Business Context and Reporting Period
Company: SciSparc Ltd. (SPRC)
Reporting Period: Fiscal year ended December 31, 2025
Business Overview: SciSparc is a clinical-stage pharmaceutical company focused on cannabinoid-based therapies. In October 2025, the Company completed a strategic restructuring (the "NeuroThera Transaction"), transferring its advanced clinical-stage pharmaceutical portfolio and a 51% stake in its nutraceutical subsidiary (SciSparc Nutraceuticals) to NeuroThera Labs Inc. (formerly Miza III Ventures Inc.), a publicly traded entity on the TSX Venture Exchange. SciSparc now holds a controlling interest (approximately 75%) in NeuroThera. The Company also operates a minority interest in an eCommerce business selling hemp-based products via Amazon Marketplace.
Key Financial Metrics
| Metric (USD in thousands) | 2025 | 2024 |
|---|---|---|
| Revenue | $856 | $1,306 |
| Cost of Revenues | $225 | $800 |
| Gross Profit | $631 | $506 |
| Operating Loss | $(8,374) | $(7,316) |
| Net Loss (Attributable to Equity Holders) | $(12,179) | $(6,284) |
| Total Comprehensive Loss | $(12,564) | $(7,472) |
| Cash and Cash Equivalents (Year End) | $4,591 | $1,540 |
| Accumulated Deficit | $(87,154) | $(74,975) |
| Working Capital | $3,183 | $6,104 |
Note: Working Capital calculated as Current Assets ($5,436) minus Current Liabilities ($2,253) for 2025.
Material Changes vs. Prior Period
- Revenue Decline: Revenue decreased 35% to $856,000, primarily due to operational difficulties and temporary removal of the Wellution brand from Amazon Marketplace due to policy compliance issues.
- Significant Impairment Loss: The Company recognized a $5.97 million impairment loss on loans granted to AutoMax Motors Ltd. following the termination of a proposed merger and the commencement of insolvency proceedings against AutoMax.
- Increased Operating Expenses: General and Administrative (G&A) expenses increased 41% to $6.37 million, driven by a $1.41 million deemed issuance listing expense related to the NeuroThera Transaction and increased share-based compensation.
- Gain on Sale of Associate: The Company recorded a $2.23 million gain from the sale of its investment in MitoCareX Bio Ltd. to Nexentis Technologies Inc.
- Financing Activities: Net cash provided by financing activities increased to $8.59 million, funded by proceeds from convertible debentures ($3.99 million), share capital issuance ($2.26 million), and warrant exercises ($1.12 million).
Guidance, Outlook, and Risks
Going Concern: The independent auditor has issued an explanatory paragraph expressing substantial doubt about the Company's ability to continue as a going concern. Management states that existing cash ($4.6 million) is insufficient to fund operations for at least the next 12 months. Continued operations depend on raising additional capital through equity or debt financing.
Outlook:
- NeuroThera Integration: Future performance will be increasingly influenced by NeuroThera's regulatory progress and capital requirements. SciSparc may provide additional financial support to NeuroThera.
- Clinical Development: The Company expects to initiate enrollment for the Phase IIb clinical trial of SCI-110 (Tourette Syndrome) in the third quarter of 2026. Results for the SCI-210 (Autism Spectrum Disorder) trial are expected within 12 to 18 months.
- Strategic Acquisitions: NeuroThera has entered into an agreement to acquire a majority stake in CliniQuantum Ltd. (quantum computing bio-data analytics), with closing anticipated in May 2026.
Key Risks:
- Liquidity: Failure to secure additional funding could force the Company to delay or terminate development programs.
- Regulatory Approval: No assurance that product candidates (SCI-110, SCI-210) will receive FDA or other regulatory approvals.
- Geopolitical Instability: Ongoing military conflicts in the Middle East (Israel/Iran/Hezbollah) pose risks to operations, employee safety, and supply chains.
- Amazon Dependency: The eCommerce segment relies heavily on Amazon Marketplace; policy changes or non-compliance can lead to immediate suspension of sales.
Investor Verification Checklist
- Cash Runway: Verify the sufficiency of the $4.6 million cash balance against the projected burn rate and the timeline for the next financing round.
- NeuroThera Transaction: Confirm the status of the NeuroThera listing on a U.S. exchange and the achievement of milestones for contingent share issuance.
- AutoMax Exposure: Assess the likelihood of recovery on the remaining $451,000 loan balance to AutoMax amidst insolvency proceedings.
- Clinical Trial Timelines: Monitor the start date of the SCI-110 Phase IIb trial (targeted Q3 2026) and patient enrollment rates.
- Amazon Compliance: Review the status of the Wellution brand's reinstatement and sales volume recovery on Amazon Marketplace.
- Reverse Split Impact: Note the impact of the 1-for-21 (July 2025) and 1-for-9 (March 2026) reverse share splits on share count and liquidity.