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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Check Cap Ltd | NASDAQ:CHEK | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.05 | -2.22% | 2.20 | 2.15 | 2.55 | 2.27 | 2.19 | 2.27 | 6,648 | 01:00:00 |
|
|
Per Share
|
|
|
Total
|
|
||
Offering price
|
|
$
|
0.5000
|
|
|
$
|
10,000,000
|
|
Placement agent fees (1)
|
|
$
|
0.0350
|
|
|
$
|
700,000
|
|
Proceeds, before expenses, to us
|
|
$
|
0.4650
|
|
|
$
|
9,300,000
|
|
(1)
|
In addition, we have also agreed to pay the placement agent a management fee equal to 1.0% of the gross proceeds raised in this offering, a non-accountable
expense of $70,000, and to issue the placement agent or its designees warrants to purchase up to 1,000,000 of our ordinary shares, which represent 5.0% of the gross proceeds of this offering divided by the offering price. In addition,
upon any exercise of the Warrants for cash, we shall (i) pay the placement agent a cash fee of 7.0% of the aggregate gross exercise price from the exercise of the Warrants and a management fee of 1.0% of the aggregate gross exercise
price from the exercise of the Warrants, and (ii) issue to the placement agent, Placement Agent Warrants to purchase that number of ordinary shares equal to 5.0% of the aggregate number of such ordinary shares underlying the Warrants
that have been so exercised, and in the aggregate Placement Agent Warrants to purchase up to 750,000 ordinary shares. See “Plan of Distribution” on page S-23 of this prospectus supplement for more information regarding the placement
agent’s compensation.
|
|
Page
|
S - 1
|
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S - 2
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S - 4
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S - 5
|
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S - 6
|
|
S - 6
|
|
S - 7
|
|
S - 7
|
|
S - 9
|
|
S - 11
|
|
S - 25
|
|
S - 27
|
|
S - 27
|
|
S - 27
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|
S - 27
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|
S - 28
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Page
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1 | |
2 | |
4 | |
4 | |
5 | |
5 | |
6 | |
7 | |
13 | |
14 | |
15 | |
16 | |
20 | |
20
|
|
21 | |
21 |
|
21 | |
21 | |
22
|
•
|
references to “Check-Cap,” the “Company,” “we,” “us” or “our” refer to Check-Cap Ltd., an Israeli company, together with Check-Cap US, Inc., its
U.S. subsidiary;
|
•
|
references to “dollars,” “US$” or “$” refer to the legal currency of the United States;
|
•
|
the term “NIS” refers to New Israeli Shekels, the lawful currency of the State of Israel; and
|
•
|
references to the “2020 Annual Report” refer to our Annual Report on Form 20-F for the fiscal year ended December 31, 2020.
|
Offering price
|
$0.50 per one ordinary share and accompanying Warrant.
|
|
|
Ordinary shares we are offering
|
20,000,000 ordinary shares.
|
|
|
Warrants we are offering
|
We are also offering Warrants to purchase up to 15,000,000 ordinary shares. Each Warrant will be immediately exercisable, and will expire on March 1, 2027. The exercise price of each
Warrant will equal $0.65 per ordinary share. This prospectus supplement also relates to the offering of the ordinary shares issuable upon exercise of such Warrants. See “Description of Securities We Are Offering” for a discussion on the
terms of the Warrants.
|
|
|
Placement Agent Warrants
|
We will also issue Placement Agent Warrants to purchase up to 1,000,000 ordinary shares, to the placement agent or its designees, as part of the compensation
payable to the placement agent. In addition, upon any exercise of the Warrants for cash, we shall issue to the placement agent, Placement Agent Warrants to purchase that number of ordinary shares equal to 5.0% of the aggregate number
of such ordinary shares underlying the Warrants that have been so exercised, and in the aggregate Placement Agent Warrants to purchase up to 750,000 ordinary shares. The Placement Agent Warrants will have an exercise price of $0.625
per share (which represents 125% of the offering price per ordinary share and accompanying Warrant sold in this offering) and will expire on March 1, 2027. Each Placement Agent Warrant will be immediately exercisable. This prospectus
supplement also relates to the offering of the ordinary shares issuable upon exercise of such Placement Agent Warrants. See “Plan of Distribution” beginning on page S-23 of this prospectus supplement for additional information with
respect to the Placement Agent Warrants.
|
|
|
Ordinary shares outstanding immediately prior to the offering
|
96,411,949 ordinary shares
|
Ordinary shares to be outstanding immediately after the offering
|
116,411,949 ordinary shares.
|
Use of Proceeds
|
The net proceeds from this offering are expected to be approximately $8.9 million after deducting the placement agent fees and estimated offering expenses
payable by us, excluding any proceeds that may be received upon exercise of the Warrants. We currently intend to use the net proceeds from this offering to advance the ongoing clinical development of C-Scan®, including the Company’s
U.S. pivotal study, and for general corporate purposes. See “Use of Proceeds” for additional information.
|
|
|
Transfer Agent and the Registrar
|
American Stock Transfer & Trust Company
|
|
|
Risk Factors
|
Investment in our securities involves a high degree of risk. See “Risk Factors” on page S-4 of this prospectus supplement and on page 4 of the accompanying prospectus and under similar
sections in the documents we incorporate by reference into this prospectus supplement and the accompanying prospectus supplement for a discussion of factors you should consider carefully before making an investment decision.
|
|
|
Nasdaq Capital Market Symbol
|
Our ordinary shares are listed on the Nasdaq Capital Market under the symbol “CHEK.” There is no established trading market for the Warrants or the Placement Agent Warrants, and we do
not expect a market to develop. We do not intend to apply for a listing for any such warrants on any securities exchange or other nationally recognized trading system. Without an active trading market, the liquidity of the Warrants or
the Placement Agent Warrants will be limited.
|
•
|
33,301,884 ordinary shares issuable upon the exercise of outstanding warrants, with a weighted average exercise price of $1.96 per ordinary
share;
|
•
|
3,188,806 ordinary shares issuable upon the exercise of outstanding options, with a weighted average exercise price of $2.25 per ordinary
share, granted under our option and equity incentive plans;
|
•
|
457,042 restricted stock units issued to employees, consultants and directors;
|
•
|
642,670 ordinary shares that are available for future equity awards under our 2015 Equity Incentive Plan and 2015 U.S. Sub-Plan to the 2015 Equity Incentive Plan, or the 2015 Plan;
|
•
|
15,000,000 ordinary shares issuable upon exercise of the Warrants to be issued to the investors in this offering, at an exercise price of
$0.65 per share; and
|
•
|
1,000,000 ordinary shares issuable upon exercise of the Placement Agent Warrants to be issued to the placement agent or its designees as compensation in connection with and at the closing of this
offering, at an exercise price of $0.625 per share.
|
●
|
our history of losses and our ability to continue as a going concern;
|
●
|
our needs for additional capital to fund our operations and our inability to obtain additional capital on acceptable terms, or at all;
|
●
|
the impact of the COVID-19 pandemic;
|
●
|
the initiation, timing, progress and results of our clinical trials and other product development efforts;
|
●
|
our reliance on one product;
|
●
|
the clinical development, commercialization and market acceptance of C-Scan;
|
●
|
our ability to receive de novo classification and other regulatory approvals for C-Scan;
|
●
|
our ability to successfully complete clinical trials;
|
●
|
our reliance on sole or single-source suppliers;
|
●
|
our reliance on third parties, such as for purposes of our clinical trials and clinical development and the manufacturing, marketing and
distribution of C-Scan;
|
●
|
our ability to establish and maintain strategic partnerships and other corporate collaborations;
|
●
|
our ability to achieve reimbursement and coverage from government and private third-party payors;
|
●
|
the implementation of our business model and strategic plans for our business;
|
●
|
the scope of protection we are able to establish and maintain for intellectual property rights covering C-Scan and our ability to operate our
business without infringing the intellectual property rights of others;
|
●
|
competitive companies, technologies and our industry;
|
●
|
statements as to the impact of the political and security situation in Israel, or the ongoing conflict in Ukraine, on our business; and
|
●
|
our expectations regarding the use of proceeds of this offering.
|
•
|
on an actual basis; and
|
•
|
on an as adjusted basis, to give further effect to the issuance and sale in this offering of 20,000,000 ordinary shares at the offering price of
$0.50 per ordinary share and accompanying Warrant, and after deducting the placement agent fees and estimated offering expenses payable by us.
|
|
September 30, 2021
|
|||||||
|
Actual
|
As-Adjusted
|
||||||
Shareholders’ equity:
|
(in thousands)
(unaudited) |
|||||||
Ordinary shares, par value NIS 2.40 per share; Authorized 360,000,000 shares;
Issued and outstanding: 96,404,949 shares (actual) and 116,404,949 shares (as adjusted) as of September 30, 2021
|
$
|
68,782
|
$
|
83,643
|
||||
Additional paid-in capital
|
$
|
89,867
|
$
|
83,935
|
||||
|
||||||||
Accumulated deficit
|
$
|
(102,708
|
)
|
$
|
(102,708
|
)
|
||
Total shareholders’ equity
|
$
|
55,941
|
$
|
64,870
|
•
|
33,679,931 ordinary shares issuable upon the exercise of outstanding warrants, with a weighted average exercise price of $2.87 per ordinary share;
|
•
|
1,760,858 ordinary shares issuable upon the exercise of outstanding options, with a weighted average exercise price of $3.14 per ordinary share,
granted under our option and equity incentive plans;
|
•
|
332,542 restricted stock units issued to employees, consultants and directors;
|
•
|
1,687,779 ordinary shares that are available for future equity awards under the 2015 Plan;
|
•
|
15,000,000 ordinary shares issuable upon exercise of the Warrants to be issued to the investors in this offering, at an exercise price of $0.65 per
share; and
|
•
|
1,000,000 ordinary shares issuable upon exercise of the warrants to be issued to placement agent or its designees as compensation in connection with
this offering, at an exercise price of $0.625 per share.
|
• |
amortization over an eight-year period, beginning from the year in which such rights were first used, of the cost of purchased know-how and patents and rights to use a patent and know-how which are used for the development or
advancement of the Industrial Enterprise;
|
• |
under limited conditions, an election to file consolidated tax returns with related Israeli Industrial Companies; and
|
• |
expenses related to a public offering are deductible in equal amounts over three years beginning from the year of the offering.
|
• | an individual citizen or resident of the United States; |
• |
a corporation (or other entity treated as a corporation) that is created or organized (or treated as created or organized) in or under the laws of the United States, any state thereof or the District of Columbia;
|
• |
an estate whose income is includible in gross income for U.S. federal income tax purposes regardless of its source; or
|
• |
a trust if (i) a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust; or (i) it has a valid election in effect under
applicable U.S. Treasury regulations to be treated as a U.S. person.
|
• |
financial institutions or financial services entities;
|
• |
broker-dealers;
|
• |
persons that are subject to the mark-to-market accounting rules under Section 475 of the Code;
|
• |
tax-exempt entities;
|
• |
governments or agencies or instrumentalities thereof;
|
• |
insurance companies;
|
• |
regulated investment companies;
|
• |
real estate investment trusts;
|
• |
persons that actually or constructively own 5% or more of our shares (by vote or value);
|
• |
persons that acquired our securities pursuant to an exercise of employee options, in connection with employee incentive plans or otherwise as compensation;
|
• |
persons that hold our securities as part of a straddle, constructive sale, hedging, conversion or other integrated transaction;
|
• |
persons whose functional currency is not the U.S. dollar;
|
• |
passive foreign investment companies; or
|
• |
controlled foreign corporations.
|
• |
any “excess distribution” made to the U.S. Holder (generally, any distributions to such U.S. Holder during a taxable year of the U.S. Holder that are greater than 125% of the average annual distributions received by such U.S. Holder in
respect of the ordinary shares during the three preceding taxable years of such U.S. Holder or, if shorter, such U.S. Holder’s holding period for the ordinary shares).
|
• |
U.S. Holder’s gain or excess distribution will be allocated ratably over the U.S. Holder’s holding period for the ordinary shares or Warrants;
|
• |
the amount allocated to the U.S. Holder’s taxable year in which the U.S. Holder recognized the gain or received the excess distribution or to the period in the U.S. Holder’s holding period before the first day of our first taxable year
in which we qualified as a PFIC will be taxed as ordinary income;
|
• |
the amount allocated to other taxable years (or portions thereof) of the U.S. Holder and included in its holding period will be taxed at the highest ordinary tax rate in effect for that year and applicable to the U.S. Holder; and
|
• |
the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to each such other taxable year of the U.S. Holder.
|
|
Per Share and Warrant
|
Total
|
||||||
Offering price
|
$
|
0.500
|
$
|
10,000,000
|
||||
Placement agent fees
|
$
|
0.035
|
$
|
700,000
|
||||
Proceeds, before expenses, to us
|
$
|
0.465
|
$
|
9,300,000
|
● |
may not engage in any stabilization activity in connection with our securities; and
|
● |
may not bid for or purchase any of our securities, or attempt to induce any person to purchase any of our securities, other than as permitted under the Exchange Act, until it has completed its participation in the distribution in
the securities offered by this prospectus supplement.
|
Legal fees and expenses
|
$
|
177,500
|
||
Miscellaneous fees and expenses
|
$
|
8,000
|
||
Total
|
$
|
185,500
|
• |
our Annual Report on Form 20-F for the fiscal year ended December 31, 2020, filed with the SEC on March 18, 2021;
|
• |
our Current Reports on Form 6-K filed with the SEC on March 19, 2021, May 12, 2021, July
2, 2021, August 5, 2021, September 1, 2021, October 18, 2021, October 21, 2021, October 29, 2021, November 2, 2021, November 3, 2021, November 22, 2021, December 9,
2021, December 23, 2021, January 5, 2022 and February 7, 2022 (in each case, to the extent expressly incorporated by reference into our effective registration statements
on Form F-3); and
|
•
|
the description of our ordinary shares contained Exhibit 2.1 to our Annual Report on Form 20-F for the year ended December 31, 2020, filed with the SEC on March 18, 2021, and any
amendment on report filed with the SEC for the purpose of updating such description.
|
Page
|
|
1 | |
2 | |
4 | |
4 | |
5 | |
5 | |
6 | |
7 | |
13 | |
14 | |
15 | |
16 | |
20 | |
20
|
|
21 | |
21 |
|
21 | |
21 | |
22
|
• |
our history of losses and our ability to continue as a going concern;
|
• |
our needs for additional capital to fund our operations and our inability to obtain additional capital on acceptable terms, or at all;
|
• |
the impact of the COVID-19 pandemic;
|
• |
the initiation, timing, progress and results of our clinical trials and other product development efforts;
|
• |
our reliance on one product;
|
• |
the clinical development, commercialization and market acceptance of C-Scan;
|
• |
our ability to receive de novo classification and other regulatory approvals for C-Scan;
|
• |
our ability to successfully complete clinical trials;
|
• |
our reliance on single-source suppliers;
|
• |
our reliance on third parties, such as for purposes of our clinical trials and clinical development and the manufacturing, marketing and distribution of C-Scan;
|
• |
our ability to establish and maintain strategic partnerships and other corporate collaborations;
|
• |
our ability to achieve reimbursement and coverage from government and private third-party payors;
|
• |
the implementation of our business model and strategic plans for our business;
|
• |
the scope of protection we are able to establish and maintain for intellectual property rights covering C-Scan and our ability to operate our business without infringing the intellectual property rights of others;
|
• |
competitive companies, technologies and our industry; and
|
• |
statements as to the impact of the political and security situation in Israel on our business.
|
|
September 30, 2021
|
|||
|
Actual
|
|||
Shareholders’ equity:
|
(in thousands)
(unaudited) |
|||
Ordinary shares, par value NIS 2.40 per share; Authorized 360,000,000 shares;
Issued and outstanding: 96,404,949 shares as of September 30, 2021
|
$
|
68,782
|
||
Additional paid-in capital
|
$
|
89,867
|
||
|
||||
Accumulated deficit
|
$
|
(102,708
|
)
|
|
Total shareholders’ equity
|
$
|
55,941
|
• |
33,679,931 ordinary shares issuable upon the exercise of outstanding warrants, with a weighted average exercise price of $2.87 per ordinary share;
|
• |
1,760,858 ordinary shares issuable upon the exercise of outstanding options, with a weighted average exercise price of $3.14 per ordinary share, granted under our option and equity incentive plans;
|
• |
332,542 restricted stock units issued to employees, consultants and directors; and
|
•
|
1,687,779 ordinary shares that are available for future equity awards under the Company’s 2015 Equity Incentive Plan and 2015 United States Sub-Plan.
|
• |
amendments to our articles of association;
|
• |
appointment, terms of service and termination of service of our auditors;
|
• |
appointment of external directors ;
|
• |
approval of certain related party transactions;
|
• |
increases or reductions of our authorized share capital;
|
• |
mergers; and
|
• |
the exercise of our board of director’s powers by a general meeting, if our board of directors is unable to exercise its powers and the exercise of any of its powers is essential for our proper management.
|
• |
the title of such warrants;
|
• |
the aggregate number of such warrants;
|
• |
the price or prices at which such warrants will be issued and exercised;
|
• |
the currency or currencies in which the price of such warrants will be payable;
|
• |
the securities purchasable upon exercise of such warrants;
|
• |
the date on which the right to exercise such warrants shall commence and the date on which such right shall expire;
|
• |
if applicable, the minimum or maximum amount of such warrants which may be exercised at any one time;
|
• |
if applicable, the designation and terms of the securities with which such warrants are issued and the number of such warrants issued with each such security;
|
• |
if applicable, the date on and after which such warrants and the related securities will be separately transferable;
|
• |
information with respect to book-entry procedures, if any;
|
• |
any material United States federal and Israeli income tax consequences;
|
• |
the anti-dilution provisions of the warrants, if any; and
|
• |
any other terms of such warrants, including terms, procedures and limitations relating to the exchange and exercise of such warrants.
|
• |
the title of such subscription rights;
|
• |
the securities for which such subscription rights are exercisable;
|
• |
the exercise price for such subscription rights;
|
• |
the number of such subscription rights issued to each shareholder;
|
• |
the extent to which such subscription rights are transferable;
|
• |
if applicable, a discussion of the material United States federal and Israel income tax considerations applicable to the issuance or exercise of such subscription rights;
|
• |
the date on which the right to exercise such subscription rights shall commence, and the date on which such rights shall expire (subject to any extension);
|
• |
the extent to which such subscription rights include an over-subscription privilege with respect to unsubscribed securities;
|
• |
if applicable, the material terms of any standby underwriting or other purchase arrangement that we may enter into in connection with the subscription rights offering; and
|
• |
any other terms of such subscription rights, including terms, procedures and limitations relating to the exchange and exercise of such subscription rights.
|
• |
the designation and terms of the units and of the securities comprising the units, including whether and under what circumstances those securities may be held or transferred separately;
|
• |
the material terms of a unit agreement under which the units will be issued;
|
• |
any provisions for the issuance, payment, settlement, transfer or exchange of the units or of the securities comprising the units; and
|
• |
whether the units will be issued in fully registered or global form.
|
•
|
through agents;
|
•
|
to or through one or more underwriters on a firm commitment or agency basis;
|
•
|
through put or call option transactions relating to the securities;
|
•
|
to or through dealers, who may act as agents or principals, including a block trade (which may involve crosses) in which a broker or dealer so engaged will
attempt to sell as agent but may position and resell a portion of the block as principal to facilitate the transaction;
|
•
|
through privately negotiated transactions;
|
•
|
purchases by a broker or dealer as principal and resale by such broker or dealer for its own account pursuant to this prospectus;
|
•
|
directly to purchasers, including our affiliates, through a specific bidding or auction process, on a negotiated basis or otherwise;
|
•
|
to or through one or more underwriters on a firm commitment or best efforts basis;
|
•
|
exchange distributions and/or secondary distributions;
|
•
|
ordinary brokerage transactions and transactions in which the broker solicits purchasers;
|
•
|
in an “at the market offering”, within the meaning of Rule 415(a)(4) of the Securities into an existing trading market, on an exchange or otherwise;
|
•
|
transactions not involving market makers or established trading markets, including direct sales or privately negotiated transactions;
|
•
|
transactions in options, swaps or other derivatives that may or may not be listed on an exchange;
|
•
|
through any other method permitted pursuant to applicable law; or
|
•
|
through a combination of any such methods of sale.
|
• |
A stabilizing bid means the placing of any bid, or the effecting of any purchase, for the purpose of pegging, fixing or maintaining the price of a security.
|
• |
A syndicate covering transaction means the placing of any bid on behalf of the underwriting syndicate or the effecting of any purchase to reduce a short position created in connection with the offering.
|
• |
A penalty bid means an arrangement that permits the managing underwriter to reclaim a selling concession from a syndicate member in connection with the offering when offered securities originally sold by the syndicate member are
purchased in syndicate covering transactions.
|
SEC registration fee
|
$
|
18,540
|
||
FINRA fees
|
$
|
30,500
|
||
Transfer agent’s fees and expenses
|
$
|
*
|
||
Legal fees and expenses
|
$
|
*
|
||
Printing fees and expenses
|
$
|
*
|
||
Accounting fees and expenses
|
$
|
*
|
||
Miscellaneous fees and expenses
|
$
|
*
|
||
Total
|
$
|
*
|
• |
our Annual Report on Form 20-F for the fiscal year ended December 31, 2020, filed with the SEC on March 18, 2021;
|
• |
our Current Reports on Form 6-K filed with the SEC on March 19, 2021, May 12, 2021, July
2, 2021, August 5, 2021, September 1, 2021, October 18, 2021, October 21, 2021, October 29, 2021, November 2, 2021, November 3, 2021, November 22, 2021, December 9,
2021, December 23, 2021, and January 5, 2022; and
|
•
|
The description of our ordinary shares contained in Exhibit 2.1 to our Annual Report on Form 20-F for the year ended December 31, 2020, filed with the SEC on March 18, 2021, and any
amendment on report filed with the SEC for the purpose of updating the description.
|
• |
the judgment was rendered by a court which was, according to the laws of the state of the court, competent to render the judgment;
|
• |
the judgment may no longer be appealed;
|
• |
the obligation imposed by the judgment is enforceable according to the rules relating to the enforceability of judgments in Israel and the substance of the judgment is not contrary to public policy; and
|
• |
the judgment is executory in the state in which it was given.
|
• |
the judgment was given in a state whose laws do not provide for the enforcement of judgments of Israeli courts (subject to exceptional cases);
|
• |
the enforcement of the judgment is likely to prejudice the sovereignty or security of the State of Israel;
|
• |
the judgment was obtained by fraud;
|
• |
the opportunity given to the defendant to bring its arguments and evidence before the court was not reasonable in the opinion of the Israeli court;
|
• |
the judgment was rendered by a court not competent to render it according to the laws of private international law as they apply in Israel;
|
• |
the judgment is contradictory to another judgment that was given in the same matter between the same parties and that is still valid; or
|
• |
at the time the action was brought in the foreign court, a lawsuit in the same matter and between the same parties was pending before a court or tribunal in Israel.
|
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