20-F/A: Captivision Inc. Files Amended 20-F Report Including XBRL Files for Fiscal Year 2023

Captivision Inc. has filed an amendment to its 20-F report to include XBRL files for the fiscal year ended December 31, 2023.

Summary

• Captivision Inc. filed an amendment to its annual report on Form 20-F for the fiscal year ended December 31, 2023, to include XBRL files.
• The company's ordinary shares and warrants are listed on the Nasdaq Stock Market under the ticker symbols CAPT and CAPTW, respectively.
• As of the close of the period covered by the annual report, there were 28,979,828 ordinary shares and 11,499,990 warrants outstanding.
• The company's principal executive office is located in Pyeongtaek, Gyounggi, Republic of Korea.
• The company faces significant risks, including the need for additional financing, market adoption of its technology, and competition.
• The company's current liquidity resources raise substantial doubt about its ability to continue as a going concern.
• The company's financial results could vary significantly from quarter to quarter and are difficult to predict.
• The company is subject to the risks of operations in the United Kingdom, China, Japan, Hong Kong and the United States.
• The company is subject to potential exposure to environmental liabilities and is subject to environmental regulation and any such liabilities or regulation may adversely affect our costs and results of operations in the future.
• The company is subject to labor, health, construction/building and safety regulations, and may be exposed to liabilities and potential costs for lack of compliance.
• The company relies on key researchers and engineers, senior management and production facility operators, and the loss of the services of any such personnel or the inability to attract and retain them may adversely affect our business.
• The company's business involves complex manufacturing processes that may cause personal injury or property damage, subjecting us to liabilities and possible losses or other disruptions of its operations in the future, which may not be covered by insurance.
• The company's success will depend, to a significant extent, on our ability to obtain and enforce our patent rights both in South Korea and worldwide.
• The company is subject to potential exposure to environmental liabilities and are subject to environmental regulation and any such liabilities or regulation may adversely affect our costs and results of operations in the future.
• The company continues to face significant risks associated with our international expansion strategy.
• The company's government sector sales, which comprise a significant portion of our sales, may be adversely affected by presidential and congressional elections, policy changes, government land development plan changes and other local political events.
• The IT, vertical real estate and large format wallscape sectors are regulated and any new or modified regulatory restrictions could adversely affect our sales and results of operations.
• Changes in building codes could lower the demand for our GGlass technology.
• The company sometimes manages the installation of its products, which subjects us to risks and costs that may impact our profit margin.
• The company sometimes rely on thirdparty contractors for the installation of its products, which subjects us to risks and costs that are out of our control.
• The company is subject to labor, health, construction/building and safety regulations, and may be exposed to liabilities and potential costs for lack of compliance.
• Equipment failures, delays in deliveries and catastrophic loss at our manufacturing facilities could lead to production curtailments or shutdowns that prevent us from producing our products.
• The company may be adversely affected by disruptions to our manufacturing facilities or disruptions to our customer, supplier or employee base.
• The company operates with a modest inventory, which may make it difficult for us to efficiently allocate capacity on a timely basis in response to changes in demand.
• The company's business involves complex manufacturing processes that may cause personal injury or property damage, subjecting us to liabilities and possible losses or other disruptions of its operations in the future, which may not be covered by insurance.
• Failure to protect our intellectual property rights could impair our competitiveness and harm our business and future prospects.
• Earthquakes, tsunamis, floods, severe health epidemics (including any possible recurrence of COVID19 or other types of widespread infectious diseases) and other natural calamities could materially adversely affect our business, results of operations or financial condition.
• The company's results of operations are subject to exchange rate fluctuations, which may affect its costs and revenues.
• The company is subject to the risks of operations in the United Kingdom, China, Japan, Hong Kong and the United States.
• The Warrants and the Converted Options may never be in the money, and may expire worthless.
• The company relies on production facility operators and manufacturing facility employees, and the loss of the services of any such personnel or the inability to attract and retain will adversely affect our business.
• The company incurs significant costs as a result of operating as a public company.
• The company is subject to additional regulations and financial reporting obligations in South Korea.
• The company may not be able to timely and effectively implement controls and procedures required by Section 404(a) of the SarbanesOxley Act.
• The company may lose its foreign private issuer status, which would then require us to comply with the Exchange Acts domestic reporting regime and cause us to incur significant legal, accounting and other expenses.
• The company is a Cayman Islands exempted company with limited liability. The rights of its shareholders, including with respect to fiduciary duties and corporate opportunities, may be different from the rights of shareholders governed by the laws of U.S. jurisdictions.
• The company's ability to meet expectations and projections in any research or reports published by securities or industry analysts, or a lack of coverage by securities or industry analysts, could result in a depressed market price and limited liquidity for our securities.
• Future resales of a substantial number of Ordinary Shares in the public market, or the perception that such sales could occur, could cause the price of Ordinary Shares to decline.
• The A&R Warrant Agreement designates the courts of the State of New York or the United States District Court for the Southern District of New York as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by holders of the warrants, which could limit the ability of warrant holders to obtain a favorable judicial forum for disputes with us.
• The price of our Ordinary Shares has and may continue to be volatile.
• Our only significant asset is our ownership interest in Captivision Korea. If our business is not profitably operated, we may be unable to pay our shareholders dividends or make distributions or loans to enable us to pay any dividends on our ordinary shares or satisfy our other financial obligations.
• There is a risk that we may be classified as a PFIC for U.S. federal income tax purposes, which could have adverse U.S. federal income tax consequences to U.S. Holders of Captivision Securities.
• If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud.

Sentiment

Score: 3

Explanation: The document presents a concerning financial picture with declining revenue, increasing losses, and liquidity issues. While there are some positive aspects, the overall sentiment is negative due to the significant financial challenges and risks.

Positives

• The company has a robust reseller network that it supports constructively with technical expertise, demonstration units and marketing materials.
• The company has a strong commitment to sustainability, ethical sourcing of materials and ensuring that our systems move towards carbon neutrality.
• The company has a full set of international certifications that cover our media glass, including glass safety, glass construction, fire safety and electronics certifications across the European, North American and South Korean markets.
• The company has over 20 patents, five of which are fundamental patents essential for GGlass production.
• The company has a proprietary superprecision laser etching and surfacemount technology machine.
• The company has developed over 30 proprietary raw materials used in our manufacturing, including unique resin and LEDs from global suppliers.
• The company has a stateoftheart manufacturing facility located in Pyeongtaek, South Korea, which has a production capacity of over 700,000 square feet of GGlass per year.
• The company is vertically integrated, controlling almost every aspect of product manufacturing and assembly.
• The company's GGlass technology is fully customizable, architecturally durable, and fully transparent.
• The company's GGlass technology has sophisticated media capabilities.
• The company's GGlass technology is able to generate revenue from several different applications, such as content services, interactive services, broadcasting services, messaging services and apps.

Negatives

• The company's revenue decreased by 27.5% to $14,636,763 for the year ended December 31, 2023.
• The company's operating loss increased to $(13,278,632) for the year ended December 31, 2023.
• The company's net loss increased to $(76,985,584) for the year ended December 31, 2023.
• The company's current liabilities exceeded its current assets by $40,692,649 as of December 31, 2023.
• The company's current liquidity resources raise substantial doubt about its ability to continue as a going concern.
• The company will require substantial additional financing to fund its operations.
• The company is subject to the risks of operations in the United Kingdom, China, Japan, Hong Kong and the United States.
• The company is subject to potential exposure to environmental liabilities and is subject to environmental regulation and any such liabilities or regulation may adversely affect our costs and results of operations in the future.
• The company is subject to labor, health, construction/building and safety regulations, and may be exposed to liabilities and potential costs for lack of compliance.
• The company relies on key researchers and engineers, senior management and production facility operators, and the loss of the services of any such personnel or the inability to attract and retain them may adversely affect our business.
• The company's business involves complex manufacturing processes that may cause personal injury or property damage, subjecting us to liabilities and possible losses or other disruptions of its operations in the future, which may not be covered by insurance.
• Failure to protect our intellectual property rights could impair our competitiveness and harm our business and future prospects.
• Earthquakes, tsunamis, floods, severe health epidemics (including any possible recurrence of COVID19 or other types of widespread infectious diseases) and other natural calamities could materially adversely affect our business, results of operations or financial condition.
• The company's results of operations are subject to exchange rate fluctuations, which may affect its costs and revenues.
• The Warrants and the Converted Options may never be in the money, and may expire worthless.
• The company incurs significant costs as a result of operating as a public company.
• The company is subject to additional regulations and financial reporting obligations in South Korea.
• The company may not be able to timely and effectively implement controls and procedures required by Section 404(a) of the SarbanesOxley Act.
• The company may lose its foreign private issuer status, which would then require us to comply with the Exchange Acts domestic reporting regime and cause us to incur significant legal, accounting and other expenses.
• The company is a Cayman Islands exempted company with limited liability. The rights of its shareholders, including with respect to fiduciary duties and corporate opportunities, may be different from the rights of shareholders governed by the laws of U.S. jurisdictions.
• The company's ability to meet expectations and projections in any research or reports published by securities or industry analysts, or a lack of coverage by securities or industry analysts, could result in a depressed market price and limited liquidity for our securities.
• Future resales of a substantial number of Ordinary Shares in the public market, or the perception that such sales could occur, could cause the price of Ordinary Shares to decline.
• The A&R Warrant Agreement designates the courts of the State of New York or the United States District Court for the Southern District of New York as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by holders of the warrants, which could limit the ability of warrant holders to obtain a favorable judicial forum for disputes with us.
• The price of our Ordinary Shares has and may continue to be volatile.
• Our only significant asset is our ownership interest in Captivision Korea. If our business is not profitably operated, we may be unable to pay our shareholders dividends or make distributions or loans to enable us to pay any dividends on our ordinary shares or satisfy our other financial obligations.
• There is a risk that we may be classified as a PFIC for U.S. federal income tax purposes, which could have adverse U.S. federal income tax consequences to U.S. Holders of Captivision Securities.
• If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud.

Risks

• The company will require substantial additional financing to fund its operations and complete the development and commercialization of its process technologies.
• The fourthgeneration architectural media glass industry is a nascent industry; it may take a long time for our technology to penetrate our target markets.
• The company's future growth and success are dependent upon the DOOH market and the construction industrys willingness to adopt architectural media glass and specifically our GGlass technology.
• Failure to maintain the performance, reliability and quality standards required by our customers could have a materially adverse impact on our financial condition and results of operation.
• The company's business and results have been and may be adversely affected by fluctuations in the cost or availability of raw materials, components, purchased finished goods, shipping or services.
• A global economic downturn could result in reduced demand for our products and adversely affect our profitability.
• The company's sales cycle for large projects is protracted, which makes our annual revenue and other financial metrics hard to predict.
• Technological innovation by others could render our technology and the products produced using our process technologies obsolete or uneconomical.
• The company's financial projections are subject to significant risks, assumptions, estimates and uncertainties.
• The company's success depends upon its ability to develop new products and services and enhance existing products and services through product development initiatives and technological advances; any failure to make such improvements could harm our future business and prospects.
• The company's government sector sales, which comprise a significant portion of our sales, may be adversely affected by presidential and congressional elections, policy changes, government land development plan changes and other local political events.
• The IT, vertical real estate and large format wallscape sectors are regulated and any new or modified regulatory restrictions could adversely affect our sales and results of operations.
• Changes in building codes could lower the demand for our GGlass technology.
• The company sometimes manages the installation of its products, which subjects us to risks and costs that may impact our profit margin.
• The company sometimes rely on thirdparty contractors for the installation of its products, which subjects us to risks and costs that are out of our control.
• The company is subject to labor, health, construction/building and safety regulations, and may be exposed to liabilities and potential costs for lack of compliance.
• Equipment failures, delays in deliveries and catastrophic loss at our manufacturing facilities could lead to production curtailments or shutdowns that prevent us from producing our products.
• The company may be adversely affected by disruptions to our manufacturing facilities or disruptions to our customer, supplier or employee base.
• The company operates with a modest inventory, which may make it difficult for us to efficiently allocate capacity on a timely basis in response to changes in demand.
• The company's business involves complex manufacturing processes that may cause personal injury or property damage, subjecting us to liabilities and possible losses or other disruptions of its operations in the future, which may not be covered by insurance.
• Failure to protect our intellectual property rights could impair our competitiveness and harm our business and future prospects.
• Earthquakes, tsunamis, floods, severe health epidemics (including any possible recurrence of COVID19 or other types of widespread infectious diseases) and other natural calamities could materially adversely affect our business, results of operations or financial condition.
• The company continues to face significant risks associated with our international expansion strategy.
• The company's results of operations are subject to exchange rate fluctuations, which may affect its costs and revenues.
• The company is subject to the risks of operations in the United Kingdom, China, Japan, Hong Kong and the United States.
• The Warrants and the Converted Options may never be in the money, and may expire worthless.
• The company relies on production facility operators and manufacturing facility employees, and the loss of the services of any such personnel or the inability to attract and retain will adversely affect our business.
• The company incurs significant costs as a result of operating as a public company.
• The company is subject to additional regulations and financial reporting obligations in South Korea.
• The company may not be able to timely and effectively implement controls and procedures required by Section 404(a) of the SarbanesOxley Act.
• The company may lose its foreign private issuer status, which would then require us to comply with the Exchange Acts domestic reporting regime and cause us to incur significant legal, accounting and other expenses.
• The company is a Cayman Islands exempted company with limited liability. The rights of its shareholders, including with respect to fiduciary duties and corporate opportunities, may be different from the rights of shareholders governed by the laws of U.S. jurisdictions.
• The company's ability to meet expectations and projections in any research or reports published by securities or industry analysts, or a lack of coverage by securities or industry analysts, could result in a depressed market price and limited liquidity for our securities.
• Future resales of a substantial number of Ordinary Shares in the public market, or the perception that such sales could occur, could cause the price of Ordinary Shares to decline.
• The A&R Warrant Agreement designates the courts of the State of New York or the United States District Court for the Southern District of New York as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by holders of the warrants, which could limit the ability of warrant holders to obtain a favorable judicial forum for disputes with us.
• The price of our Ordinary Shares has and may continue to be volatile.
• Our only significant asset is our ownership interest in Captivision Korea. If our business is not profitably operated, we may be unable to pay our shareholders dividends or make distributions or loans to enable us to pay any dividends on our ordinary shares or satisfy our other financial obligations.
• There is a risk that we may be classified as a PFIC for U.S. federal income tax purposes, which could have adverse U.S. federal income tax consequences to U.S. Holders of Captivision Securities.
• If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud.

Future Outlook

The company expects its international activities to continue to grow for the foreseeable future as it continues to pursue opportunities in existing and new international markets.

Industry Context

The company operates in the architectural media glass industry, which is heavily influenced by economic trends in the real estate, construction, and advertising industries.

Comparison to Industry Standards

• The company considers Captivision Korea to be the first and only provider of fourth generation architectural media glass.
• The company competes with earlier generation hardware products that do not deliver the architectural industry mandated transparency, durability and customization, including LED bars, LED mesh and LED screens.
• The company's GGlass technology is an ITenabled construction material. It combines conventional architectural glass with customizable, largescale LED digital media display capabilities, delivering architectural durability, near full transparency and sophisticated media capabilities.
• The company has over 490 installations in nine countries around the world split across three operational regions.
• The company has a stateoftheart manufacturing facility located in Pyeongtaek, South Korea, which has a production capacity of over 700,000 square feet of GGlass per year.

Management Changes

Legal Proceedings

• A lawsuit was filed in the Suwon, Korea Division court against Captivision Korea by SANGSANGIN SAVINGS Bank and SANGSANGIN PLUS SAVINGS BANK Co., Ltd.
• The Company filed suits against Trinit and certain individuals related to Trinit on June 23, 2021, in Republic of Korean Seoul Central District Court.

Related Party Transactions

• Captivision Korea and Bio X, a company founded by Ho Joon Lee and Houng Ki Kim, Captivision Koreas cofounders, for which Mr.

Next Steps

• The company will need to raise capital through equity, debt or mezzanine financing.
• The company will need to implement more aggressive sales efforts resulting in decreased pipeline growth and reduced conversion of existing pipeline into revenue.
• The company will need to continue to seek new opportunities to produce and commercialize products using our process technologies outside the South Korea through entering into licensing and distribution with new and existing industry partners.

Key Dates

Keywords

Captivision, GGlass, financial results, architectural media glass, DOOH, XBRL, 20-F, warrants, ordinary shares, financials