SciSparc Ltd 20-F for FY2023

SciSparc Ltd. (SPRC)

20-F 2024-04-01 For: 2023-12-31

Added on April 11, 2026

About this 20-F

SciSparc Ltd filed this 20-F on April 1, 2024, covering the fiscal year ended December 31, 2023 (FY2023).

Headline figures

Fiscal year ended December 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $2.88M; up 113.7% from $1.35M a year earlier
Net loss: $5.12M; compared with a net loss of $2.59M a year earlier
Diluted EPS: $14.43; down 2.6% from $14.82 a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Ordinary Shares, no par value	SPRC	The Nasdaq Capital Market
Rights to Purchase Ordinary Shares, no par value		The Nasdaq Stock Market LLC

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Emerging growth company	☐

		Page

INTRODUCTION		iii
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		iv
SUMMARY RISK FACTORS		vi

	PART I	1

ITEM 1.	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	1
ITEM 2.	OFFER STATISTICS AND EXPECTED TIMETABLE	1
ITEM 3.	KEY INFORMATION	1
A.	[Reserved]	1
B.	Capitalization and Indebtedness	1
C.	Reasons for the Offer and Use of Proceeds	1
D.	Risk Factors	1
ITEM 4.	INFORMATION ON THE COMPANY	51
A.	History and Development of the Company	51
B.	Business Overview	52
C.	Organizational Structure	91
D.	Property, Plants and Equipment	91
ITEM 4A.	UNRESOLVED STAFF COMMENTS	91
ITEM 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS	92
A.	Operating Results	92
B.	Liquidity and Capital Resources	95
C.	Research and development, patents and licenses, etc.	99
D.	Trend information	99
E.	Critical Accounting Estimates	99
ITEM 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	101
A.	Directors and Senior Management	101
B.	Compensation	105
C.	Board Practices	107
D.	Employees	120
E.	Share Ownership	121
F.	Action to Recover Erroneously Awarded Compensation	121
ITEM 7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	121
A.	Major Shareholders	121
B.	Related Party Transactions	123
C.	Interests of Experts and Counsel	123
ITEM 8.	FINANCIAL INFORMATION	124
A.	Consolidated Statements and Other Financial Information	124
B.	Significant Changes	124

ITEM 9.	THE OFFER AND LISTING	125
A.	Offer and Listing Details	125
B.	Plan of Distribution	125
C.	Markets	125
D.	Selling Shareholders	125
E.	Dilution	125
F.	Expenses of the Issue	125
ITEM 10.	ADDITIONAL INFORMATION	125
A.	Share Capital	125
B.	Memorandum and Articles of Association	125
C.	Material Contracts	125
D.	Exchange Controls	125
E.	Taxation	126
F.	Dividends and Paying Agents	135
G.	Statement by Experts	135
H.	Documents on Display	135
I.	Subsidiary Information	135
J.	Annual Report to Security Holders	135
ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	135
ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	135
A.	Debt Securities
B.	Warrants and rights
C.	Other Securities
D.	American Depositary Shares

	PART II	136

ITEM 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	136
ITEM 14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	136
ITEM 15.	CONTROLS AND PROCEDURES	136
ITEM 16.	[Reserved].	137
ITEM 16A.	AUDIT COMMITTEE FINANCIAL EXPERT	137
ITEM 16B.	CODE OF ETHICS	137
ITEM 16C.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	137
ITEM 16D.	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	138
ITEM 16E.	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	138
ITEM 16F.	CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT	138
ITEM 16G.	CORPORATE GOVERNANCE	138
ITEM 16H.	MINE SAFETY DISCLOSURE	139
ITEM 16I.	DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS	139
ITEM 16J.	INSIDER TRADING POLICIES	139
ITEM 16K.	CYBERSECURITY	139

	PART III	140

ITEM 17.	FINANCIAL STATEMENTS	140
ITEM 18.	FINANCIAL STATEMENTS	140
ITEM 19.	EXHIBITS	140
SIGNATURES		142

	●	our ability to raise capital through the issuance of additional securities and ability to continue as a going concern;

	●	our ability to advance the development of our pharmaceutical product candidates, including the anticipated starting and ending dates of our anticipated clinical trials;

	●	our assessment of the potential of our pharmaceutical product candidates to treat certain indications;

	●	our ability to successfully receive approvals from the U.S. Food and Drug Administration, or FDA, or other regulatory bodies, including approval to conduct clinical trials, the scope of those trials and the prospects for regulatory approval of, or other regulatory action with respect to our product candidates, including the regulatory pathway to be designated to our product candidates;

	●	the regulatory environment and changes in the health policies and regimes in the countries in which we operate, including the impact of any changes in regulation and legislation that could affect the pharmaceutical industry;

	●	our ability to commercialize our existing product candidates and future sales of our existing product candidates or any other future potential product candidates;

	●	our ability to meet our expectations regarding the commercial supply of our product candidates;

	●	our ability to integrate our new eCommerce operations business, which focuses on the sale of hemp-based products on the Amazon.com marketplace;

	●	our ability to pursue our intended restructuring plan which involves transferring our pharmaceutical activities to Jeffs’ Brand Holding Inc., a wholly owned subsidiary of Jeff’s Brands, or NewCo, or the Restructuring Plan, and list NewCo on a leading stock exchange;

	●	the overall global economic environment;

	●	the impact of competition and new technologies;

	●	general market, political and economic conditions in the countries in which we operate including those related to recent unrest and actual or potential armed conflict in Israel and other parts of the Middle East, such as the recent attack by Hamas and other terrorist organizations from the Gaza Strip and Israel’s war against them and the military hostilities with the Hezbollah organization along the Northern border of Israel;

	●	projected capital expenditures and liquidity;

	●	changes in our strategy;

	●	litigation; and

	●	those factors referred to in “Item 3. Key Information - D. Risk Factors,” “Item 4. Information on the Company,” and “Item 5. Operating and Financial Review and Prospects,” as well as in this Annual Report.

	●	We are a specialty clinical-stage pharmaceutical company and have a limited operating history on which to assess the prospects for our business, have incurred significant losses since the date of our inception, and anticipate that we will continue to incur significant losses until we are able to successfully commercialize our product candidates.

	●	We have not generated any revenue from the sale of our current product candidates and may never be profitable.

	●	We expect that we will need to raise substantial additional funding before we can expect to become profitable from sales of our product candidates. Failure to obtain this necessary capital when needed may force us to delay, limit or terminate our product candidate development efforts or other operations.

	●	The report of our independent registered public accounting firm contains an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern, which could prevent us from obtaining new financing on reasonable terms or at all.

	●	We are heavily dependent on the success of our pharmaceutical product candidates, which are in the late stages of pre-clinical development or early stages of clinical development. We cannot give any assurance that any of our product candidates will receive regulatory approval, which is necessary before they can be commercialized.

	●	Clinical drug development involves a lengthy and expensive process with an uncertain outcome, and results of earlier studies may not be predictive of future study results. We may also find it difficult to enroll patients in our clinical studies. Difficulty in enrolling patients could delay or prevent clinical studies of our pharmaceutical product candidates.

	●	If the FDA does not conclude that our pharmaceutical product candidates satisfy the requirements for the Section 505(b)(2) regulatory approval pathway, or if the requirements for our pharmaceutical product candidates under Section 505(b)(2) are not as we expect, the approval pathway would likely take significantly longer, cost significantly more and entail significantly greater complications and risks than anticipated and in either case may not be successful.

	●	In respect of our pharmaceutical product candidates targeting rare indications, orphan drug exclusivity may afford limited protection, and if another party obtains orphan drug exclusivity for the drugs and indications we are targeting, we may be precluded from commercializing our pharmaceutical product candidates in those indications during that period of exclusivity.

	●	We rely on third parties to conduct our preclinical and clinical studies and perform other tasks for us. If these third parties do not successfully carry out their contractual duties, meet expected deadlines or comply with regulatory requirements, we may not be able to obtain regulatory approval for or commercialize our pharmaceutical product candidates and our business could be substantially harmed.

	●	We will rely on third parties to manufacture our active pharmaceutical ingredient, or API, and formulations. Our business could be harmed if those third parties fail to provide us with sufficient quantities of our needed supplies or fail to do so at acceptable quality levels or prices.

	●	If the market opportunities for our pharmaceutical product candidates are smaller than we believe they are, our revenue may be adversely affected, and our business may suffer.

	●	We face intense competition and rapid technological change and the possibility that our competitors may discover, develop or commercialize therapies that are similar, more advanced or more effective than ours, which may adversely affect our financial condition and our ability to successfully commercialize our pharmaceutical product candidates.

	●	If we are unable to obtain and maintain effective patent rights for our product candidates, we may not be able to compete effectively in our markets. Further, if we are unable to protect the confidentiality of our trade secrets or know-how, such proprietary information may be used by others to compete against us.

	●	We may not be able to identify infringements of our patents and accordingly the enforcement of our intellectual property rights may be difficult.

	●	From time to time, we may sign letters of intent and/or enter into term sheets or other similar arrangements that are subject to negotiation of definitive agreements. There can be no assurance that we will enter into any such definitive agreements. Similarly, we may strategically invest in transactions from time to time, and there can be no assurance that the value of our investment will increase or that it will not fluctuate.

	●	We may strategically invest in transactions from time to time, and there can be no assurance that the value of our investment will increase or that it will not fluctuate or that we will be able to successfully integrate or operate any new business we acquire.

	●	We will need to expand our organization and we may experience difficulties in recruiting needed additional employees and consultants, which could disrupt our operations.

	●	We will need additional capital in the future. Raising additional capital by issuing securities may cause dilution to existing shareholders.

	●	We do not know whether a market for the Ordinary Shares will be sustained or what the trading price of the Ordinary Shares will be and as a result it may be difficult for you to sell your Ordinary Shares.

	●	Provisions of Israeli law may make it easy for our shareholders to demand that we convene a shareholders meeting, and/or allow shareholders to convene a shareholder meeting without the consent of our management, which may disrupt our management’s ability to run our company.

	●	Our principal executive offices, most of our research and development activities and other significant operations are located in Israel, and, therefore, our results may be adversely affected by political, economic and military instability in Israel, including (i) the recent attack by Hamas and other terrorist organizations from the Gaza Strip and elsewhere in the region and Israel’s war against them as well as the war’s potential impact on our business and operations and (ii) the military hostilities with the Hezbollah organization along the Northern border of Israel.

	●	inability to generate sufficient preclinical, toxicology or other in vivo or in vitro data to support the initiation of human clinical studies;

	●	the occurrence of a pandemic or the spread of a virus that diverts the attention of regulatory agencies from reviewing our study design or results or which, as a result of such pandemic or widespread, requires us to materially modify our planned clinical studies;

	●	delays in reaching a consensus with regulatory agencies on study design;

	●	delays in obtaining required Institutional Review Board, or IRB, approval at each clinical study site;

	●	imposition of a clinical hold by regulatory agencies, after review of an IND, application, or equivalent application, or an inspection of our clinical study operations or study sites;

	●	delays in recruiting suitable patients to participate in our clinical studies;

	●	difficulty collaborating with patient groups and investigators;

	●	failure by our CROs, other third parties or us to adhere to clinical study requirements;

	●	failure to perform in accordance with the FDA’s Good Clinical Practices, or GCP, requirements, or applicable regulatory guidelines in other countries;

	●	delays in having patients complete participation in a study or return for post-treatment follow-up;

	●	regulatory authorities may withdraw approvals of such product candidate;

	●	regulatory authorities may require additional warnings on the label;

	●	we may be required to create a Risk Evaluation and Mitigation Strategy, or REMS, plan, which could include a medication guide outlining the risks of such side effects for distribution to patients, a communication plan for healthcare providers and/or other Elements To Assure Safe Use, or ETASU;

	●	continue the research and development of our product candidates;

	●	expand the scope of our current clinical studies for our product candidates;

	●	seek regulatory and marketing approvals for our product candidates that successfully complete clinical studies;

	●	establish a sales, marketing and distribution infrastructure to commercialize our product candidates;

	●	seek to identify, assess, acquire, license, and/or develop other product candidates and subsequent generations of our current product candidates;

	●	seek to maintain, protect, and expand our intellectual property portfolio;

	●	seek to attract and retain skilled personnel; and

	●	create additional infrastructure to support our operations as a public company and our product candidate development and planned future commercialization efforts.

	●	completing research and preclinical and clinical development of our pharmaceutical product candidates;

	●	obtaining regulatory and marketing approvals for pharmaceutical product candidates for which we complete clinical studies;

	●	establishing and maintaining supply and manufacturing relationships with third parties that can provide adequate (in amount and quality) pharmaceutical products to support market demand for our pharmaceutical product candidates, if approved;

	●	launching and commercializing pharmaceutical product candidates if and when we obtain regulatory and marketing approval, either directly or with a collaborator or distributor;

	●	obtaining market acceptance of our pharmaceutical product candidates as viable treatment options;

	●	addressing any competing pharmaceutical or biotechnological and market developments;

	●	identifying, assessing, acquiring and/or developing new pharmaceutical product candidates;

	●	negotiating favorable terms in any collaboration, licensing or other arrangements into which we may enter;

	●	maintaining, protecting and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how; and

	●	attracting, hiring and retaining qualified personnel.

	●	the scope, rate of progress, results and cost of pharmaceutical product development, clinical studies, preclinical testing, and other related activities;

	●	the cost, timing and outcomes of regulatory approvals;

	●	the cost and timing of establishing sales, marketing, and distribution capabilities; and

	●	the terms and timing of any collaborative, licensing, and other arrangements that we may establish.

	●	the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical studies;

	●	we may be unable to demonstrate to the FDA or comparable foreign regulatory authorities that a pharmaceutical product candidate’s safety-benefit ratio for its proposed indication is acceptable;

	●	the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical studies;

	●	the data collected from clinical studies of our pharmaceutical product candidates may not be sufficient to support the submission of a New Drug Application, or NDA, in the United States or elsewhere;

	●	the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes, test procedures and specifications or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; and

	●	the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval.

	●	patients dropping out of a study;

	●	occurrence of serious adverse events associated with the pharmaceutical product candidate that are viewed to outweigh its potential benefits;

	●	changes in regulatory requirements and guidance that require amending or submitting new clinical protocols;

	●	the cost of clinical studies of our pharmaceutical product candidates being greater than we anticipate;

	●	clinical studies of our pharmaceutical product candidates producing negative or inconclusive results, which may result in us deciding, or regulators requiring us, to conduct additional clinical studies or abandon pharmaceutical product candidate development programs; and

	●	delays in manufacturing, testing, releasing, validating or importing/exporting sufficient stable quantities of our pharmaceutical product candidates for use in clinical studies or the inability to do any of the foregoing.

	●	we could be sued and held liable for harm caused to patients; and

	●	our reputation may suffer.

	●	issue warning letters;

	●	impose civil or criminal penalties;

	●	suspend or withdraw regulatory approval;

	●	suspend any of our ongoing clinical studies;

	●	refuse to approve pending applications or supplements to approved applications submitted by us;

	●	impose restrictions on our operations, including closing our contract manufacturers’ facilities; or

	●	seize or detain product candidates, or require a product candidate recall.

	●	the prevalence and severity of any side effects, including any limitations or warnings contained in a product’s approved labeling;

	●	the clinical indications for which approval is granted;

	●	relative convenience and ease of administration;

	●	the cost of treatment, particularly in relation to competing treatments;

	●	the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;

	●	the strength of marketing and distribution support and timing of market introduction of competitive products;

	●	publicity concerning our products or competing products and treatments; and

	●	sufficient third-party insurance coverage and reimbursement.

	●	an annual, nondeductible fee on any entity that manufactures or imports certain specified branded prescription drugs and biologic agents apportioned among these entities according to their market share in some government healthcare programs;

	●	an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program to 23.1% and 13% of the Average Manufacturer Price, or AMP, for most branded and generic drugs, respectively, and capped the total rebate amount for innovator drugs at 100% of the AMP;

	●	expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals and by adding new mandatory eligibility categories for individuals with income at or below 133% of the federal poverty level, thereby potentially increasing manufacturers’ Medicaid rebate liability;

	●	a Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% (now 70%) point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D;

	●	expansion of the entities eligible for discounts under federal 340B;

	●	our research or business development methodology or search criteria and process may be unsuccessful in identifying potential pharmaceutical product candidates;

	●	we may not be able or willing to assemble sufficient resources to acquire or discover additional pharmaceutical product candidates;

	●	our pharmaceutical product candidates may not succeed in preclinical or clinical testing;

	●	our potential pharmaceutical product candidates may be shown to have harmful side effects or may have other characteristics that may make the pharmaceutical products unmarketable or unlikely to receive marketing approval;

	●	competitors may develop alternatives that render our pharmaceutical product candidates obsolete or less attractive;

	●	pharmaceutical product candidates we develop may be covered by third parties’ patents or other exclusive rights;

	●	a pharmaceutical product candidate may not be capable of being produced in commercial quantities at an acceptable cost, or at all; and

	●	a pharmaceutical product candidate may not be accepted as safe and effective by patients, the medical community or third-party payors.

	●	federal civil and criminal false claims laws and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid or other third-party payors that are false or fraudulent;

	●	the Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created new federal criminal statutes that prohibit executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters;

	●	HIPAA, as amended by the Health Information Technology and Clinical Health Act, or HITECH and its implementing regulations, which imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information;

	●	the federal physician sunshine requirements under the ACA requires manufacturers of drugs, devices and medical supplies to report annually to the U.S. DHHS information related to payments and other transfers of value to physicians, other healthcare providers and teaching hospitals and ownership and investment interests held by physicians and other healthcare providers and their immediate family members and applicable group purchasing organizations; and

	●	state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws that may apply to items or services reimbursed by any third-party payor, including commercial insurers, state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

	●	adverse results or delays in preclinical studies or clinical trials;

	●	reports of adverse events in our product candidates or clinical trial failures of our product candidates;

	●	inability to obtain additional funding;

	●	any delay in filing a regulatory submission for any of our product or product candidates and any adverse development or perceived adverse development with respect to the review of that regulatory submission by the FDA or European or Asian authorities;

	●	failure to successfully develop and commercialize our products or product candidates;

	●	failure to enter into strategic collaborations or failure to successfully integrate acquisitions we have made;

	●	failure by us or strategic collaboration partners to prosecute, maintain or enforce our intellectual property rights;

	●	changes in laws or regulations applicable to future products;

	●	inability to scale up our manufacturing capabilities through third-party manufacturers, inability to obtain adequate product supply for our products or the inability to do so at acceptable prices;

	●	introduction of new products or technologies by our competitors;

	●	failure to meet or exceed financial projections we may provide to the public;

	●	failures or delays in our intended Restructuring Plan;

	●	failure to meet or exceed the financial expectations of the investment community;

	●	announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by our competitors;

	●	disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our platform technologies, technologies, products or product candidates;

	●	additions or departures of key scientific or management personnel;

	●	significant lawsuits, including patent or shareholder litigation;

	●	changes in the market valuations of similar companies;

	●	changes in general conditions in the economy and the financial markets in the countries in which we operate including those related to recent unrest and actual or potential armed conflict in Israel and other parts of the Middle East, such as the recent attack by Hamas and other terrorist organizations from the Gaza Strip and elsewhere in the region and Israel’s war against them and the military hostilities with the Hezbollah organization along the Northern border of Israel;

	●	sales of our securities by us or our shareholders in the future; and

	●	trading volumes of our securities.

	●	subject to certain exceptions, our amended and restated articles of association restrict us from engaging in certain business combination transactions, with any shareholder who holds 15% or more of our voting power. The transactions subject to such restrictions include mergers, consolidations and dispositions of our assets with a market value of 10% or more of our assets or outstanding shares. Subject to certain exceptions, such restrictions will apply for a period of three years following each time a shareholder became the holder of 15% or more of our voting power; and

	●	subject to certain exceptions, our amended and restated articles of association restrict certain transactions which may have a significant effect on the Company’s structure, assets or business, including significant mergers and acquisitions, a disposition of all or substantially all of the assets of the Company, a voluntary dissolution and material changes to the principal business of the Company.