Company: GAUZ
Filing Date: 2025-03-11
Form Type: 20-F
Source: 0001213900-25-022437
Chunk: 166

Company: Gauzy Ltd.
Filing Date: 2025-03-11
Form: 20-F
Item: Item 19
Chunk 166
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 freestanding instruments, the Company first analyzes the provisions of ASC 480 in order to determine whether the instrument
should be classified as a liability, with subsequent changes in fair value recognized in the statements of operations in each period.
If the instrument is not within the scope of ASC 480, the Company further analyzes the provisions of ASC 815-40 in order to determine
whether the instrument should be classified within equity or classified as an asset or liability, with subsequent changes in fair value
recognized in the statements of operations in each period. The Company’s issued financial instruments that were convertible to preferred
shares were in the scope of ASC 480.

Warrants to purchase
Ordinary Shares are not within the scope of ASC 480, and as such the Company further analyzes the provisions of ASC 815-40 in
order to determine whether the contract should be classified within equity or classified as a liability, with subsequent changes in fair
value recognized in the statements of operations in each period.

Under ASC 815-40, contracts that
are not indexed to the Company’s own stock are classified as liabilities recorded at fair value. This liability is subject to re-measurement
at each balance sheet date until the private warrants are exercised or expire, or upon reassessment of classification.

The Company reassesses the classification
of a contract over its own equity under the guidance above at each balance sheet date. If classification changes as a result of events
during the reporting period, the Company reclassifies the contract as of the date of the event that caused the reclassification. When
a contract over own equity is reclassified from a liability to equity, gains or losses recorded to account for the contract at fair value
during the period that the contract was classified as a liability are not reversed, and the contract is marked to fair value immediately
before the reclassification.

Upon the closing of the IPO, warrants
outstanding, other than warrants issued to an Israeli bank, were reclassified to equity (see Note 16). Warrants issued to an Israeli bank
may be settled for cash under certain circumstances and are not indexed to the Company’s equity.

  dd.      Loans and Convertible Loans issued  

Under the Fair Value
Option Subsection of ASC Subtopic 825-10, Financial Instruments - Overall (“ ASC 825”), the Company has an irrevocable
option to designate certain financial assets and financial liabilities at fair value on an instrument-by-instrument basis, with changes
in fair value reported in the statement of operations.