Company: NCEL
Filing Date: 2025-05-16
Form Type: 20-F
Source: 0001213900-25-044868
Chunk: 355

Company: NewcelX Ltd.
Filing Date: 2025-05-16
Form: 20-F
Item: Item 19
Chunk 355
---
 Topic 606 and the related amendments, Revenue from Contracts
with Customers, the Company recognizes revenue when control of promised goods or services is transferred to the customer. The five-step
model is applied, which includes identifying performance obligations, determining the transaction price, allocating the transaction price,
and recognizing revenue when obligations are satisfied. Performance obligations are distinct when the customer can benefit from them independently,
and the Company evaluates the distinctiveness considering factors such as intellectual property development and customer capabilities.

Variable consideration is estimated based on the
likelihood of achievement, with constrained amounts included only if a significant reversal is unlikely. Transaction prices are allocated
to performance obligations based on stand-alone selling prices, which may require judgment and references to comparable transactions,
clinical trial probabilities, and expected option exercises.

Revenue from development and regulatory milestones
is recognized under the most likely amount method, subject to the constraint that revenue is only recognized when it is probable that
a significant reversal will not occur. Milestones tied to regulatory approvals or other external conditions are not considered probable
until those conditions are met. At each reporting period, the Company reassesses the likelihood of milestone achievement and adjusts the
transaction price as necessary. Any adjustments are recorded on a cumulative catch-up basis, impacting license revenues in the period
of adjustment.

F-12

Sales-based royalties are recognized when the
related sales occur or when the performance obligation is satisfied. Deferred revenue is recorded when payments exceed recognized revenue,
including non-refundable payments.

As of December 31, 2024, the Company recognized
$2.5million from its exclusive license agreement (the “ EF License Agreement”) as Other income due to the termination of the
EF License Agreement. The amount represents a non-refundable upfront payment, which was retained by the Company after the early termination
of the EF License Agreement, and falls outside the scope of ASC 606. See Note 7 for further details.

Research and Development

Costs for R& D of products, including vendor
expenses and supplies and consultant fees, are expensed as incurred. Clinical trial and other development costs incurred by third parties
are expensed as the contracted work is performed. Where contingent milestone payments are due to third parties under research and development
arrangements, the obligations are recorded when the milestone results are probable of being achieved.

Fair Value Measurements

The Company measures and discloses fair value
in accordance with ASC 820, “ Fair Value,”which defines fair value, establishes a framework and gives guidance regarding
the methods used for measuring fair