SciSparc

Kurta Law is investigating investor losses on shares of SciSparc stock. This stock belongs to a group of 180+ stocks underwritten by Aegis Capital Corporation that may have been excessively risky for investors.

Brokers have a duty to recommend stocks that match an investor’s desired level of risk, and investors who lost money through broker misconduct may be able to recoup their losses by pursuing FINRA arbitration. Contact a securities attorney with your concerns: (877) 600-0098.

What is SciSparc?

According to the prospectus, SciSparc Ltd. (SPRC) is a pharmaceutical company developing a portfolio of product candidates and technologies based on cannabinoid therapies for the potential treatment of Alzheimer’s disease, Tourette syndrome, and other conditions.

The company also reports that it holds a 50.86% interest in SciSparc Nutraceuticals, its subsidiary that sells hemp-based products online.

What are the Risks Associated with SciSparc?

Clinical-stage pharmaceutical companies often face significant challenges, as they typically rely on outside funding until they can successfully commercialize their products.

In its stock prospectus, SciSparc discloses similar risks, as well as additional concerns that investors should know about.

Uncertain Share Price

Because the shares in this offering are sold in at-the-market offerings, their price will depend on factors such as the timing of the offering and the number of shares. This means that investors will probably pay different prices for their shares depending on when they purchase them.

SciSparc also states that its share price “may be highly volatile,” and subject to influences including:

• The results of preclinical studies and clinical trials
• Delays in receiving FDA approval for product candidates
• Failure to raise additional capital or to meet financial projections
• Litigation or disputes regarding proprietary rights

Need for Additional Funding and Potential Shareholder Dilution

In its prospectus, SciSparc discloses that it has experienced losses since its inception, and states: “If we continue to use cash at our historical rates of use we will need significant additional financing.”

However, any future offerings will dilute current shareholders’ ownership interest, and a high volume of sales following this or a future offering could also decrease the share price. Since these are at-the-market offerings, SciSparc cannot know in advance how many shares it will issue, either in total or at a time.

Dilution by Exercise of Warrants

The warrants and pre-funded warrants of this offering also present a risk of dilution. As stated in the prospectus, “As of May 2, 2023, holders of warrants and pre-funded warrants may exercise their warrants into up to 9,500,188 ordinary shares.’

If all of these warrants are exercised, the share price and ownership interest of existing investors would be severely affected.

Aegis Capital Corp. Underwriting    

Investors should know that Aegis Capital Corp. served as the underwriter for this offering. Underwriters take on risk in exchange for a fee, which could motivate certain investment banks to underwrite investments that pose too much risk for the average retail investor. Additionally, brokers may have conflicts of interest when they recommend shares that are underwritten by an affiliate of their brokerage firm.  

Do You Have Concerns Related to Your Shares of SciSparc?

If you have concerns about your investment in SciSparc, reach out to a Kurta Law securities attorney today. Kurta Law attorneys regularly win fair settlements for our clients in cases of unsuitable investment recommendations. Call (877) 600-0098 or email info@kurtalawfirm.com.