MBody AI and Check-Cap Enter into Definitive Merger Agreement

Rhea-AI Summary

Check-Cap (NASDAQ:CHEK) has entered into a definitive merger agreement with MBody AI, creating a combined company focused on embodied AI for the autonomous workforce. Under the agreement, MBody AI shareholders will own 90% of the combined company, while Check-Cap shareholders will retain 10% on a fully diluted basis.

The merged entity, to be renamed MBody AI Ltd., will operate in the embodied-AI market, which Morgan Stanley forecasts to reach $40 Trillion by 2050. MBody AI specializes in developing proprietary AI technology for intelligent systems, initially focusing on hospitality with plans to expand into warehousing, office management, and healthcare. Check-Cap's legacy business, including patents and proprietary medical equipment, will continue as part of the combined company.

The merger requires Check-Cap shareholder approval at the October 17, 2025 Annual General Meeting. Additionally, Check-Cap must address a Nasdaq compliance issue regarding minimum stockholders' equity by October 20, 2025.

Positive

• None.

Negative

• Significant dilution for current Check-Cap shareholders, receiving only 10% ownership
• Company currently not compliant with Nasdaq's $2.5M minimum stockholders' equity requirement
• Requires additional financing through private placement
• Previous business combination agreement with Apollo Technology Capital needs termination

Insights

Mergers & Acquisitions Specialist

Check-Cap's merger with MBody AI transforms the struggling medical company into an AI-focused entity, with original shareholders retaining just 10% ownership.

This merger represents a significant pivot for Check-Cap, transitioning from its medical technology roots into the emerging embodied AI market. The deal structure reveals Check-Cap shareholders will retain only 10% ownership in the renamed "MBody AI Ltd.," with MBody AI shareholders controlling the remaining 90%. This highly dilutive arrangement suggests Check-Cap was negotiating from a position of weakness, likely driven by its disclosed Nasdaq compliance issues regarding the minimum stockholder equity requirement of $2.5 million.

MBody AI positions itself in the embodied AI sector—essentially AI systems with physical presence—initially focusing on hospitality with plans to expand into warehousing, office management, and healthcare. While Morgan Stanley's forecasts of a $40 trillion embodied-AI market by 2050 sound impressive, such long-range projections should be viewed cautiously.

The merger documentation reveals several noteworthy aspects: Check-Cap will maintain its legacy medical technology business alongside the new AI focus; the companies plan to secure additional financing through a private placement; and there's an unusual mention of "Ghost Kitchen franchise rights in New Jersey" as a potential synergy area. The termination of Check-Cap's previously announced business combination with Apollo Technology Capital suggests this deal represents a better alternative for a company facing financial challenges.

Most tellingly, this appears to be a reverse merger allowing the private MBody AI to access public markets without a traditional IPO, while providing Check-Cap a lifeline to address its Nasdaq compliance issues. The proposed October 17th shareholder vote will determine whether this dramatic business transformation proceeds.

Financial Analyst

Check-Cap's merger with MBody AI offers a potential Nasdaq compliance solution but represents extreme shareholder dilution with uncertain financial prospects.

The financial structure of this transaction raises several red flags for current Check-Cap shareholders. Most critically, the 90/10 ownership split heavily favors MBody AI investors, indicating a severely imbalanced negotiation that substantially dilutes existing Check-Cap shareholders. This suggests Check-Cap's precarious financial position left it with limited leverage.

The Nasdaq compliance issue reveals Check-Cap has fallen below the $2.5 million stockholders' equity requirement, a fundamental financial threshold for continued listing. The company now faces an October 20th deadline to submit a compliance plan, with this merger positioned as the solution. This timing pressure likely contributed to the unfavorable deal terms.

Notably absent from this announcement are any concrete financial metrics about MBody AI. While described as "revenue-generating," the release provides no actual revenue figures, profit margins, growth rates, or cash position. This lack of transparency makes evaluating the true value proposition difficult.

The planned private placement financing suggests additional capital needs, which could lead to further dilution depending on terms. The vague statement about using "commercially reasonable efforts" indicates uncertainty about the financing's success.

While the embodied AI sector has significant long-term potential, the $40 trillion market projection by 2050 represents highly speculative, far-future forecasting. Near-term revenue generation capabilities remain unclear, particularly as MBody AI appears to be primarily focused on the hospitality sector currently, with other verticals as future expansion targets rather than established business lines.

Merger to Create Combined Company Focused on Embodied AI for the Autonomous Workforce

ISFIYA, ISRAEL, Sept. 12, 2025 (GLOBE NEWSWIRE) -- MBody AI (“MBody AI”) and Check-Cap Ltd. (“Check-Cap” or the “Company”) (NASDAQ: CHEK) today announced that they have entered into a definitive Agreement and Plan of Merger (the “Merger”). If the Merger is approved by Check-Cap shareholders, it will create a combined company focused on embodied AI for the autonomous workforce. Check-Cap’s legacy business will continue its research and development activities as part of the combined company.

MBody AI is a market-leading artificial intelligence (“AI”) company redefining the future of work through embodied AI. Morgan Stanley recently forecasted the embodied-AI market to reach $40 Trillion by 2050 and contribute more than $16 Trillion in additional value to global equity markets. MBody AI is engineering the “brains of autonomy,” a proprietary AI stack that powers intelligent systems capable of learning, adapting, and optimizing in real time. From its initial focus in hospitality, MBody AI is positioned to expand across warehousing, office management, and healthcare—verticals representing trillions of dollars in addressable labor spend, and is strategically placed to scale rapidly into global markets.

David Lontini, Chairman of the Board of Directors and Interim CEO of Check-Cap, commented: “We are excited to enter into a definitive merger agreement with MBody AI”. It has been a long road for Check-Cap since announcing a review of strategic alternatives back in 2023. We believe we have found the right revenue-generating merger partner that will allow us to enter into a high-growth industry while continuing to focus on our legacy business.”  

John Fowler, CEO of MBody AI continued: “The proposed merger with Check-Cap is expected to be a transformative step forward in delivering value to our shareholders. MBody AI is a market leader in embodied AI in hospitality, and this merger will give us a platform to pursue many opportunities to execute our mission of simplifying embodied AI adoption to revolutionize industries as a public company and capture for our shareholders the once-in-a-generation shift in how we do work.”

The combined company will be renamed “MBody AI Ltd.” The combined company will continue to hold Check-Cap’s legacy assets, consisting primarily of patents and proprietary medical equipment. MBody AI and Check-Cap have also agreed to use commercially reasonable efforts to secure a financing in a private placement on terms reasonably acceptable to each of the parties.

Following the closing of the Merger, current MBody AI equityholders will own 90% of the issued and outstanding ordinary shares of the combined company on a fully diluted basis, and current Check-Cap equityholders will own 10% of the issued and outstanding ordinary shares of the combined company on a fully diluted basis.

The Merger is also expected to complement and create potential synergies with Check-Cap’s Ghost Kitchen franchise rights in New Jersey. The Company expects the combined company to leverage shared technology, operational resources, and market relationships that will enable it to capitalize on the Ghost Kitchen franchise rights.

The Merger has been approved by the board of directors of both Check-Cap and MBody AI. The Merger is subject to the approval of Check-Cap shareholders at the upcoming Annual General Meeting of Shareholders to be held on October 17, 2025. If the Merger is approved at the meeting, the previously entered into business combination agreement with Apollo Technology Capital Corporation (formerly known as Nobul AI Corp.) (“Apollo”) will be terminated by the mutual consent of the parties so long as Check-Cap continues to be open to future integration with Apollo.

Nasdaq Letter

As previously disclosed, the Company received a letter from the Nasdaq Listing Qualifications Department on September 3, 2025, notifying the Company that it is not in compliance with Nasdaq Listing Rule 5550(b)(1), which requires the Company to maintain a minimum of $2,500,000 in stockholders’ equity. The letter further stated that the Company has 45 calendar days, or by October 20, 2025, to submit a plan to regain compliance with respect to the deficiency identified in the letter. If the Nasdaq Stock Market (“Nasdaq”) accepts such plan, it may grant an extension of up to 180 calendar days from the date of the letter for the Company to evidence compliance. The Company is working diligently to submit the plan promptly and take the necessary steps to regain compliance as soon as practicable. The proposed Merger and the related financing are also expected to enhance the Company’s capital position and provide a pathway to regain compliance following closing of the Merger, subject to Nasdaq’s review and confirmation.

Legal Notice Regarding Forward-Looking Statements

Certain statements in this press release may constitute “forward-looking statements”. Forward-looking statements include, but are not limited to, statements regarding expectations, hopes, beliefs, intentions or strategies of Check-Cap and/or MBody AI regarding the future including, without limitation, statements regarding MBody AI’s technology and the proposed Merger. The words “anticipate,” “believe,” continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “strive,” “would,” “aim,” “target,” “commit,” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that statement is not forward looking. Forward-looking statements are based on current expectations and assumptions that, while considered reasonable, are inherently uncertain. Check-Cap assumes no obligation and does not intend to update these forward-looking statements, except as required by law, to reflect events or circumstances occurring after today’s date.

Contact

MacKenzie Partners

bmarese@mackenziepartners.com

FAQ

What are the ownership terms of the Check-Cap and MBody AI merger?

After the merger closes, MBody AI shareholders will own 90% of the combined company, while Check-Cap shareholders will retain 10% on a fully diluted basis.

When will Check-Cap (CHEK) shareholders vote on the MBody AI merger?

Check-Cap shareholders will vote on the merger at the Annual General Meeting scheduled for October 17, 2025.

What is MBody AI's market focus and potential?

MBody AI focuses on embodied AI for autonomous workforce, initially in hospitality with planned expansion into warehousing, office management, and healthcare. Morgan Stanley forecasts this market to reach $40 Trillion by 2050.

What is Check-Cap's current Nasdaq compliance status?

Check-Cap received a Nasdaq notice on September 3, 2025, for non-compliance with the $2.5M minimum stockholders' equity requirement. They have until October 20, 2025, to submit a compliance plan.

What will happen to Check-Cap's existing business after the merger?

Check-Cap's legacy assets, including patents and proprietary medical equipment, will continue to be held by the combined company, which will be renamed MBody AI Ltd.