Check-Cap Ltd. (CHEK) - Form 20-F Summary
Business Context and Reporting Period
Company: Check-Cap Ltd.
Reporting Period: Fiscal Year Ended December 31, 2024
Business Overview: Check-Cap is a clinical-stage medical diagnostics company formerly developing C-Scan, a non-invasive capsule-based screening test for colorectal cancer (CRC). As of June 2023, the Company discontinued its calibration studies and the powered portion of its U.S. pivotal study due to efficacy results not meeting goals. Operations have shifted to evaluating strategic options and preserving cash.
Current Status: The Company is pursuing a business combination with Apollo Technology Capital Corporation (formerly Nobul AI Corp.) ("Nobul"). If consummated, Check-Cap will become a private subsidiary of Nobul and delist from Nasdaq.
Key Financial Metrics
| Metric (USD in thousands) | 2024 | 2023 | 2022 |
|---|---|---|---|
| Revenue | $0 | $0 | $0 |
| Net Loss | $(25,149) | $(17,568) | $(19,108) |
| Operating Loss | $(25,949) | $(19,287) | $(20,034) |
| Research & Development Expenses | $0 | $8,311 | $14,271 |
| General & Administrative Expenses | $9,462 | $9,550 | $5,763 |
| Impairment of Loans Receivable | $16,487 | $0 | $0 |
| Cash and Cash Equivalents (Year End) | $0 | $8,844 | $4,090 |
| Short-Term Bank Deposits (Year End) | $265 | $15,912 | $352 |
| Accumulated Deficit | $(170,010) | $(144,861) | $(127,293) |
Material Changes vs. Prior Period
- Net Loss Increase: Net loss increased by approximately $7.6 million (43%) from 2023 to 2024. This was primarily driven by a $16.5 million impairment charge on loans receivable provided to Nobul, partially offset by the elimination of R&D expenses.
- Cessation of R&D: Research and development expenses dropped to $0 in 2024 from $8.3 million in 2023, reflecting the discontinuation of clinical studies and significant workforce reduction.
- Liquidity Depletion: Cash and cash equivalents decreased from $8.8 million in 2023 to $0 in 2024. Short-term bank deposits decreased from $15.9 million to $0.3 million.
- Loan Impairment: The Company provided approximately $16.3 million in loans to Nobul in connection with the Business Combination Agreement. Due to significant uncertainty regarding recoverability, management fully impaired these receivables in 2024.
Guidance, Outlook, and Risks
- Going Concern: Management has concluded that substantial doubt exists regarding the Company's ability to continue as a going concern for one year from the issuance of the financial statements. The Company requires additional financing or the consummation of the Nobul Business Combination to continue operations.
- Business Combination: The Company is in a business combination agreement with Nobul. Check-Cap shareholders are expected to own approximately 15% of the combined entity. The transaction is subject to shareholder approval and other conditions.
- Nasdaq Compliance: The Company received notice from Nasdaq in April 2025 regarding non-compliance with the Minimum Bid Price Requirement (stock price below $1.00 for 30 consecutive days). A compliance period was granted until October 6, 2025. Additionally, the Company received a delinquency letter in May 2025 for failure to file the 2024 Form 20-F on time, though an extension was granted to file by August 31, 2025.
- Legal Proceedings:
- Derivative Action: A derivative claim was filed in October 2024 against directors and Nobul regarding corporate governance and the Nobul transaction (approx. $690,000).
- Lease Dispute: The Company ceased rent payments in September 2024. The landlord filed an eviction complaint in June 2025 claiming approx. $60,000 in unpaid rent and damages.
- Internal Controls: Management identified a material weakness in internal control over financial reporting due to staffing reductions and inadequate segregation of duties.
Investor Verification Checklist
- Going Concern Status: Verify the Company's ability to secure funding or close the Nobul deal to avoid liquidation.
- Nobul Loan Recoverability: Assess the likelihood of recovering the $16.3 million impaired loans to Nobul, which are contingent on the Business Combination closing.
- Nasdaq Delisting Risk: Monitor the stock price to ensure it meets the $1.00 minimum bid price requirement to avoid delisting.
- Legal Liabilities: Review the status of the derivative lawsuit and the lease eviction proceedings for potential financial impact.
- Business Combination Terms: Confirm the final exchange ratio and ownership percentage for Check-Cap shareholders in the combined Nobul entity.