Company: GAUZ
Filing Date: 2025-03-11
Form Type: 20-F
Source: 0001213900-25-022437
Chunk: 164

Company: Gauzy Ltd.
Filing Date: 2025-03-11
Form: 20-F
Item: Item 19
Chunk 164
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 liability method, deferred income tax assets and liabilities are determined based on the differences
between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws.
A valuation allowance is recognized to the extent that it is more likely than not that the deferred taxes will not be realized in the
foreseeable future. Given the Company’s losses, the Company has provided a full valuation allowance with respect to its deferred
tax assets.

F-17

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):

  Uncertainty in income tax  

The Company follows a two-step approach
in recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if
the available evidence indicates that it is more likely than not that the position will be sustained based on technical merits. If this
threshold is met, the second step is to measure the tax position as the largest amount that has more than a50% likelihood of being realized
upon ultimate settlement.

  Loss per share  

The Company’s
basic net loss per share is calculated by dividing net loss attributable to ordinary shareholders by the weighted-average number of shares
of ordinary shares outstanding for the period, without consideration of potentially dilutive securities. The diluted net loss per share
is calculated by giving effect to all potentially dilutive securities outstanding for the period using the treasury share method or the
if-converted method based on the nature of such securities. Diluted net loss per share is the same as basic net loss per share in periods
when the effects of potentially dilutive shares of ordinary shares are anti-dilutive.

For periods before
the IPO, the Company computed net loss per share using the two-class method required for participating securities. The two-class method
requires income available to ordinary shareholders for the period to be allocated between ordinary shares and participating securities
based upon their respective rights to receive dividends as if all income for the period had been distributed. The Company considered its
redeemable convertible preferred shares to be participating securities as the holders of the redeemable convertible preferred shares were
entitled to dividends that could have been distributed to the holders of ordinary shares, on a pro-rata basis assuming conversion of all
redeemable convertible preferred shares into ordinary shares. These participating securities did not contractually require the holders
of such