Company: GAUZ
Filing Date: 2025-03-11
Form Type: 20-F
Source: 0001213900-25-022437
Chunk: 59

Company: Gauzy Ltd.
Filing Date: 2025-03-11
Form: 20-F
Item: Item 5
Chunk 59
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 income of such sale transaction as part of the royalty
payment obligation). In such case, the acquiring company would have to assume all of the applicable restrictions and obligations towards
the IIA (including the restrictions on the transfer of know-how and manufacturing outside of Israel) as a condition to the
IIA’s approval.

The restrictions under the
Innovation Law, including restrictions on the transfer of IIA-funded know-how and manufacturing outside of Israel, continue to apply
even after the payment of the full amount of royalties in respect of grants. However, upon payment of the redemption fee on a transfer
of IIA-funded know-how outside Israel, the obligations towards the IIA (including the obligation to pay royalties) and restrictions under
the Innovation Law cease to apply.

We cannot be certain that
any approval of the IIA will be obtained on terms that are acceptable to us, or at all. We may not receive the required approvals should
we wish to transfer IIA-funded know-how and/or manufacture products developed with IIA-funded know-how outside of Israel
in the future. Furthermore, in the event that we undertake a transaction involving the transfer to a non-Israeli entity of IIA-funded know-how pursuant
to a merger or similar transaction, the consideration available to our shareholders may be reduced by the amounts we are required to
pay to the IIA. If we fail to satisfy the conditions of the Innovation Law, we may be required to refund the amounts of the grants previously
received, together with interest and penalties, and may become subject to criminal charges.

Indebtedness

Israeli Bank Loans

During 2020, we entered into
a loan agreement with an Israeli bank in the amount of $0.5 million, or the 2020 Loan. The annual interest rate was Libor + 10.5%
and the loan was to be repaid in 30 monthly payments beginning in March 2021. As part of the terms of the loan, we issued to the
bank warrants to purchase 4,180 series C preferred shares at an exercise price of $14.35 per share and exercisable for eight years
commencing from the date of the loan.

On October 19, 2021,
we entered into an additional loan facility agreement with an Israeli bank, pursuant to which we borrowed an aggregate loan amount of
$3 million, which bore interest at a rate of 4.2% per annum, or the 2021 Loan. As part of the terms of the