Israel
(State or other jurisdiction of
incorporation or organization) |
3844
(Primary Standard Industrial
Classification Code Number) |
Not Applicable
(I.R.S. Employer
Identification Number) |
Mitchell S. Nussbaum, Esq.
Angela M. Dowd, Esq.
Loeb & Loeb LLP
345 Park Avenue
New York, New York 10154
(212) 407-4000 - Telephone
(212) 407-4990 - Facsimile
|
Eran Yaniv, Adv.
Sharon Rosen, Adv.
Fischer Behar Chen Well
Orion & Co.
3 Daniel Frisch Street
Tel Aviv, 6473104, Israel
+972 3 6944111 - Telephone
+972 3 6091116 - Facsimile
|
Rick A. Werner, Esq.
Haynes and Boone, LLP
30 Rockefeller Plaza, 26th Floor
New York, New York 10112
(212) 659-7300 Telephone
(212) 884-8234
Facsimile
|
Zvi Gabbay, Adv.
Barnea Jaffa Lande & Co.
Electra City Tower
HaRakevet St. 58
Tel Aviv 6777016, Israel
+972 3 640 0600 Telephone
+972 3 6400650
Facsimile
|
Title of Each Class of Securities to be Registered
|
Proposed Maximum Aggregate Offering Price
(1)(2)(3)
|
Amount of Registration Fee
(5)
|
|||||
Units, each Unit consisting of one Ordinary Share, par value NIS 2.40 per share and one Series C Warrant to purchase one Ordinary Share
(3)
|
$
|
34,500,000
|
$
|
4,295.25
|
|||
(i) Ordinary Shares included in the Units
(4)
|
—
|
—
|
|||||
(ii) Series C Warrants included in the Units
(4)
|
—
|
—
|
|||||
Pre-funded Units, each Pre-funded Unit consisting of one Pre-funded Warrant to purchase one Ordinary Share and one Series C Warrant to purchase one Ordinary Share
(3)
|
$
|
34,500,000
|
$
|
4,295.25
|
|||
(i) Pre-funded Warrants included in the Pre-funded Units
(4)
|
—
|
—
|
|||||
(ii) Series C Warrants included in the Pre-funded Units
(4)
|
—
|
—
|
|||||
Ordinary Shares underlying Pre-funded Warrants included in the Pre-funded Units
(3)(4)
|
—
|
—
|
|||||
Ordinary Shares underlying Series C Warrants included in the Units and the Pre-funded Units
(3)(4)
|
—
|
—
|
|||||
Total
|
$
|
34,500,000
|
$
|
4,295.25
|
(6)
|
(1) |
Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended. Includes the aggregate offering price of additional Ordinary Shares and Series C Warrants to purchase Ordinary Shares that the underwriter has the right to purchase.
|
(2) |
In accordance with Rule 416(a) under the Securities Act of 1933, as amended, the Registrant is also registering hereunder an indeterminate number of additional Ordinary Shares that shall be issuable pursuant to Rule 416 to prevent dilution resulting from stock splits, stock dividends or similar transactions.
|
(3) |
The proposed maximum aggregate offering price of the Units proposed to be sold in the offering will be reduced on a dollar-for-dollar basis based on the offering price of any Pre-funded Units offered and sold in the offering, and the proposed maximum aggregate offering price of the Pre-funded Units to be sold in the offering will be reduced on a dollar-for-dollar basis based on the offering price of any Units sold in the offering. Accordingly, the proposed maximum aggregate offering price of the Units and Pre-funded Units (including the Ordinary Shares issuable upon exercise of the Pre-funded Warrants included in the Pre-funded Units), if any, is $17,250,000.
|
(4) |
No additional registration fee is payable pursuant to Rule 457(i) under the Securities Act of 1933, as amended.
|
(5) |
No additional registration fee is payable pursuant to Rule 457(g) under the Securities Act of 1933, as amended.
|
(6) |
A filing fee of $1,976.44 was previously paid.
|
Per Unit
|
Per Pre-funded Unit
|
Total
|
||||||||||
Public offering price
|
$ | $ | $ | |||||||||
Underwriting discounts and commissions (8%) (1)
|
$ | $ | $ | |||||||||
Proceeds, before expenses, to us
|
$ | $ | $ |
(1) |
We have also agreed to pay the underwriter a management fee equal to 1.0% of the gross proceeds raised in this offering, a non-accountable expense allowance of $30,000 and reimbursement for legal fees and expenses in the amount of up to $120,000. For a description of the additional compensation to be received by the underwriter see “Underwriting.”
|
1
|
|
4
|
|
7
|
|
11
|
|
13
|
|
13
|
|
14
|
|
15
|
|
16
|
|
17
|
|
26
|
|
29 | |
44
|
|
47
|
|
47
|
|
48
|
|
48
|
|
48
|
|
49
|
|
50
|
· |
references to “Check-Cap,” the “Company,” “we,” “us” or “our” refer to Check-Cap Ltd., an Israeli company, together with Check-Cap US, Inc., its U.S. subsidiary;
|
· |
references to “dollars,” “US$” or “$” refer to the legal currency of the United States; and
|
· |
the term “NIS” refers to New Israeli Shekels, the lawful currency of the State of Israel.
|
· |
we may present only two years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations;
|
· |
we are exempt from the requirement to obtain an attestation and report from our auditors on whether we maintained effective internal control over financial reporting under the Sarbanes-Oxley Act;
|
· |
we are permitted to provide less extensive disclosure about our executive compensation arrangements;
|
· |
we are permitted to utilize the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, for complying with new or revised accounting standards available to private companies;
|
· |
we are not required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation; and
|
· |
we are not required to give our shareholders non-binding advisory votes on executive compensation or golden parachute arrangements.
|
Issuer
|
Check-Cap Ltd.
|
Units offered by us
|
2,500,000 units, each consisting of one ordinary share and one Series C Warrant to purchase one ordinary share
|
Pre-funded units offered by us in this offering
|
We are also offering to each purchaser whose purchase of units in this offering would otherwise result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99% of our outstanding ordinary shares immediately following the consummation of this offering, the opportunity to purchase, if the purchaser so chooses, pre-funded units (each pre-funded unit consisting of one pre-funded warrant to purchase one ordinary share and one Series C Warrant to purchase one ordinary share) in lieu of units that would otherwise result in the purchaser's beneficial ownership exceeding 4.99% of our outstanding ordinary shares (or, at the election of the purchaser, 9.99%). The purchase price of each pre-funded unit will equal the public offering price at which the units are being sold to the public in this offering, minus $0.01, and the exercise price of each pre-funded warrant included in each pre-funded unit will be $0.01 per share. This offering also relates to the ordinary shares issuable upon exercise of any pre-funded warrants sold in this offering. For each pre-funded unit we sell, the number of units we are offering will be decreased on a one-for-one basis. Because we will issue a Series C Warrant as part of each unit or pre-funded unit, the number of Series C Warrants sold in this offering will not change as a result of a change in the mix of the units and pre-funded units sold.
|
Series C Warrants offered by us in the offering
|
Series C Warrants to purchase an aggregate of 2,500,000 ordinary shares. Each unit and each pre-funded unit includes one Series C Warrant to purchase one ordinary share. Each Series C Warrant entitles the holder to purchase one ordinary share at an exercise price of $ per share, will be immediately exercisable and will expire on the 5
th
anniversary of the original issuance date. This prospectus also relates to the offering of the ordinary shares issuable upon exercise of the Series C Warrants.
|
Option to purchase additional securities
|
The underwriter has an option to purchase up to 375,000 additional ordinary shares and/or Series C Warrants to purchase up to an additional 375,000 ordinary shares, at the public offering price less underwriting discounts and commissions. The underwriter may exercise this option at any time and from time to time within 30 days from the date of this prospectus
|
Ordinary shares outstanding immediately prior to the offering
|
1,
609
,
133
shares
|
Ordinary shares to be outstanding immediately after the offering
(1)
|
4,109,133 ordinary shares, assuming no sale of pre-funded units (or 4,484,133 ordinary shares if the underwriter exercises in full its option to purchase additional securities, assuming no sale of pre-funded units).
|
Use of Proceeds
|
We estimate that the net proceeds from this offering will be approximately $13.2 million (assuming no sale of any pre-funded units), before taking into account the proceeds to be received from any future exercise of Series C Warrants issued to investors in this offering and after deducting underwriting discounts and commissions and offering expenses payable by us. If the underwriter exercises its option to purchase additional securities in full, we estimate that the net proceeds from this offering will be approximately $15.3 million (assuming no sale of any pre-funded units), before taking into account the proceeds to be received from any future exercise of Series C Warrants issued to investors in this offering and after deducting underwriting discounts and commissions and offering expenses payable by us. We currently expect to use the net proceeds from this offering as follows:
·
approximately $
2.8
million on research and development to advance the ongoing development of our
C-Scan® system;
·
approximately $
2.0
million on clinical trials in Europe and the United States;
·
approximately $
1.2
million to build our manufacturing capabilities; and
·
the balance, if any, for other general corporate purposes.
See “Use of Proceeds” beginning on page 13 of this prospectus.
|
|
|
Dividend Policy
|
We have never declared or paid dividends on our ordinary shares and currently do not anticipate declaring or paying any cash dividends on our ordinary shares following this offering
|
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 7 of this prospectus and under similar sections in the documents we incorporate by reference into this prospectus 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 Series C Warrants or the pre-funded warrants, and we do not expect a trading market to develop. We have applied to list the Series C Warrants on the Nasdaq Capital Market under the symbol “CHECK.” There can, however, be no assurance that such listing will be approved. We will not list the pre-funded warrants on any securities exchange or other trading market. Without a trading market, the liquidity of the pre-funded warrants and the Series C Warrants will be extremely limited.
|
(1) |
The number of ordinary shares to be outstanding immediately prior to and after this offering is based on 1,609,133 ordinary shares outstanding as of April 20, 2018, and excludes:
|
· |
910,518 ordinary shares issuable upon the exercise of outstanding warrants, with a weighted average exercise price of $59.81 per ordinary share;
|
· |
158,684 ordinary shares issuable upon the exercise of outstanding options, with a weighted average exercise price of $45.03 per ordinary share, granted under our option and equity incentive plans;
|
· |
29,326 restricted stock units issued to employees, consultants and directors;
|
· |
118,249 ordinary shares that are available for future option grants under our 2015 Equity Incentive Plan and 2015 US Sub-Plan to the 2015 Equity Incentive Plan (the “2015 Plan”);
|
• |
2,500,000 ordinary shares issuable upon exercise of the pre-funded warrants offered hereby at an exercise price of $0.01 per share; and
|
• |
2,500,000 ordinary shares issuable upon exercise of the Series C Warrants offered hereby at an exercise price of $ per share.
|
· |
a one-for-12 reverse share split of our ordinary shares, which occurred on April 4, 2018; and
|
· |
that the underwriter does not exercise its option to purchase additional ordinary shares and/or Series C Warrants to purchase ordinary shares.
|
· |
our goals, targets and strategies;
|
· |
the timing and conduct of the clinical trials for our C-Scan system, including statements regarding the timing, progress and results of current and future preclinical studies and clinical trials, and our research and development programs;
|
· |
timing or likelihood of regulatory filings, approvals and required licenses for our C-Scan system;
|
· |
our future business development, results of operations and financial condition;
|
· |
our ability to adequately protect our intellectual property rights and enforce such rights and to avoid violation of the intellectual property rights of others;
|
· |
our plans to develop, launch and commercialize our C-Scan system and any future products;
|
· |
the timing, cost or other aspects of the commercial launch of our C-Scan system;
|
· |
our estimates regarding expenses, future revenues, capital requirements and our need for additional financing and strategic partnerships;
|
· |
our estimates regarding the market opportunity, clinical utility, potential advantages, and market acceptance of our C-Scan system;
|
· |
the impact of government laws and regulations;
|
· |
our ability to recruit and retain qualified clinical, regulatory and research and development personnel;
|
· |
the availability of reimbursement or other forms of funding for our products from government and commercial payors
;
|
· |
difficulties in maintaining commercial scale manufacturing capacity and capability and our ability to generate growth;
|
· |
our failure to comply with regulatory guidelines;
|
· |
uncertainty in industry demand and patient wellness behavior;
|
· |
general economic conditions and market conditions in the medical device industry;
|
· |
future sales of large blocks of our securities, which may adversely impact our share price;
|
· |
depth of the trading market in our securities; and
|
· |
our expectations regarding the use of proceeds of this offering.
|
· |
approximately $
2.8
million on research and development to advance the ongoing development of our C-Scan® system;
|
· |
approximately $
2.0
million on clinical trials in Europe and the United States;
|
· |
approximately $
1.2
million to build our manufacturing capabilities; and
|
· |
the balance, if any, for working capital and other general corporate purposes.
|
· |
the timing of clinical studies and eventual U.S. Food and Drug Administration approval of our C-Scan® system;
|
· |
the need or desire on our part to accelerate, increase or eliminate existing initiatives due to, among other things, changing market conditions and competitive developments; and
|
· |
the availability of other sources of cash, including cash flow from operations and new bank debt financing arrangements, if any.
|
· |
on an actual basis; and
|
· |
on as adjusted basis to give effect to (i) the amendment of our articles of association to increase our authorized and registered share capital by NIS 12,500,000 and (ii) the issuance and sale of 2,500,000 units in this offering at an assumed public offering price of $6.00 per unit after deducting underwriting discounts and commissions and estimated offering expenses payable by us, assuming no sale of any pre-funded warrants in this offering and excluding the proceeds, if any, from the exercise of Series C Warrants issued in this offering at an exercise price of $ per share:
|
As of December 31, 2017
|
||||||||
Actual
|
As adjusted
|
|||||||
(in thousands of $)
(Unaudited) |
||||||||
Shareholders’ equity:
|
||||||||
Ordinary share capital, 4,791,667 shares authorized and 1,605,434 shares issued, actual; 10,000,000 shares authorized and 4,105,434 shares issued, as adjusted
|
$
|
974
|
$
|
2,704
|
||||
Additional Paid in Capital
|
$
|
57,643
|
$
|
69,125
|
||||
Accumulated deficit
|
$
|
(52,712
|
)
|
$
|
(52,712
|
)
|
||
Total shareholders’ equity
|
$
|
5,905
|
$
|
19,117
|
||||
Total capitalization
|
$
|
5,905
|
$
|
19,117
|
· |
910,518 ordinary shares issuable upon the exercise of outstanding warrants with a weighted average exercise price of $59.81 per ordinary share;
|
· |
158,684 ordinary shares issuable upon the exercise of outstanding options with a weighted average exercise price of $45.03 per ordinary share, granted under our option and equity incentive plans;
|
· |
29,326 restricted stock units issued to directors, employees and consultants;
|
· |
118,249 ordinary shares that are available for future option grants under the 2015 Plan;
|
• |
2,500,000 ordinary shares issuable upon exercise of the pre-funded warrants offered hereby at an exercise price of $0.01 per share; and
|
• |
2,500,000 ordinary shares issuable upon exercise of the Series C Warrants offered hereby at an exercise price of $ per share.
|
· |
a one-for-12 reverse share split of our ordinary shares, which occurred on April 4, 2018; and
|
· |
that the underwriter does not exercise its option to purchase additional ordinary shares and/or Series C Warrants to purchase ordinary shares.
|
Year Ended
|
High
|
Low
|
||||||
December 31, 2015 (from March 18, 2015)
|
$
|
75.60
|
$
|
21.60
|
||||
December 31, 2016
|
$
|
44.64
|
$
|
11.64
|
||||
December 31, 2017
|
$
|
31.68
|
$
|
9.60
|
Quarter Ended
|
High
|
Low
|
||||||
March 31, 2016
|
$
|
40.20
|
$
|
30.84
|
||||
June 30, 2016
|
$
|
36.12
|
$
|
11.64
|
||||
September 30, 2016
|
$
|
41.04
|
$
|
12.96
|
||||
December 31, 2016
|
$
|
35.40
|
$
|
20.64
|
||||
March 31, 2017
|
$
|
31.68
|
$
|
24.84
|
||||
June 30, 2017
|
$
|
28.56
|
$
|
21.72
|
||||
September 30, 2017
|
$
|
24.00
|
$
|
19.80
|
||||
December 31, 2017
|
$
|
23.88
|
$
|
9.60
|
||||
March 31, 2018
|
$
|
13.64
|
$
|
5.58
|
Month Ended
|
High
|
Low
|
||||||
October 2017
|
$
|
23.88
|
$
|
15.00
|
||||
November 2017
|
$
|
18.24
|
$
|
11.40
|
||||
December 2017
|
$
|
12.24
|
$
|
9.60
|
||||
January 2018
|
$
|
13.64
|
$
|
9.84
|
||||
February 2018
|
$
|
10.64
|
$
|
7.20
|
||||
March 2018
|
$
|
8.64
|
$
|
5.58
|
||||
April 2018 (through April 25, 2018)
|
$
|
19.78
|
$
|
3.12
|
Assumed public offering price per unit
|
$
|
6.00
|
||||||
Net tangible book value per share as of December 31, 2017
|
$
|
3.68
|
||||||
Increase in net tangible book value per share attributable to this offering
|
$
|
0.98
|
||||||
As adjusted net tangible book value per share as of December 31, 2017, after giving effect to this offering
|
$
|
4.66
|
||||||
Dilution per share to new investors purchasing our ordinary shares in this offering
|
$
|
1.34
|
|
· |
910,518 ordinary shares issuable upon the exercise of outstanding warrants with a weighted average exercise price of $59.81 per ordinary share;
|
· |
158,684 ordinary shares issuable upon the exercise of outstanding options with a weighted average exercise price of $45.03 per ordinary share, granted under our option and equity incentive plans;
|
· |
29,326 restricted stock units issued to directors, employees and consultants;
|
· |
118,249 ordinary shares that are available for future option grants under the 2015 Plan;
|
· |
2,500,000 ordinary shares issuable upon exercise of the pre-funded warrants offered hereby at an exercise price of $0.01 per share; and
|
· |
2,500,000 ordinary shares issuable upon exercise of the Series C Warrants offered hereby at an exercise price of $ per share.
|
· |
a one-for-12 reverse share split of our ordinary shares, which occurred on April 4, 2018; and
|
· |
that the underwriter does not exercise its option to purchase additional ordinary shares and/or Series C Warrants to purchase ordinary shares.
|
· |
7,689 warrants to purchase ordinary shares (formerly (i) warrants to purchase 3,487 Series C-1 preferred shares; and (ii) warrants to purchase 4,202 Series C-2 preferred shares), with a weighted average exercise price of $62.44 per ordinary share;
|
· |
18,464 warrants to purchase ordinary shares, of which (i) warrants to purchase 9,232 ordinary shares have an exercise price of NIS 2.40 per ordinary share; and (ii) warrants to purchase 9,232 ordinary shares have an exercise price of $60.72 per ordinary share;
|
· |
14,970 warrants to purchase ordinary shares automatically exercisable, for no consideration, upon the exercise of certain outstanding warrants (the “Anti-Dilution Warrants”);
|
· |
35,082 warrants to purchase ordinary shares issued in connection with the certain Credit Line Agreement dated as of August 20, 2014, as amended (the “CLA Warrants” and the “Credit Line Agreement”), with an exercise price of NIS 2.40 per share;
|
· |
93,750 Series A Warrants issued in our initial public offering and 83,334 Series A Warrants issued in the simultaneous private placement, each with an exercise price of $90.00 per share;
|
· |
142,614 Long Term Incentive Warrants issued in our initial public offering and 235,433 Long Term Incentive Warrants issued in the simultaneous private placement, each with an exercise price of $82.80 per share;
|
· |
8,334 warrants to purchase ordinary shares issued to the underwriter in connection with our initial public offering, with an exercise price of $90.00 per share;
|
· |
1,250 warrants to purchase ordinary shares issued to our U.S. legal counsel in connection with our initial public offering, with an exercise price of $60.72 per share;
|
· |
112,460 warrants issued in connection with the private placement concurrent with our June 2017 registered direct offering, with an exercise price of $25.50 per share;
|
· |
142,042 warrants issued in connection with the private placement concurrent with our November 2017 registered direct offering, with an exercise price of $15.00 per share;
|
· |
5,625 warrants to purchase ordinary shares issued to the placement agent in connection with our June 2017 registered direct offering, with an exercise price of $30.00 per share; and
|
· |
9,471 warrants to purchase ordinary shares issued to the placement agent in connection with our November 2017 registered direct offering, with an exercise price of $16.50 per share.
|
· |
options to purchase 91,744 of our ordinary shares, with a weighted average exercise price of $47.32 per share, were outstanding under our 2006 Unit Option Plan. Of such outstanding options, options to purchase 88,538 of our ordinary shares, with a weighted average exercise price of $47.76 per share, were vested as of such date; and
|
· |
options to purchase 66,940 of our ordinary shares, with a weighted average exercise price of $41.89 per share, were outstanding under the 2015 Plan. Of such outstanding options, options to purchase 49,252 of our ordinary shares, with a weighted average exercise price of $$48.75 per share, were vested as of such date.
|
· |
Since March 31, 2015 we granted options to purchase an aggregate of 21,641 ordinary shares, in each case having an exercise price per share ranging from $52.20 to $60.72, to certain of our employees, officers, directors and consultants under our 2006 Unit Option Plan. Of such options, options to purchase an aggregate of 4,453 ordinary shares have been forfeited and cancelled without being exercised as of the date of this prospectus. Since August 13, 2015 we granted options to purchase an aggregate of 131,957 ordinary shares, in each case having an exercise price per share ranging from $10.44 to $54.84 to certain of our employees, officers, directors and consultants under the 2015 Plan. Of such options, options to purchase an aggregate of 65,018 ordinary shares have been forfeited and cancelled without being exercised as of the date of this prospectus.
|
· |
On February 27, 2017, we issued 7,457 RSUs to certain of our employees, officers and consultants under our 2015 Plan. On June 22, 2017, we issued additional 17,448 RSUs to certain of our officers and directors under the 2015 Plan and on August 3, 2017, we issued additional 24,951 RSUs to certain of our employees under the 2015 Plan. Of such RSUs, 17,236 RSUs have been forfeited and cancelled as of the date of this prospectus.
|
· |
Between March 31, 2015 and April 20, 2018 we issued and sold 155,662 ordinary shares upon the exercise of
158,688 CLA Warrants
and 3,026 CLA warrants expired.
|
· |
Between March 31, 2015 and April 20, 2018, we issued and sold 2,881 ordinary shares upon the exercise of 2,881 Anti-Dilution Warrants.
|
· |
Between March 6, 2017 and April 20, 2018, we issued and sold 1,396 ordinary shares upon the exercise of 1,430 Finders’ Warrants and 34 Finders’ Warrants expired.
|
· |
Between February 24, 2015 and February 24, 2017, 153,288 Long Term Incentive Warrants expired.
|
· |
On February 24, 2017, 5,837
Finders’ Warrants expired.
|
· |
Pursuant to a Securities Purchase Agreement dated as of August 8, 2016 between us and the purchasers identified therein, we issued and sold a total of 53,635 ordinary shares at a price of $22.80 per share and pre-funded warrants to purchase 209,524 ordinary shares (“2016 Pre-Funded Warrants”), at a price of $22.20 per Pre-Funded Warrant, in a registered direct offering. The exercise price for each 2016 Pre-Funded Warrant was $0.60 per share.
|
· |
Between August 11, 2016 and January 23, 2017, we issued a total of 209,524 ordinary shares upon the exercise of the 2016 Pre-Funded Warrants.
|
· |
On June 2, 2017, pursuant to a Securities Purchase Agreement dated as of May 30, 2017, between us and the purchasers identified therein, we issued and sold a total of 112,460 ordinary shares in a registered direct offering and warrants to purchase 112,460 ordinary shares
(“June 2017 Warrants”), with an exercise price of $25.50 per share, in a concurrent private placement, for an aggregate purchase price of $2,699,000.
|
· |
On June 2, 2017, we issued warrants to purchase 5,625 ordinary shares issued to the placement agent in connection with our June 2017 registered direct offering, with an exercise price of $30 per share.
|
· |
On November 22, 2017, pursuant to a Securities Purchase Agreement dated as of November 20, 2017, between us and the purchasers identified therein, we issued and sold a total of 189,387 ordinary shares in a registered direct offering and warrants to purchase 142,042 ordinary shares
(“November 2017 Warrants”), with an exercise price of $15 per share, in a concurrent private placement, for an aggregate purchase price of $2,499,900.
|
· |
On November 22, 2017 we issued warrants to purchase 9,471 ordinary shares issued to the placement agent in connection with our November 2017 registered direct offering, with an exercise price of $16.50 per share.
|
· |
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.
|
•
|
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 (ii) 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;
|
•
|
certain expatriates or former long-term residents of the United States;
|
•
|
persons that actually or constructively own 5% or more of our voting shares;
|
•
|
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 gain recognized by the U.S. Holder on the sale or other disposition of its ordinary shares, pre-funded warrants or Series C Warrants; and
|
•
|
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).
|
•
|
the U.S. Holder’s gain or excess distribution will be allocated ratably over the U.S. Holder’s holding period for the ordinary shares, pre-funded warrants or Series C 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.
|
•
|
fails to provide an accurate taxpayer identification number;
|
•
|
is notified by the IRS that backup withholding is required; or
|
•
|
in certain circumstances, fails to comply with applicable certification requirements.
|
|
•
|
amortization over an eight-year period 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, commencing the tax year in which the company started to use such know-how/ patent;
|
|
•
|
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.
|
Per Unit
|
Per Pre-funded Unit
|
Total Without Option
|
Total With Option
|
|||||||||||||
Public offering price
|
$
|
|
$ |
$
|
|
$
|
|
|||||||||
Underwriting discounts and commissions
|
$
|
|
$ |
$
|
|
$
|
|
|||||||||
Proceeds before expenses
|
$
|
|
$ |
$
|
|
$
|
|
· |
Syndicate covering transactions involve purchases of securities in the open market after the distribution has been completed in order to cover syndicate short positions. Such a naked short position would be closed out by buying securities in the open market. A naked short position is more likely to be created if the underwriter is concerned that there could be downward pressure on the price of the securities in the open market after pricing that could adversely affect investors who purchase in the offering.
|
· |
Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specific maximum.
|
· |
Penalty bids permit the underwriter to reclaim a selling concession from a syndicate member when the securities originally sold by the syndicate member are purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.
|
SEC registration fee
|
$
|
4,295.25
|
||
Financial Industry Regulatory Authority, Inc. filing fee
|
$
|
$5,675.00
|
||
Nasdaq Application Fee*
|
$
|
5,000.00
|
||
Legal fees and expenses*
|
$
|
200,000.00
|
||
Accounting fees and expenses*
|
$
|
1,000.00
|
||
Printing expenses*
|
$
|
1,000.00
|
||
Miscellaneous fees and expenses*
|
$
|
1,000.00
|
||
Total
|
$
|
217,970.25
|
· |
our Annual Report on Form 20-F for the fiscal year ended December 31, 2017, filed with the SEC on April 4, 2018;
|
· |
our Reports on Form 6-K filed with the SEC on April 5, 2018 and April 19, 2018; and
|
· |
the description of our ordinary shares contained in our Registration Statement on Form F-1, as amended, under the Securities Act, as originally filed with the SEC on December 23, 2014 (Registration No. 333- 201250) under the heading “Description of Securities” and as incorporated into our Registration Statement on Form 8-A12B, filed with the SEC February 11, 2015.
|
· |
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.
|
· |
a financial liability imposed on him or her in favor of another person pursuant to a judgment, including a settlement or arbitrator’s award approved by a court. However, if an undertaking to indemnify an office holder with respect to such liability is provided in advance, then such an undertaking must be limited to events which, in the opinion of the board of directors, can be foreseen based on the company’s activities when the undertaking to indemnify is given, and to an amount or according to criteria determined by the board of directors as reasonable under the circumstances, and such undertaking shall detail the abovementioned foreseen events and amount or criteria;
|
· |
reasonable litigation expenses, including attorneys’ fees, incurred by the office holder (1) as a result of an investigation or proceeding instituted against him or her by an authority authorized to conduct such investigation or proceeding, provided that (i) no indictment was filed against such office holder as a result of such investigation or proceeding; and (ii) no financial liability was imposed upon him or her as a substitute for the criminal proceeding as a result of such investigation or proceeding or, if such financial liability was imposed, it was imposed with respect to an offense that does not require proof of criminal intent; and (2) in connection with a monetary sanction;
|
· |
reasonable litigation expenses, including attorneys’ fees, incurred by the office holder or imposed by a court in proceedings instituted against him or her by the company, on its behalf, or by a third party, or in connection with criminal proceedings in which the office holder was acquitted, or as a result of a conviction for an offense that does not require proof of criminal intent; and
|
· |
expenses, including reasonable litigation expenses and legal fees, incurred by an office holder in relation to an administrative proceeding instituted against such office holder, or certain compensation payments made to an injured party imposed on an office holder by an administrative proceeding, pursuant to certain provisions of the Israeli Securities Law.
|
· |
a breach of the duty of loyalty to the company, provided that the office holder acted in good faith and had a reasonable basis to believe that the act would not harm the company;
|
· |
a breach of the duty of care to the company or to a third party, to the extent such a breach arises out of the negligent conduct of the office holder;
|
· |
a financial liability imposed on the office holder in favor of a third party; and
|
· |
expenses, including reasonable litigation expenses and legal fees, incurred by an office holder in relation to an administrative proceeding instituted against such office holder or certain compensation payments to an injured party imposed on an office holder by an administrative proceeding, pursuant to certain provisions of the Securities Law.
|
· |
a breach of the duty of loyalty, except for indemnification and insurance for a breach of the duty of loyalty to the company to the extent that the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company;
|
· |
a breach of the duty of care committed intentionally or recklessly, excluding a breach arising out of the negligent conduct of the office holder;
|
· |
an act or omission committed with intent to derive illegal personal benefit; or
|
· |
a fine, monetary sanction or forfeit levied against the office holder.
|
· |
Since March 31, 2015, we granted options to purchase an aggregate of 21,641 ordinary shares, in each case having an exercise price per share ranging from $52.20 to $60.72, to certain of our employees, officers, directors and consultants under our 2006 Unit Option Plan. Of such options, options to purchase an aggregate of 4,453 ordinary shares have been forfeited and cancelled without being exercised as of the date of this prospectus. We claimed exemption from registration under the Securities Act for such transactions under Section 4(a)(2) and/or Regulation S of the Securities Act.
|
· |
Since August 31, 2015 we granted options to purchase an aggregate of 131,957 ordinary shares, in each case having an exercise price per share ranging from $10.44 to $54.84 to certain of our employees, officers, directors and consultants under the 2015 Plan. Of such options, options to purchase an aggregate of 65,018 ordinary shares have been forfeited and cancelled without being exercised as of the date of this prospectus. We claimed exemption from registration under the Securities Act for such transactions under Section 4(a)(2) and/or Regulation S of the Securities Act.
|
· |
On February 27, 2017, we issued 7,457 RSUs to certain of our employees, officers and consultants under our 2015 Plan. On June 22, 2017, we issued additional 17,448 RSUs to certain of our officers and directors under the 2015 Plan and on August 3, 2017, we issued additional 24,951 RSUs to certain of our employees under the 2015 Plan. Of such RSUs, 17,236 RSUs have been forfeited and cancelled as of the date of this prospectus. We claimed exemption from registration under the Securities Act for such transactions under Section 4(a)(2) and/or Regulation S of the Securities Act.
|
· |
Between March 31, 2015 and April 4, 2018, we issued and sold 155,662 ordinary shares upon the exercise of 158,688 CLA Warrants. We claimed exemption from registration under the Securities Act for the initial issuance of the CLA Warrants and the issuance and the sale of the shares upon exercise of the CLA Warrants under Section 4(a)(2) and/or Regulation S of the Securities Act.
|
· |
Between March 31, 2015 and April 4, 2018, we issued and sold 2,881 ordinary shares upon the exercise of 2,881 Anti-Dilution Warrants. We claimed exemption from registration under the Securities Act for the initial issuance of the Anti-Dilution Warrants and the issuance and the sale of the shares upon exercise of the Anti-Dilution Warrants under Section 4(a)(2) and/or Regulation S of the Securities Act.
|
· |
Between March 6, 2017 and April 4, 2018, we issued and sold 1,396 ordinary shares upon the exercise of 1,430 Finders’ Warrants. We claimed exemption from registration under the Securities Act for the initial issuance of the Finders’ Warrants and the issuance and the sale of the shares upon exercise of the Finders’ Warrants under Section 4(a)(2) and/or Regulation S of the Securities Act.
|
· |
On June 2, 2017, pursuant to a Share Purchase Agreement dated as of May 30, 2017, we issued warrants to purchase 112,460 ordinary shares to two accredited investors in a private placement concurrent with our June 2017 registered direct offering. We claimed exemption from registration under the Securities Act for this transaction under Section 4(a)(2) and Rule 506 of the Securities Act.
|
· |
On June 2, 2017, we issued warrants to purchase 5,625 ordinary shares to the placement agent in connection with our June 2017 registered direct offering. We claimed exemption from registration under the Securities Act for this transaction under Section 4(a)(2) and Rule 506 of the Securities Act.
|
· |
On November 22, 2017, pursuant to a Share Purchase Agreement dated as of November 20, 2017 we issued warrants to purchase 142,042 ordinary shares to accredited investors in a private placement concurrent with our November 2017 registered direct offering. We claimed exemption from registration under the Securities Act for this transaction under Section 4(a)(2) and Rule 506 of the Securities Act.
|
· |
On November 22, 2017, we issued warrants to purchase 9,471 ordinary shares to the placement agent in connection with our November 2017 registered direct offering. We claimed exemption from registration under the Securities Act for this transaction under Section 4(a)(2) and Rule 506 of the Securities Act.
|
Check-Cap Ltd.
|
|||
By:
|
/s/ Alex Ovadia
|
||
Name:
|
Alex Ovadia
|
||
Title:
|
Chief Executive Officer
|
Dated: April 25, 2018
|
By:
|
/s/ Alex Ovadia
|
|
Name:
|
Alex Ovadia
|
||
Title:
|
Chief Executive Officer (Principal Executive Officer)
|
||
Dated: April 25, 2018
|
By:
|
/s/ Lior Torem
|
|
Name:
|
Lior Torem
|
||
Title:
|
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
|
||
Dated: April 25, 2018
|
By:
|
/s/ Steven Hanley*
|
|
Name:
|
Steven Hanley
|
||
Title:
|
Chairman of the Board of Directors
|
||
Dated: April 25, 2018
|
By:
|
/s/ Clara Ezed*
|
|
Name:
|
Clara Ezed
|
||
Title:
|
Director
|
||
Dated: April 25, 2018
|
By:
|
/s/ Mary Jo Gorman*
|
|
Title::
|
Mary Jo Gorman
|
||
Title:
|
Director
|
||
Dated: April 25, 2018
|
By:
|
/s/ Tomer Kariv*
|
|
Name:
|
Tomer Kariv
|
||
Title:
|
Director
|
||
Dated: April 25, 2018
|
By:
|
/s/ XiangQian Lin*
|
|
Name:
|
XiangQian Lin
|
||
Title:
|
Director
|
||
Dated: April 25, 2018
|
By:
|
/s/ Yuval Yanai*
|
|
Name:
|
Yuval Yanai
|
||
Title:
|
Director
|
* By: |
/s/ Lior Torem
|
|||
Attorney-in-Fact
|
Authorized U.S. Representative
|
||
/s/ Donald Puglisi
|
||
Puglisi & Associates
|
Exhibit No.
|
Description
|
|
|
Very truly yours,
CHECK-CAP LTD.
By: _________________________________
Name:
Title:
|
Number of Firm Shares and Pre-Funded Warrants to be Purchased from the Company
|
Number of Firm Warrants to be Purchased from the Company
|
Number of Option Shares to be Purchased if the Option to Purchase additional Shares and/or Warrants is Fully Exercised
|
Number of Option Warrants to be Purchased if the Option to Purchase additional Shares and/or Warrants is Fully Exercised
|
|||||||||||||
H.C. Wainwright & Co., LLC
|
[•
|
]
|
[•
|
]
|
[•
|
]
|
[•
|
]
|
||||||||
Total
|
Warrant Shares: _______
|
Initial Exercise Date: ___, 2018
Issue Date: ___, 2018
|
(A) |
= as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b)(64) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Ordinary Share on the principal Trading Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day;
|
|
CHECK-CAP LTD.
By:__________________________________________
Name:
Title:
|
Name:
|
|
(Please Print)
|
|
Address:
|
|
Phone Number:
Email Address:
|
(Please Print)
______________________________________
______________________________________
|
Dated: _______________ __, ______
|
|
Holder’s Signature:
|
|
Holder’s Address:
|
Warrant Shares: _______
|
Initial Exercise Date: ___, 2018
Issue Date: ___, 2018
|
(A) |
= as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b)(64) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Ordinary Share on the principal Trading Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day;
|
|
CHECK-CAP LTD.
By:__________________________________________
Name:
Title:
|
Name:
|
|
(Please Print)
|
|
Address:
|
|
Phone Number:
Email Address:
|
(Please Print)
______________________________________
______________________________________
|
Dated: _______________ __, ______
|
|
Holder’s Signature:
|
|
Holder’s Address:
|
|
CHECK-CAP LTD.
By:
_______________________________
Name:
_____________________________
Title:
______________________________
AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC
By:
_______________________________
Name:
_____________________________
Title:
______________________________
|
Tel. 972-3-69441111
|
|
Fax. 972-3-6091116
|
|
fbc@fbclawyers.com
|
|
Very truly yours,
/s/ Fischer Behar Chen Well Orion & Co.
|
|
345 Park Avenue
New York, NY 10154-1895
|
Direct
212.407.4000
Main 212.407.4000 Fax 212.407.4990 |
Check-Cap Ltd.
Check-Cap Building
Abba Hushi Avenue
P.O. Box 1271
Isfiya, 30090
Mount Carmel, Israel
|
|
Check-Cap, Ltd
.
April 25, 2018
Page 2
|
|
Very truly yours,
/s/ Loeb & Loeb LLP
|