Exhibit 99.1
SCISPARC LTD.
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2024
UNAUDITED
INDEX
SCISPARC LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
| June 30, | December 31, | |||||||||||||
| 2024 | 2023 | 2023 | ||||||||||||
| Unaudited | Audited | |||||||||||||
| Note | USD in thousands | |||||||||||||
| ASSETS | ||||||||||||||
| CURRENT ASSETS: | ||||||||||||||
| Cash and cash equivalents | $ | $ | $ | |||||||||||
| Restricted deposit | ||||||||||||||
| Short-term deposit | ||||||||||||||
| Trade receivables | ||||||||||||||
| Other accounts receivable | ||||||||||||||
| Inventory | ||||||||||||||
| NON-CURRENT ASSETS: | ||||||||||||||
| Intangible asset, net | 4 | |||||||||||||
| Related parties | 5,6 | |||||||||||||
| Investment in company account for at equity | 3 | |||||||||||||
| Investments in financial assets | 5 | |||||||||||||
| Property and equipment, net | ||||||||||||||
| $ | $ | $ | ||||||||||||
The accompanying notes are an integral part of the interim consolidated financial statements.
2
SCISPARC LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
| June 30, | December 31, | |||||||||||||
| 2024 | 2023 | 2023 | ||||||||||||
| Unaudited | Audited | |||||||||||||
| Note | USD in thousands | |||||||||||||
| LIABILITIES AND EQUITY | ||||||||||||||
| CURRENT LIABILITIES: | ||||||||||||||
| Trade payables | $ | $ | $ | |||||||||||
| Other accounts payable | ||||||||||||||
| Warrants | 8 | |||||||||||||
| Lease liability | ||||||||||||||
| NON-LIABILITIES | ||||||||||||||
| Lease liability | ||||||||||||||
| EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY: | 9 | |||||||||||||
| Share capital and premium | ||||||||||||||
| Reserve from share-based payment transactions | ||||||||||||||
| Warrants | ||||||||||||||
| Foreign currency translation reserve | ||||||||||||||
| Transactions with non-controlling interests | ||||||||||||||
| Accumulated deficit | ( | ) | ( | ) | ( | ) | ||||||||
| Non-controlling interests | ||||||||||||||
| Total equity | $ | $ | $ | |||||||||||
| Total liabilities and equity | $ | $ | $ | |||||||||||
The accompanying notes are an integral part of the interim consolidated financial statements.
3
SCISPARC LTD.
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE LOSS
| Six months ended June 30, | Year Ended December 31, | |||||||||||||
| 2024 | 2023 | 2023 | ||||||||||||
| Unaudited | Audited | |||||||||||||
| Note | USD in thousands, except per share amounts | |||||||||||||
| Revenues | $ | $ | $ | |||||||||||
| Cost of goods sold | ( | ) | ( | ) | ( | ) | ||||||||
| Gross profit | ||||||||||||||
| Research and development expenses | 10a | |||||||||||||
| Sales and marketing | ||||||||||||||
| Impairment of intangible asset | ||||||||||||||
| General and administrative expenses | 11b | |||||||||||||
| Operating loss | ||||||||||||||
| Company’s share of losses of companies accounted for at equity, net | ||||||||||||||
| Finance income | ( | ) | ( | ) | ( | ) | ||||||||
| Finance expenses | ||||||||||||||
| Loss before income taxes | ||||||||||||||
| Taxes on income | ( | ) | ||||||||||||
| Total comprehensive loss | ||||||||||||||
| Attributable to: | ||||||||||||||
| Equity holders of the Company | ||||||||||||||
| Non-controlling interests | ||||||||||||||
| Basic loss per share attributable to equity holders of the Company: | ||||||||||||||
| Loss from operations | (*) | |||||||||||||
| Diluted loss per share attributable to equity holders of the Company: | ||||||||||||||
| Loss from operations | (*) | |||||||||||||
| (*) |
The accompanying notes are an integral part of the interim consolidated financial statements.
4
SCISPARC LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT)
For the six months ended June 30, 2024
| 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, 2024 | $ | ( | ) | |||||||||||||||||||||||||||||||||
| Income (loss) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Issuance of shares, net of issuance expenses | ||||||||||||||||||||||||||||||||||||
| Cost of share-based payment | ||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2024 | $ | ( | ) | |||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of the interim consolidated financial statements.
5
SCISPARC LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT)
For the six months ended June 30, 2023
| 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, 2023 | $ | ( | ) | |||||||||||||||||||||||||||||||||
| Income (loss) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Issuance of share capital in respect of investment in affiliate | ||||||||||||||||||||||||||||||||||||
| Sale of minority interest in subsidiary | ||||||||||||||||||||||||||||||||||||
| Issuance of shares, net of issuance expenses | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Cost of share-based payment | ||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2023 | $ | ( | ) | |||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of the interim consolidated financial statements.
6
SCISPARC LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the year ended December 31, 2023
| 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, 2023 | $ | ( | ) | |||||||||||||||||||||||||||||||||
| Income (loss) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Sales of minority interest in subsidiary | ||||||||||||||||||||||||||||||||||||
| Issuance of share capital in respect of investment in affiliate | ||||||||||||||||||||||||||||||||||||
| Issuance of share capital, net of issuance expenses | ||||||||||||||||||||||||||||||||||||
| Cost of share-based payment | ||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | ( | ) | |||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of the interim consolidated financial statements.
7
SCISPARC LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Six months ended June 30, | Year Ended December 31, | |||||||||||
| 2024 | 2023 | 2023 | ||||||||||
| Unaudited | Audited | |||||||||||
| USD in thousands | ||||||||||||
| Cash flows from operating activities: | ||||||||||||
| Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||
| Adjustments to the profit or loss items: | ||||||||||||
| Depreciation and amortization | ||||||||||||
| Loss on impairment of intangible asset | ||||||||||||
| Cost of share-based payment | ||||||||||||
| Finance expenses, net | ( | ) | ( | ) | ( | ) | ||||||
| Group’s share of losses of company accounted for at equity, net | ||||||||||||
| Losses from remeasurement of investment in financial assets | ||||||||||||
| Working capital adjustments: | ||||||||||||
| Decrease (increase) in other accounts receivable | ( | ) | ( | ) | ||||||||
| Increase (decrease) in trade payables | ( | ) | ||||||||||
| Increase (decrease) in other accounts payable | ( | ) | ( | ) | ||||||||
| Decrease (increase) in trade receivables | ||||||||||||
| Decrease (increase) in inventory | ( | ) | ||||||||||
| ( | ) | ( | ) | |||||||||
| Net cash used in operating activities | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
The accompanying notes are an integral part of the interim consolidated financial statements.
8
SCISPARC LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Six months ended June 30, | Year Ended December 31, | |||||||||||
| 2024 | 2023 | 2023 | ||||||||||
| Unaudited | Audited | |||||||||||
| USD in thousands | ||||||||||||
| Cash flows from investing activities: | ||||||||||||
| Investment (withdrawal) in restricted bank deposits | $ | $ | $ | ( | ) | |||||||
| Investment (withdrawal) in short-term bank deposits | ( | ) | ||||||||||
| Purchase of property and equipment | ( | ) | ||||||||||
| Investment in a company accounted for at equity | ( | ) | ( | ) | ( | ) | ||||||
| Investments in financial assets | ( | ) | ||||||||||
| Purchase of financial assets at fair value through profit or loss | ( | ) | ||||||||||
| Net cash provided by investing activities | ( | ) | ( | ) | ||||||||
| Cash flows from financing activities: | ||||||||||||
| Proceeds from issuance of share capital and warrants (net of issuance expenses) | ( | ) | ||||||||||
| Repayment of lease liability | ( | ) | ( | ) | ( | ) | ||||||
| Interest paid on lease liability | ( | ) | ||||||||||
| Proceeds from issuance of shares to minority interests in a subsidiary | (*) | |||||||||||
| Loans to related parties | ( | ) | ||||||||||
| Net cash provided by financing activities | ||||||||||||
| Increase (decrease) in cash and cash equivalents | ( | ) | ( | ) | ( | ) | ||||||
| Cash and cash equivalents at the beginning of the period | ||||||||||||
| Cash and cash equivalents at the end of the period | $ | $ | $ | |||||||||
| (*) |
The accompanying notes are an integral part of the interim consolidated financial statements.
9
SCISPARC LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Six months ended June 30, | Year Ended December 31, | |||||||||||
| 2024 | 2023 | 2023 | ||||||||||
| Unaudited | Audited | |||||||||||
| USD in thousands | ||||||||||||
| (a) Significant non-cash transactions: | ||||||||||||
| Mutual share exchange of ordinary shares (see note 10) | $ | $ | $ | |||||||||
| Right-of-use asset recognized with corresponding lease liability | $ | $ | $ | |||||||||
The accompanying notes are an integral part of the interim consolidated financial statements.
10
SCISPARC LTD.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except per share and per unit amounts)
NOTE 1:- GENERAL
| a. | SciSparc Ltd. (formerly known as Therapix Biosciences Ltd.) (“SciSparc” or the “Company” or the “Group”), a specialty clinical-stage pharmaceutical company, was incorporated in Israel and commenced its operations on August 23, 2004. Until March 2014, SciSparc and its subsidiaries at the time were mainly engaged in developing several innovative immunotherapy products and SciSparc’s own patents in the immunotherapy field. In August 2015, the Company decided to adopt a different business strategy and began focusing on developing a portfolio of approved drugs based on cannabinoid molecules. With this focus, the Company is currently engaged in development programs based on Δ9-tetrahydrocannabinol (“THC”) and/or non-psychoactive cannabidiol for the treatment of Tourette syndrome, Alzheimer’s disease and agitation, autism spectrum disorder and Status Epilepticus. The headquarters of the Company are located in Tel Aviv, Israel. |
|
The Company’s ordinary shares are listed on Nasdaq and are trading under the symbol “SPRC”.
As of June 30, 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. (“SciSparc Nutraceuticals”) (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 interim consolidated financial statements for all periods presented. |
| b. | These interim consolidated financial statements should be read in conjunction with the Company’s annual financial statements for the year ended December 31, 2023, and accompanying notes, that were approved on March 31, 2024, and signed on April 1, 2024 (the “2023 Annual Consolidated Financial Statements”). |
11
SCISPARC LTD.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except per share and per unit amounts)
NOTE 1:- GENERAL (cont.)
| c. | The Company incurred a net loss of $
The Company intends to finance operating costs over the next twelve months through a combination of actions that may include existing cash on hand and issuing equity and/or debt securities.
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and liabilities and commitments in the normal course of business.
The interim consolidated financial statements for the period ended June 30, 2024, do not include any adjustments to the carrying amounts and classifications of assets and liabilities that might result should the Group be unable to continue as a going concern. |
| d. | The interim consolidated financial statements of the Company for the six-month period ended on June 30, 2024, were approved for issuance on October 22, 2024 (the “Approval Date”). In connection with the preparation of the interim consolidated financial statements and in accordance with authoritative guidance for subsequent events, the Company evaluated subsequent events after the consolidated statements of financial position date of June 30, 2024, through November 4, 2024, the date on which the unaudited interim consolidated financial statements were available to be issued. |
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES
Unaudited Interim Financial Information
The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with International Accounting Standard (“IAS”) 34, “Interim Financial Reporting”. The significant accounting policies adopted in the preparation of the interim consolidated financial statements are consistent with those followed in the preparation of the 2023 Annual Consolidated Financial Statements. Accordingly, these condensed consolidated financial statements should be read in conjunction with the 2023 Annual Consolidated Financial Statements. The results for any interim period are not necessarily indicative of results for any future period.
The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all adjustments that are necessary to present fairly the Company’s financial position and results of operations for the interim periods presented. The results for the six-month period ended June 30, 2024, are not necessarily indicative of the results for the year ending December 31, 2024, or for any future period.
As of June 30, 2024, there have been no material changes in the Company’s significant accounting policies from those that were disclosed in the 2023 Annual Consolidated Financial Statements.
12
SCISPARC LTD.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except per share and per unit amounts)
NOTE 3:- INVESTMENT IN ASSOCIATE
On March 10, 2022, the Company entered
into a Founders and Investment Agreement with Dr. Alon Silberman, or the MitoCareX Agreement. Pursuant to the MitoCareX Agreement, the
Company invested an initial amount of $
On February 17, 2023, MitoCareX achieved
its first milestone pursuant to the MitoCareX Agreement. As a result of MitoCareX meeting this milestone, the Company invested an additional
sum of $
On November 25, 2023, MitoCareX achieved
its second milestone pursuant to the MitoCareX Agreement. As a result of MitoCareX meeting this milestone, the Company invested an additional
sum of $
During the six months ended June 30,
2024, and 2023, the Company recorded equity losses from the investment in MitoCareX in the amount of $
| Balance at January 1, 2023 | $ | |||
| Investment following achievement of first milestone | ||||
| Equity losses from investment in MitoCareX | ( | ) | ||
| Balance at December 31, 2023 | ||||
| Investment following achievement of second milestone | ||||
| Equity losses from investment in MitoCareX | ( | ) | ||
| Balance at June 30, 2024 | $ |
13
SCISPARC LTD.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except per share and per unit amounts)
NOTE 4:- INTANGIBLE ASSET
On September 30, 2022, the Company announced the closing of the acquisition (“Wellution Acquisition”) of WellutionTM, an Amazon Marketplace account and American food supplement and cosmetics brand and trademark (the “Brand”). In connection with the Wellution Acquisition, the Company incorporated a new wholly owned Delaware subsidiary, SciSparc Nutraceuticals., to hold the new assets. The definitive agreement for the acquisition of the Brand was entered into with Merhavit M.R.M Holding and Management Ltd (“M.R.M”).
At the closing, the Company paid a
cash payment of $
In addition, the Company issued to
M.R.M $
The Company reviewed the transaction
and deemed it to be the purchase of assets for accounting purposes under generally accepted accounting principles. The Company reviewed
the guidance under International Financial Reporting Standard (“IFRS”) 3, Business Combinations, for the transaction and determined
that the fair value of the gross assets acquired was concentrated in a single identifiable asset, a brand. Accordingly, the Company treated
the transaction as an asset acquisition. On the closing date of the Wellution Acquisition, the Company fully recognized the Wellution
Acquisition amount total of $
In the years ended December 31, 2022,
and 2023, the Brand recorded significant losses. As of December 31, 2023, the Company has determined there are signs of decline in the
value of the Brand and recognized a loss as a result of impairment to its intangible asset of $
The impairment loss was determined
based on the revenue projections of the Brand, using the relief from royalty approach. Under the relief from royalty approach, the fair
value of a brand is determined based on discounted future royalty payments that the owner of the asset would have been required to pay
if instead of purchasing the intangible asset it would have been licensed from a third party. Revenues were projected for a period of
| Balance at January 1, 2023 | $ | |||
| Loss on impairment of intangible asset | ( | ) | ||
| Depreciation of intangible asset | ( | ) | ||
| Balance at December 31, 2023 | ||||
| Depreciation of intangible asset | ( | ) | ||
| Balance at June 30, 2024 | $ |
During the six months ended June 30,
2024, and 2023, the Company recorded depreciation expenses with respect to intangible asset in the amount of $
14
SCISPARC LTD.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except per share and per unit amounts)
NOTE 5:- INVESTMENT IN FINANCIAL ASSETS
Share Purchase Agreement
On June 25, 2023, the Company entered
into a share purchase agreement (the “Share Purchase Agreement”) with AutoMax Motors Ltd. (“AutoMax”), an Israeli
company traded on the Tel Aviv Stock Exchange (“TASE”) and the leading parallel importer and distributor of vehicles in Israel,
pursuant to which, at the closing and upon the terms and conditions set forth in the Share Purchase Agreement, the Company invested NIS
Bridge Loan Agreement
On January 16, 2024, the Company entered, as a lender, into an agreement (the “Bridge Loan Agreement”) with AutoMax, pursuant to which AutoMax received from the Company a bridge loan (the “Bridge Loan”) in the amount of $
The Bridge Loan Agreement states that the principal amount of the Bridge Loan will bear interest at a rate of
On June 9, 2024, the Company entered into an amendment (the “Amendment”) to the Bridge Loan Agreement with AutoMax. Pursuant to the Amendment, the Company extended an additional loan in the amount of $
On September 5, 2024, the Company entered into a second amendment (the “Second Amendment”) to the Bridge Loan Agreement with AutoMax. Pursuant to the Second Amendment, the Company extended an additional loan in the amount of $
Merger Agreement
On April 10, 2024, the Company entered into an Agreement and Plan of Merger, as amended (the “Merger Agreement”) with AutoMax and SciSparc Merger Sub Ltd., an Israeli limited company and wholly-owned subsidiary of the Company (“Merger Sub”). Upon the terms and subject to the satisfaction of the conditions described in the Merger Agreement, including approval of the transaction by the Company’s shareholders and AutoMax’s shareholders, Merger Sub will be merged with and into AutoMax, with AutoMax surviving the Merger as a wholly-owned subsidiary of the Company (the “Merger”) (see also note 6).
At the effective time of the Merger (the “Effective Time”, as further defined in the Merger Agreement): (a) each outstanding share of AutoMax’s share capital will be converted into the right to receive ordinary shares of the Company, equal to the exchange ratio set forth in the Merger Agreement (the “Exchange Ratio”). Under the Exchange Ratio, following the Effective Time, the former AutoMax shareholders immediately before the Merger (other than the Company) are expected to hold together approximately
15
SCISPARC LTD.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except per share and per unit amounts)
NOTE 6:- TRANSACTIONS AND BALANCES WITH RELATED PARTIES
| a. | Balances with related parties: |
| June 30, 2024 | December 31, 2023 | |||||||||||||||
| Key management personnel | Other related parties | Key management personnel | Other related parties | |||||||||||||
| Current assets | $ | $ | $ | $ | ||||||||||||
| Non-current assets | $ | $ | (*) | $ | $ | |||||||||||
| Current liabilities | $ | $ | - | $ | $ | |||||||||||
| (*) |
| b. |
| Six months ended | Year ended | |||||||||||
| June 30, | December 31, | |||||||||||
| 2024 | 2023 | 2023 | ||||||||||
| Research and development expenses | $ | $ | - | $ | ||||||||
| Sale of minority interest in subsidiary | $ | $ | - | $ | (*) | |||||||
| (*) | Sale of approximately |
| c. |
| Six months ended | Year ended | |||||||||||
| June 30, | December 31, | |||||||||||
| 2024 | 2023 | 2023 | ||||||||||
| Short-term benefits | $ | $ | $ | |||||||||
| Management fees | $ | $ | $ | |||||||||
| Cost of share-based payment | $ | $ | $ | |||||||||
| d. | On February 23, 2023, the Company entered into an agreement with Jeffs’ Brands Ltd. (“Jeffs’ Brands”) and Jeffs’ Brands Holdings Inc. (“Jeffs’ Holdings”), a newly-formed wholly owned subsidiary of Jeffs’ Brands, in which Jeffs’ Holdings acquired from the Company common stock of SciSparc Nutraceuticals equal to approximately a 49% for a cash consideration of $ |
16
SCISPARC LTD.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except per share and per unit amounts)
NOTE 6:- TRANSACTIONS AND BALANCES WITH RELATED PARTIES (cont.)
| e. | On March 7, 2022, the Company entered into a cooperation agreement with Clearmind Medicine Inc. (“Clearmind”) in which the Company and Clearmind test and integrate their core technologies with a view to developing novel psychedelic drug candidates (the “Cooperation Agreement”). Dr. Adi Zuloff-Shani, our Chief Technologies Officer, Mr. Amitai Weiss, our President, and Mr. Adler, our Chief Executive Officer and Chief Financial Officer serve as officers and directors of Clearmind.
During the six-month period ended June 30, 2024, the Company recognized expenses in respect of the Cooperation Agreement in the amount of $
| |
| f. | Mr. Weiss, our chairman of the board of directors, is the chairman of the board of directors of AutoMax (see Note 5). |
NOTE 7:- FINANCIAL INSTRUMENTS
Classification of financial assets and financial liabilities:
| June 30, | December 31, | |||||||||||||||
| 2024 | 2023 | 2023 | ||||||||||||||
| Unaudited | Audited | |||||||||||||||
| Note | USD in thousands | |||||||||||||||
| Financial assets: | ||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | |||||||||||||
| Short-term deposits | ||||||||||||||||
| Loans to related party | ||||||||||||||||
| Trade receivables | ||||||||||||||||
| Government authorities | ||||||||||||||||
| Other receivables | ||||||||||||||||
| Investments in financial assets | ||||||||||||||||
| $ | $ | $ | ||||||||||||||
| Financial liabilities: | ||||||||||||||||
| Credit from others | $ | $ | $ | |||||||||||||
| Warrants liability | ||||||||||||||||
| Lease liability | ||||||||||||||||
| Total financial and lease liabilities | $ | $ | $ | |||||||||||||
17
SCISPARC LTD.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except per share and per unit amounts)
NOTE 8:- WARRANTS
On June 1, 2022, the Company completed
a private offering with an investor for gross proceeds of $
The June 2022 Warrants have an exercise
price of $
General Overview of Valuation Approaches used in the Valuation:
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Economic methodology:
| December 31, 2023 | June 30, 2024 | |||||||
| Dividend yield (%) | ||||||||
| Expected volatility (%) | ||||||||
| Risk-free interest rate (%) | ||||||||
| Underlying share price ($) | ||||||||
| Exercise price ($) | ||||||||
| Warrants fair value ($) | ||||||||
The June 2022 Warrants are classified as current warrant liability in the Company’s balance sheet, as they are exercisable at any given time.
During the six months ended June 30,
2024, and 2023, the Company recorded finance income from the change in fair value of the June 2022 Warrants in the amount of $
18
SCISPARC LTD.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except per share and per unit amounts)
NOTE 9:- EQUITY
Reverse Share Split
On August 18, 2023, the Company convened
a general meeting of its shareholders, whereby the shareholders approved, inter alia, a reverse split of the Company’s share capital
up to a ratio of
On September 14, 2023, the Company’s Board resolved that the final ratio for the Reverse Split will be 26:1, which became effective on September 28, 2023.
| a. |
| June 30, 2024 | December 31, 2023 | June 30, 2023 | |||||||||||||||||||||||
| Authorized | Issued and outstanding | Authorized | Issued and outstanding | Authorized | Issued and outstanding | ||||||||||||||||||||
| Number of shares | |||||||||||||||||||||||||
| Ordinary shares, no par value | |||||||||||||||||||||||||
| b. | Changes in share capital: |
| Number of ordinary shares | ||||
| Balance at January 1, 2024 | ||||
| Issuance of share capital – in respect of Standby Equity Purchase Agreement (Note 6j) | ||||
| Shares issued to consultants (Note 6e) | ||||
| Issuance of share in respect of exercise of pre-funded October 2023 Warrants (Note 6i) | ||||
| Balance at June 30, 2024 | ||||
19
SCISPARC LTD.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except per share and per unit amounts)
NOTE 9:- EQUITY (cont.)
| c. | Rights attached to shares: |
Voting rights at shareholders meetings, right to dividends, rights upon liquidation of the Company and right to nominate the directors in the Company.
| d. | Capital management in the Company: |
The Company’s capital management objectives are to preserve the Company’s ability to ensure business continuity thereby creating a return for the shareholders, investors and other interested parties. The Company is not under any minimal equity requirements nor is it required to attain a certain level of capital return.
| e. | Additional issuance of ordinary shares: |
On February 26, 2024, the Company issued
a consultant
On April 9, 2024, the Company issued
| f. | March 2021 Financing Round |
On March 4, 2021, the Company completed
a private offering with several accredited and institutional investors for gross proceeds of $
The Series A Warrants have an exercise
price of $
The March 2021 Warrants are classified as issued warrants in the Company’s equity.
During the six-month period ended June 30, 2024, and the year ended December 31, 2023, there were no exercises of the 2021 Series A Warrants.
| g. | June 2022 Financing Round (see also note 8) |
On June 1, 2022, the Company completed
the June 2022 Private Placement with an investor for gross proceeds of $
The June 2022 Warrants have an exercise
price of $
The June 2022 Warrants are classified as current warrant liability in the Company’s balance sheet, as they are exercisable at any given time.
During the six-month period ended June 30, 2024, and the year ended December 31, 2023, there were no exercises of the June 2022 Warrants.
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SCISPARC LTD.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except per share and per unit amounts)
NOTE 9:- EQUITY (cont.)
| h. | August 2023 Financing Round |
On August 14, 2023, the Company closed
an underwritten public offering (the “2023 Public Offering”) of
| i. | October 2023 Financing Round |
On October 13, 2023, the Company announced
the closing of a private placement with an institutional investor with gross cash proceeds to the Company of approximately $
In connection with the private placement,
the Company issued an aggregate of
During the six-month period ended June
30, 2024,
During the period between July 1, 2024,
and through to the date of this report,
| j. | January 2024 Standby Equity Purchase Agreement |
On January 21, 2024, the Company entered
into a Standby Equity Purchase Agreement (“SEPA”), as amended on February 26, 2024, with YA II PN, LTD. (“YA”),
which provided for the sale of up to $
In connection with the SEPA, the Company
may request pre-paid advances of the Commitment Amount, in an amount up to $
In addition, pursuant to the SEPA,
the Company issued to YA an aggregate of
YA will pay all brokerage fees and commissions and similar expenses in connection with the offer and sale of Ordinary Shares by YA pursuant to the SEPA. The Company will pay the expenses (except brokerage fees and commissions and similar expenses) incurred and register pursuant to the Securities Act of 1933, as amended, the offer and sale of the Ordinary Shares pursuant to the SEPA by YA. See also note 11b.
21
SCISPARC LTD.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except per share and per unit amounts)
NOTE 10:- ADDITIONAL INFORMATION TO THE ITEMS OF PROFIT OR LOSS
| Six months ended June 30, | Year Ended December 31, | |||||||||||
| 2024 | 2023 | 2023 | ||||||||||
| Unaudited | Audited | |||||||||||
| USD in thousands | ||||||||||||
| a. Research and development expenses: | ||||||||||||
| Wages and related expenses | $ | $ | $ | |||||||||
| Share-based payment | ||||||||||||
| Clinical studies | ||||||||||||
| Regulatory, professional and other expenses | ||||||||||||
| Research and preclinical studies | ||||||||||||
| Chemistry and formulations | ||||||||||||
| b. General and administrative expenses: | ||||||||||||
| Wages and related expenses | ||||||||||||
| Share-based payment | ||||||||||||
| Professional and directors’ fees | ||||||||||||
| Business development expenses | ||||||||||||
| Office maintenance, rent and other expenses | ||||||||||||
| Investor relations and business expenses | ||||||||||||
| Wellution operating expenses | ||||||||||||
| Amazon fees | ||||||||||||
| Regulatory expenses | ||||||||||||
| $ | $ | |||||||||||
22
SCISPARC LTD.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except per share and per unit amounts)
NOTE 11:- EVENTS AFTER THE REPORTING PERIOD
| a. | On July 8, 2024, the Company announced that it signed a non-binding letter of intent (the “LOI”) to spin off its advanced clinical stage pharmaceutical portfolio and its equity stake in SciSparc Nutraceuticals Inc. (collectively, the “Target Assets”). The LOI references a proposed asset and share purchase agreement (the “Asset and Share Purchase Agreement”), the definitive agreement of which is to be negotiated between the Company and Miza III Ventures Inc. (“Miza”) (TSXV: MIZA.P), a publicly traded company on the Toronto Stock Exchange Venture in Canada.
The Asset and Share Purchase Agreement is based on the approximate total USD
Pursuant to the LOI, SciSparc will sell,
assign, convey and transfer to Miza the Target Assets in consideration for | |
| b. | From July 16, 2024, through September 17,
2024, the Company has sold | |
| c. | On August 13, 2024, the Company entered into
an exclusive patent license agreement (the “License Agreement”) for the out-licensing of its SCI-160 program (the “Assets”)
with Polyrizon Ltd. (the “Licensee”). According to the License Agreement, SciSparc granted the Licensee a royalty-bearing,
exclusive, sub-licensable right and license to the Assets (the “License”). In consideration for the License, the Company
received and will receive certain shares of the Licensee, reflecting an issue price of $ | |
| d. | On September 26, 2024, the Company signed
a non-binding letter of intent (“LOI”) to sell its entire ownership interest in MitoCareX to a publicly-traded company in
the United States (“the Purchaser”). SciSparc currently owns |
23