Full Press Release Details
Index to Financial Statements
| Page | |
| Report of Independent Registered Public Accounting Firm (PCAOB Firm ID: 7158) | 2 |
| Financial Statements | |
| Balance Sheets | 4 |
| Statements of Operations | 5 |
| Statements of Stockholders' Equity | 6 |
| Statements of Cash Flows | 7 |
| Notes to Financial Statements | 8 |
| 200 Spectrum Center | |
| Drive, Suite 1300 Irvine, | |
| CA 92618 | |
| (714) 234-5980 | |
| www.bcrgcpas.com |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
To the Shareholders and the Board of Directors
Opinion on the Financial Statements
We have audited the accompanying balance
sheets of MBody AI Corp. (the "Company") as of December 31, 2025 and 2024, and the related statements of operations, stockholders'
equity, and cash flows for the year ended December 31, 2025 and for the period from October 7, 2024 (date of formation) to December 31,
2024, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements
present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its
operations and its cash flows for the year ended December 31, 2025 and for the period from October 7, 2024 (date of formation) to December
31, 2024, in conformity with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB")
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's
internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
Revenue Recognition for Customer Subscription
The Company accounts for certain customer subscription
arrangements as sales-type leases under ASC 842, resulting in the recognition of net investment in lease arrangements and upfront recognition
of selling profit upon commencement of the arrangements. As of December 31, 2025, the Company recognized significant balances related
to net investment in customer subscription arrangements and related subscription contract revenue. Auditing management's accounting
for these arrangements involved especially challenging and subjective auditor judgment due to the complexity of evaluating lease classification
under ASC 842, including assessment of whether the arrangements met the criteria for sales-type lease accounting, determination of the
present value of future contractual payments, and evaluation of the timing and amount of revenue recognized at commencement.
The principal considerations for our determination
that auditing revenue recognition related to customer subscription arrangements was a critical audit matter included the significant judgment
involved in evaluating management's application of ASC 842 to the arrangements, the assumptions utilized in determining the present
value of future payments, and the assessment of the related accounting treatment and disclosures.
Our audit procedures related to this matter included,
Assessing the reasonableness of significant assumptions utilized
by management; and Evaluating the adequacy of related financial statement disclosures.
BCRG Group (PCAOB ID 7158)
We have served as the Company's auditor
| December 31, | December 31, | |||||||||||
| Note | 2025 | 2024 | ||||||||||
| ASSETS | ||||||||||||
| Current Assets: | ||||||||||||
| Cash and cash equivalents | 2 | $ | 799,468 | $ | 94,333 | |||||||
| Inventories, net | 5 | - | 75,934 | |||||||||
| Loan to related party | 11 | 16,000 | - | |||||||||
| Net investment in customer subscription contracts - current | 4 | 824,841 | - | |||||||||
| Other current assets | - | 14,673 | ||||||||||
| Total current assets | 1,640,309 | 184,940 | ||||||||||
| Non-current Assets: | ||||||||||||
| Net investment in customer subscription contracts - non-current | 4 | 1,260,334 | - | |||||||||
| Property, plant and equipment, net | 6 | 545,985 | - | |||||||||
| Total non-current assets | 1,806,319 | - | ||||||||||
| Total assets | $ | 3,446,628 | $ | 184,940 | ||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||
| Current Liabilities: | ||||||||||||
| Trade payables | 139,046 | - | ||||||||||
| Accrued expenses | 259,571 | 290 | ||||||||||
| Loans payable to shareholders and related parties | 7 | 416,000 | 183,202 | |||||||||
| Total current liabilities | 814,617 | 183,492 | ||||||||||
| Non-current Liabilities: | ||||||||||||
| Deferred tax liability | 8 | 43,626 | - | |||||||||
| Total non-current liabilities | 43,626 | - | ||||||||||
| Total liabilities | 858,243 | 183,492 | ||||||||||
| Commitments and contingencies | ||||||||||||
| Stockholders' equity | ||||||||||||
| Common Stock - $0.00001 par value; 200,000,000 authorized shares; 153,366,667 shares and 35,900,000 shares issued and outstanding as of December 31, 2025 and 2024, respectively | 9 | 1,534 | 359 | |||||||||
| Additional paid-in-capital | 9 | 2,077,911 | - | |||||||||
| Accumulated retained earnings | 9 | 508,940 | 1,089 | |||||||||
| Total stockholders' equity | 2,588,385 | 1,448 | ||||||||||
| Total liabilities and stockholders' equity | $ | 3,446,628 | $ | 184,940 |
The accompanying footnotes are an integral part
of these financial statements.
Statements of Operations
| From | ||||||||||||
| October 7, 2024 | ||||||||||||
| Year Ended | (Date of formation) to | |||||||||||
| December 31, | December 31, | |||||||||||
| Note | 2025 | 2024 | ||||||||||
| Net Revenue | ||||||||||||
| Customer subscription contract revenue | 4 | $ | 2,209,792 | $ | - | |||||||
| Subscription interest income | 4 | 65,542 | - | |||||||||
| Product sales | 3 | 73,655 | 47,940 | |||||||||
| Services | 3 | 51,474 | - | |||||||||
| Other interest income | 19 | - | ||||||||||
| Total net revenue | 2,400,482 | 47,940 | ||||||||||
| Cost of Revenue | ||||||||||||
| Cost of revenue | 1,046,065 | 45,450 | ||||||||||
| Total cost of sales | 1,046,065 | 45,450 | ||||||||||
| Gross profit | 1,354,417 | 2,490 | ||||||||||
| Operating expenses: | ||||||||||||
| Selling, general and administrative expenses | 721,459 | 1,111 | ||||||||||
| Depreciation | 6 | 69,097 | - | |||||||||
| Interest expense | 7 | 12,384 | - | |||||||||
| Total operating expenses | 802,940 | 1,111 | ||||||||||
| Income before income tax provision | 551,477 | 1,379 | ||||||||||
| Income tax provision | 8 | 43,626 | 290 | |||||||||
| Net income | $ | 507,851 | $ | 1,089 | ||||||||
| Earnings Per Share: | ||||||||||||
| Net income (loss) per common share - basic and diluted | 10 | $ | 0.0034 | $ | 0.0000 | |||||||
| Weighted average number of common shares | 10 | 150,346,911 | 35,900,000 |
The accompanying footnotes are an integral part
of these financial statements.
Statement of Stockholders' Equity
| Additional | Retained | |||||||||||||||||||||||
| Common Stock | Paid-in | Earnings | Total | |||||||||||||||||||||
| Note | # of Shares | Amount | Capital | (Deficit) | Equity | |||||||||||||||||||
| Balance - October 7, 2024 (date of formation) | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||
| Shares issued at formation | 9 | 35,900,000 | 359 | - | - | 359 | ||||||||||||||||||
| Net income | - | - | - | 1,089 | 1,089 | |||||||||||||||||||
| Balance - December 31, 2024 | 35,900,000 | 359 | - | 1,089 | 1,448 | |||||||||||||||||||
| Shares issued for cash | 9 | 117,466,667 | 1,175 | 2,077,911 | - | 2,079,086 | ||||||||||||||||||
| Net income | - | - | - | 507,851 | 507,851 | |||||||||||||||||||
| Balance - December 31, 2025 | 153,366,667 | $ | 1,534 | $ | 2,077,911 | $ | 508,940 | $ | 2,588,385 |
The accompanying footnotes are an integral part
of these financial statements.
Statements of Cash Flows
| From | ||||||||||||
| October 7, 2024 | ||||||||||||
| Year Ended | (Date of formation) to | |||||||||||
| December 31, | December 31, | |||||||||||
| Note | 2025 | 2024 | ||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net income | $ | 507,851 | $ | 1,089 | ||||||||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||||||
| Depreciation | 6 | 69,097 | - | |||||||||
| Deferred income tax expense | 8 | 43,626 | - | |||||||||
| Customer subscription contract selling profit recognized at commencement | 4 | (1,163,727 | ) | - | ||||||||
| Standard-cost variance disposition (non-cash) | (46,395 | ) | ||||||||||
| Subscription interest income on net investment in customer subscription contracts | 4 | (65,542 | ) | - | ||||||||
| Cash paid for inventory for customer subscription contracts equipment | 5 | (617,000 | ) | - | ||||||||
| Changes in assets and liabilities: | ||||||||||||
| Decrease in inventories | 5 | 75,934 | (75,934 | ) | ||||||||
| Decrease in vendor deposits | 14,673 | (14,673 | ) | |||||||||
| Cash collected on subscription receivables | 4 | 190,159 | - | |||||||||
| Increase in accrued liabilities and other payables | 398,327 | 290 | ||||||||||
| Net cash used in operating activities | (592,997 | ) | (89,228 | ) | ||||||||
| Cash flows from investing activities: | ||||||||||||
| Purchase of property and equipment | 6 | (599,582 | ) | - | ||||||||
| Purchase of vehicles | 6 | (15,500 | ) | - | ||||||||
| Loan advanced to related party | 11 | (16,000 | ) | - | ||||||||
| Cash returned by procurement agent | 6 | 17,330 | - | |||||||||
| Net cash used in investing activities | (613,752 | ) | - | |||||||||
| Cash flows from financing activities: | ||||||||||||
| Proceeds from issuance of common stock | 9 | 2,079,086 | 359 | |||||||||
| Net repayments to shareholders/related parties | 7 | (167,202 | ) | 183,202 | ||||||||
| Net cash provided by financing activities | 1,911,884 | 183,561 | ||||||||||
| Net increase in cash and cash equivalents | 705,135 | 94,333 | ||||||||||
| Cash and cash equivalents, beginning of period | 94,333 | - | ||||||||||
| Cash and cash equivalents, end of period | $ | 799,468 | $ | 94,333 | ||||||||
| Supplemental disclosures of cash flow information | ||||||||||||
| Cash paid during the periods for: | ||||||||||||
| Interest | $ | - | $ | - | ||||||||
| Income taxes | $ | - | $ | - |
The accompanying footnotes are an integral part
of these financial statements.
Notes to Financial Statements
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
MBody AI Corp. (the "Company") is
a corporation organized under the laws of the State of Nevada on October 7, 2024. The Company's functional and reporting currency
is the U.S. dollar. The Company's legal headquarters and principal place of business is 9205 West Russell Road, Building 3, Suite
240, Las Vegas, NV 89148.
These financial statements are presented on a
single-entity basis and the term "consolidated" is not used. In anticipation of the proposed merger with Check-Cap Ltd., pro-form
combined financial information will be presented separately under Article 11 of SEC Regulation S-X as part of the relevant SEC filings;
that pro-forma information is not included in these financial statements.
The Company is a Nevada-based artificial intelligence
technology company that designs, integrates, and manages AI-enabled robotic and software systems for large commercial environments such
as hotels, casinos, convention centers, and other high-traffic facilities. The Company's core business model combines artificial
intelligence software, robotic automation, and data analytics to deliver an operational efficiency solution to clients in the hospitality,
property management, and commercial cleaning industries.
Historically, the Company operated under a hardware
leasing model, purchasing robotic equipment from suppliers and deploying them at customer sites under multi-year customer subscription
agreements. Beginning in 2025, the Company commenced a strategic transition toward a software-as-a-service (SaaS) and AI-platform subscription
model, emphasizing recurring, high-margin software revenues over hardware ownership. Under this evolving model, MBody AI provides customers
with continuous access to its proprietary software platform and AI-driven analytics suite that powers, monitors, and optimizes robotic
systems deployed at customer sites. The Company's December 31, 2025 results continue to reflect a mix of legacy lease-based contracts
accounted for as customer subscription contracts with sales-type contract components and emerging SaaS / AI-service contracts accounted
for under the revenue standard.
MBody AI operates primarily in the United States
but maintains supplier relationships internationally for the sourcing of robotic hardware. The Company's customers are primarily
large-scale hospitality groups and other enterprise clients pursuing technology-driven operational automation.
On September 12, 2025, the Company entered into
an Agreement and Plan of Merger with Check-Cap Ltd. ("Check-Cap"), a public company organized under the laws of Israel and
listed on the Nasdaq Capital Market under ticker symbol "MBAI" (rebranded by Check-Cap in advance of the merger), pursuant
to which the Company will become a wholly owned subsidiary of Check-Cap. For accounting purposes, the Company is the accounting acquirer
in the merger. Check-Cap shareholders approved the merger in November 2025. The transaction had not been consummated as of December 31,
2025 or as of the date these financial statements were available to be issued; the merger remains subject to satisfaction of the remaining
closing conditions and closing is expected to occur before the end of June 2026. The Company therefore remains a private company through
the date these financial statements were available to be issued and these financial statements have been prepared on a stand-alone (single-entity)
basis under U.S. GAAP applicable to a private company.
Notes to Financial Statements
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Preparation