F-1/A: Captivision Inc. Files Amendment for Secondary Offering and Warrant Exercises

Captivision Inc. is registering the offer and sale of ordinary shares and warrants to satisfy registration obligations and granted rights.

Summary

• Captivision Inc., a Cayman Islands exempted company, has filed an amendment to its registration statement to register the offer and sale of up to 24,204,341 ordinary shares.
• This includes shares issuable upon the exercise of private warrants (11,950,000 shares), public warrants (11,499,990 shares), and converted options (754,351 shares).
• The filing also covers the offer and resale of up to 38,180,020 ordinary shares by selling securityholders, including JGGC Founder Shares, Earnout Shares, and shares held by parties to the Registration Rights Agreement.
• The selling securityholders may offer these shares from time to time through public or private transactions at prevailing market prices or negotiated prices.
• The company is registering these securities to satisfy certain registration obligations and rights it has granted.
• The ordinary shares being offered for resale represent approximately 50.3% of the company's total issued and outstanding ordinary shares on a fully diluted basis.
• The warrants being offered for resale represent approximately 51.0% of the company's current total outstanding warrants.
• The selling securityholders acquired the ordinary shares at prices ranging from less than $0.01 per share to $11.50 per share.
• The company will not receive any proceeds from the sale of resale securities by the selling securityholders, except upon the cash exercise of warrants or converted options.
• Assuming the exercise of all outstanding warrants for cash, the company would receive approximately $290.1 million.
• The exercise price of the public warrants, private warrants, and founder warrants is $11.50 per share.
• The exercise price of the converted options is $4.84 per share.
• The company believes the likelihood of warrant and option exercises depends on the market price of its ordinary shares.
• The company is an emerging growth company and a foreign private issuer, which allows it to take advantage of certain reduced reporting requirements.

Sentiment

Score: 3

Explanation: The document presents a mixed picture, with some positive aspects like potential cash inflow from warrant exercises, but also significant concerns about financial performance, liquidity, and potential dilution. The overall sentiment is slightly negative due to the challenges the company faces.

Positives

• Potential for significant cash inflow to the company upon exercise of warrants and converted options.
• Registration of resale securities allows selling securityholders to sell their shares, potentially increasing liquidity.
• The company's status as an emerging growth company and foreign private issuer provides certain exemptions from reporting requirements.

Negatives

• The company will not receive any proceeds from the sale of resale securities by the selling securityholders, except upon the cash exercise of warrants or converted options.
• The market price of the ordinary shares may decline if the selling securityholders sell a large number of their ordinary shares.
• The likelihood of warrant and option exercises depends on the market price of the ordinary shares being above the exercise price.
• The securities being offered in this prospectus represent a substantial percentage of our outstanding Ordinary Shares.

Risks

• The market price of the company's ordinary shares could decline due to potential sales by selling securityholders.
• The warrants and converted options may expire worthless if the market price of the ordinary shares remains below the exercise price.
• The company's reliance 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's current liquidity resources raise substantial doubt about our ability to continue as a going concern and to comply with our debt covenants unless we raise additional capital to meet our obligations in the near term.

Future Outlook

The company expects to use the proceeds received from the exercise of warrants or converted options, if any, for working capital and general corporate purposes.

Industry Context

The document provides insight into Captivision's financial standing and its efforts to navigate the public markets, particularly in the context of its innovative architectural media glass product, G-Glass. The company operates in the DOOH market and the construction industry.

Comparison to Industry Standards

• The document does not provide enough information to make a detailed comparison to industry standards.
• However, the document does mention that the company is the exclusive developer, manufacturer and installer of an innovative architectural media glass product called G-Glass.
• The document also mentions that the company is a market leader in the delivery of fully transparent media faade capabilities with over 460 architectural installations worldwide.

Legal Proceedings

• A lawsuit has been filed against Captivision Korea by SANGSANGIN SAVINGS Bank and SANGSANGIN PLUS SAVINGS BANK Co., Ltd, alleging that Captivision Korea must return a full deposit of $1,544,962, as stipulated by a factory and equipment lease contract.

Related Party Transactions

• Captivision Korea and Bio X, a company founded by Ho Joon Lee and Houng Ki Kim, Captivision Koreas co-founders, for which Mr. Lee formerly acted as Chief Executive Officer and for which Houng Ki Kim currently serves as Chief Executive Officer, entered into 18 loan agreements during the period from January 4, 2023 to December 27, 2023, where the effective period for each agreement was one year.
• Captivision Korea and Houng Ki Kim, Captivision Koreas co-founder, entered into a credit agreement dated January 2, 2023, that provides for a revolving line of credit to Captivision Korea in an amount of $1,544,962, with interest accruing at a rate of 5% per annum and with a maturity date of December 31, 2023.
• Captivision Korea and Mr. Lee, Captivision Koreas co-founder, entered into a loan agreement dated July 21, 2021, whereby Mr. Lee lent an aggregate of $26,209 to Captivision Korea, accruing at a rate of 0% per annum and maturing July 20, 2024.
• G-SMATT America Co., Ltd., a partly owned subsidiary of Captivision Korea (G-SMATT America), and Captivision Korea entered into twenty three loan agreements during the period from April 2, 2018 to December 31, 2023, where the effective period of each agreement was one year, accruing at a rate of 5% per annum.
• G-SMATT America and G-Frame Co., Ltd., a wholly-owned subsidiary of Captivision Korea (G-Frame), entered into two loan agreements during the period from July 16, 2018 to June 26, 2019, where the effective period of each agreement was one year, whereby Captivision Korea lent an aggregate of $170,000 to G-SMATT America, accruing at a rate of 5% per annum.
• G-SMATT America and G-SMATT Europe, a partly-owned subsidiary of Captivision Korea (G-SMATT Europe), entered into eight loan agreements during the period from March 26, 2020 to October 5, 2023, where the effective period of each agreement was one year, accruing at a rate of 5% per annum.
• G-SMATT Europe and Orhan Ertughrul, entered into a loan agreement, accruing at a rate of 5% per annum.
• G-SMATT Europe and Ho-Joon Lee, our Chief Technology Officer, entered into a loan agreement, accruing at a rate of 5% per annum.
• G-SMATT Europe and Captivision Korea entered into loan agreements during the period from May 9, 2018 to September 20, 2023 where the effective period of each agreement was one year, accruing at a rate of 5% per annum.
• G-SMATT Europe and BioXClan entered into loan agreements during the period from August 9, 2019 to February 8, 2022, accruing at a rate of 5% per annum.

Stakeholder Impact

• Shareholders may experience dilution due to the issuance of additional ordinary shares.
• Shareholders may experience a decline in the value of their shares if the selling securityholders sell a large number of their ordinary shares.
• The company's ability to attract and retain qualified personnel may be affected by the additional demands associated with being a public company.
• The company's ability to meet customer expectations and deliver products on time may be affected by disruptions to its manufacturing facilities or its customer, supplier, or employee base.

Next Steps

• The selling securityholders may offer and sell the resale securities from time to time.
• The company will use commercially reasonable efforts to maintain the effectiveness of a registration statement and a current prospectus relating to the ordinary shares until the converted warrants expire or are redeemed.
• The company is engaged in negotiations to extend the maturity date of its debt to December 31, 2024, and to allow the conversion of this debt into equity at its discretion.

Key Dates

Keywords

ordinary shares, warrants, resale securities, selling securityholders, exercise price, emerging growth company, foreign private issuer, registration statement, Captivision Inc., converted options