Company: GAUZ
Filing Date: 2025-03-11
Form Type: 20-F
Source: 0001213900-25-022437
Chunk: 165

Company: Gauzy Ltd.
Filing Date: 2025-03-11
Form: 20-F
Item: Item 19
Chunk 165
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 shares to participate in the Company’s losses. As such, net loss for the periods presented prior to IPO was not allocated
to the Company’s participating securities.

  aa.      Comprehensive loss  

Comprehensive loss
includes currency translation adjustments, net actuarial gain (loss) on employee benefit obligations and changes in fair value of certain
financial liabilities attributed to own credit risk.

  bb.      Fair value measurement  

Fair value is based
on the price that would be received from the sale of an asset or that would be paid to transfer a liability in an orderly transaction
between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, the
guidance establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three
broad levels, which are described as follows:

  Level 1:      Quoted prices (unadjusted) in active markets that are accessible                                                           

  Level 2:      Observable prices that are based on inputs not quoted on                                                              

  Level 3:      Unobservable inputs are used when little or no market data                           

In determining fair
value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs
to the extent possible and considers counterparty credit risk in its assessment of fair value.

F-18

GAUZY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(U. S. dollars in thousands, except share and per
share amounts)

NOTE 2 -
SIGNIFICANT ACCOUNTING POLICIES(continued):

  cc.      Financial instruments issued  

When the Company
issued preferred shares, it considered the provisions of ASC 480, Distinguishing Liabilities from Equity (“ ASC 480”)
in order to determine whether the preferred share should be classified as a liability. If the instrument was not within the scope of ASC
480, the Company further analyzed the instrument’s characteristics in order to determine whether it should be classified within
temporary equity (mezzanine) or within permanent equity in accordance with the provisions of ASC 480-10-S99. The Company’s redeemable
convertible preferred shares were not mandatorily or currently redeemable. However, they included a liquidation or Deemed Liquidation
events that would constitute a redemption event that is outside of the Company’s control. As such, all shares of redeemable preferred
shares had been presented outside of permanent equity.

When the Company
issues other