Business Context and Reporting Period
Company: Check-Cap Ltd. (Ticker: MBAI, formerly CHEK)
Filing Type: Form 20-F (Annual Report)
Reporting Period: Fiscal year ended December 31, 2025
Business Overview: Check-Cap is a clinical-stage medical diagnostics company that discontinued its primary C-Scan product development in 2023 due to clinical efficacy challenges. The company is currently in a strategic transition phase, focusing on a pending merger with MBody AI Inc. (an AI robotics company) and the acquisition of Ghost Kitchen franchise rights in New Jersey. The company is incorporated in Israel and listed on the Nasdaq Capital Market.
Key Financial Metrics
| Metric | 2025 (USD) | 2024 (USD) |
|---|---|---|
| Revenue | $0 | $0 |
| Net Income (Loss) | $4.1 million | ($25.1 million) |
| Operating Loss | ($2.4 million) | ($9.5 million) |
| Cash and Cash Equivalents | $2,000 | $0 |
| Short-term Bank Deposits | $217,000 | $265,000 |
| Total Assets | $7.5 million | $0.4 million |
| Total Liabilities | $4.0 million | $1.8 million |
| Shareholders' Equity | $3.4 million | ($1.5 million) |
| Accumulated Deficit | ($165.9 million) | ($170.0 million) |
Note: The 2025 net income is primarily driven by a non-cash credit loss recovery of $6.5 million related to the reinstatement and subsequent conversion of loans to Apollo Technology Capital Corporation into equity.
Material Changes vs. Prior Period
- Profitability Shift: The company reported a net income of $4.1 million in 2025, a significant turnaround from the $25.1 million net loss in 2024. This is attributable to the reversal of a loan impairment and the accounting treatment of a debt-for-equity exchange, rather than operational revenue.
- Asset Composition: Total assets increased from $0.4 million to $7.5 million. This increase is driven by the recognition of a $6.5 million equity investment in Apollo (converted from loans) and a $0.7 million intangible asset from the Ghost Kitchen acquisition.
- Expense Reduction: General and administrative expenses decreased by approximately $7.1 million year-over-year, reflecting continued cost-cutting measures and the cessation of R&D activities.
- Capital Structure: The company issued 1,169,596 ordinary shares in September 2025 as consideration for the Ghost Kitchen acquisition.
Guidance, Outlook, and Risks
Strategic Outlook
- Pending Merger: On September 12, 2025, Check-Cap entered into a merger agreement with MBody AI Inc. The transaction was approved by shareholders on November 14, 2025. Upon closing (expected H1 2026), MBody AI shareholders will own approximately 90% of the combined entity, and Check-Cap shareholders will own approximately 10%. The company name will change to "MBody AI Ltd."
- Financing: In December 2025, the company entered into an Equity Line of Credit (ELOC) with ARC Group International Ltd., committing to purchase up to $30.0 million of ordinary shares over three years.
- Ghost Kitchen: The company acquired exclusive Ghost Kitchen area representative rights in New Jersey to generate near-term revenue.
Material Risks and Contingencies
- Going Concern: Management has concluded that substantial doubt exists regarding the company's ability to continue as a going concern for the next 12 months. Continuity depends on the successful consummation of the MBody AI merger or raising additional capital via the ARC ELOC.
- Merger Uncertainty: The merger is subject to closing conditions, including Nasdaq listing approval. If the merger fails, the company may need to curtail operations or liquidate.
- Apollo Investment Risk: The $6.5 million equity investment in Apollo is illiquid and lacks a readily determinable fair value. If the merger does not close, the underlying loan agreements remain in effect, and recovery of the $16.3 million principal is uncertain.
- Geopolitical Risk: Operations are based in Israel, exposing the company to risks related to regional military conflict and instability.
Key Facts for Investor Verification
- Merger Closing Conditions: Verify the status of Nasdaq listing approval for the combined entity and the satisfaction of all closing conditions for the MBody AI merger.
- ARC ELOC Utilization: Monitor whether the company has drawn down any funds from the $30.0 million ARC ELOC facility to sustain operations.
- Apollo Investment Valuation: Confirm the fair value assessment of the 7.5% equity stake in Apollo, which is currently carried at cost ($6.5 million) under ASC 321.
- Ghost Kitchen Revenue: Assess whether the Ghost Kitchen franchise rights have generated any actual revenue in the post-acquisition period.
- Legal Proceedings: Review the status of the shareholder derivative lawsuit filed in October 2024 and the eviction proceedings regarding the Isfiya facility.