Exhibit 99.2
GAUZY LTD.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
June 30, 2025
TABLE OF CONTENTS
The amounts are stated in U.S. dollars in thousands except share data
1
GAUZY LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(U.S. dollars in thousands, except share data)
| June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Assets | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Trade receivables, net of allowance for credit losses of $ | ||||||||
| Institutions | ||||||||
| Inventories | ||||||||
| Other current assets | ||||||||
| TOTAL CURRENT ASSETS | ||||||||
NON-CURRENT ASSETS: | ||||||||
| Restricted long term bank deposit | ||||||||
| Restricted investment in marketable securities | ||||||||
| Operating lease right of use assets | ||||||||
| Property and equipment, net | ||||||||
| Other non-current assets | ||||||||
| Intangible assets: | ||||||||
| Customer relationships | ||||||||
| Technology | ||||||||
| Goodwill | ||||||||
| Other intangible asset | ||||||||
| TOTAL NON-CURRENT ASSETS | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
2
GAUZY LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) - (continued)
(U.S. dollars in thousands, except share data)
| June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Liabilities, and shareholder’s equity | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Short-term borrowing and current maturities of bank loan | $ | $ | ||||||
| Short-term loan relating to factoring arrangements | ||||||||
| Trade payables | ||||||||
| Employee related obligations | ||||||||
| Accrued expenses | ||||||||
| Deferred revenues | ||||||||
| Current maturities of operating lease liabilities | ||||||||
| Current maturities of finance lease liabilities | ||||||||
| Warrants and phantom warrants to purchase ordinary shares | ||||||||
| Other current liabilities (including $ | ||||||||
| TOTAL CURRENT LIABILITIES | ||||||||
| LONG-TERM LIABILITIES: | ||||||||
| Long-term debt measured under the fair value option | ||||||||
| Long-term bank loan | ||||||||
| Operating lease liabilities | ||||||||
| Finance lease liabilities | ||||||||
| Long-term employee related obligations | ||||||||
| Employee rights upon retirement | ||||||||
| Other long-term liabilities (including $ | ||||||||
| TOTAL LONG-TERM LIABILITIES | ||||||||
| COMMITMENTS AND CONTINGENT LIABILITIES | ||||||||
| TOTAL LIABILITIES | $ | $ | ||||||
| SHAREHOLDERS’ EQUITY: | ||||||||
| Additional paid-in capital | ||||||||
| Other comprehensive loss | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| TOTAL SHAREHOLDERS’ EQUITY | $ | $ | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | $ | ||||||
| (*) | Following the IPO and as of June 30, 2025, the authorized share capital of the Company is 49,200,191 ordinary shares with no par value |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
GAUZY LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (unaudited)
(U.S. dollars in thousands, except share data)
| Three months ended June 30 | Six months ended June 30 | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| REVENUES | $ | $ | $ | $ | ||||||||||||
| Cost of revenues (exclusive of depreciation and amortization) | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| TOTAL COST OF REVENUES | ||||||||||||||||
| GROSS PROFIT | ||||||||||||||||
| Research and development expenses (exclusive of depreciation and amortization reflected below) | ||||||||||||||||
| General and administrative expenses (exclusive of depreciation and amortization reflected below) | ||||||||||||||||
| Sales and marketing expenses (exclusive of depreciation and amortization reflected below) | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Other expenses (change in fair value of contingent consideration) | ( | ) | ( | ) | ||||||||||||
| TOTAL OPERATING EXPENSES | ||||||||||||||||
| OPERATING LOSS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| OTHER INCOME | ||||||||||||||||
| INTEREST EXPENSES | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| OTHER FINANCIAL INCOME (EXPENSES) | ( | ) | ( | ) | ||||||||||||
| FINANCIAL INCOME (EXPENSES), net (including amount reclassified from OCI reserve) | ( | ) | ( | ) | ( | ) | ||||||||||
| LOSS BEFORE INCOME TAX | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| INCOME TAX | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| LOSS FOR THE PERIOD | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| OTHER COMPREHENSIVE LOSS, net of tax | ||||||||||||||||
| NET ACTUARIAL GAIN (LOSS) | ( | ) | ( | ) | ||||||||||||
| FOREIGN CURRENCY TRANSLATION LOSS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| RECLASSIFICATION OF FAIR VALUE GAIN ON CHANGES OF OWN CREDIT RISK | ||||||||||||||||
| FAIR VALUE GAIN (LOSS) ON CHANGES OF OWN CREDIT RISK | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| TOTAL OTHER COMPREHENSIVE INCOME (LOSS) | ( | ) | ( | ) | ( | ) | ||||||||||
| NET COMPREHENSIVE LOSS | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| LOSS PER SHARE BASIC AND DILUTED | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING USED IN COMPUTATION OF BASIC AND DILUTED LOSS PER SHARE | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
GAUZY LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED SHARES AND SHAREHOLDERS’ EQUITY (CAPITAL DEFICIENCY)
(Unaudited)
(U.S. dollars in thousands, except per share data)
| Ordinary shares | Additional paid-in | Accumulated other comprehensive | Accumulated | Total shareholders’ | ||||||||||||||||||||
| Shares | Amount | capital | Income (loss) | deficit | equity | |||||||||||||||||||
| BALANCE AT JANUARY 1, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| CHANGES DURING THE SIX MONTHS ENDED JUNE 30, 2025 | ||||||||||||||||||||||||
| Exercise of options and warrants | ||||||||||||||||||||||||
| Other comprehensive loss | ( | ) | ( | ) | ||||||||||||||||||||
| Share-based compensation | ||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||
| BALANCE AT JUNE 30, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
GAUZY LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED SHARES AND SHAREHOLDERS’ EQUITY (CAPITAL DEFICIENCY)
(Unaudited) - (continued)
(U.S. dollars in thousands, except per share data)
| Redeemable Convertible Preferred Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Convertible Preferred Shares A | Convertible Preferred Shares B | Convertible
Preferred Shares C | Convertible Preferred Shares D | Ordinary | Additional paid-in | Accumulated other comprehensive | Accumulated | Total capital | ||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | capital | Income (loss) | deficit | deficiency | |||||||||||||||||||||||||||||||||||||||||||
| BALANCE AT JANUARY 1, 2024 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||||
| CHANGES DURING THE SIX MONTHS ENDED JUNE 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Exercise of options and warrants into Ordinary Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Conversion of preferred shares to Ordinary Shares prior IPO | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of Ordinary Shares following initial public offering, net of offering costs | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Classification of warrants to equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Conversion of CLAs to Ordinary Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Conversion of preferred shares to Ordinary Shares following the IPO | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| BALANCE AT JUNE 30, 2024 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
GAUZY LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED SHARES AND SHAREHOLDERS’ EQUITY (CAPITAL DEFICIENCY)
(Unaudited) - (continued)
(U.S. dollars in thousands, except per share data)
| Ordinary shares | Additional paid-in | Accumulated other comprehensive | Accumulated | Total shareholders’ | ||||||||||||||||||||
| Shares | Amount | capital | Income (loss) | deficit | equity | |||||||||||||||||||
| BALANCE AT MARCH 31, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| CHANGES DURING THE THREE MONTHS ENDED JUNE 30, 2025 | ||||||||||||||||||||||||
| Exercise of options and warrants | ||||||||||||||||||||||||
| Other comprehensive loss | ( | ) | ( | ) | ||||||||||||||||||||
| Share-based compensation | ||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||
| BALANCE AT JUNE 30, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| * |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7
GAUZY LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED SHARES AND SHAREHOLDERS’ EQUITY (CAPITAL DEFICIENCY)
(Unaudited) - (continued)
(U.S. dollars in thousands, except per share data)
| Redeemable Convertible Preferred Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Convertible Preferred Shares A | Convertible Preferred Shares B | Convertible Preferred Shares C | Convertible Preferred Shares D | Ordinary
shares | Additional paid-in | Accumulated other comprehensive | Accumulated | Total capital | ||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | capital | Income (loss) | deficit | deficiency | |||||||||||||||||||||||||||||||||||||||||||
| BALANCE AT MARCH 31, 2024 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||||
| CHANGES DURING THE THREE MONTHS ENDED JUNE 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Exercise of options and warrants into Ordinary Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Conversion of preferred shares to Ordinary Shares prior IPO | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of Ordinary Shares following initial public offering, net of offering costs | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Classification of warrants to equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Conversion of CLAs to Ordinary Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Conversion of preferred shares to Ordinary Shares following the IPO | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| BALANCE AT JUNE 30, 2024 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
8
GAUZY LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(U.S. dollars in thousands)
| Six months ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Gain (loss) from sale and sale of property and equipment, net | ( | ) | ||||||
| Unrealized losses (gains) on restricted marketable securities | ( | ) | ||||||
| Share-based compensation | ||||||||
| Earn-out liability Revaluation | ( | ) | ||||||
| Non-cash financial expenses (income) | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Trade receivables | ( | ) | ||||||
| Other current assets | ( | ) | ( | ) | ||||
| Institutions | ( | ) | ||||||
| Inventories | ( | ) | ||||||
| Operating lease assets | ||||||||
| Other non-current assets | ||||||||
| Trade payables | ||||||||
| Accrued expenses | ||||||||
| Payment of Earn-out | ( | ) | ||||||
| Other current liabilities | ( | ) | ( | ) | ||||
| Other long-term liabilities | ( | ) | ||||||
| Employee related obligations | ||||||||
| Employee rights upon retirement | ||||||||
| Deferred revenues | ( | ) | ||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTMENT ACTIVITIES: | ||||||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Proceeds from sale of property and equipment | ||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from initial public offering | ||||||||
| Underwriters’ IPO costs | ( | ) | ||||||
| IPO other costs | ( | ) | ||||||
| Proceeds from loans and warrants under the 2025 Loan Agreement | ||||||||
| Payments in respect of bank borrowings | ( | ) | ( | ) | ||||
| Proceeds from exercise of options into ordinary shares | ||||||||
| Financial lease payments | ( | ) | ( | ) | ||||
| Payments to short-term loan relating to factoring arrangements, net | ( | ) | ( | ) | ||||
| Settlement of Phantom warrants | ( | ) | ( | ) | ||||
| Proceeds from issuance of convertible loans | ||||||||
| Proceeds from long-term debt measured under the fair value option, net | ||||||||
| Repayment of long-term debt measured under the fair value option | ( | ) | ||||||
| Net cash (used in) provided by financing activities | ||||||||
9
GAUZY LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) - (continued)
(U.S. dollars in thousands)
| Six months ended June 30 | ||||||||
| 2025 | 2024 | |||||||
| INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | ( | ) | ||||||
| TRANSLATION ADJUSTMENT ON CASH AND CASH EQUIVALENTS AND RESTRICTED CASH | ( | ) | ||||||
| BALANCE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF THE PERIOD | ||||||||
| BALANCE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF THE PERIOD | $ | $ | ||||||
| RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH REPORTED IN THE CONSOLIDATED BALANCE SHEETS: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| TOTAL CASH, CASH EQUIVALENTS AND RESTRICTED CASH SHOWN IN STATEMENT OF CASH FLOWS | $ | $ | ||||||
| SUPPLEMENTARY INFORMATION ON INVESTING AND FINANCING ACTIVITIES NOT INVOLVING CASH FLOWS: | ||||||||
| Right-of-use assets obtained in exchange for lease obligations: Operating leases | $ | $ | ||||||
| Conversion of preferred share to Ordinary shares | $ | $ | ||||||
| Conversion of CLAs to Ordinary shares | $ | $ | ||||||
| Exercise of warrants | $ | $ | ||||||
| Reclass of warrants to Additional paid in capital | $ | $ | ||||||
| IPO costs | $ | $ | ||||||
| Sale of property and equipment | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
10
GAUZY LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(U.S. dollars in thousands, except share and per share amounts)
| NOTE 1 - | NATURE OF OPERATIONS: |
| a. | Gauzy Ltd. (the “Company”) was incorporated in Israel in 2009. The Company is engaged in the development, manufacturing and supply of technologies for operating and control of complex materials. On June 6, 2024, the Company’s ordinary shares began trading on the NASDAQ Global Market under the symbol “GAUZ”, see Note 1(b). |
The Company has wholly owned subsidiaries in France (“Vision”), the United States of America (the “U.S. Subsidiary”), in Germany (the “German Subsidiary”) and in China (the “Chinese Subsidiary”), and a branch in South Korea which commenced activity in the fourth quarter of 2024.
The Company, Vision and other subsidiaries together defined as - “the Group”.
| b. | Initial Public Offering and Private Placement: |
On June 7, 2024, the Company closed its
initial public offering (IPO), in which it issued and sold
| c. | As of June 30, 2025, the Company had an accumulated deficit of $ |
| d. | In October 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets. Following the attack, Israel’s security cabinet declared war against Hamas and commenced a military campaign against Hamas. In addition, since the commencement of these events, there have been continued hostilities along Israel’s northern border with Lebanon (with the Hezbollah terror organization;), Israel’s southern border with the Gaza Strip (with the Hamas terrorist organization) and on other fronts from various extremist groups in region, such as the Houthis in Yemen and various rebel militia groups in Syria and Iraq. Further, on April 13, 2024, and on October 1, 2024, Iran launched a series of drone and missile strikes against Israel. As of June 30, 2025, a ceasefire agreement has been reached between Israel and Lebanon. In June 2025, Israel launched a preemptive attack on Iran, to which Iran responded with ballistic missile and drone attacks. On June 23, 2025, Israel and Iran agreed to a ceasefire, although there is no assurance that the ceasefire will continue. To date the Company’s operations and financial results have not been materially affected. The Company expects that the current conflict in the Gaza Strip, Lebanon and the security escalation in Israel will not have a material impact on its business results in the short term. However, since this is an event beyond the Company’s control, its continuation or cessation may affect our expectations. The Company continues to monitor its ongoing activities and will make any needed adjustments to ensure continuity of its business, while supporting the safety and well-being of its employees. |
11
GAUZY LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
(U.S. dollars in thousands, except share and per share amounts)
| NOTE 1 - | NATURE OF OPERATIONS (continued): |
| e. | On April 2, 2025, U.S. President Donald Trump signed an executive order imposing new tariffs on imports
from all countries, including Israel. Based on the executive order, Israel and France will be subject to elevated tariffs of |
| NOTE 2 - | SIGNIFICANT ACCOUNTING POLICIES: |
| a. | Basis of presentation |
The accompanying condensed financial statements are unaudited. The unaudited condensed financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”), are stated in U.S. dollars and follow the requirements of the Securities and Exchange Commission (“SEC”) for interim financial reporting. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements as certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted.
The unaudited condensed financial statements have been prepared on the same basis as the audited financial statements. The unaudited condensed financial statements include the accounts of the Company. Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).
In the opinion of management, the unaudited condensed financial statements include all normal and recurring adjustments that are considered necessary for the fair statement of results for the interim periods. The results for the period ended June 30, 2025 are not necessarily indicative of those expected for the year ending December 31, 2025 or for any future period. The condensed balance sheet as of December 31, 2024 included herein was derived from the audited financial statements as of that date but does not include all disclosures required by U.S. GAAP. These unaudited condensed financial statements should be read in conjunction with the Company’s audited financial statements and the related notes thereto for the year ended December 31, 2024, included in the Company’s Annual Report on Form 20F filed with the SEC on March 11, 2025.
The significant accounting policies adopted and used in the preparation of the financial statements are consistent with those of the previous financial year.
| b. | Use of estimates |
In preparing the Company’s consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets, liabilities, equity and disclosure of contingent liabilities and assets at the dates of the financial statements and the reported amounts of revenues and expenses during the reported years. Actual results could differ from those estimates.
| c. | Revenue recognition |
As of June 30, 2025, the Company does not have any contracts for the provision of goods that result in the material contract assets and contract liabilities.
As permitted by ASC 606, the Company does not disclose information on unearned revenue as it generally enters into binding contracts for a period of one year or less.
12
GAUZY LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
(U.S. dollars in thousands, except share and per share amounts)
| NOTE 2 - | SIGNIFICANT ACCOUNTING POLICIES (continued): |
| d. | Concentration of credit risks |
Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash and cash equivalents, restricted cash, bank deposits, marketable securities and accounts receivable. The Company deposits cash and cash equivalents mostly with a single highly rated financial institution. The Company has not experienced any material credit losses in these accounts and does not believe it is exposed to significant credit risk on these instruments.
For the periods
ended June 30, 2025, and December 31, 2024, the Company’s largest customer represented
Recently Adopted Accounting Pronouncements:
| e. | In June 2022, the FASB issued ASU 2022-03 “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. The ASU clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring its fair value. The ASU also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The ASU also introduces new disclosure requirements for equity securities subject to contractual sale restrictions. The Company adopted the ASU on January 1, 2025 and it did not have a material impact on its consolidated financial statement. |
Recently Issued and Not Adopted Accounting Pronouncements:
| f. | In December, 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. The ASU will be effective for fiscal years beginning after December 15, 2025, and allows adoption on a prospective basis, with a retrospective option. The Company is in the process of assessing the impacts and method of adoption. |
In November 2024, the FASB issued ASU No. 2024-03 Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). The ASU improves the disclosures about a public business entity’s expenses and provides more detailed information about the types of expenses in commonly presented expense captions. The amendments require that at each interim and annual reporting period an entity will, inter alia, disclose amounts of purchases of inventory, employee compensation, depreciation and amortization included in each relevant expense caption (such as cost of sales, SG&A and research and development). The ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating this ASU to determine its impact on the Company's disclosures.
In July 2025, the FASB issued ASU 2025-05 “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets”. The ASU introduces a practical expedient for all entities when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606. Under the practical expedient, when developing reasonable and supportable forecast as part of estimating expected credit losses, an entity may assume that current conditions as of the balance sheet date do not change for the remaining life of the asset. The ASU is effective for annual reporting period beginning after December 15, 2025 and interim reporting within those annual reporting periods. Early adoption is permitted in both interim and annual reporting periods. The Company is evaluating the impact of ASU 2025-05 on its consolidated financial statements if it elects to apply the practical expedient.
13
GAUZY LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
(U.S. dollars in thousands, except share and per share amounts)
| NOTE 3 - | OTHER SIGNIFICANT TRANSACTIONS AND AGREEMENTS DURING THE SIX MONTHS ENDED JUNE 30, 2025: |
| a. | In January 2025, the Company paid $ |
| b. | In March 2025, warrants issued in connection with a note purchase agreement that the Company entered into
in January 2024 (see note 16(g) of the 2024 annual financial statements) were replaced and the Company issued an amended and restated
warrant to such note purchasers (hereinafter “amended and restated 2024 Note Purchaser Warrant”). The amended and restated
2024 Note Purchaser Warrant is exercisable for up to an additional of |
Warrants to Ordinary Shares are classified as equity. See Note 2(cc) in the 2024 annual financial statements.
| c. | On April 24, 2025 the Company entered into a loan agreement with an Israeli bank (the “Bank”)
and issued warrants to purchase up to |
| d. | On March 7, 2025, Gauzy GmbH received an approval to a research and development grant relating to its
Suspended Particle Device activity for the years 2020 through 2025. The overall amount expected to be received totaling to $ |
| NOTE 4 - | OPERATING SEGMENTS AND GEOGRAPHICAL INFORMATION: |
The Company operates its business and
reports its financial results in
| a. | Architecture – this segment focuses on sales for both interior and exterior applications for commercial, retail, residential, healthcare and hospitality customers. |
| b. | Automotive – this segment focuses on sales that enable OEMs to incorporate Company’s technology into glass rooftops, side windows and windshields to replace conventional mechanical sun visors and shades. |
| c. | Safety tech – this segment focuses on sales of advanced driver assistance systems for buses, coaches, recreational vehicles and specific vehicles, such as camera and motion sensor systems, smart mirrors and safety doors. |
| d. | Aeronautics - this segment focuses on the sale of shading and cabin management systems in private and commercial aircraft and helicopters. |
14
GAUZY LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
(U.S. dollars in thousands, except share and per share amounts)
| NOTE 4 - | OPERATING SEGMENTS AND GEOGRAPHICAL INFORMATION (continued): |
| For the period of six months ended June 30, 2025 | ||||||||||||||||||||
| Aeronautics | Architecture | Automotive | Safety tech | Total | ||||||||||||||||
| Revenues from external customers | $ | $ | $ | $ | $ | |||||||||||||||
| Intersegment revenues | ||||||||||||||||||||
| Cost of revenue | ||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||
| Gross profit | $ | $ | $ | $ | $ | |||||||||||||||
| For the period of six months ended June 30, 2024 | ||||||||||||||||||||
| Aeronautics | Architecture | Automotive | Safety tech | Total | ||||||||||||||||
| Revenues from external customers | $ | $ | $ | $ | $ | |||||||||||||||
| Intersegment revenues | ||||||||||||||||||||
| Cost of revenue | ||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||
| Gross profit (loss) | $ | $ | $ | ( | ) | $ | $ | |||||||||||||
| For the period of three months ended June 30, 2025 | ||||||||||||||||||||
| Aeronautics | Architecture | Automotive | Safety tech | Total | ||||||||||||||||
| Revenues from external customers | $ | $ | $ | $ | $ | |||||||||||||||
| Intersegment revenues | ||||||||||||||||||||
| Cost of revenue | ||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||
| Gross profit | $ | $ | $ | $ | $ | |||||||||||||||
| For the period of three months ended June 30, 2024 | ||||||||||||||||||||
| Aeronautics | Architecture | Automotive | Safety tech | Total | ||||||||||||||||
| Revenues from external customers | $ | $ | $ | $ | $ | |||||||||||||||
| Intersegment revenues | ||||||||||||||||||||
| Cost of revenue | ||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||
| Gross profit (loss) | $ | $ | $ | ( | ) | $ | $ | |||||||||||||
| For the three months ended, June 30 | For the six months, ended June 30 | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Total revenues for reportable segments | $ | $ | $ | $ | ||||||||||||
| Elimination of intersegment revenues | ( | ) | ( | ) | ( | ) | ||||||||||
| Total consolidated revenues | ||||||||||||||||
| Total reportable segment profit | ||||||||||||||||
| Amounts not allocated to segments: | ||||||||||||||||
| Research and development expenses, net | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Sales and marketing expenses | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Other expenses, net | ( | ) | ( | ) | ||||||||||||
| Consolidated operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income | ||||||||||||||||
| Financial expenses, net | ( | ) | ( | ) | ( | ) | ||||||||||
| Consolidated loss before income taxes | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
15
GAUZY LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
(U.S. dollars in thousands, except share and per share amounts)
| NOTE 4 - | OPERATING SEGMENTS AND GEOGRAPHICAL INFORMATION (continued): |
| f. | Geographical information: |
The following table summarizes revenue by region based on the shipping address of customers:
| For the three months ended June 30 | For the six months ended June 30 | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| United States | $ | $ | $ | $ | ||||||||||||
| Israel | ||||||||||||||||
| France | ||||||||||||||||
| United Kingdom | ||||||||||||||||
| Rest of Europe | ||||||||||||||||
| Asia | ||||||||||||||||
| Rest of world | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| NOTE 5 - | INVENTORIES: |
Inventories consisted of the following:
| June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Finished products | $ | $ | ||||||
| Raw and packaging materials | ||||||||
| Products in process | ||||||||
| $ | $ | |||||||
The Company recorded inventory write-downs
in the amount of $
16
GAUZY LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
(U.S. dollars in thousands, except share and per share amounts)
| NOTE 6 - | FAIR VALUE MEASUREMENTS: |
| a. | Financial instruments measured at fair value on a recurring basis |
The Company’s assets and liabilities that are measured at fair value as of June 30, 2025, and December 31, 2024, are classified in the tables below in one of the six categories described in “Note 2bb – Fair value measurement” in the 2024 annual financial statements:
| June 30, 2025 | ||||||||||||
| Level 1 | Level 3 | Total | ||||||||||
| Financial Assets | ||||||||||||
| RFI Shares | $ | $ | ||||||||||
| Financial Liabilities | ||||||||||||
| Warrants | $ | $ | ||||||||||
| NPAs | $ | $ | ||||||||||
| December 31, 2024 | ||||||||||||
| Level 1 | Level 3 | Total | ||||||||||
| Financial Assets | ||||||||||||
| RFI Shares | $ | $ | ||||||||||
| Financial Liabilities | ||||||||||||
| Warrants and phantom warrants | ||||||||||||
| NPA | $ | $ | ||||||||||
| Six months ended June 30, 2025 | ||||||||
| Warrants* | NPAs | |||||||
| January 1, 2025 | $ | $ | ||||||
| Settlement of Phantom warrants | ( | ) | ||||||
| Issuance | ||||||||
| Change in fair value | ( | ) | ||||||
| June 30, 2025 | $ | $ | ||||||
The following is a roll forward of the fair value of liabilities classified under Level 3
| Six months ended June 30, 2024 | ||||||||||||||||||||||||
| Warrants* | CLAs | NPAs | Facility loans | Earn-out liability | Other | |||||||||||||||||||
| January 1, 2024 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Issuance | ||||||||||||||||||||||||
| Payment | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Conversion to equity | ( | ) | ( | ) | ||||||||||||||||||||
| Reclassification to equity | ( | ) | ||||||||||||||||||||||
| Change in fair value | ( | ) | ( | ) | ||||||||||||||||||||
| June 30, 2024 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| * |
17
GAUZY LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
(U.S. dollars in thousands, except share and per share amounts)
| NOTE 6 - | FAIR VALUE MEASUREMENTS (continued): |
Warrants over ordinary shares
Starting from the closing of the IPO, the Company utilized a Black-Scholes Option Pricing model with Level 3 inputs for the valuation of its liability-classified warrants. Inherent in pricing models are assumptions related to expected share-price volatility, expected life, risk-free interest rate and dividend yield. The underlying stock price input is the closing stock price as of each valuation date and the exercise price is the price as stated in the warrant agreement. The volatility input was determined using the historical volatility of comparable publicly traded companies which operate in a similar industry or compete directly against the Company.
Volatility for each comparable publicly traded company is calculated as the annualized standard deviation of daily continuously compounded returns. The Black-Scholes analysis is performed in a risk-neutral framework, which requires a risk-free rate assumption based upon constant-maturity treasury yields, which are interpolated based on the remaining term of the warrants as of each valuation date.
The following table provides quantitative information regarding Level 3 fair value measurements inputs at their measurement dates:
| June 30, | June 30, | |||||||
| 2025 | 2024 | |||||||
| Exercise price | $ | $ | ||||||
| Share price | $ | $ | ||||||
| Volatility | % | % | ||||||
| Term (years) | ||||||||
| Risk-free interest rate | % | % | ||||||
| Dividend yield | % | % | ||||||
| b. | Financial instruments measured not at fair value on a recurring basis |
Financial instruments not recorded at fair value on a recurring basis include cash and cash equivalents, restricted cash, bank deposits, trade receivables, trade and other payables and short-term borrowings. Due to their nature, their fair value approximates their carrying value.
The fair value of Vision’s bank loans approximates their carrying value.
18
GAUZY LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
(U.S. dollars in thousands, except share and per share amounts)
| NOTE 7 - | SHAREHOLDERS’ EQUITY: |
As of June 30, 2025 and December 31, 2024, the share capital is composed of shares, as follows:
| June 30, 2025 | ||||||||||||
| Authorized | Issued and paid | Carrying Value | ||||||||||
| Ordinary Shares | $ | |||||||||||
| December 31, 2024 | ||||||||||||
| Authorized | Issued
and | Carrying Value | ||||||||||
| Ordinary Shares | $ | |||||||||||
| NOTE 8 - | CONVERTIBLE LOAN AGREEMENTS: |
On
November 8, 2023 the Group entered a Note Purchase Agreement (the “November 2023 NPA”) among Chutzpah Holdings Ltd. a related
party, (the “Purchaser”) as purchaser, administrative agent and collateral agent. Under the November 2023 NPA, the Purchaser
extended a credit facility to the Group in an aggregate principal amount of $
Following the consummation of the IPO, in July 2024, the Group repaid
the November 2023 NPA to the Purchaser totaling $
As of June 30, 2025,
$
During the six months
ending June 30, 2025, the Company incurred interest expense totaling to $
| NOTE 9 - | NONCONVERTIBLE LOANS: |
| a. | In January 2024, the Group entered into a note purchase agreement (hereinafter “2024 NPA”),
with OIC Growth Fund I, L.P. and affiliated funds (hereinafter “2024 Note Purchases”) for a total amount of $ |
Under the 2024 NPA, the Company and its
subsidiaries are subject to various negative and affirmative covenants, which include, among others, the following: (i) limitations on
incurrence of additional financial indebtedness and on grant of liens (subject to certain permitted incurrence of indebtedness); (ii)
limitations on investments in, and formation or acquisition of, additional entities or joint ventures; (iii) limitations on the conduct
of any material activities other than those related to the development, manufacture and marketing of vision and light control technologies
or incidental thereto; (iv) the Company is required to maintain at all times a cash balance of at least $
As of June 30, 2025, and the date of the issuance of these condensed consolidated financial statements, the Company meets the conditions above.
On May 4, 2025, the Company signed an amendment to the 2024 NPA according to which the maturity date of the 2024 NPA was updated to May 1, 2028. Other conditions of the NPA remain unchanged.
19
GAUZY LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
(U.S. dollars in thousands, except share and per share amounts)
| NOTE 9 - | NONCONVERTIBLE LOANS (continued): |
| b. | On April 24, 2025, the Company entered into a loan agreement with an Israeli bank (the “Bank”),
pursuant to which the Bank agreed to provide the Company with a credit facility in the aggregate amount of $ |
The short-term credit
facility bears interest at a rate of Term SOFR (monthly) plus
As of June 30, 2025, and the date of the issuance of these condensed consolidated financial statements, the entire amount of short-term credit facility is available for withdrawal based on the conditions above.
The long-term loan
bears interest at a rate of Term SOFR (quarterly) plus
In connection with
the 2025 Loan Agreement, the Company issued to the Bank warrants to purchase up to
No material transaction costs were incurred in relation to this loan.
The 2025 Loan Agreement contains representations, warranties and other provisions customary for transactions of this nature, including various negative and affirmative covenants.
Key covenants include: not canceling or reducing the 2023 NPA; restrictions on early repayment of the 2024 NPA; and a certain minimum deposit in the bank at all time.
As of June 30, 2025, and the date of the issuance of these condensed consolidated financial statements, the Company meets the conditions above.
In addition, the 2025 Loan Agreement contains events of default customary in such transactions, in each case, may be subject to grace or cure periods as prescribed by the 2025 Loan Agreement.
The amounts owing under the 2025 Loan Agreement, including principal, interest and fees payable to the Bank, are secured by, among other things, a first-ranking floating charge on all of the company’s assets and first-ranking fixed charges on the Company’s goodwill, fixed assets, intellectual property, receivables from the Company’s subsidiaries, Vision Lite SAS, Gauzy USA Inc. and Gauzy GmbH, and its equity interests in these subsidiaries, and Research Frontiers Incorporated.
During the reporting
period the Company drew $
20
GAUZY LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
(U.S. dollars in thousands, except share and per share amounts)
| NOTE 9 - | NONCONVERTIBLE LOANS (continued): |
| c. |
June 30, 2025 | ||||
| Year 1 | $ | |||
| Year 2 | ||||
| Year 3 | ||||
| Year 4 | ||||
| Year 5 and thereafter | ||||
| Total | $ | |||
| NOTE 10 - | NET LOSS PER SHARE ATTRIBUTABLE TO ORDINARY SHAREHOLDERS |
The following table sets forth the computation of basic and diluted net loss per share attributable to ordinary shareholders for the periods presented:
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |||||||||||||
| Numerator: | ||||||||||||||||
| Net loss for the period | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Deemed dividend on issuance of warrants | ( | ) | ||||||||||||||
| Net loss attributable to ordinary shareholders, basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Denominator: | ||||||||||||||||
| Weighted-average shares used in computing net loss per share attributable to ordinary shareholders, basic and diluted | ||||||||||||||||
| Net loss per share attributable to ordinary shareholders, basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
The following instruments were not included in the computation of diluted earnings per share because of their anti-dilutive effect:
For the period ending on June 30, 2025:
| - | Warrants to purchase ordinary shares; |
| - | Share-based compensation; |
For the period ending on June 30, 2024:
| - | Redeemable convertible preferred shares; |
| - | Convertible loan agreements; |
| - | Warrants to purchase ordinary shares; |
| - | Share-based compensation. |
21
GAUZY LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
(U.S. dollars in thousands, except share and per share amounts)
| NOTE 11 - | TRANSACTIONS AND BALANCES WITH RELATED PARTIES: |
Transactions with related parties which are shareholders and directors of the Company:
| a. |
| Six months ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Interest expenses (See Note 8) | $ | $ | ||||||
| Share-based compensation to non-executive directors | $ | $ | ||||||
| b. |
June 30, 2025 | December 31, 2024 | |||||||
| Short-term liabilities - | ||||||||
| Other current liabilities (See Note 8) | $ | $ | ||||||
| Long-term liabilities - | ||||||||
| Other non-current liabilities (See Note 8) | $ | $ | ||||||
| Note 12 - | subsequent events: |
| a. | In July 2025, the Bank provided an additional million loan under the same commercial terms as the
short-term credit facility of $ |
| b. | For receipt of grant after the reporting period see Note 3(d). |
| c. | On July 4, 2025, the United States enacted tax reform legislation through the One Big Beautiful Bill Act, which changes existing U.S. tax laws, including extending or making permanent certain provisions of the Tax Cuts and Jobs Act, repealing certain clean energy initiatives, in addition to other changes. The Company is still in the process of evaluating the impact of this new legislation to provision for income taxes, deferred tax assets, deferred tax liabilities, and to income taxes payable in the period of enactment and will continue to assess the impact the new legislation will have on the consolidated financial statements. |
22