Full Press Release Details
LTD. AND ITS SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2024
U.S. DOLLARS IN THOUSANDS
| Page | ||
| Report of Independent Registered Public Accounting Firm (PCAOB ID 1281) | F-2 - F-3 | |
| Consolidated Statements of Financial Position | F-4 - F-5 | |
| Consolidated Statements of Comprehensive Loss | F-6 | |
| Consolidated Statements of Changes in Equity | F-7 | |
| Consolidated Statements of Cash Flows | F-8 - F-10 | |
| Notes to Consolidated Financial Statements | F-11 - F-53 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
To the Shareholders and the Board of Directors
SCISPARC LTD. AND ITS SUBSIDIARIES
Opinion on the Financial Statements
We have audited the accompanying
consolidated statements of financial position of SciSparc Ltd. and its subsidiaries (the "Company") as of December 31, 2024
and 2023, the related consolidated statements of comprehensive loss, changes in equity and cash flows for each of the three years in
the period ended December 31, 2024, and the related notes (collectively referred to as the "consolidated financial statements").
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company
at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December
31, 2024, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
The Company's Ability to Continue as
The accompanying consolidated
financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company has suffered recurring losses from operations, negative cash flows from operating activities, and has stated
that substantial doubt exists about the Company's ability to continue as a going concern. Management's evaluation of the
events and conditions and management's plans regarding these matters are also described in Note 1. The consolidated financial statements
do not include any adjustments that might result from the outcome of this uncertainty.
These financial statements
are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial
statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United
States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in
accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required
to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required
to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness
of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing
procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management,
as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for
Critical Audit Matters
The critical audit matters
communicated below are matters arising from the current period audit of the financial statements that were communicated or required to
be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements
and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matters does not
alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical
audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Liquidity and Capital Resources
| Description of the Matter | As discussed in Note 1 to the consolidated financial statements, the Company has incurred losses since inception, and expects to continue to incur losses for the foreseeable future. At December 31, 2024, the Company's cash and cash equivalents position is not sufficient to fund the Company's planned operations for at least a year beyond the date of the issuance of the consolidated financial statements. Those factors raise substantial doubt about the Company's ability to continue as a going concern. We determined the Company's ability to continue as a going concern is a critical audit matter due to the estimation and execution uncertainty regarding the Company's future cash flows and the risk of bias in management's judgments and assumptions in estimating these cash flows to conclude the Company would have sufficient liquidity to sustain itself for at least a year beyond the date of the issuance of the consolidated financial statements. This in turn led to a high degree of auditor subjectivity and judgment to evaluate the audit evidence supporting the liquidity conclusions. | |
| How We Addressed the Matter in Our Audit | Addressing the matter involved performing procedures and evaluating audit evidence in connection with our overall opinion on the consolidated financial statements. Our audit procedures included testing the reasonableness of the forecasted revenue, operating expenses, and uses and sources of cash used in management's assessment of whether the Company has sufficient liquidity to fund operations for at least one year from the consolidated financial statement issuance date. This testing included inquiries with management, consideration of positive and negative evidence impacting management's forecasts, the Company's financing arrangements in place as of the report date, market and industry factors, we evaluated management's analysis of their impact on the forecasted cash flows. We assessed the adequacy of the Company's going concern disclosures included in Note 1 to the consolidated financial statements. |
Fair value of loan to Automax (a related party)
| /s/ KOST FORER GABBAY & KASIERER | Tel Aviv, Israel | |
| April 24, 2025, except for note 1(d), as to which the date is July 8, 2025. |
A Member of EY Global
We have served as the Company's auditor since 2007.
SCISPARC LTD. AND ITS
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
| December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Note | USD in thousands | ||||||||||
| ASSETS | |||||||||||
| CURRENT ASSETS: | |||||||||||
| Cash | 4 | $ | 1,540 | $ | 2,076 | ||||||
| Restricted deposit | 20 | 65 | |||||||||
| Short-term deposit | - | 3,000 | |||||||||
| Trade receivables | 10 | 22 | |||||||||
| Other accounts receivable | 6 | 1,079 | 540 | ||||||||
| Investments in short-term financial assets | 24g | 517 | - | ||||||||
| Bridge loan to related parties | 24a | 4,224 | - | ||||||||
| Inventory | 5 | 113 | 742 | ||||||||
| 7,503 | 6,445 | ||||||||||
| NON-CURRENT ASSETS: | |||||||||||
| Intangible assets, net | 11 | 1,479 | 3,189 | ||||||||
| Investments in company accounted for at equity | 7 | 952 | 781 | ||||||||
| Investments in financial assets | 8, 24d | 354 | 659 | ||||||||
| Property and equipment, net | 10 | 59 | 108 | ||||||||
| 2,844 | 4,737 | ||||||||||
| $ | 10,347 | $ | 11,182 |
The accompanying notes are an integral part of
the consolidated financial statements.
SCISPARC LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
| December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Note | USD in thousands | ||||||||||
| LIABILITIES AND EQUITY | |||||||||||
| CURRENT LIABILITIES: | |||||||||||
| Trade payables | 12 | $ | 816 | $ | 802 | ||||||
| Other accounts payable | 13 | 205 | 185 | ||||||||
| Warrants | - | 191 | (*) | ||||||||
| Other short-term liability | 17e | 341 | 341 | (*) | |||||||
| Lease liability | 9 | 37 | 52 | ||||||||
| 1,399 | 1,571 | ||||||||||
| NON-CURRENT LIABILITIES: | |||||||||||
| Lease liability | 9 | 9 | 24 | ||||||||
| EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY: | 18 | ||||||||||
| Share capital and premium | 70,886 | 64,526 | |||||||||
| Reserve from share-based payment transactions | 19 | 5,746 | 5,282 | ||||||||
| Warrants | 5,190 | 5,190 | |||||||||
| Foreign currency translation reserve | 2d | 497 | 497 | ||||||||
| Transactions with non-controlling interests | 810 | 810 | |||||||||
| Accumulated deficit | ( 74,975 | ) | ( 68,691 | ) | |||||||
| 8,154 | 7,614 | ||||||||||
| Non-controlling interests | 785 | 1,973 | |||||||||
| Total equity | 8,939 | 9,587 | |||||||||
| Total liabilities and equity | $ | 10,347 | $ | 11,182 |
The accompanying notes are an integral part of
the consolidated financial statements.
SCISPARC LTD. AND ITS
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
| Year ended December 31, | |||||||||||||||
| 2024 | 2023 | 2022 | |||||||||||||
| Note | USD in thousands (except per share data) | ||||||||||||||
| Revenues | 20 | $ | 1,306 | $ | 2,879 | $ | 1,347 | ||||||||
| Cost of goods sold | 20 | ( 800 | ) | ( 683 | ) | ( 322 | ) | ||||||||
| Gross profit | 506 | 2,196 | 1,025 | ||||||||||||
| Research and development expenses | 21a | 1,707 | 1,641 | 2,803 | |||||||||||
| Sales and marketing | 21b | 1,515 | 2,484 | * | 1,082 | * | |||||||||
| Impairment of intangible assets | 1,344 | 1,042 | - | ||||||||||||
| General and administrative expenses | 21c | 4,526 | 3,844 | * | 5,427 | * | |||||||||
| Other income | 21d | ( 1,270 | ) | - | - | ||||||||||
| Operating loss | 7,316 | 6,815 | 8,287 | ||||||||||||
| Equity losses from the investment in MitoCareX | 429 | 210 | 109 | ||||||||||||
| Finance income | 21e | ( 612 | ) | ( 2,219 | ) | ( 7,832 | ) | ||||||||
| Finance expenses | 21f | 353 | 1,055 | 2,014 | |||||||||||
| Loss before income taxes | 7,486 | 5,861 | 2,578 | ||||||||||||
| Taxes on income | ( 14 | ) | 22 | 14 | |||||||||||
| Total comprehensive loss | 7,472 | 5,883 | 2,592 | ||||||||||||
| Attributable to: | |||||||||||||||
| Equity holders of the Company | 6,284 | 5,122 | 2,592 | ||||||||||||
| Non-controlling interests | 1,188 | 761 | - | ||||||||||||
| 7,472 | 5,883 | 2,592 | |||||||||||||
| Basic loss per ordinary share attributable to equity holders of the Company | 22 | 26.94 | 303.03 | 311.22 | |||||||||||
| Diluted loss per ordinary share attributable to equity holders of the Company | 22 | 26.94 | 303.03 | 311.22 |
The accompanying notes are an integral part of
the consolidated financial statements.
SCISPARC LTD. AND ITS
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
| Attributable to equity holders of the Company | ||||||||||||||||||||||||||||||||||||
| Share capital and premium | Reserve from share- based payment transactions | Warrants | Transactions with non- controlling interests | Foreign currency translation reserve | Accumulated deficit | Total | Non- controlling interests | Total equity | ||||||||||||||||||||||||||||
| USD in thousands | ||||||||||||||||||||||||||||||||||||
| Balance at January 1, 2022 | $ | 58,541 | 4,331 | 5,190 | 559 | 497 | ( 60,977 | ) | 8,141 | - | 8,141 | |||||||||||||||||||||||||
| Loss | - | - | - | - | - | ( 2,592 | ) | ( 2,592 | ) | - | ( 2,592 | ) | ||||||||||||||||||||||||
| Exercise of warrants | 3 | - | - | - | - | - | 3 | - | 3 | |||||||||||||||||||||||||||
| Cost of share-based payment | 48 | 849 | - | - | - | - | 897 | - | 897 | |||||||||||||||||||||||||||
| Balance at December 31, 2021 | $ | 58,592 | $ | 5,180 | $ | 5,190 | $ | 559 | $ | 497 | $ | ( 63,569 | ) | $ | 6,449 | $ | - | $ | 6,449 | |||||||||||||||||
| Loss | - | - | - | - | - | ( 5,122 | ) | ( 5,122 | ) | ( 761 | ) | ( 5,883 | ) | |||||||||||||||||||||||
| Sale of minority interest in subsidiary | - | - | - | 251 | - | - | 251 | 2,734 | 2,985 | |||||||||||||||||||||||||||
| Issuance of share capital in respect of investment in affiliate | 288 | - | - | - | - | - | 288 | - | 288 | |||||||||||||||||||||||||||
| Issuance of share capital, net of issue expenses | 5,552 | - | - | - | - | - | 5,552 | - | 5,552 | |||||||||||||||||||||||||||
| Cost of share-based payment | 94 | 102 | - | - | - | - | 196 | - | 196 | |||||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | 64,526 | $ | 5,282 | $ | 5,190 | $ | 810 | $ | 497 | $ | ( 68,691 | ) | $ | 7,614 | $ | 1,973 | $ | 9,587 | |||||||||||||||||
| Loss | ( 6,284 | ) | ( 6,284 | ) | ( 1,188 | ) | ( 7,472 | ) | ||||||||||||||||||||||||||||
| Issuance of share capital, net of issue expenses | 6,255 | - | 6,255 | - | 6,255 | |||||||||||||||||||||||||||||||
| Cost of share-based payment | 105 | 464 | - | - | - | - | 569 | - | 569 | |||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | 70,886 | $ | 5,746 | $ | 5,190 | $ | 810 | $ | 497 | $ | ( 74,975 | ) | $ | 8,154 | $ | 785 | $ | 8,939 |
The accompanying notes are an integral part of
the consolidated financial statements.
SCISPARC LTD. AND ITS
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Year ended December 31, | ||||||||||||
| 2024 | 2023 | 2022 | ||||||||||
| USD in thousands | ||||||||||||
| Cash flows from operating activities: | ||||||||||||
| Loss | $ | ( 7,472 | ) | $ | ( 5,883 | ) | $ | ( 2,592 | ) | |||
| Adjustments to reconcile loss to net cash used in operating activities: | ||||||||||||
| Adjustments to the profit or loss items: | ||||||||||||
| Depreciation and amortization | 482 | 538 | 187 | |||||||||
| Loss on impairment of intangible asset | 1,344 | 1,042 | - | |||||||||
| Cost of share-based payment | 569 | 196 | 897 | |||||||||
| Finance income, net | ( 897 | ) | ( 2,205 | ) | ( 6,585 | ) | ||||||
| Group's share of losses of company accounted for at equity, net | 429 | 210 | 109 | |||||||||
| Losses from remeasurement of investment in financial assets | 305 | 1,048 | 770 | |||||||||
| 2,232 | 829 | ( 4,622 | ) | |||||||||
| Working capital adjustments: | ||||||||||||
| Decrease (increase) in other accounts receivable | ( 535 | ) | ( 409 | ) | 3 | |||||||
| Increase (decrease) in trade payables | 25 | ( 397 | ) | - | ||||||||
| Increase (decrease) in other accounts payable | 20 | ( 8 | ) | 39 | ||||||||
| Increase in related parties | ( 15 | ) | - | - | ||||||||
| Decrease (increase) in trade receivables | 12 | 55 | ( 77 | ) | ||||||||
| Decrease (increase) in inventory | 629 | ( 74 | ) | ( 668 | ) | |||||||
| 136 | ( 833 | ) | ( 703 | ) | ||||||||
| Net cash used in operating activities | $ | ( 5,104 | ) | $ | ( 5,887 | ) | $ | ( 7,917 | ) |
The accompanying notes are an integral part of
the consolidated financial statements.
SCISPARC LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Year ended December 31, | ||||||||||||
| 2024 | 2023 | 2022 | ||||||||||
| USD in thousands | ||||||||||||
| Cash flows from investing activities: | ||||||||||||
| Withdrawal of (investment in) restricted bank deposits | $ | 45 | $ | ( 5 | ) | $ | ( 15 | ) | ||||
| Withdrawal of (investment in) short-term bank deposits | 3,000 | ( 3,000 | ) | - | ||||||||
| Sale (purchase) of property and equipment | 8 | - | ( 8 | ) | ||||||||
| Investment in a company accounted for at equity | ( 600 | ) | ( 400 | ) | ( 700 | ) | ||||||
| Bridge loan to related parties | ( 4,078 | ) | - | - | ||||||||
| Investments in financial assets | - | ( 689 | ) | ( 1,500 | ) | |||||||
| Purchase of intangible asset | - | - | ( 4,861 | ) | ||||||||
| Net cash provided by (used in) investing activities | ( 1,625 | ) | ( 4,094 | )* | ( 7,084 | ) | ||||||
| Cash flows from financing activities: | ||||||||||||
| Proceeds from issue of share capital (net of issuance expenses) | 6,255 | 5,552 | 9,005 | |||||||||
| Sale of minority interest in subsidiary | - | 2,985 | * | - | ||||||||
| Exercise of warrants (a) | - | - | 2,770 | |||||||||
| Payment of issuance expenses related to previous period | - | - | 3 | |||||||||
| Interest paid on lease liability | ( 8 | ) | ( 7 | ) | ( 8 | ) | ||||||
| Repayment of lease liability | ( 54 | ) | ( 47 | ) | ( 70 | ) | ||||||
| Net cash provided by financing activities | 6,193 | 8,483 | * | 11,700 | ||||||||
| Decrease in cash | ( 536 | ) | ( 1,498 | ) | ( 3,301 | ) | ||||||
| Cash at the beginning of the period | 2,076 | 3,574 | 6,875 | |||||||||
| Cash at the end of the period | $ | 1,540 | $ | 2,076 | $ | 3,574 |
The accompanying notes are an integral part of
the consolidated financial statements.
SCISPARC LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Year ended December 31, | ||||||||||||
| 2024 | 2023 | 2022 | ||||||||||
| USD in thousands | ||||||||||||
| (a) Significant non-cash transactions : | ||||||||||||
| Right-of-use asset recognized with corresponding lease liability | 75 | 102 | - | |||||||||
| Investment in financial asset | - | 288 | - |
The accompanying notes are an integral part of
the consolidated financial statements.
SCISPARC LTD. AND ITS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
USD in thousands (except share data)
ordinary shares are listed on Nasdaq and are trading under the symbol "SPRC".
As of December 31, 2024, the Company
had three private subsidiaries, including an inactive company incorporated under the laws of Israel: Evero Health Ltd ("Evero");
an inactive company incorporated under the laws of Israel: Brain Bright Ltd ("Brain Bright"); and a company incorporated
under the laws of the State of Delaware: Scisparc Nutraceuticals Inc. (together with Evero and Brain Bright, the "Subsidiaries").
On September 14, 2023, the Company's
board of directors (the "Board") resolved that the final ratio for the Third Reverse Split (as defined below) will be 26:1,
which became effective on September 28, 2023. Consequently, all share numbers, share prices, and exercise prices have been retroactively
adjusted in these consolidated financial statements for all periods presented.
As of December 31, 2024, the Company's