SciSparc
DUE DILIGENCE
($SPRC)
u/Best_Phone
Sunday, 5 January 2025
Fully accredited to leed117 for finding this stock
Abstract
This due-diligence has two purposes:
- To serve as a library of all available information investors should have access to and awareness of as shareholders of SciSparc, in doing so moving the market towards perfect information and allowing shareholders to make the most informed decisions possible.
- To provide accessible and perfect information to those considering investing in Scisparc, to help them reach a decision.
- To explain the reasons why I am bullish, and see a lucrative opportunity for a short-term position.
This due-diligence will be updated regularly over the weekend as more information becomes available.
1. Introduction
SciSparc is an Israeli-based biopharmaceutical company, focused on developing treatments for those suffering with disorders to the central nervous system.
Whilst I am generally bearish on biostocks, and I am not in any way considering SciSparc for a long hold, I am incredibly bullish on the company in the short-run due to the strong likelihood of inside activity.
The catalyst for the expected run-up will be the confirmation of the sale of SciSparc’s subsidiary company (Mitocare) to N2OFF (NITO), as well as the confirmation of a NASDAQ grace period.
WARNING: This play is very speculative, so before going into this do your risk analysis and your own DD.
2. Acquisition – Short term catalyst
2.1. Information
Whilst this information is not immediately accessible and does not stick out, the similarities between the press releases of both SciSparc and N2OFF are uncanny.
On September 26 2024, SciSparc announced a letter-of-intent to sell its “entire ownership” in MitoCareX. In return for the sale, SciSparc will receive $700,000 in cash as well as $8,000,000 worth in shares at $0.70 per share.
Figure 1, SciSparc LOI
On October 2 2024, N2OFF issued a press-release about their “strategic initiatives” to “maximize shareholder value”. In this press-release they announced the “acquisition of a computationally advanced drug discovery company”. The description of the PR bears uncanny similarities to the PR contained in Figure 1.
For example:
- “LOI contemplates that the acquisition would be effected through combination of cash and equity”
- “contemplates a valuation of at least $5,000,000, with a potential increase in valuation by $2,000,000”
Figure 2, N2OFF PR
Figure 3, N2OFF acquisition terms
Consequently, I believe I can fairly confidently say that the purchase is between N2OFF and SciSparc. Moreover, as contained within chapter 3, the N2OFF and SciSparc share the exact same Chairman of the board – Amitay Weiss.
2.2. Further analysis of acquisition
The acquisition stipulates that the exchange of shares has been determined based on a “valuation” of the “purchaser” (NITO) to be $8,000,000. This means that at the time of agreement, N2OFF had a market cap of $8,000,000. I believe that this sets a fixed price at which the shares would be transferred for.
- As there are 11,410,000 outstanding shares for N2OFF, the price per share (according to the fixed market cap valuation of $8,000,000) would be $0.70 per share.
- This is somewhat suspicious, given that the share price on the 26th September was just $0.26. This means that SciSparc grossly overpaid for an incredibly risky position.
- HOWEVER I believe that this was because the SciSparc board (the Chairman of Scisparc is simultaneously the Chairman of N2OFF as explored in chapter 3) were well aware that N2OFF would see a major run-up above this cost-basis of $0.70.
- For reference, the share-price is now trading at over $2.
This means that the asset value accrued from this acquisition will have increased by 900%. Alongside $700,000 in immediate liquidity, this puts SciSparc in an incredibly advantageous financial position.
- The acquisition deal is also worth ~$3,000,000 more than the current market cap of the company (~$5,000,000). I expect that once this PR releases the SP will drastically increase to reflect this.
2.3. When can we expect acquisition confirmation
I believe that the board at SciSparc have been gearing up (by buying shares) for a major run-up above $1, similar to both RailVision and NITO in order to ensure NASDAQ compliance.
SciSparc is the last one needed to get over the $1 line.
Given that their share-price is now linked to N2OFF (via the acquisition agreement), I expect the Chairman will want to capitalise on this timing as much as possible by confirming the acquisition very soon by releasing a PR. In doing so, both stocks will see a significant run-up.
3. Corporate Inbreeding
3.1. Board of Directors & Chairman
One incredibly interesting thing to note is that within the companies RailVision, N2OFF, SciSparc and Jeff’s Brand there are multiple shared board members, implying that there may be possible insider activity taking place between these companies.
For example, the CEO of SPRC is simultaneously also a board member on RailVision, Jeff’s Brand and ClearMind.
Another example is Amitayy Weiss, who is simultaneously the Chairman of both N2OFF (NITO) and SciSparc – the two parties involved in the acquisition agreement. It’s obvious that there will be some insider information on this.
3.2. Investor Relations
Another thing to note, although obviously less significant than the mutual board members, is that RailVision, NITO and Jeff’s Brand share the same investor relations team:
Figure 9, RVSN website Figure 10, NITO website
Figure 11, Spiderweb diagram of insiders
4. NASDAQ Compliance
WARNING: This is the most speculative part of the play, and investors should choose their investment decision wisely based on this inherent risk.
On July 16 2024, SciSparc received notice that it has until January 13 2025 to regain compliance. This means that it must trade above $1 for at least 10 consecutive trading days. This is now impossible as the minimum amount of time to ensure this has already elapsed.
However, I believe that they have applied for and received permission for an extension period of 180 days. Consequently, they will not return to the pink sheets.
For example, in a press-release on December 30th about a merger with AutoMax Motors Ltd., the company declared their intent to apply for this extension period.
Figure 12, PR 20 Dec
I believe that there is no reason for NASDAQ to reject this request, so I predict that SciSparc has this 180-day grace period to regain compliance. Once they release this PR, I expect a further boost to the share-price.
5. Market Analysis
This section will be updated over the weekend, however the most important thing to note for the time being is the huge surge in volume on December 26nd to 240 million, on an average volume of 4.4 (which is also skewed by this huge surge). In my view, this can only be the activity of large institutional investors. This has similar patterns to RailVision, which makes more sense when also considering the corporate inbreeding explored in chapter 3.
Figure 13, Market Chameleon SPRC
Furthermore with a miniscule 3,590,000 outstanding shares and a market cap of just $5,550,000 this has enormous potential to run-up.
5. Conclusion
SciSparc appears to be strategically positioned for a short-term price surge, driven by the impending acquisition of its subsidiary, MitoCareX, by N2OFF, as well as its potential receipt of a NASDAQ grace period extension.
The close ties between SciSparc and N2OFF, particularly through shared leadership and the acquisition deal, suggest a possible coordinated effort that could lead to significant value appreciation in both stocks. While the situation is highly speculative and risky, the combination of insider information, market manipulation potential, and strong shareholder initiatives presents an opportunity for short-term investors.
However, the inherent risks, including the uncertainty surrounding NASDAQ compliance and potential insider trading, should be carefully considered. I would also not consider this for a long-hold, RailVision has far better potential for this.
Also keep an eye on CMND, where both Oz Adler and Amitay Weiss are also board members. There is a general shareholder meeting on Monday 6th January.