Company: GAUZ
Filing Date: 2025-03-11
Form Type: 20-F
Source: 0001213900-25-022437
Chunk: 167

Company: Gauzy Ltd.
Filing Date: 2025-03-11
Form: 20-F
Item: Item 19
Chunk 167
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 Changes in fair value do not include accrued interest on debt instruments. Any
changes in the fair value of liabilities resulting from changes in instrument-specific credit risk are reported in other comprehensive
loss. The Company separately measures changes attributed to instrument-specific credit risk by calculating the difference between the
overall change in the fair value of the instrument and the change attributed to fluctuations in the relevant risk-free benchmark rate.

The Company elected the fair value option for its CLAs and for its
NPA, as defined in Note 15. The Company also elected the fair value option for its Facility Loans and 2024 NPA, see Note 9.

  ee.      Debt modifications  

When the Company
modifies the terms of its debt, it determines whether to account for these modifications as troubled debt restructuring. For modifications
that are not trouble debt restructuring, it goes on to determine whether to account for these modifications as debt modifications or
debt extinguishments. As part of the assessment, the Company determines whether the amended terms are substantially different, defined
as the present value of the remaining cash flows after amendment differ by at least10% of those prior to the amendment.

F-19

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):

  ff.      Contingent consideration for business combination  

Contingent consideration
incurred in a business combination is included as part of the acquisition price and recorded at a probability weighted assessment of its
fair value as of the acquisition date. The fair value of the contingent consideration is re-measured at each reporting period, with any
adjustments in fair value recognized in earnings under other assets impairments, restructuring and other items.

  gg.      Share split  

On May 28, 2024,
the board of directors approved a forward share split (the “ Share Split”), that was approved by the shareholders and became
effective on May 28, 2024. The Share Split results in a four point four -for-one (4.390914:1) share split of the Company’s
Preferred and Ordinary shares. No fractional shares were issued in connection with the Share Split. These financial statements have been
adjusted retrospectively for the Share Split.

  hh.      Newly issued and recently adopted accounting pronouncements:  

The Company qualifies
as an emerging growth company (“ EGC”) as defined