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Consolidated Unaudited Financial Statements
of and for the six months ended June 30, 2025.
| Unaudited Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024 | 1 |
| Unaudited Consolidated Statements of Operations for the Six Months Ended June 30, 2025 and 2024 | 2 |
| Unaudited Consolidated Statements of Stockholders' Equity (Deficit) for the Six Months Ended June 30, 2025 and 2024 | 3 |
| Unaudited Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024 | 4 |
| Notes to Unaudited Consolidated Financial Statements | 5 |
CONSOLIDATED UNAUDITED BALANCE SHEETS
(U.S. dollars in thousands, except share and
| (Unaudited) June 30, 2025 | December 31, 2024 | |||||||
| Unaudited | Audited | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and Cash Equivalent | $ | 1,155 | $ | - | ||||
| Short-term Bank Deposit | 261 | 265 | ||||||
| Total current assets | $ | 1,416 | $ | 265 | ||||
| Non-current assets | ||||||||
| Investments | 4,278 | - | ||||||
| Property and equipment, net | - | - | ||||||
| Right of Use Assets | 70 | 112 | ||||||
| Total non-current assets | $ | 4,348 | $ | 112 | ||||
| Total assets | $ | 5,764 | $ | 377 | ||||
| Liabilities and shareholders' equity | ||||||||
| Current liabilities | ||||||||
| Accounts Payable | ||||||||
| Trade | $ | 674 | $ | 492 | ||||
| Other | 782 | 793 | ||||||
| Employees and payroll accruals | 406 | 406 | ||||||
| Operating lease liabilities - current | 123 | 120 | ||||||
| Total current liabilities | $ | 1,985 | $ | 1,811 | ||||
| Operating lease liabilities - non-current | 16 | 16 | ||||||
| Total non-current liabilities | $ | 16 | $ | 16 | ||||
| Total liabilities | $ | 2,001 | $ | 1,827 | ||||
| Shareholders' (Deficit) Equity | ||||||||
| Share Capital, Ordinary shares 48 NIS par value ( 18,000,000 authorized shares as of June 30, 2025, and December 31, 2024; 5,850,906 shares issued and outstanding as of June 30, 2025, and December 31, 2024) | 83,751 | 83,751 | ||||||
| Additional Paid-in Capital | 84,809 | 84,809 | ||||||
| Retained Earnings | ( 164,797 | ) | ( 170,010 | ) | ||||
| Total shareholders' (deficit) equity | $ | 3,763 | $ | ( 1,450 | ) | |||
| Total liabilities and shareholders' equity | $ | 5,764 | $ | 377 |
See accompanying notes to unaudited consolidated financial statements.
CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except share and
| (Unaudited) Six months ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Research and development expenses, net | $ | - | $ | 335 | ||||
| General and administrative expenses | 1,330 | 6,484 | ||||||
| Impairment of loans receivable | - | - | ||||||
| Impairment of fixed assets | - | - | ||||||
| Operating income (loss) | ( 1,330 | ) | ( 6,819 | ) | ||||
| Other income (expense): | ||||||||
| Income on Debt Extinguishment and Conversion | 6,525 | - | ||||||
| Finance Income, net | 18 | 507 | ||||||
| Income (loss) before income tax | $ | 5,213 | $ | ( 6,312 | ) | |||
| Net income (loss) for the period | $ | 5,213 | $ | ( 6,312 | ) | |||
| Income/(loss) per share: | ||||||||
| Net income (loss) per ordinary share - basic and diluted | $ | 0.89 | $ | ( 1.08 | ) | |||
| Weighted average number of ordinary shares outstanding - basic and diluted | 5,850,906 | 5,850,799 |
See accompanying notes to unaudited consolidated
financial statements.
CONSOLIDATED UNAUDITED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY
(U.S. dollars in thousands, except share and
| Number of Ordinary Shares | Amount | Additional paid-in capital | Accumulated deficit | Total Shareholders' Equity | ||||||||||||||||
| Balance as of January 1, 2025 | 5,850,906 | $ | 83,751 | $ | 84,809 | $ | ( 170,010 | ) | $ | ( 1,450 | ) | |||||||||
| RSU vesting | - | - | - | - | - | |||||||||||||||
| Share-based compensation | - | - | - | - | - | |||||||||||||||
| Net gain | - | - | - | 5,213 | 5,213 | |||||||||||||||
| Balance as of June 30, 2025 (unaudited) | 5,850,906 | $ | 83,751 | $ | 84,809 | $ | ( 164,797 | ) | $ | 3,763 | ||||||||||
| Balance as of January 1, 2024 | 5,850,555 | $ | 83,746 | $ | 84,802 | $ | ( 144,861 | ) | $ | 23,687 | ||||||||||
| RSU vesting | 487 | 7 | ( 7 | ) | - | - | ||||||||||||||
| Share-based compensation | - | - | ( 198 | ) | - | ( 198 | ) | |||||||||||||
| Net loss | - | - | - | ( 6,312 | ) | ( 6,312 | ) | |||||||||||||
| Balance as of June 30, 2024 (unaudited) | 5,851,042 | $ | 83,753 | $ | 84,597 | $ | ( 151,173 | ) | $ | 17,177 |
See accompanying notes to unaudited consolidated
financial statements.
CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS
(U.S. dollars in thousands, except share and
| (Unaudited) Six months ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net Income/(Loss) | $ | 5,213 | $ | ( 6,312 | ) | |||
| Adjustments required to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | - | 25 | ||||||
| Impairment of loans receivable | - | - | ||||||
| Impairment of fixed assets | - | - | ||||||
| Share-based compensation | - | ( 198 | ) | |||||
| Financial expense (income), net | - | - | ||||||
| Changes in assets and liabilities items: | ||||||||
| Operation leasing | 42 | - | ||||||
| Decrease (increase) in investments and non-current assets | ( 4,278 | ) | ( 30 | ) | ||||
| Increase (decrease) in trade accounts payable, accruals and other current liabilities | 174 | ( 86 | ) | |||||
| Increase (decrease) in employees and payroll accruals | - | ( 331 | ) | |||||
| Decrease in royalties provision | - | - | ||||||
| Net cash used in operating activities | $ | 1,151 | $ | ( 6,932 | ) | |||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchase of property and equipment | - | - | ||||||
| Increase (decrease) in loans receivable | - | - | ||||||
| Changes (investment) in short-term bank and other deposits | 4 | 15,912 | ||||||
| Net cash provided in (used in) investing activities | $ | 4 | $ | 15,912 | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Exercise of warrants into ordinary shares, net of issuance expenses | - | - | ||||||
| Issuance of ordinary shares in the registered direct offerings, net of issuance expenses | - | - | ||||||
| Options exercise | - | - | ||||||
| Net cash provided by financing activities | $ | - | $ | - | ||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | $ | 1,155 | $ | 8,980 | ||||
| Cash, cash equivalents and restricted cash at the beginning of the year | $ | - | $ | 8,844 | ||||
| Cash, cash equivalents and restricted cash at the end of the year | $ | 1,155 | $ | 17,824 |
See accompanying notes to unaudited consolidated financial statements.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and
Note 1 - General Information
Check-Cap Ltd. (the "Company") was incorporated under the
laws of the State of Israel and historically engaged in the research, development and clinical evaluation of the C-Scan System, a capsule-based
colorectal cancer screening technology. Following negative outcomes from calibration studies and adverse regulatory guidance, the Company
discontinued all research and development activities during 2023 and 2024, terminated all clinical programs, and substantially wound down
operating activities.
The Company's primary focus in 2024 and 2025 has been the evaluation
and execution of strategic alternatives, including a corporate restructuring, cash preservation, and a proposed business combination with
MBody AI Corp., a Nevada corporation ("MBody AI").
The Company has two wholly owned subsidiaries:
The Company's shares trade on the Nasdaq Capital Market under
Note 2 - Basis of Presentation
These unaudited condensed consolidated interim financial statements
have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) applicable to interim financial information
and the instructions to Form 6-K and Regulation S-X, Rule 10-01. Accordingly, they do not include all of the information and footnotes
required for complete annual financial statements and should be read together with the audited consolidated financial statements and notes
included in the Company's Annual Report on Form 20-F for the year ended December 31, 2024.
In the opinion of management, all adjustments considered necessary
for a fair presentation of the Company's financial position and results of operations have been included. All such adjustments are
of a normal recurring nature unless otherwise noted.
These unaudited condensed consolidated financial statements have been
prepared on the assumption that the Company will continue as a going concern. See Note 4.
Note 3 - Significant Accounting Policies
The accounting policies applied in these interim financial statements
are consistent with those used in the annual financial statements for the year ended December 31, 2024. There have been no material changes
to accounting policies during the period.
The following policies are referenced because they are relevant to
Note 4 - Going Concern
As of June 30, 2025, the Company had total assets of USD 5.764 million,
accumulated deficits of USD 164.797 million, negative working capital, and minimal ongoing revenue-generating operations. Management continues
to evaluate the Company's ability to continue as a going concern.
The Company is dependent on the completion of the planned reverse merger
with MBody AI Corp. and on the receipt of future financing. These conditions raise substantial doubt about the Company's ability
to continue as a going concern. The accompanying interim financial statements do not include any adjustments relating to the recoverability
of assets or classification of liabilities that might result from the outcome of this uncertainty.
Note 5 - Loan Receivable From Apollo Technology Capital Corp.,
Impairment, Reversal, and Set-Off
Initial Impairment (December 2024)
During the year ended December 31, 2024, the Company fully impaired
its loan receivable from Apollo Technology Capital Corp. ("Apollo"), formerly Nobul AI Corp., because Apollo exhibited severe
financial distress, recurring losses, and negative working capital. Based on conditions existing as of December 31, 2024 and in accordance
with ASC 310 (Receivables), management recorded a full impairment, reducing the carrying value of the loan to zero.
Reversal of Impairment (June 2025)
During the six months ended June 30, 2025, new information regarding
Apollo's financial condition became available, including management's valuation analysis dated September 2025, which estimated
Apollo's equity value at approximately USD 87 million as of June 30, 2025. This represented a significant improvement compared to
year-end 2024 conditions.
Management determined that the original impairment indicators no longer
existed and the previously impaired receivable should be re-recognized in accordance with ASC 310-10-35-23 (subsequent increase in expected
future cash flows). Accordingly, the Company reinstated the recoverable portion of the loan.
Right of Set-Off and Net Presentation
The Company and Apollo also completed a reconciliation of reciprocal
balances. Management determined that:
Accordingly, the reciprocal positions were offset under ASC 210-20
(Balance Sheet Offsetting). The net balance of USD 4.278 million is reflected under "Investments" within non-current assets
on the condensed consolidated balance sheet.
No impairment charge or credit loss is recorded in the current interim
Nature of the Loan and Expected Settlement
No new advances were made during the interim period. The reinstated
receivable and set-off relate solely to the reversal of the prior impairment and the updated net position between the parties.
The Company leases administrative office space. Lease arrangements
are accounted for under ASC 842.
Note 7 - Share Capital and Share-Based Compensation
No ordinary shares, warrants, RSUs, or stock options were issued, granted,
vested, or exercised during the six months ended June 30, 2025.
Total ordinary shares outstanding at June 30, 2025 were 5,850,906.
No share-based compensation expense was recorded during the interim
Note 8 - Earnings per Share
Basic and diluted earnings (loss) per share are calculated using the
weighted-average number of ordinary shares outstanding during the period.
For the six months ended June 30, 2025, the Company reported a profit
of USD 5.213 million (presented as a negative number in the Company's historic reporting convention). Because the Company generated
profit and had no dilutive securities, basic and diluted EPS are the same.
Note 9 - Income Taxes
The Company incurred no income tax expense during the interim period.
Tax payable of USD (1) thousand represents adjustments related to prior-period estimates and immaterial routine reconciliations.