Company: NCEL
Filing Date: 2025-05-16
Form Type: 20-F
Source: 0001213900-25-044868
Chunk: 50

Company: NewcelX Ltd.
Filing Date: 2025-05-16
Form: 20-F
Item: Item 3
Chunk 50
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 on a timely basis, and be subject
to fines, penalties, investigations or judgements, all of which could negatively affect investor confidence and adversely impact our stock
price.

As of December 31, 2024, we
have material weaknesses in our internal control over financial reporting, relating to a lack of sufficient number of trained professionals
with an appropriate level of accounting knowledge to design and maintain controls over the preparation of financial statements, and relating
to a lack of maintaining appropriate segregation of duties.

During the year ended December
31, 2024, we have taken steps to remediate the material weaknesses and to strengthen our internal control over financial reporting. We
conducted an analysis to identify the underlying reasons for the material weaknesses. This involved assessing risk factors, understanding
process gaps, and pinpointing areas that needed improvement. As part of our remediation, we have transitioned the accounting processes
to a dedicated team with U. S. GAAP and SEC reporting knowledge, with the support of additional external advisors. While we believe that
these efforts will improve our internal control over financial reporting in accordance with U. S. GAAP and SEC reporting requirements,
the implementation of these measures is ongoing and will require validation and testing of the design and operating effectiveness of internal
controls over a sustained period of financial reporting cycles. We cannot assure you that the measures we have taken to date, and are
continuing to implement, will be sufficient to establish and maintain effective internal control over financial reporting.

The Warrants we have issued are speculative
in nature.

The Warrants we have offered
and sold do not confer any rights of common share ownership on their holders, such as voting rights or the right to receive dividends,
but rather merely represent the right to acquire common shares at a fixed price for a limited period of time. Specifically, holders of
the Warrants we have issued may exercise their right to acquire the common shares and pay an exercise price per common share as contemplated
in such holder’s Warrant, prior to five years from the date of issuance, after which date any unexercised Warrants will expire and
have no further value.

If we were to be characterized as a “passive
foreign investment company” for U. S. tax purposes, U. S. holders of our common shares and Warrants could have adverse U. S. income
tax consequences.

In general, we will be treated
as a passive foreign investment company, or a PFIC, for U. S. federal income tax