Company: GAUZ
Filing Date: 2025-03-11
Form Type: 20-F
Source: 0001213900-25-022437
Chunk: 48

Company: Gauzy Ltd.
Filing Date: 2025-03-11
Form: 20-F
Item: Item 5
Chunk 48
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 and evolving policies and regulations in the
United States and Europe.

Cost of revenues

Cost of revenues mainly consists
of raw materials used in the production line for our products, shipping and handling costs, salary of headcount related to production,
employee-related expenses and overhead expenses of internal assembly line and service costs. Cost of revenues also consists of royalties
to the Israel Innovation Authority, or the IIA.

Research and development expenses

Research and development
expenses include costs directly attributable to the conduct of research and development programs, including employee-related expenses,
such as salaries and share-based compensation, lab expenses, consumable equipment and consulting fees, and intellectual property expenses,
such as patent application and maintenance expenses. We received royalty-bearing grants, which represents participation of the IIA in
approved programs for research and development. These grants are recognized as a reduction of research and development expenses as the
related costs are incurred.

Research credit tax granted
by the French Government is recognized when the tax credit becomes receivable, provided there is reasonable assurance that Vision Lite
will comply with the conditions attributed to this credit and there is reasonable assurance the credit will be received. The tax credit
is deducted from research and development expenses as the applicable costs are incurred.

We expect to continue to
invest in research and development to enhance our solutions and offerings to our customers, including hiring additional employees and
continuing research and development projects. As a result, we expect that our research and development expenses will continue to increase
in absolute dollars in future periods and vary from period to period as a percentage of revenue.

General and administrative expenses

General and administrative
expenses consist primarily of personnel costs, including share-based compensation related to directors and employees, facility costs,
office space rental costs, external professional service costs, including legal, accounting, audit, finance, business development, investor
relations, and human resource services, and other consulting fees.

We expect that our general
and administrative expenses will continue to increase in absolute dollars in future periods, primarily due to increased headcount to
support anticipated growth in the business and due to incremental costs associated with operating as a public company, including costs
to comply with the rules and regulations applicable to companies listed on a securities exchange and costs related to compliance and
reporting obligations pursuant to the rules and regulations of the SEC and Nasdaq listing standards, public relations, insurance and
professional services.

Sales and marketing expenses

Sales and marketing expenses
include employee-related expenses, such as salaries and share-based compensation, expenses relating to outsourced and contracted services