* 41 Chief Financial Officer Yaron Zaltsman* 49 Chief Financial Officer (Incoming) Joshua Tech 44 Chief Operating Officer Keren Shemesh 47 Chief Marketing Officer Avital Futterman 39 General Counsel & Corporate Secretary Tali Miller 47 Chief Business Officer Limor Raz 43 Chief People Officer Directors Arik Shteinberg (3) 58 Director Hari Nair (1) (3) 63 Director Michal Marom-Brikman (1) (2) (3) 54 Director Ittamar Givton** (1)(3) 70 Director Hicham Abdessamad** 49 Director * Yaron Zaltsman has been appointed CFO effective March 29, 2023 replacing David Goldberg, who will remain as CFO until that date. ** Appointment to the board of directors is effective March 29, 2023 (1) Member of our audit committee (2) Member of our compensation committee (3) Independent director under the rules of Nasdaq Executive Officers Daniel Barel has been the Chief Executive Officer of REE since 2013 and has served as a member of the board of directors since 2013.
Directors and senior management The following table sets forth the name, age and position of each of our executive officers and directors as of March 27, 2024: Name Age Position Executive Officers Daniel Barel 45 Co-Founder, Chief Executive Officer and Director Ahishay Sardes 42 Co-Founder, Chief Technology Officer and Director Yaron Zaltsman* 49 Chief Financial Officer Joshua Tech 45 Chief Operating Officer Keren Shemesh 48 Chief Marketing Officer Avital Futterman 40 General Counsel & Corporate Secretary Tali Miller 48 Chief Business Officer Limor Raz 44 Chief People Officer Directors Carlton Rose 62 Director Michal Drayman (1) (2) (3) 51 Director Alla Felder (1) (2) (3) 50 Director Ittamar Givton (1) (2) (3) 71 Director Hicham Abdessamad 50 Director Michal Marom-Brikman (1) (2) (3) 55 Director * Yaron Zaltsman was appointed CFO effective March 29, 2023 replacing David Goldberg.
The income from warrants remeasurement is from the change in fair value prior to the settlement of the warrant liability recognized in our statement of comprehensive loss.
The income from warrants remeasurement for the year ended December 31, 2022 is from the change in fair value prior to the settlement of the warrant liability. The income from warrants remeasurement for the year ended December 31, 2023 is from the change in fair value of warrants liability issued in December 2023.
REE expects selling, general and administrative expenses to increase as our overall activity levels increase due to the construction and operation of facilities and costs associated with being a public company. Finance Income (Expense), Net Finance income (expense), net consists primarily of interest income and foreign exchange gains or losses offset by bank fees.
REE expects selling, general and administrative expenses to increase as our overall activity levels increase over time once we will start mass production. Finance Income, Net Finance income, net consists primarily of interest income, foreign exchange gains or losses, and the change in fair value of derivatives liabilities offset by bank fees.
Net cash used in investing activities was $0.7 million for the year ended December 31, 2021, which was primarily due to $2.4 million cash outflows for fixed assets (plant and equipment) in support of R&D programs offset by the maturity of bank deposits of $1.7 million.
Net cash provided by investing activities was $49.6 million for the year ended December 31, 2023, which was primarily due to the maturity of short-term investments of $147.7 million, partially offset by purchase of short-term investments of $94.4 million and $3.7 million cash outflows for fixed assets (plant and equipment).
REE intends to utilize this facility for assembly operations. The following table summarizes REE’s contractual obligations and other commitments for cash expenditures as of December 31, 2022, and the years in which these obligations are due. Certain obligations are reflected in our balance sheet, while other are disclosed as future obligations.
REE intends to use this facility in the future for accelerating mass production phase in the U.S. and is currently exploring other uses for this facility until such time. The following table summarizes REE’s contractual obligations and other commitments for cash expenditures as of December 31, 2023, and the years in which these obligations are due.
Zaltsman also serves as the managing partner of OTRE Fund from 2022 and as a board 1 REE is also a customer of SpecterX. See “
Zaltsman also serves as the managing partner of OTRE Fund from 2022 and as a board member at Megureit Israel Ltd since 2020.
Financial Income, Net Financial income, net increased by $3.9 million, or 933%, from net financial income of $0.4 million for the year ended December 31, 2021 to $4.4 million for the year ended December 31, 2022. The increase in financial income, net was primarily comprised of bank deposit and short term investment income and foreign currency gains.
Financial Income, Net Financial income, net decreased by $0.5 million, or 10%, from financial income, net of $4.4 million for the year ended December 31, 2022 to $3.9 million for the year ended December 31, 2023.
REE has not begun significant commercial operations and currently has no significant revenues. Cost of Revenue Cost of revenue decreased by $0.4 million, or 45%, from $1.0 million for the year ended December 31, 2021 to $0.5 million for the year ended December 31, 2022.
Cost of Revenues Cost of revenue increased by $2.8 million, or 498%, from $0.5 million for the year ended December 31, 2022 to $3.3 million for the year ended December 31, 2023.
Research and Development Expenses, Net R&D expenses decreased by $174.2 million, or 69%, from $252.4 million for the year ended December 31, 2021 to $78.2 million for the year ended December 31, 2022.
Research and Development Expenses, Net R&D expenses increased by $4.5 million, or 6%, from $78.2 million for the year ended December 31, 2022 to $82.7 million for the year ended December 31, 2023. This increase was primarily due to an increase in non-recurring engineering expenses related to the development of the P7 EV Platform.
Income tax expense Income tax expense, increased by $0.5 million, or 36%, from $1.3 million for the year ended December 31, 2021 to $1.7 million for the year ended December 31, 2022. This increase was primarily due to the recognition of an uncertain tax position. B.
This decrease was partially offset by an increase in income from bank deposits and short term investments. 58 Table of Contents Income tax expense Income tax expense (income), decreased by $3.1 million, or 178%, from income tax expense of $1.7 million for the year ended December 31, 2022 to income tax income of $1.4 million for the year ended December 31, 2023.
This table is not meant to represent a forecast of our total cash expenditures for any of the periods presented. 60 Table of Contents Payments due by period Total Less than 1 year 1-5 years More than 5 years USD in thousands Contractual obligations: Operating lease obligations $ 21,371 4,112 10,719 6,540 Purchase obligations 2,569 2,569 — — Total $ 23,940 $ 6,681 $ 10,719 $ 6,540 Open purchase orders that are cancellable are not considered unconditional purchase obligations for financial reporting purposes and are not included in the table above.
Payments due by period Total Less than 1 year 1-5 years More than 5 years USD in thousands Contractual obligations: Operating lease obligations $ 24,222 3,489 11,599 9,134 Purchase obligations 18,054 13,600 4,454 — Total $ 42,276 $ 17,089 $ 16,053 $ 9,134 Open purchase orders that are cancellable are not considered unconditional purchase obligations for financial reporting purposes and are not included in the table above.
Additionally, the Company saw increased wages and salaries year-over-year as we expanded our R&D employee headcount. Selling, General and Administrative Expenses Selling, general and administrative expenses decreased by $212.9 million, or 81%, from $262.1 million for the year ended December 31, 2021 to $49.2 million for the year ended December 31, 2022.
Selling, General and Administrative Expenses Selling, general and administrative expenses decreased by $13.6 million, or 28%, from $49.2 million for the year ended December 31, 2022 to $35.6 million for the year ended December 31, 2023.
Excluding this share-based compensation, R&D expenses increased by $21.5 million, or 50%, from $43.5 million for the year ended December 31, 2021 to $65.0 million for the year ended December 31, 2022. This increase was primarily due to costs incurred to open our UK Engineering Center and higher spend related to R&D for the P7 Platform.
Excluding share-based compensation expense, R&D expenses increased by $9.3 million, or 14%, from $65.0 million for the year ended December 31, 2022 to $74.3 million for the year ended December 31, 2023.
Net cash provided by financing activities was $291.3 million for the year ended December 31, 2021, which was primarily due to $287.6 million cash inflow from the consummation of the Merger, proceeds from the exercise of warrants of $2.9 million, and proceeds from the exercise of options in the amount of $0.8 million Debt Currently, REE has no third-party debt although it may determine, based on changes in its expected cash flow needs or because it deems it beneficial, to incur debt in the future.
Debt As of the date of this Annual Report, except for the Credit Facility, the November Note and the December Note, REE has no third-party debt although it may determine, based on changes in its expected cash flow needs or because it deems it beneficial, to incur debt in the future.
Results of Operations Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 The following table sets forth REE’s historical operating results for the periods indicated: 56 Table of Contents December 31, 2022 December 31, 2021 $'000 Changes % Changes USD in thousands Revenue $ — $ 6 $ (6) (100) % Cost of sales 547 995 (448) (45) % Gross loss (547) (989) 442 (45) % Research and development expenses, net 78,225 252,424 (174,199) (69) % Selling, general and administrative expenses 49,200 262,083 (212,883) (81) % Total operating expenses 127,425 514,507 (387,082) (75) % Operating loss (127,972) (515,496) 387,524 (75) % Income from warrants remeasurement 17,929 11,024 6,905 63 % Finance income, net 4,371 423 3,948 933 % Net loss before income tax $ (105,672) $ (504,049) $ 398,377 (79) % Income tax expense 1,748 1,281 467 36 % Net loss (107,420) (505,330) 397,910 (79) % 57 Table of Contents Revenue There was no revenue for the twelve months ended December 31, 2022 and insignificant revenue for the twelve months ended December 31, 2021.
Results of Operations Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 The following table sets forth REE’s historical operating results for the periods indicated: December 31, 2023 December 31, 2022 $'000 Changes % Changes USD in thousands Revenues $ 1,608 $ — $ 1,608 Cost of revenues 3,270 547 2,723 498 % Gross loss (1,662) (547) (1,115) 204 % Research and development expenses, net 82,662 78,225 4,437 6 % Selling, general and administrative expenses 35,568 49,200 (13,632) (28) % Total operating expenses 118,230 127,425 (9,195) (7) % Operating loss (119,892) (127,972) 8,080 (6) % Income from warrants remeasurement 396 17,929 (17,533) (98) % Financial income, net 3,928 4,371 (443) (10) % Net loss before income tax $ (115,568) $ (105,672) $ (9,896) 9 % Income tax expense (income) (1,360) 1,748 (3,108) (178) % Net loss (114,208) (107,420) (6,788) 6 % 57 Table of Contents Revenue REE has not begun significant commercial operations and currently has no significant revenues.
This decrease was primarily due to decreased share-based compensation expense of $13.2 million incurred during the year ended December 31, 2022 compared to $208.9 million during the year ended December 31, 2021. The decrease in share based compensation expense results mainly from options granted to the Founders prior to the Merger and vested at the time of closing.
This increase was partially offset by a decreased share-based compensation expense of $8.4 million incurred during the year ended December 31, 2023 compared to $13.2 million during the year ended December 31, 2022 as well as a decrease in costs related to a decrease in R&D employee headcount and outsourced engineering consultants and other efficiencies in R&D expenses.
Removed
Recent Developments On September 23, 2022, REE announced the results of the Company’s previously announced offer to each holder of the Company’s outstanding (i) public warrants to purchase Class A ordinary shares (the “public warrants”), and (ii) related private placement warrants to purchase Class A ordinary shares (the “private placement warrants” and, together with the public warrants, the “warrants”) to receive 0.20 Class A ordinary shares, in exchange for each outstanding warrant tendered by the holder and exchanged pursuant to the Offer and the Company’s accompanying solicitation of consents from holders of the warrants to amend the warrant agreement governing the warrants (the “Warrant Amendment”), which Warrant Amendment permitted the Company to require that each warrant that is outstanding upon the closing of the Offer be exchanged for 0.18 Class ordinary shares, which is a ratio 10% less than the exchange ratio applicable to the Offer.
Added
Item 5.B . Operating and Financial Review and Prospects-Liquidity and Capital Resources. ” B. Business Overview Company Overview REE is an automotive technology company focused on building commercial electric vehicles controlled fully by wire, what REE calls X-by-Wire.
Removed
The 54 Table of Contents Company issued 3,062,450 Class A ordinary shares in exchange for all outstanding warrants. On October 7, 2022, Nasdaq issued a notification of removal of the warrants from registration. Market Trends REE’s strategic plan is based on what it believes is a market shift to electric vehicles.
Added
Unbound by legacy thinking, we created the world’s first certified, software-driven, fully by-wire electric vehicle, built around its proprietary REEcorner™, which packs critical vehicle components into a single compact module positioned between the chassis and the wheel.
Removed
Both COVID-19 and the action taken to mitigate its spread have and are expected to continue to have an adverse impact on the economies and financial markets of many countries, including the geographical areas in which REE operates.
Added
The REEcorner TM , our proprietary by-wire technology for drive, steer and brake control, enables X-by-Wire vehicle control and is designed to allow for key benefits for building commercial electric trucks, such as reduction in total cost of ownership, or TCO, operational efficiency, and many other benefits as described below.
Removed
At the onset and during peaks in new variants of COVID-19, government authorities, and in some instances employers, have implemented measures to contain its spread including travel bans and restrictions, quarantines, shelter-in-place and stay-at-home orders, and business shutdowns.
Added
REE’s technology, which is patent protected, and design make it possible for OEMs, delivery and logistics fleets, dealers, e-commerce retailers, Mobility-as-a-Service providers and others, to build any size or shape of electric vehicle.
Removed
These measures may continue periodically until COVID-19 is eradicated or society adopts acceptable protocol to coexist with the virus, which could adversely affect REE’s business and manufacturing plans. Measures that have been relaxed may be reimplemented if COVID-19 continues to spread.
Added
With the first Federal Motor Vehicle Safety Standards, or FMVSS, certified full by-wire electric vehicle, we are currently focused primarily on the North American medium-duty truck segment due to the large total addressable market, increased tax incentives for customers, and strong demand from fleets to electrify their fleets.
Removed
If, as a result of these measures, REE has to implement alternative work arrangements or modify employee on-site work schedules, it could cause a delay in REE completing the requirements to meet its production schedule as it may cause a delay in retooling efforts or in the production schedule of the REEcorner TM .
Added
We are targeting delivery and logistic fleets, dealers, e-commerce retailers, new mobility players, MaaS providers and autonomous drive companies. Our business plan is geared to allow these companies to build entire fleets based on REEcorner TM technology and Powered by REE™ platforms.
Removed
Further, REE ability to demonstrate its product to potential customers may be impacted based on restricted travel regulations and requirements. Additionally REE’s sales and marketing strategic plans and goals may be adversely impacted due to the cancellation or reduction of in-person sales activities, meetings, events and conferences.
Added
We aim to offer many customer benefits including reduction in TCO, lower maintenance and spare-part inventory management costs, higher active and passive safety, improved vehicle efficiency, advanced driver-assistance systems, or ADAS, compatibility. 44 Table of Contents By completing and not competing, we can partner with other vehicle manufacturers in the automotive industry where electric and autonomous vehicles will be “powered by REE™”, allowing faster and larger adaption of our X-by-Wire technology and electrification scale.
Removed
Lastly, if REE’s workforce is unable to work effectively, including due to illness, quarantines, government actions or other restrictions in connection with COVID-19, REE’s operations will be adversely affected. The extent to which the COVID-19 pandemic may continue to affect REE’s business will depend on continued developments, which are uncertain and cannot be predicted.
Added
In 2023, we continued to make progress on the following main business fronts: • Increasing our North American footprint though our Authorized Dealer Network; • Growing our initial orderbook value; and • Lowering our customer acquisition costs Increasing REE’s North American footprint through its Authorized Dealer Network REE is focused on commercializing the high value add portion of the commercial EV value chain with the REEcorner TM .
Removed
Even after the COVID-19 pandemic has subsided its global economic effect may continue to adversely effect our business.
Added
To do this, we built out an extensive network of carefully curated authorized dealers, focusing on dealers that have proven to embrace the EV future of commercial vehicles and that are in areas of high demand. In many cases, our dealers are also located in states that provide incentives in addition to incentives provided by the federal government.
Removed
COVID-19 and many of the resulting implications are beyond REE’s control and, as a result, REE is unable to fully predict the ultimate impact, both in terms of severity and duration, that the COVID-19 pandemic will have on our business, operating results, cash flows and financial condition.
Added
In 2023, we continued to expand our Authorized Dealership Network across the U.S. and Canada by 900% year-over-year, or YoY. Each of our Authorized Dealers has placed initial orders.
Removed
Key Components of Statements of Operations Revenue 55 Table of Contents REE has not begun significant commercial operations and currently has no significant revenues.
Added
As of March 25, 2024, we had over twenty customers in various industries, including vehicle rental and leasing, shipping and logistics and commercial vehicle dealers, and an initial order book value of approximately $50 million.
Removed
Cost of Revenue Cost of revenue relates primarily to share-based compensation expense and expenses related to non-recurring engineering. Once REE reaches commercialization and commences production of our products, we expect cost of revenue to include vehicle components and parts, including batteries, raw materials, direct labor costs, warranty costs and costs related to the operation of manufacturing facilities.
Added
As of March 25, 2024 our Authorized Dealer Network consists of, among other dealers: Pritchard EV, Tom's Truck Center, Industrial Power & Truck Equipment, New England Truck Solutions, FMI Truck Sales & Services The Truck Shop, Monarch Truck Center, Ry-Den Truck Center, Jim Reed’s Truck Sales, Inc., Fleet Direct Sales, Specialty Vehicles & Equipment Ltd., McCandless Truck Centers, Lynch Truck Centers, C&M Motors, Inc., Midwest Transit Equipment, LLC, XPO Auto Sales, Inc. and Harris Auto Group (BC).
Removed
This decrease was primarily due to the write off of inventory of $0.3 million during December 31, 2021 and lower amounts incurred for the work with a strategic partner during for the year ended December 31, 2022.

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Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

8 edited+1 added−0 removed7 unchanged
On October 19, 2022 the Audit Committee had decided to classify the Tax Indemnity Agreement as an “extraordinary transaction”, considering that such transaction in not executed in the ordinary course of business; Pursuant to section 270(1) and section 272(a) of the Companies Law, on October 19, 2022 the Audit Committee and the Board have determined that it is advisable and in the best interest of the Company to (i) indemnify the private placement warrantholders in the event the ITA determines that a private placement warrantholder is subject to withholding tax or if a private placement warrantholder fails to obtain an ITA Exemption, which indemnity is to take the form of a Tax Indemnity Agreement; (ii) the potential exposure to the Company, as has been calculated by the management of the Company, as of the date of the exchange offer, does not exceed $ 0.2 million; considering that the available funds of the company, which to the Company’s best knowledge, exceed $180 million as of September 2022, and (iii) that the Company’s strength, and the nature and purpose of the aforementioned capital consolidation, such exposure is not material nor does it likely to substantially influence the profitability, property or liabilities of the Company.
On October 19, 2022 the Audit Committee had decided to classify the Tax Indemnity Agreement as an “extraordinary transaction”, considering that such transaction in not executed in the ordinary course of business; Pursuant to section 270(1) and section 272(a) of the Companies Law, on October 19, 2022 the Audit Committee and the Board have determined that it is advisable and in the best interest of the Company to (i) indemnify the private placement warrantholders in the event the ITA determines that a private placement warrantholder is subject to withholding tax or if a private placement warrantholder fails to obtain an ITA Exemption, which indemnity is to take the form of a Tax Indemnity Agreement; (ii) the potential exposure to the Company, as has been calculated by the management of the Company, as of the date of the exchange offer, does not exceed $0.2 million; considering that the available funds of the company, which to the Company’s best knowledge, exceed $180 million as of September 2022, and (iii) that the Company’s strength, and the nature and purpose of the aforementioned capital consolidation, such exposure is not material nor does it likely to substantially influence the 87 Table of Contents profitability, property or liabilities of the Company.
The full value of the vehicle is recorded in our balance sheet as of December 31, 2022. Employment of Daniel Barel’s Father-in-Law . During 2021, REE hired co-founder, director, and CEO Daniel Barel’s father-in-law as an employee in the selling, general, and administrative department. He is paid customary compensation for this position. SpecterX Transaction .
The full value of the vehicle is recorded in our balance sheet as of December 31, 2023. Employment of Daniel Barel’s Father-in-Law . During 2021, REE hired co-founder, director, and CEO Daniel Barel’s father-in-law as an employee in the selling, general, and administrative department. He is paid customary compensation for this position. SpecterX Transaction .
Nissin Sardes Welding Workshop is owned and operated by co-founder and Chief Technology Officer Ahishay Sardes’ father and brother. Employment and Related Agreements. We have entered into written employment agreements with each of our officers.
Nissim Sardes Welding Workshop is owned and operated by co-founder and Chief Technology Officer Ahishay Sardes’ father and brother. Employment and Related Agreements. We have entered into written employment agreements with each of our officers.
During 2021, REE entered into an agreement with co-founder, director, and CEO Daniel Barel, relating to joint ownership of a company car. REE undertook to provide Daniel Barel with a 85 Table of Contents company car, the value of which is an amount of up to NIS 300,000 to be borne by REE.
During 2021, REE entered into an agreement with co-founder, director, and CEO Daniel Barel, relating to joint ownership of a company car. REE undertook to provide Daniel Barel with a company car, the value of which is an amount of up to NIS 300,000 to be borne by REE.
Agreements with Directors and Officers Anti-Dilution Protection. Each of our Founders, Daniel Barel and Ahishay Sardes, were granted 39.4 million additional options to purchase Class A Ordinary Shares, which were triggered by the transactions contemplated under the Merger Agreement (and/or the PIPE Investment). Joint Ownership Agreement for Company Vehicle.
Each of our Founders, Daniel Barel and Ahishay Sardes, were granted 39.4 million additional options to purchase Class A Ordinary Shares, which were triggered by the transactions contemplated under the Merger Agreement (and/or the PIPE Investment). Joint Ownership Agreement for Company Vehicle.
Prior to entering into the agreement with SpecterX, REE conducted an extensive analysis of the available solutions, and determined that SpecterX best met REE’s needs. In 2022, REE paid SpecterX $98,982. Carpentry Services from Nissin Sardes Welding Workshop. During the year ended December 31, 2020, REE engaged Nissin Sardes Welding Workshop to provide carpentry and welding services.
Prior to entering into the agreement with SpecterX, REE conducted an extensive analysis of the available solutions, and determined that SpecterX best met REE’s needs. In 2023, REE paid SpecterX $45,630. Carpentry Services from Nissim Sardes Welding Workshop. During the year ended December 31, 2021, REE engaged Nissin Sardes Welding Workshop to provide carpentry and welding services.
Major Shareholders” for additional information. C. Interests of experts and counsel Not applicable.
Major Shareholders” for additional information. 88 Table of Contents C. Interests of experts and counsel Not applicable.
The following table provides information regarding the options to purchase our Class A Ordinary Shares held by each of our directors and officers who beneficially owns 1% or more of our Class A Ordinary Shares as of February 28, 2023: Name/Title Number of Shares Underlying Options Exercise Price Expiration Date Daniel Barel, Co-Founder, Chief Financial Officer and Director 41,708,616 $ 0.00 – 0.61 01/06/2027 - 07/22/2031 Ahishay Sardes, Co-Founder, Chief Technology Officer and Director 41,708,615 $ 0.00 – 0.61 01/06/2027 - 07/22/2031 Hari Nair, Director 1,869,119 $ 0.00 – 2.68 11/27/2029 – 05/26/2030 Arik Shteinberg, Director 4,338,589 $ 0.04 - 2.68 12/06/2028 - 05/26/2030 See “Item 7.A.
The following table provides information regarding the options to purchase our Class A Ordinary Shares held by each of our directors and officers who beneficially owns 1% or more of our Class A Ordinary Shares as of March 12, 2024: Name/Title Number of Shares Underlying Options Exercise Price Expiration Date Daniel Barel, Co-Founder, Chief Financial Officer and Director 1,390,287 $ 0.01 – 18.22 01/06/2027 - 07/22/2031 Ahishay Sardes, Co-Founder, Chief Technology Officer and Director 1,390,287 $ 0.01 – 18.22 01/06/2027 - 07/22/2031 See “Item 7.A.
Added
In 2023, the Company received a withholding tax exemption from ITA, therefore the tax indemnity agreement is no longer applicable. Agreements with Directors and Officers Anti-Dilution Protection.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

83 edited+20 added−25 removed171 unchanged
An office holder is defined in the Companies Law as a general manager, chief business manager, deputy general manager, vice general manager, any other person assuming the responsibilities of any of these positions regardless of such person’s title, a director, and any other manager directly subordinate to the general manager.
An office holder is defined in the Companies Law as a general manager, chief business manager, deputy general manager, vice general manager, any other person assuming the responsibilities of any of these positions regardless of such person’s title, a director, and any other manager directly subordinate to the general manager.
Notwithstanding any of the foregoing, if a grantee’s employment or services with REE or any of its affiliates is terminated for “cause” (as defined in the Existing Plan), all outstanding awards held by such grantee (whether vested or unvested) will terminate on the date of such termination and the shares covered by such awards shall again be available for issuance under t the 2021 Plan, and all shares issued upon previous exercise of options of such grantee shall be subject to repurchase by REE or its designee at a price to be determined by REE’s board of directors, but not less than their nominal value.
Notwithstanding any of the foregoing, if a grantee’s employment or services with REE or any of its affiliates is terminated for “cause” (as defined in the Existing Plan), all outstanding awards held by such grantee (whether vested or unvested) will terminate on the date of such termination and the shares covered by such awards shall again be available for issuance under the 2021 Plan, and all shares issued upon previous exercise of options of such grantee shall be subject to repurchase by REE or its designee at a price to be determined by REE’s board of directors, but not less than their nominal value.
Significant Changes To our knowledge, other than as disclosed in this Annual Report and in other filings with the SEC, there has been no significant change in the percentage ownership held by any major shareholder since January 1, 2019.
To our knowledge, other than as disclosed in this Annual Report and in other filings with the SEC, there has been no significant change in the percentage ownership held by any major shareholder since January 1, 2019.
Our board of directors adopted a compensation committee charter setting forth the responsibilities of the committee, which are consistent with Nasdaq corporate governance rules and include: • recommending to our board of directors for its approval a compensation policy, in accordance with the requirements of the Companies Law, as well as other compensation policies, incentive-based compensation plans, and equity-based compensation plans, overseeing the development and implementation of such policies, and recommending to our board of directors any amendments or modifications the committee deems appropriate, including as required under the Companies Law; • reviewing and approving the granting of options and other incentive awards to our Chief Executive Officer and other executive officers, including reviewing and approving corporate goals and objectives relevant to the compensation of our Chief Executive Officer and other executive officers, including evaluating their performance in light of such goals and objectives; • approving and exempting certain transactions regarding office holders’ compensation pursuant to the Companies Law; and • administering our equity-based compensation plans, including without limitation, approving the adoption of such plans, amending and interpreting such plans, and the awards and agreements issued pursuant thereto, and making and determining the terms of awards to eligible persons under the plans.
Our board of directors adopted a compensation committee charter setting forth the responsibilities of the committee, which are consistent with Nasdaq corporate governance rules and include: • recommending to our board of directors for its approval a compensation policy, in accordance with the requirements of the Companies Law, as well as other compensation policies, incentive-based compensation plans, and equity-based compensation plans, overseeing the development and implementation of such policies, and recommending to our board of directors any amendments or modifications the committee deems appropriate, including as required under the Companies Law; 77 Table of Contents • reviewing and approving the granting of options and other incentive awards to our Chief Executive Officer and other executive officers, including reviewing and approving corporate goals and objectives relevant to the compensation of our Chief Executive Officer and other executive officers, including evaluating their performance in light of such goals and objectives; • approving and exempting certain transactions regarding office holders’ compensation pursuant to the Companies Law; and • administering our equity-based compensation plans, including without limitation, approving the adoption of such plans, amending and interpreting such plans, and the awards and agreements issued pursuant thereto, and making and determining the terms of awards to eligible persons under the plans.
(2) All current officers listed in the table are full-time employees. Cash compensation amounts denominated in currencies other than the U.S. dollar were converted into U.S. dollars at the average conversion rate for the year ended December 31, 2022. (3) Amounts reported in this column include benefits and perquisites, including those mandated by applicable law.
(2) All current officers listed in the table are full-time employees. Cash compensation amounts denominated in currencies other than the U.S. dollar were converted into U.S. dollars at the average conversion rate for the year ended December 31, 2023. (3) Amounts reported in this column include benefits and perquisites, including those mandated by applicable law.
An Israeli company may insure an office holder against the following liabilities incurred for acts performed as an office holder if and to the extent provided in the company’s articles of association: • a breach of the duty of loyalty to the company, to the extent that the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the Company; • a breach of the duty of care to the company or to a third party, including a breach arising out of the negligent conduct of the office holder; • a financial liability imposed on the office holder in favor of a third party; • a financial liability imposed on the office holder in favor of a third party harmed by a breach in an administrative proceeding; and • expenses, including reasonable litigation expenses and legal fees, incurred by the office holder as a result of an administrative proceeding instituted against him or her, pursuant to certain provisions of the Israeli Securities Law.
An Israeli company may insure an office holder against the following liabilities incurred for acts performed as an office holder if and to the extent provided in the company’s articles of association: • a breach of the duty of loyalty to the company, to the extent that the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the Company; 81 Table of Contents • a breach of the duty of care to the company or to a third party, including a breach arising out of the negligent conduct of the office holder; • a financial liability imposed on the office holder in favor of a third party; • a financial liability imposed on the office holder in favor of a third party harmed by a breach in an administrative proceeding; and • expenses, including reasonable litigation expenses and legal fees, incurred by the office holder as a result of an administrative proceeding instituted against him or her, pursuant to certain provisions of the Israeli Securities Law.
In addition, if the compensation of a public company’s directors is inconsistent with the company’s compensation policy, then those inconsistent provisions must be separately considered by the compensation committee and board of directors, and approved by the shareholders by a special vote in one of the following two ways: • at least a majority of the shares held by all shareholders who are not controlling shareholders and do not have a personal interest in such matter, present and voting at such meeting, vote in favor of the inconsistent provisions of the compensation package, excluding abstentions; or 80 Table of Contents • the total number of shares of non-controlling shareholders and shareholders who do not have a personal interest in such matter voting against the inconsistent provisions of the compensation package does not exceed two percent (2%) of the aggregate voting rights in the Company.
In addition, if the compensation of a public company’s directors is inconsistent with the company’s compensation policy, then those inconsistent provisions must be separately considered by the compensation committee and board of directors, and approved by the shareholders by a special vote in one of the following two ways: • at least a majority of the shares held by all shareholders who are not controlling shareholders and do not have a personal interest in such matter, present and voting at such meeting, vote in favor of the inconsistent provisions of the compensation package, excluding abstentions; or • the total number of shares of non-controlling shareholders and shareholders who do not have a personal interest in such matter voting against the inconsistent provisions of the compensation package does not exceed two percent (2%) of the aggregate voting rights in the Company.
This amount includes $0.4 million set aside or accrued to provide pension, severance, retirement or similar benefits or expenses, but does not include business travel, car expenses, relocation, professional and business association dues and expenses reimbursed to office holders, and other benefits commonly reimbursed or paid by companies in Israel.
This amount includes $0.5 million set aside or accrued to provide pension, severance, retirement or similar benefits or expenses, but does not include business travel, car expenses, relocation, professional and business association dues and expenses reimbursed to office holders, and other benefits commonly reimbursed or paid by companies in Israel.
Voting Rights 84 Table of Contents Neither our major shareholders nor our directors and executive officers have different or special voting rights with respect to their Ordinary Shares, except that each Class A Ordinary Share is entitled to one vote per share and each Class B Ordinary Share is be entitled to ten votes per share.
Voting Rights Neither our major shareholders nor our directors and executive officers have different or special voting rights with respect to their Ordinary Shares, except that each Class A Ordinary Share is entitled to one vote per share and each Class B 86 Table of Contents Ordinary Share is be entitled to ten votes per share.
The duty of loyalty requires an office holder to act in good faith and in the best interests of the Company, and includes, among other things, the duty to: • refrain from any act involving a conflict of interest between the performance of the office holder’s duties in the company and the office holder’s other duties or personal affairs; • refrain from any activity that is competitive with the business of the company; • refrain from exploiting any business opportunity of the company for the purpose of gaining a personal advantage for the office holder or others; and • disclose to the company any information or documents relating to the company’s affairs which the office holder received as a result of the office holder’s position.
The duty of loyalty requires an office holder to act in good faith and in the best interests of the Company, and includes, among other things, the duty to: • refrain from any act involving a conflict of interest between the performance of the office holder’s duties in the company and the office holder’s other duties or personal affairs; • refrain from any activity that is competitive with the business of the company; 79 Table of Contents • refrain from exploiting any business opportunity of the company for the purpose of gaining a personal advantage for the office holder or others; and • disclose to the company any information or documents relating to the company’s affairs which the office holder received as a result of the office holder’s position.
Shareholder Duties Pursuant to the Companies Law, a shareholder has a duty to act in good faith and in a customary manner toward the company and other shareholders and to refrain from abusing his or her power with respect to the company, including, among other things, in voting at a general meeting and at shareholder class meetings with respect to the following matters: • an amendment to the company’s articles of association; • an increase of the company’s authorized share capital; • a merger; or • interested party transactions that require shareholder approval.
Shareholder Duties Pursuant to the Companies Law, a shareholder has a duty to act in good faith and in a customary manner toward the company and other shareholders and to refrain from abusing his or her power with respect to the company, including, among other things, in voting at a general meeting and at shareholder class meetings with respect to the following matters: • an amendment to the company’s articles of association; 80 Table of Contents • an increase of the company’s authorized share capital; • a merger; or • interested party transactions that require shareholder approval.
An Israeli company may not indemnify or insure an office holder against any of the following: 79 Table of Contents • a breach of the duty of loyalty, except to the extent that the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company; • a breach of the duty of care committed intentionally or recklessly, excluding a breach arising out of the negligent conduct of the office holder; • an act or omission committed with intent to derive illegal personal benefit; or • a fine, monetary sanction, or forfeit levied against the office holder.
An Israeli company may not indemnify or insure an office holder against any of the following: • a breach of the duty of loyalty, except to the extent that the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company; • a breach of the duty of care committed intentionally or recklessly, excluding a breach arising out of the negligent conduct of the office holder; • an act or omission committed with intent to derive illegal personal benefit; or • a fine, monetary sanction, or forfeit levied against the office holder.
Under the 2021 Plan, the administrator has the authority, subject to applicable law, to interpret the terms of the 2021 Plan and any award agreements or awards granted thereunder, designate recipients of awards, determine and amend the terms of awards, including the exercise price of an option award, the fair market value of an ordinary share, the time and vesting schedule applicable to an award or the method of payment for an award, accelerate or amend the vesting schedule applicable to an award, prescribe the forms of agreement for use under the 2021 Plan and take all other actions and make all other determinations necessary for the administration of the 2021 Plan.
Under the 2021 Plan, the administrator has the authority, subject to applicable law, to interpret the terms of the 2021 Plan and any award agreements or awards granted thereunder, designate recipients of awards, determine and amend the terms of awards, including the exercise price of an option award, the fair market value of an ordinary share, the time and vesting schedule applicable to an award or the method of payment for an award, accelerate or amend the vesting schedule applicable to an award, prescribe the forms of 72 Table of Contents agreement for use under the 2021 Plan and take all other actions and make all other determinations necessary for the administration of the 2021 Plan.
(5) Amounts reported in this column represent the expense recorded in our financial statements for the year ended December 31, 2022 with respect to equity-based compensation, reflecting also equity awards made in previous years which may have vested during the current year.
(5) Amounts reported in this column represent the expense recorded in our financial statements for the year ended December 31, 2023, with respect to equity-based compensation, reflecting also equity awards made in previous years which may have vested during the current year.
These responsibilities include: • appointing, retaining, and overseeing our independent auditors, subject to ratification by the board of directors, and in the case of retention, subject to ratification by the shareholders; • pre-approving audit and non-audit services to be provided by the independent auditors and related fees and terms; • overseeing the accounting and financial reporting processes of our company; • managing audits of our financial statements; • preparing all reports as may be required of an audit committee under the rules and regulations promulgated under the Exchange Act; • reviewing with management and our independent auditor our annual and quarterly financial statements prior to publication, filing, or submission to the SEC; • recommending to the board of directors the retention and termination of the internal auditor, and the internal auditor’s engagement fees and terms, in accordance with the Companies Law, as well as approving the yearly or periodic work plan proposed by the internal auditor; • reviewing with our general counsel and/or external counsel, as deemed necessary, legal and regulatory matters that may have a material impact on the financial statements; • identifying irregularities in our business administration, inter alia, by consulting with the internal auditor or with the independent auditor, and suggesting corrective measures to the board of directors; • reviewing policies and procedures with respect to transactions (other than transactions related to compensation or terms of services) between REE and its officers and directors, affiliates of officers or directors, or transactions that are not in the ordinary course of REE’s business and deciding whether to approve such acts and transactions if so required under the Companies Law; and • establishing procedures for handling employee complaints relating to the management of our business and the protection to be provided to such employees.
These responsibilities include: • appointing, retaining, and overseeing our independent auditors, subject to ratification by the board of directors, and in the case of retention, subject to ratification by the shareholders; • pre-approving audit and non-audit services to be provided by the independent auditors and related fees and terms; • overseeing the accounting and financial reporting processes of our company; • managing audits of our financial statements; • preparing all reports as may be required of an audit committee under the rules and regulations promulgated under the Exchange Act; • reviewing with management and our independent auditor our annual and quarterly financial statements prior to publication, filing, or submission to the SEC; • recommending to the board of directors the retention and termination of the internal auditor, and the internal auditor’s engagement fees and terms, in accordance with the Companies Law, as well as approving the yearly or periodic work plan proposed by the internal auditor; • reviewing with our general counsel and/or external counsel, as deemed necessary, legal and regulatory matters that may have a material impact on the financial statements; • identifying irregularities in our business administration, inter alia, by consulting with the internal auditor or with the independent auditor, and suggesting corrective measures to the board of directors; • reviewing policies and procedures with respect to transactions (other than transactions related to compensation or terms of services) between REE and its officers and directors, affiliates of officers or directors, or transactions that are not in the ordinary course of REE’s business and deciding whether to approve such acts and transactions if so required under the Companies Law; and • establishing procedures for handling employee complaints relating to the management of our business and the protection to be provided to such employees. 76 Table of Contents Internal Auditor Under the Companies Law, the board of directors of a public company must appoint an internal auditor based on the recommendation of the audit committee.
Notwithstanding any of the foregoing, if a grantee’s employment or services with REE or any of its affiliates is terminated for “cause” (as defined in the 2021 Plan), all outstanding awards held by such grantee (whether vested or unvested) will terminate on the date of such termination and the shares covered by such awards shall again be available for issuance under the 2021 Plan.
Notwithstanding any of the foregoing, if a grantee’s employment or services with REE or any of its affiliates is terminated for “cause” (as defined in the 2021 Plan), all outstanding awards held by such grantee (whether vested or unvested) will 73 Table of Contents terminate on the date of such termination and the shares covered by such awards shall again be available for issuance under the 2021 Plan.
The maximum number of Class A Ordinary Shares available for issuance under the 2021 Plan is equal to the sum of (i) 23,142,623 Class A Ordinary Shares, (ii) any shares subject to awards under the Existing Plan which have expired, or were cancelled, terminated, forfeited or settled in cash in lieu of issuance of shares or became unexercisable without having been exercised, and (iii) an annual increase on the first day of each year beginning in 2022 and on January 1st of each calendar year thereafter during the term of the Plan, equal to the lesser of (A) 5 % of the outstanding Class A Ordinary Shares on the last day of the immediately preceding calendar year and (B) such amount as determined by REE’s board of directors if so determined prior to January 1 of a calendar year.
The maximum number of Class A Ordinary Shares available for issuance under the 2021 Plan is equal to the sum of (i) 771,421 Class A Ordinary Shares, (ii) any shares subject to awards under the Existing Plan which have expired, or were cancelled, terminated, forfeited or settled in cash in lieu of issuance of shares or became unexercisable without having been exercised, and (iii) an annual increase on the first day of each year beginning in 2022 and on January 1st of each calendar year thereafter during the term of the Plan, equal to the lesser of (A) 5 % of the outstanding Class A Ordinary Shares on the last day of the immediately preceding calendar year and (B) such amount as determined by REE’s board of directors if so determined prior to January 1 of a calendar year.
The Compensation Committee may change the minimum amounts of compensation (as defined in the ESPP) for payroll deductions, the frequency with which a participant may elect to change his or her rate of payroll deductions, the 68 Table of Contents dates by which a participant is required to submit an enrollment form and the effective date of a participant’s withdrawal from the ESPP due to a termination or transfer of employment or change in employment status.
The Compensation Committee may change the minimum amounts of compensation (as defined in the ESPP) for payroll deductions, the frequency with which a participant may elect to change his or her rate of payroll deductions, the dates by which a participant is required to submit an enrollment form and the effective date of a participant’s withdrawal from the ESPP due to a termination or transfer of employment or change in employment status.
A shareholder is also deemed to be, as of any date, the beneficial owner of all securities that such shareholder has the right to acquire within 60 days after that date through (i) the exercise of any option, warrant or right, (ii) the conversion of a security, (iii) the power to revoke a trust, discretionary account or similar 82 Table of Contents arrangement, or (iv) the automatic termination of a trust, discretionary account or similar arrangement.
A shareholder is also deemed to be, as of any date, the beneficial owner of all securities that such shareholder has the right to acquire within 60 days after that date through (i) the exercise of any option, warrant or right, (ii) the conversion of a security, (iii) the power to revoke a trust, discretionary account or similar arrangement, or (iv) the automatic termination of a trust, discretionary account or similar arrangement.
(4) Amounts reported in this column refer to Variable Compensation such as earned commissions, incentives and earned or paid bonuses as recorded in our financial statements for the year ended December 31, 2022.
(4) Amounts reported in this column refer to Variable Compensation such as earned commissions, incentives and earned or paid bonuses as recorded in our financial statements for the year ended December 31, 2023.
The accumulated payroll deductions held on behalf of the participant in his or her notional account will be paid to the participant promptly following receipt of the participant’s revised enrollment form indicating their election to withdraw, and the participant’s option will be automatically terminated. Termination of Employment; Change in Employment Status; Transfer of Employment .
The accumulated payroll deductions held on behalf of the participant in his or her notional account will be paid to the participant promptly following receipt of the participant’s revised enrollment form indicating their election to withdraw, and the participant’s option will be automatically terminated. 71 Table of Contents Termination of Employment; Change in Employment Status; Transfer of Employment .
The Compensation Committee has the authority to take any actions necessary or desirable for the administration of the ESPP, including adopting sub-plans applicable to particular participating subsidiaries or locations, which sub-plans may be designed to be outside the scope of Section 423 of the Code, or special rules applicable to participants in particular participating subsidiaries or particular locations.
The Compensation Committee has the authority to take any actions necessary or desirable for the administration of the ESPP, including adopting sub-plans 70 Table of Contents applicable to particular participating subsidiaries or locations, which sub-plans may be designed to be outside the scope of Section 423 of the Code, or special rules applicable to participants in particular participating subsidiaries or particular locations.
Disclosure of Personal Interests of an Office Holder and Approval of Certain Transactions 77 Table of Contents The Companies Law requires that an office holder promptly disclose to the board of directors any personal interest and all related material information known to such office holder concerning any existing or proposed transaction with the company.
Disclosure of Personal Interests of an Office Holder and Approval of Certain Transactions The Companies Law requires that an office holder promptly disclose to the board of directors any personal interest and all related material information known to such office holder concerning any existing or proposed transaction with the company.
Pursuant to the amended compensation policy, the non-executive directors are paid an annual cash retainer and receive a fixed annual equity grant. The policy does not provide for the payment of any benefits upon termination of any non-executive director’s service. Cash retainer.
Pursuant to the amended compensation policy, the non-executive directors are paid an annual cash retainer and receive a fixed annual equity grant. The policy does not provide for the payment of any benefits upon termination of any non-executive director’s service. 68 Table of Contents Cash retainer.
The annual retainer for serving as chair of the audit 66 Table of Contents committee, the compensation committee and the nominating and corporate governance committee is $20,000, $15,000 and $10,000, respectively. To this date, REE has no nomination committee. Initial equity awards.
The annual retainer for serving as chair of the audit committee, the compensation committee and the nominating and corporate governance committee is $20,000, $15,000 and $10,000, respectively. To this date, REE has no nomination committee. Initial equity awards.
However, if the chief executive officer candidate will serve as a member of the board of directors, such candidate’s compensation terms as chief executive officer must be approved in accordance with the rules applicable to approval of compensation of directors. D. Employees.
However, if the chief executive officer candidate will serve as a member of the board of directors, such candidate’s compensation terms as chief executive officer must be approved in accordance with the rules applicable to approval of compensation of directors. 83 Table of Contents D. Employees.
The expiration date of such options is 10 years after their date of grant. 65 Table of Contents The table below sets forth the compensation earned by our five most highly compensated office holders (as defined under the Companies Law) during or with respect to the year ended December 31, 2022.
The expiration date of such options is 10 years after their date of grant. The table below sets forth the compensation earned by our five most highly compensated office holders (as defined under the Companies Law) during or with respect to the year ended December 31, 2023.
With respect to restricted share awards, 71 Table of Contents grantees will possess all incidents of ownership of the restricted shares, including the right to vote and receive dividends on such shares. Dividends. Grantees holding restricted share awards will be entitled to receive dividends and other distributions with respect to the shares underlying the restricted share award.
With respect to restricted share awards, grantees will possess all incidents of ownership of the restricted shares, including the right to vote and receive dividends on such shares. Dividends. Grantees holding restricted share awards will be entitled to receive dividends and other distributions with respect to the shares underlying the restricted share award.
The administrator also has the authority to amend and rescind rules and regulations relating to the 2021 Plan or terminate the 2021 Plan at any time before the date of expiration of its ten-year term. 70 Table of Contents Eligibility.
The administrator also has the authority to amend and rescind rules and regulations relating to the 2021 Plan or terminate the 2021 Plan at any time before the date of expiration of its ten-year term. Eligibility.
Section 102 includes two alternatives for tax treatment involving the issuance of options or shares to a trustee for the benefit of the grantees and also includes an additional alternative for the issuance of options or shares directly to the grantee.
Section 102 includes two alternatives for tax treatment involving the issuance of options or shares to a trustee for the benefit of the 69 Table of Contents grantees and also includes an additional alternative for the issuance of options or shares directly to the grantee.
The Companies Law 78 Table of Contents does not define the substance of this duty of fairness, except to state that the remedies generally available upon a breach of contract will also apply in the event of a breach of the duty of fairness.
The Companies Law does not define the substance of this duty of fairness, except to state that the remedies generally available upon a breach of contract will also apply in the event of a breach of the duty of fairness.
The share pool will be increased on the first day of each fiscal year in an amount equal to the lesser of (i) 4,628,524 Class A Ordinary Shares (ii) 1.0% of the total number of shares of the Class A Ordinary Shares outstanding on the last day of the immediately preceding fiscal year and (iii) such number of shares as determined by the Board in its discretion.
The share pool will be increased on the first day of each fiscal year in an amount equal to the lesser of (i) 154,284 Class A Ordinary Shares (ii) 1.0% of the total number of shares of the Class A Ordinary Shares outstanding on the last day of the immediately preceding fiscal year and (iii) such number of shares as determined by the Board in its discretion.
The annual cash bonus that may be granted to executive officers, other than our Chief Executive Officer, may alternatively be based entirely on a discretionary evaluation. Furthermore, our Chief Executive Officer will be entitled to approve performance objectives for executive officers who report to him.
The annual cash bonus that may be granted to executive officers, other than our Chief Executive Officer, may alternatively be based entirely on a discretionary 78 Table of Contents evaluation. Furthermore, our Chief Executive Officer will be entitled to approve performance objectives for executive officers who report to him.
Section 102(b)(2) of the Ordinance, the most favorable tax treatment for the grantee, permits the issuance to a trustee under the “capital gain track.” 67 Table of Contents Grants.
Section 102(b)(2) of the Ordinance, the most favorable tax treatment for the grantee, permits the issuance to a trustee under the “capital gain track.” Grants.
On termination of a participant’s employment for any reason, or a change in the participant’s employment status following which the participant is no longer an eligible employee, the participant will be deemed to have withdrawn from the ESPP effective as of the date of such termination of employment or change in status, the accumulated payroll deductions remaining in the participant’s notional account will be returned to the participant, and the participant’s option will be automatically terminated. 69 Table of Contents Over-subscribed Offerings.
On termination of a participant’s employment for any reason, or a change in the participant’s employment status following which the participant is no longer an eligible employee, the participant will be deemed to have withdrawn from the ESPP effective as of the date of such termination of employment or change in status, the accumulated payroll deductions remaining in the participant’s notional account will be returned to the participant, and the participant’s option will be automatically terminated.
Compensation Policy under the Companies Law 75 Table of Contents In general, under the Companies Law, the board of directors of a public company must approve a compensation policy after receiving and considering the recommendations of the compensation committee.
Compensation Policy under the Companies Law In general, under the Companies Law, the board of directors of a public company must approve a compensation policy after receiving and considering the recommendations of the compensation committee.
Board Practices — Approval of Related Party Transactions under Israeli Law .” Investors’ Rights Agreement In connection with the Merger, each of REE, 10X Capital and certain of REE’s shareholders entered into an Investors Rights Agreement, which became effective upon the Closing Date, pursuant to which REE agreed to file a registration statement as soon as practicable upon a request from certain significant shareholders of REE to register the resale of certain registrable securities under the Securities Act, subject to required notice provisions to other shareholders party thereto.
Investors’ Rights Agreement In connection with the Merger, each of REE, 10X Capital and certain of REE’s shareholders entered into an Investors Rights Agreement, which became effective upon the Closing Date, pursuant to which REE agreed to file a registration statement as soon as practicable upon a request from certain significant shareholders of REE to register the resale of certain registrable securities under the Securities Act, subject to required notice provisions to other shareholders party thereto.
Tech brings over 23 years of experience to REE in complex product development & launch, industrialization, infrastructure development, engineering, supply chain, quality, and operations management. Mr.
Based in the U.S.. Mr. Tech brings over 23 years of experience to REE in complex product development & launch, industrialization, infrastructure development, engineering, supply chain, quality, and operations management. Mr.
Ittamar Givton has been appointed to REE’s board of directors effective March 29, 2023. Mr. Givton served on the boards of several government entities and public companies in Israel, across the energy, banking, chemical, and communication sectors as well as on the board of the Israeli Stock Exchange. In addition, Mr.
Ittamar Givton has served on the board of directors since March 29, 2023. Mr. Givton served on the boards of several government entities and public companies in Israel, across the energy, banking, chemical, and communication sectors as well as on the board of the Israeli Stock Exchange. In addition, Mr.
Each member of our audit committee meets the requirements for financial literacy under the applicable rules and regulations of the SEC and the Nasdaq corporate governance rules. Our board of directors has determined that Ms. Marom-Brikman is an audit committee financial expert as defined by the SEC rules.
Each member of our audit committee meets the requirements for financial literacy under the applicable rules and regulations of the SEC and the Nasdaq corporate governance rules. Our board of directors has determined that Ms. Marom-Brikman and Ms. Felder are audit committee financial experts as defined by the SEC rules.
Compensation Compensation of Executive Officers and Directors The compensation paid by REE and our subsidiaries to our office holders as a group for the year ended December 31, 2022 was $5.5 million.
Compensation Compensation of Executive Officers and Directors The compensation paid by REE and our subsidiaries to our office holders as a group for the year ended December 31, 2023 was $6.0 million.
As of February 28, 2023, there were a total of 107,175,015 Class A Ordinary Shares subject to outstanding awards granted under the 2011 Plan, which if expired, cancelled, terminated, forfeited or settled in cash in lieu of issuance of shares or otherwise unexercisable without having been exercised, will become available for issuance under the 2021 Plan. Administration.
As of December 31, 2023, there were a total of 3,459,972 Class A Ordinary Shares subject to outstanding awards granted under the 2011 Plan, which if expired, cancelled, terminated, forfeited or settled in cash in lieu of issuance of shares or otherwise unexercisable without having been exercised, will become available for issuance under the 2021 Plan. Administration.
The maximum number of shares of our common shares available for issuance under the ESPP initially shall not exceed in the aggregate 4,628,524 Class A Ordinary Shares.
The maximum number of shares of our common shares available for issuance under the ESPP initially shall not exceed in the aggregate 154,284 Class A Ordinary Shares.
Givton held a senior position in the Budget Department of the Israeli Ministry of Finance and later served as VP for Business Development in the Dankner Group. Mr. Givton holds a BA in Economics from Tel Aviv University and an LL.B from the Hebrew University in Jerusalem.
Givton held a senior position in the Budget Department of the Israeli Ministry of Finance and later served as VP for Business Development in the Dankner Group. Mr. Givton holds a BA in Economics from Tel Aviv University and an LL.B from the Hebrew University in Jerusalem. Hicham Abdessamad has served on the board of directors since March 29, 2023.
Audit Committee Under Nasdaq corporate governance rules, we are required to maintain an audit committee consisting of at least three independent directors, each of whom is financially literate and one of whom has accounting or related financial management expertise. Our audit committee consists of Michal Marom-Brikman, Ittamar Givton (effective March 29, 2023) and Hari Nair.
Steinberg. 75 Table of Contents Audit Committee Under Nasdaq corporate governance rules, we are required to maintain an audit committee consisting of at least three independent directors, each of whom is financially literate and one of whom has accounting or related financial management expertise. Our audit committee consists of Michal Marom-Brikman, Ittamar Givton, Alla Felder and Michal Drayman.
In addition, we incurred $6.4 million of share-based compensation expense related to equity awards made by us to our office holders. As of December 31, 2022, options to purchase 106,684,790 ordinary shares granted to our office holders as a group were outstanding under our equity incentive plans at a weighted average exercise price of $0.15 per ordinary share.
In addition, we incurred $4.6 million of share-based compensation expense related to equity awards made by us to our office holders. 67 Table of Contents As of December 31, 2023, options to purchase 3,448,804 Ordinary Shares granted to our office holders as a group were outstanding under our equity incentive plans at a weighted average exercise price of $3.53 per ordinary share.
As of December 31, 2022 and 2021 we had 14 and 37 external consultants on an FTE basis deployed to REE, respectively, most of which were located in the United Kingdom. 81 Table of Contents December 31, 2022 December 31, 2021 December 31, 2020 Israel 133 127 69 United Kingdom 134 119 6 United States 18 14 5 Germany 3 5 3 Other 3 5 1 291 270 84 The following table shows the breakdown of our global workforce of employees and external consultants deployed to REE on an FTE basis by category of activity as of the dates indicated: December 31, 2022 December 31, 2021 December 31, 2020 General and administrative 59 39 13 Marketing 16 16 15 Research and development 216 215 56 291 270 84 In regard to our Israeli employees, Israeli labor laws govern the length of the work day, minimum wages for employees, procedures for hiring and dismissing employees, determination of severance pay, annual leave, sick days, advance notice of termination of employment, equal opportunity and anti-discrimination laws and other conditions of employment.
As of December 31, 2023, we had 244 employees and external consultants deployed to REE on a full-time equivalent (“FTE”) 2 basis located in the following geographic locations: December 31, 2023 December 31, 2022 December 31, 2021 Israel 112 133 127 United Kingdom 111 134 119 United States 16 18 14 Germany 3 3 5 Other 2 3 5 244 291 270 The following table shows the breakdown of our global workforce of employees and external consultants deployed to REE on an FTE basis by category of activity as of the dates indicated: December 31, 2023 December 31, 2022 December 31, 2021 General and administrative 50 59 39 Selling and Marketing 11 16 16 Research and development 183 216 215 244 291 270 In regard to our Israeli employees, Israeli labor laws govern the length of the work day, minimum wages for employees, procedures for hiring and dismissing employees, determination of severance pay, annual leave, sick days, advance notice of termination of employment, equal opportunity and anti-discrimination laws and other conditions of employment.
Does not include 325,821 restricted stock units that vest more than 60 days from February 28, 2023. Registered Holders As of February 28, 2023, we had 15 holders of record of our Class A Ordinary Shares in the United States, including Cede & Co., the nominee of The Depository Trust Company.
(18) Does not include 62,973 restricted stock units that vest more than 60 days from March 12, 2024. Registered Holders As of March 12, 2024, we had 36 holders of record of our Class A Ordinary Shares in the United States, including Cede & Co., the nominee of The Depository Trust Company.
We have one year to regain compliance with this requirement. 73 Table of Contents Our board of directors has determined that each member of our audit committee is independent, as such term is defined in Rule 10A3(b)(1) under the Exchange Act, which is different from the general test for independence of board and committee members.
Our board of directors has determined that each member of our audit committee is independent, as such term is defined in Rule 10A3(b)(1) under the Exchange Act, which is different from the general test for independence of board and committee members.
We have elected to “opt out” from additional Companies Law requirements relating to the size and composition of the compensation committee.
Companies Law Requirements Under the Companies Law, the board of directors of a public company must appoint a compensation committee. We have elected to “opt out” from additional Companies Law requirements relating to the size and composition of the compensation committee.
The percentage of ordinary shares beneficially owned is computed on the basis of 244,858,193 Class A Ordinary Shares and 83,417,110 Class B Ordinary Shares outstanding as of February 28, 2023. Unless otherwise indicated, we believe that all persons named in the table below have sole voting and investment power with respect to all Ordinary Shares beneficially owned by them.
The percentage of Ordinary Shares beneficially owned is computed on the basis of 10,827,570 Class A Ordinary Shares and 2,780,570 Class B Ordinary Shares outstanding as of March 12, 2024. Unless otherwise indicated, we believe that all persons named in the table below have sole voting and investment power with respect to all Ordinary Shares beneficially owned by them.
An “interested party” is defined in the Companies Law as (i) a holder of 5% or more of the issued share capital or voting power in a company, (ii) any person or entity who has the right to designate one or more directors or to designate the chief executive officer of the company, or (iii) any person who serves as a director or as chief executive officer of the company. 74 Table of Contents The audit committee is required to oversee the activities and to assess the performance of the internal auditor as well as to review the internal auditor’s work plan.
An “interested party” is defined in the Companies Law as (i) a holder of 5% or more of the issued share capital or voting power in a company, (ii) any person or entity who has the right to designate one or more directors or to designate the chief executive officer of the company, or (iii) any person who serves as a director or as chief executive officer of the company.
Under the Amended and Restated Articles the number of directors on our board of directors will be no less than three and no more than eleven. Our directors will generally be elected by a simple majority vote of holders of Ordinary Shares, participating and voting (in person or by proxy) at an annual general meeting of our shareholders.
Our directors will generally be elected by a simple majority vote of holders of Ordinary Shares, participating and voting (in person or by proxy) at an annual general meeting of our shareholders.
Each director will hold office until the next annual general meeting of our shareholders, unless the tenure of such director expires earlier pursuant to the Companies Law or unless such director is removed from office as described below. 72 Table of Contents Under the Amended and Restated Articles, the approval of the holders of at least 65% of the total voting power of our shareholders will generally be required to remove any of our directors from office or amend the provision requiring the approval of at least 65% of the total voting power of our shareholders to remove any of our directors from office, provided that if any Class B Ordinary Shares remain outstanding, then the required majority shall be a majority of the total voting power of REE’s shareholders.
Under the Amended and Restated Articles, the approval of the holders of at least 65% of the total voting power of our shareholders will generally be required to remove any of our directors from office or amend the provision requiring the approval of at least 65% of the total voting power of our shareholders to remove any of our directors from office, provided that if any Class B Ordinary Shares remain outstanding, then the required majority shall be a majority of the total voting power of REE’s shareholders.
Our Chief Executive Officer is appointed by and serves at the discretion of our board of directors, subject to the employment agreement that we have entered into with him. All other executive officers are appointed by the Chief Executive Officer, subject to applicable corporate approvals, and shall be subject to the terms of any applicable employment or consulting agreements.
Our Chief Executive Officer is appointed by and serves at the discretion of our board of directors, subject to the employment agreement that we have entered into with him.
All equity-based incentives granted to executive officers and directors shall be subject to vesting periods in order to promote long-term retention. Equity-based compensation shall be granted from time to time and be individually determined and awarded according to the individual’s performance, educational background, prior business experience, qualifications, role, and personal responsibilities.
Equity-based compensation shall be granted from time to time and be individually determined and awarded according to the individual’s performance, educational background, prior business experience, qualifications, role, and personal responsibilities.
Previously, oversaw manufacturing development and launch at a worldwide leader in automotive exterior design, development, and manufacturing, and most recently served as Vice President of Manufacturing and Engineering for one of America’s most advanced construction technology firms, Plant Prefab. Based in the U.S.. Mr.
Tech joins REE after serving on Tesla’s Operations Leadership Team as Head of the New Product/Manufacturing Introduction group. Previously, oversaw manufacturing development and launch at a worldwide leader in automotive exterior design, development, and manufacturing, and most recently served as Vice President of Manufacturing and Engineering for one of America’s most advanced construction technology firms, Plant Prefab.
Zaltsman is a certified public accountant in Israel and holds a BA in accounting and economics from the Hebrew University and a MBA from Tel Aviv University. Joshua Tech joined REE in April 2022 as the Chief Operating Officer. Mr. Tech joins REE after serving on Tesla’s Operations Leadership Team as Head of the New Product/Manufacturing Introduction group.
Zaltsman was the Deputy Head of Financial Advisory Services Israel for Deloitte. Mr. Zaltsman is a certified public accountant in Israel and holds a BA in accounting and economics from the Hebrew University and a MBA from Tel Aviv University. Joshua Tech joined REE in April 2022 as the Chief Operating Officer. Mr.
Our compensation policy provides for executive officer and director 76 Table of Contents compensation in the form of share options or other equity-based awards, such as restricted shares and restricted share units, in accordance with our then-current equity incentive plan.
Our compensation policy provides for executive officer and director compensation in the form of share options or other equity-based awards, such as restricted shares and restricted share units, in accordance with our then-current equity incentive plan. All equity-based incentives granted to executive officers and directors shall be subject to vesting periods in order to promote long-term retention.
The maximum amount set forth in such agreements is in addition to any amount paid (if paid) under insurance and/or by a third party pursuant to an indemnification arrangement. In the opinion of the SEC, indemnification of directors and office holders for liabilities arising under the Securities Act, however, is against public policy and therefore unenforceable.
The maximum amount set forth in such agreements is in addition to any amount paid (if paid) under insurance and/or by a third party pursuant to an indemnification arrangement.
External consultants are converted to full-time equivalents by dividing their actual working hours per month by a full-time standard.
Major shareholders 2 Number of external consultants deployed to REE is calculated on a full-time equivalent basis. External consultants are converted to full-time equivalents by dividing their actual working hours per month by a full-time standard.
Compensation of Directors and Executive Officers Directors Under the Companies Law, the compensation of a public company’s directors requires the approval of (i) its compensation committee, (ii) its board of directors and, unless exempted under regulations promulgated under the Companies Law, (iii) the approval of its shareholders at a general meeting.
In the opinion of the SEC, indemnification of directors and office holders for liabilities arising under the Securities Act, however, is against public policy and therefore unenforceable. 82 Table of Contents Compensation of Directors and Executive Officers Directors Under the Companies Law, the compensation of a public company’s directors requires the approval of (i) its compensation committee, (ii) its board of directors and, unless exempted under regulations promulgated under the Companies Law, (iii) the approval of its shareholders at a general meeting.
Raz holds a Bachelor's degree in Psychology from The Open University of Israel and a Master's degree in Art Therapy/Therapist from Beit Berl. Directors Arik Shteinberg has served on REE’s board of directors since 2018. Mr. Shteinberg serves as the chairman of the board of directors of the Tel Aviv Stock Exchange, and as a director of Leumi Partners Ltd.
Raz holds a Bachelor's degree in Psychology from The Open University of Israel and a Master's degree in Art Therapy/Therapist from Beit Berl. Directors Carlton Rose has served on the board of directors since June 2023. Mr.
Group Ltd, which was listed on the Tel Aviv Stock Exchange, and its subsidiary A.D.O. Properties S.A., which was listed on the Frankfurt Stock Exchange, from 2006 to 2016. Prior to these roles, from 2000 to 2005, Mr. Zaltzman was the Deputy Head of Financial Advisory Services Israel for Deloitte. Mr.
Item 7.B. Related Party Transactions ” of this Annual Report for additional information. 65 Table of Contents chief financial officer of A.D.O. Group Ltd, which was listed on the Tel Aviv Stock Exchange, and its subsidiary A.D.O. Properties S.A., which was listed on the Frankfurt Stock Exchange, from 2006 to 2016. Prior to these roles, from 2000 to 2005, Mr.
Sharon Cohen, a partner with Deloitte Brightman Almagor, serves as our internal auditor. Compensation Committee Under Nasdaq corporate governance rules, we are required to maintain a compensation committee consisting of at least two independent directors. Our compensation committee consists of Michal Marom-Brikman. Ms. Marom-Brikman serves as chairperson of the compensation committee.
Compensation Committee Under Nasdaq corporate governance rules, we are required to maintain a compensation committee consisting of at least two independent directors. Our compensation committee consists of Michal Marom-Brikman, Ittamar Givton, Alla Felder and Michal Drayman. Ms.
Our board of directors has determined that each member of our compensation committee is independent under Nasdaq corporate governance rules, including the additional independence requirements applicable to the members of a compensation committee. Companies Law Requirements Under the Companies Law, the board of directors of a public company must appoint a compensation committee.
Marom-Brikman served as chairperson of the compensation committee and on March 25, 2024, the Board appointed Alla Felder to serve as chairperson of the compensation committee. Our board of directors has determined that each member of our compensation committee is independent under Nasdaq corporate governance rules, including the additional independence requirements applicable to the members of a compensation committee.
Internal Auditor Under the Companies Law, the board of directors of a public company must appoint an internal auditor based on the recommendation of the audit committee. The role of the internal auditor, among other things, is to review the company’s compliance with applicable law and orderly business procedure.
The role of the internal auditor, among other things, is to review the company’s compliance with applicable law and orderly business procedure.
(2) Based on the Company’s Shell Company Report on Form 20-F for the period ended July 22, 2021 filed on July 28, 2021. (3) Based on the Company’s Shell Company Report on Form 20-F for the period ended July 22, 2021 filed on July 28, 2021. (4) Based on a Schedule 13G filed on January 20, 2023.
(1) Based on information provided to us by MAGAIM. (2) Based on information provided to us by KUKAC, LLC. (3) Based on the Company’s Shell Company Report on Form 20-F for the period ended July 22, 2021 filed on July 28, 2021.
Marom-Brikman has significant experience on public company boards; she is on the board of Partner Communications Co. (Nasdaq: PTNR) and is a board member of the Ichilov Medical Center & Hospital and a member of its investment committee. Ms.
(Nasdaq: PTNR) and is a board member of the Ichilov Medical Center & Hospital and a member of its investment committee. Ms.
Major shareholders The following table and accompanying footnotes set forth information with respect to the beneficial ownership of our Ordinary Shares, as of February 28, 2023: • each person or entity who is known by us to be the beneficial owner of more than 5% of the outstanding Ordinary Shares; • each of our current executive officers and directors, individually; and • all of our executive officers and directors, as a group.
As of December 31, 2023, 2022 and 2021 we had 11, 14 and 37 external consultants on an FTE basis deployed to REE, respectively, most of which were located in the United Kingdom. 84 Table of Contents The following table and accompanying footnotes set forth information with respect to the beneficial ownership of our Ordinary Shares, as of March 12, 2024: • each person or entity who is known by us to be the beneficial owner of more than 5% of the outstanding Ordinary Shares; • each of our current executive officers and directors, individually; and • all of our executive officers and directors, as a group.
(11) Reflects 46,710 Class A Ordinary Shares. Does not include 200,000 restricted stock units that vest more than 60 days from February 28, 2023. (12) Does not include 100,000 restricted stock units that vest more than 60 days from February 28, 2023. (13) Does not include 100,000 restricted stock units that vest more than 60 days from February 28, 2023.
Does not include 11,666 restricted stock units that vest more than 60 days from March 12, 2024. (12) Reflects 44,444 restricted stock units that vest within 60 days from March 12, 2024. Does not include 88,889 restricted stock units that vest more than 60 days from March 12, 2024. (13) Reflects 10,862 Class A Ordinary Shares.
Our board of directors has determined that Arik Shteinberg, Hari Nair, Ittamar Givton (effective March 29, 2023), and Michal Marom-Brikman are independent directors as defined in Nasdaq corporate governance rules.
Our board of directors has determined that Alla Felder, Michal Drayman, Ittamar Givton, and Michal Marom-Brikman are independent directors as defined in Nasdaq corporate governance rules. As a result of the resignation of Arik Steinberg, we do not currently have a majority of independent members of our board of directors.
Nair holds a Bachelor of Science in Engineering from Bradley University and a Master’s in Business Administration from the University of Notre Dame. Michal Marom-Brikman has served on REE’s board of directors since 2021. She specializes in financial and business structures, business deals and corporate governance. Ms.
Michal Marom-Brikman has served on REE’s board of directors since October 2021. She specializes in financial and business structures, business deals and corporate governance. Ms. Marom-Brikman has significant experience on public company boards; she is on the board of Partner Communications Co.
(10) Reflects 35,341 Class A Ordinary Shares and 703,487 Class A Ordinary Shares underlying options that are exercisable within 60 days of February 28, 2023, with a weighted average exercise price of $0.32 and which expire between March 25, 2029 and July 9, 2031.Does not include 148,563 restricted stock units that vest more than 60 days from February 28, 2023.
Does not include 10,676 restricted stock units or options that vest more than 60 days from March 12, 2024. (9) Reflects 2,356 Class A Ordinary Shares and 25,527 Class A Ordinary Shares underlying options that are exercisable within 60 days of March 12, 2024.
Hicham Abdessamad has been appointed to REE’s board of directors effective March 29, 2023. Mr. Abdessamad is the Chairman & CEO of Hitachi America, Ltd, overseeing the growth objectives of Hitachi’s North America business across key sectors such as Digital, Green & Mobility, and Innovation.
Mr. Abdessamad is the Chairman & CEO of Hitachi America, Ltd, overseeing the growth objectives of Hitachi’s North America business across key sectors such as Digital, Green & Mobility, and Innovation. Hitachi in North America has a portfolio of 72 companies and 19 R&D facilities operating in 37 states, with over 24,700 employees. Mr.
Abdessamad has held multiple executive roles within Hitachi, including CEO of Hitachi Global Digital Holdings, President and CEO of Hitachi Consulting. Mr.
Abdessamad also serves as an advisor on the investment advisory committee (IAC) appointed by the United States Secretary of Commerce, Gina Raimondo. Mr. Abdessamad has held multiple executive roles within Hitachi, including CEO of Hitachi Global Digital Holdings, President and CEO of Hitachi Consulting. Mr.
These shareholders held in the aggregate 232,189,104 of our outstanding Class A Ordinary Shares, or 94.8% of our outstanding Class A Ordinary Shares as of February 28, 2023.
These shareholders held in the aggregate 10,501,042 of our outstanding Class A Ordinary Shares, or 97.0% of our outstanding Class A Ordinary Shares as of March 12, 2024.
(14) Does not include 200,000 restricted stock units that vest more than 60 days from February 28, 2023.
Does not include 27,694 restricted stock units that vest more than 60 days from March 12, 2024. (14) Reflects 6,379 restricted stock units that vest within 60 days from March 12, 2024. Does not include 50,638 restricted stock units that vest more than 60 days from March 12, 2024.
Does not include 160,643 restricted stock units that vest more than 60 days from February 28, 2023.
Does not include 49,889 restricted stock units that vest more than 60 days from March 12, 2024. (17) Reflects 6,005 restricted stock units that vest within 60 days from March 12, 2024. Does not include 49,889 restricted stock units that vest more than 60 days from March 12, 2024.
Summary Compensation Table Information Regarding the Covered Executive (1) Name and Principal Position Base Salary Benefits & Perquisites (3) Variable Compensation (4) Equity-Based Compensation (5) Total Keren Shemesh, Chief Marketing Officer $ 283,000 $ 109,628 $ 20,000 $ 2,325,308 $ 2,737,936 Limor Raz, Chief People Officer $ 283,000 $ 106,934 $ 30,000 $ 778,743 $ 1,198,677 Hari Nair, Director $ 60,000 $ — $ — $ 1,122,472 $ 1,182,472 Tali Miller, Chief Business Officer $ 400,000 $ 175,380 $ 25,000 $ 334,212 $ 934,592 David Goldberg, Chief Financial Officer $ 366,667 $ 51,594 $ 100,000 $ 379,753 $ 898,014 (1) In accordance with Israeli law, all amounts reported in the table are based on the cost to REE as recorded in our financial statements for the year ended December 31, 2022.
Summary Compensation Table Information Regarding the Covered Executive (1) Name and Principal Position Base Salary Benefits & Perquisites (3) Variable Compensation (4) Equity-Based Compensation (5) Total Keren Shemesh, Chief Marketing Officer $ 297,000 $ 115,813 $ 74,250 $ 1,871,830 $ 2,358,893 Tali Miller, Chief Business Officer $ 400,000 $ 130,038 $ 333,333 $ 227,936 $ 1,091,307 Limor Raz, Chief People Officer $ 297,000 $ 110,323 $ 74,250 $ 798,192 $ 1,279,765 Yaron Zaltsman, Chief Financial Officer $ 227,419 $ 77,293 $ 150,000 $ 343,801 $ 798,513 Joshua Tech, Chief Operating Officer $ 380,000 $ 61,069 $ 171,000 $ 90,657 $ 702,726 (1) In accordance with Israeli law, all amounts reported in the table are based on the cost to REE as recorded in our financial statements for the year ended December 31, 2023.

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