20-F/A: SciSparc Files Amended 20-F Report Including Updated Auditor's Report

SciSparc Ltd. files an amendment to its annual report on Form 20-F to include an updated report from its independent registered public accounting firm.

Summary

• SciSparc Ltd. has filed Amendment No. 1 to its Annual Report on Form 20-F to include the Report of its Independent Registered Public Accounting Firm dated as of April 1, 2024.
• The original filing contained a report dated March 31, 2024.
• The audited consolidated financial statements as of and for the three fiscal years ended December 31, 2023, remain unchanged from the original filing.
• The company had 706,683 ordinary shares outstanding as of December 31, 2023.
• The company's cash and cash equivalents totaled $2,076 as of December 31, 2023.
• The company had an operating loss of $5,883 for the year ended December 31, 2023.
• The company had negative cash flows from operating activities of $5,887 for the year ended December 31, 2023.
• The company's current cash and cash equivalents position is not sufficient to fund the company's planned operations for at least a year beyond the filing date of the financial statements.
• The company has accumulated tax losses of approximately $62,000 as of December 31, 2023.

Sentiment

Score: 4

Explanation: The sentiment is neutral to slightly negative. While there are some positives like revenue recognition, the company faces significant financial challenges, including operating losses, insufficient cash, and dependence on future financing. The lawsuit adds further uncertainty.

Positives

• The company has started recognizing revenues from sales.
• The company successfully raised funds in the past.

Negatives

• The company has incurred operating losses since its incorporation and expects to continue to incur operating losses for the foreseeable future.
• The company's current cash position is insufficient to fund planned operations for the next year.
• The company's pharmaceutical operations are dependent on its ability to raise additional funds from existing and/or new investors.

Risks

• The company's ability to continue as a going concern is dependent upon obtaining the necessary financing.
• There is no guarantee that the company will be able to raise funds in the future.
• The inability to borrow or raise sufficient funds on commercially reasonable terms would have serious consequences on the company's financial condition and results of operations.
• The company's pharmaceutical operations are dependent on its ability to raise additional funds from existing and/or new investors.
• The company is involved in a lawsuit with Capital Point Ltd. claiming damages of approximately $2.75 million.

Future Outlook

The company's ability to continue as a going concern is dependent upon obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due.

Industry Context

The document does not provide specific details on how this announcement relates to broader industry trends or competitors beyond the general pharmaceutical and nutraceutical sectors.

Comparison to Industry Standards

• The document does not provide enough information to make a detailed comparison to industry standards.
• A thorough comparison would require benchmarking against similar-sized pharmaceutical and nutraceutical companies, considering factors like R&D spending, revenue growth, and profitability metrics.
• Without specific competitor data, a comprehensive assessment is not possible.

Legal Proceedings

• Capital Point Ltd. filed a suit against the Company claiming damages of approximately $2.75 million.

Related Party Transactions

• On February 23, 2023, the Company entered into an agreement with Jeffs Brands and Jeffs Brands Holdings Inc. (NewCo Inc.), a newly-formed wholly owned subsidiary of Jeffs Brands, pursuant to which, at the closing and upon the terms and conditions set forth in the Agreement, NewCo Inc. acquired from the Company a number of shares of stock equal to approximately a 49% interest in the Company's wholly owned subsidiary, SciSparc US which owns WellutionTM, for $2,500 in cash, and additional deferred cash payments of approximately $489,330 accounting for price adjustments related to inventory and working capital, which was paid in five equal monthly installments beginning in May 2023 (the Price Adjustment).
• Mr. Oz Adler, our Chief Executive Officer and Chief Financial Officer, is the chairman of the board of directors of Jeffs Brands.
• On March 7, 2022, we entered into the Cooperation Agreement with Clearmind, a company in which Dr. Adi Zuloff-Shani, our Chief Technologies Officer, Mr. Weiss, our President, and Mr. Adler, our Chief Executive Officer and Chief Financial Officer serve as officers and directors.
• Mr. Amitai Weiss, our chairman of the board of directors, is the chairman of the board of directors of AutoMax.

Stakeholder Impact

• Shareholders face the risk of dilution if the company raises additional capital through equity offerings.
• Employees' job security is uncertain due to the company's financial difficulties.
• Customers may be affected if the company is unable to continue operations.
• Suppliers and creditors face the risk of non-payment if the company's financial situation worsens.

Next Steps

• The company needs to secure additional financing to continue operations.
• The company needs to manage its expenses to reduce operating losses.
• The company needs to resolve the lawsuit with Capital Point Ltd.

Key Dates

Keywords

financial statements, auditor's report, Form 20-F, SciSparc, operating loss, cash flow, going concern, pharmaceutical, cannabinoid, SPRC