{"url_path":"/sec/mbai/10-k/2026/item-4","section_key":"item-4","section_title":"Item 4 “Information on Our Company” and elsewhere in this Item 5 “Operating and Financial Review and Prospects.”","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-04-27","source_url":"https://www.sec.gov/Archives/edgar/data/1610590/0001213900-26-048090-index.html","accession_number":"0001213900-26-048090","cik":"0001610590","ticker":"MBAI","issuer_name":"Check-Cap Ltd","edgar_url":"https://www.sec.gov/Archives/edgar/data/1610590/0001213900-26-048090-index.html","primary_entity_key":"0001610590","primary_entity_name":"Check-Cap Ltd"},"word_count":672,"has_tables":true,"body_markdown":"Item 4 “Information on Our Company” and elsewhere in this Item 5 “Operating and Financial Review and Prospects.”\n\n** **\n\n85\n\n \n\n** **\n\n**E. Critical Accounting Estimates**\n\n \n\nOur consolidated financial\nstatements are prepared in accordance with U.S. GAAP. The preparation of our financial statements requires us to make estimates, judgments\nand assumptions that can affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the\ndate of the financial statements and the reported amounts of expenses during the reporting periods. We base our estimates, judgments and\nassumptions on historical experience and other factors that we believe to be reasonable under the circumstances. Materially different\nresults can occur as circumstances change and additional information becomes known. See Note 2 to our audited consolidated financial statements\npresented elsewhere in this Annual Report for a description of the significant accounting policies that we used to prepare our consolidated\nfinancial statements.\n\n \n\nWe believe the following\ncritical policies reflect the more significant judgments and estimates used in preparation of the Consolidated Financial Statements.\n\n** **\n\n**Share-based compensation**\n\n \n\nWe recognize expense for\nour share-based compensation based on the fair value of the awards granted. We estimate the fair value of equity-based payment awards\non the date of grant. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite\nservice periods in our consolidated statement of operations.\n\n \n\nWe recognize compensation\nexpenses for the value of our awards granted based on the graded-vesting method over the requisite service period for each separately\nvesting portion of the award.\n\n \n\nWe recognize compensation\ncost for awards with performance conditions if and when we conclude that it is probable that the performance conditions will be achieved.\nWe reassess at each reporting period the probability of vesting for awards with performance conditions and adjust compensation cost based\non our probability assessment.\n\n \n\nWe use the Black-Scholes-Merton\noption-pricing model for our share-based awards. The option-pricing model requires a number of assumptions, of which the most significant\nare the fair market value of the underlying ordinary shares, expected share price volatility and the expected option term. In the year\nended December 31, 2024, 2023 and 2022, expected volatility was calculated based upon actual historical stock price movements over\nthe most recent periods ending on the grant date, equal to the expected term of the options.\n\n \n\nThe expected option term\nrepresents the period of time that options granted are expected to be outstanding. The expected option term is determined based on the\nsimplified method in accordance with Staff Accounting Bulletin No. 110, as adequate historical experience is not available to provide\na reasonable estimate.\n\n \n\nThe risk-free interest rate\nis based on the yield from U.S. treasury bonds with an equivalent term. We have historically not paid dividends and have no foreseeable\nplans to pay dividends.\n\n** **\n\n**Equity**\n\n \n\nIn the years ended December 31,\n2023 and December 31, 2022, we completed certain financing transactions in which we issued ordinary shares and warrants. The warrants\nare immediately exercisable at a fixed exercise price per ordinary share, subject to certain adjustments and will expire on the expiring\ndate as determined in the applicable warrant. The warrants may be exercised on a cashless basis if at the time of exercise thereof, there\nis no effective registration statement registering the ordinary shares underlying the warrants. We analyzed the terms of the warrants\nand concluded that the terms of the warrants did not include features that would preclude equity classification. Therefore, we classified\nthe warrants as equity.\n\n \n\nIn September 2025, we entered into the Parea APA,\npursuant to which we acquired exclusive Ghost Kitchen area representative rights in New Jersey in exchange for the issuance of 1,169,596\nordinary shares. In December 2025, we entered into the Purchase Agreement, pursuant to which ARC committed to purchase up to $30.0 million\nof our ordinary shares, subject to certain limitations and conditions.\n\n \n\n**Recent Accounting Pronouncements**\n\n \n\nSee Note 2 to our audited\nconsolidated financial statements presented elsewhere in this Annual Report for a description of the recent accounting policies.\n\n** **\n\n86"}