THIN FILM ELECTRONICS ASA (“Thinfilm”) Prospectus in connection with the admission to trading ...

115 Pages·2015·1.13 MB·English

by  Elisabeth Linchausen

THIN FILM ELECTRONICS ASA
(“Thinfilm”)

Prospectus in connection with the admission to trading on Oslo Børs of 34,034,653 shares
issued in the Private Placement resolved on 18 June 2015

DATE: 30 June 2015

1
IMPORTANT INFORMATION

This Prospectus (the “Prospectus”) has been prepared in connection with the application for
admission to listing on Oslo Børs of 34,034,653 new shares, which were issued in a private
placement resolved by the Board of Directors in the Company on 18 June 2015, pursuant to
an authorization from the Annual General Meeting dated 7 May 2015. This Prospectus has
been prepared exclusively in the English language. It has been reviewed and approved by the
Financial Supervisory Authority of Norway (“Norwegian FSA”) pursuant to Section 7-7 of
the Norwegian Securities Trading Act, although Norwegian FSA has not controlled and/or
approved the accuracy or completeness of the information contained in this Prospectus.
Norwegian FSA’s control and approval relate solely to the fact that the issuer has included
descriptions in accordance with a pre-defined list of content requirements. Moreover,
Norwegian FSA has not undertaken any form of control or approval of the corporate law
matters described in or covered by the Prospectus.

All inquiries relating to this Prospectus should be directed to the Company. No other person
has been authorized to give any information about, or make any representation on behalf of,
the Company in connection with the Private Placement and, if given or made, such other
information or representation must not be relied upon as having been authorized by the
Company. Cowen and Company LLC, who serves as the Company’s Placement Agent in
connection with the Private Placement, makes no representation or warranty, whether express
or implied, as to the accuracy or completeness of the information contained in this Prospectus,
and nothing contained in this Prospectus is, or shall be relied upon as, a promise or
representation by Cowen and Company LLC.

The information in the Prospectus is updated as of the date hereof, but may be subject to
change, completion and amendment without notice. Any new material information and any
material inaccuracy that might have an effect on the assessment of the shares arising after the
date of publication of this Prospectus and prior to the listing will be published and announced
as a supplement to this Prospectus in accordance with Section 7-15 of the Norwegian
Securities Trading Act. Without limiting the manner in which the Company may choose to
make public announcements, and subject to the Company’s obligations under applicable law,
announcements in relation to the matters described in this Prospectus will be considered to
have been made once they have been received by Oslo Børs and distributed through its
information system.

The distribution of this Prospectus may be restricted by law in certain jurisdictions. The
Company requires persons in possession of this Prospectus to inform themselves about
the shares being offered and to observe any such Prospectus distribution restrictions.

This Prospectus does not constitute an offer to subscribe for shares in the Company.

The content of this Prospectus is not to be construed as legal, business, financial or tax advice.
Each prospective investor should consult its own legal advisor, business advisor, financial
advisor or tax advisor as to legal, business, financial and tax advice.

Any dispute regarding the Prospectus shall be governed by Norwegian law and Norwegian
courts alone shall have jurisdiction in matters relevant hereto.

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Investing in the Company’s Shares involves risk. See Section 2 (“Risk Factors”) of this
Prospectus.

Please refer to Section 15 “Definitions and glossary terms” for definitions, which also apply
for the preceding pages.

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TABLE OF CONTENTS

1 EXECUTIVE SUMMARY ................................................................................................... 9
1.1 SECTION A – INTRODUCTION AND WARNINGS ............................................ 9
1.2 SECTION B-ISSUER ............................................................................................. 10
1.3 SECTION C-SECURITIES .................................................................................... 18
1.4 SECTION D – RISKS ............................................................................................. 20
1.5 SECTION E- OFFER .............................................................................................. 21
2 RISK FACTORS ................................................................................................................. 24
2.1 Risks Related to the Company’s Financial Condition and Business Model ........... 24
2.1.1 Thinfilm’s business is difficult to evaluate because the Company
has a limited operating history. ................................................................ 24
2.1.2 Thinfilm’s quarterly operating results will likely be volatile and
may not be a reliable indicator of the Company’s future
performance. ............................................................................................ 24
2.1.3 Thinfilm has a history of losses and expects additional losses in
the future. ................................................................................................. 25
2.1.4 Thinfilm may have difficulty developing relationships with key
customers. ................................................................................................ 25
2.1.5 Thinfilm’s business plan depends heavily on revenues from new
technology, the commercial acceptance of which remains
unproven. .................................................................................................. 25
2.1.6 The Company may not be able to effectively manage growth................. 25
2.1.7 Thinfilm may need additional capital, which, if obtainable, could
dilute the ownership interest of investors. ............................................... 26
2.1.8 Thinfilm’s operations expose it to the risk of fluctuations in
currency exchange rates. .......................................................................... 26
2.1.9 Thinfilm is subject to risks related to tax issues, and current tax
rates and rules in Norway and elsewhere may change. ............................ 26
2.2 Risks Related to the Company’s Markets ............................................................... 27
2.2.1 Thinfilm’s markets are immature and highly competitive. ...................... 27
2.2.2 Thinfilm’s markets are undergoing rapid technological change,
and the Company’s future success will depend on its ability to
meet the changing needs of the industry .................................................. 27
2.2.3 Thinfilm depends substantially on highly qualified managerial,
sales and technical personnel who are difficult to hire and retain ........... 28
2.2.4 Thinfilm faces risks associated with international expansion and
operating in multiple jurisdictions ........................................................... 28
2.2.5 Thinfilm faces risks relating to potential acquisitions of
complementary companies, products or technologies ............................. 28
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2.2.6 Thinfilm’s business and prospects will suffer if the market for
printed electronics does not develop as the Company expects ................ 29
2.3 Risks Related to Legal and Regulatory Matters ...................................................... 29
2.3.1 Thinfilm is highly dependent on IP and the Company’s methods of
protecting its IP may not be adequate ...................................................... 29
2.3.2 Thinfilm faces risks of claims for IP infringement .................................. 30
2.3.3 Thinfilm may become subject to burdensome government
regulations affecting the industry, which could adversely affect the
Company’s business ................................................................................. 30
2.3.4 If Thinfilm incurs substantial losses, the Company could be
liquidated, resulting in the Shares losing all of their value ...................... 30
2.3.5 The exercise of new and existing warrants will reduce the
ownership interests of shareholders ......................................................... 31
2.4 Other Risks Material to the Traded Securities ........................................................ 31
2.4.1 Price volatility of publicly traded securities ............................................ 31
2.4.2 The Company does not expect to pay any cash dividends for the
foreseeable future. Investors in this Offering may never obtain a
return on their investment ........................................................................ 32
2.4.3 Fluctuations in the NOK may lead to currency losses for
international investors .............................................................................. 32
2.4.4 Foreign shareholders may be restricted to participate in rights
issues ........................................................................................................ 32
2.4.5 Future issuances of Shares or other securities could dilute the
holdings of shareholders and could materially affect the price of
the Shares ................................................................................................. 32
2.4.6 Future sales of Shares could reduce the market price of the Shares
and adversely affect the Company’s ability to raise additional
capital ....................................................................................................... 33
2.4.7 Investors may not be able to exercise their voting rights for Shares
registered in a nominee account ............................................................... 33
2.4.8 Investors could be unable to recover losses in civil proceedings in
jurisdictions other than Norway ............................................................... 33
2.4.9 Limitations in Norwegian law to bring an action against the
Company .................................................................................................. 33
2.4.10 The transfer of Shares is subject to restrictions under the securities
laws of the United States and other jurisdictions ..................................... 33
2.4.11 Market interest rates could influence the price of the Shares .................. 34
3 STATEMENTS ................................................................................................................... 35
3.1 Statement of Responsibility for the Prospectus ....................................................... 35
3.2 Statement regarding third party information ........................................................... 35
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4 CAUTONERY NOTE REGARDING FORWARD LOOKING STATEMENT ............... 36
5 INFORMATION CONCERNING THE SECURITIES BEING ADMITTED TO
TRADING ........................................................................................................................... 37
5.1 The purpose and the use of the proceeds ................................................................. 37
5.2 The Private Placement ............................................................................................. 37
5.2.1 Subscription Price .................................................................................... 37
5.2.2 Disparity between Subscription Price and price to Affiliates .................. 38
5.2.3 Bookbuilding Period and Subscription .................................................... 38
5.2.4 Allocation and delivery of Offer Shares .................................................. 38
5.2.5 Share Borrowing Agreements .................................................................. 39
5.2.6 Admission to trading and dealing arrangements ...................................... 39
5.2.7 Resolution to issue the Offer Shares ........................................................ 40
5.3 Shareholder’s rights relating to the Offer Shares .................................................... 40
5.4 Dilution .................................................................................................................... 41
5.5 Warrants .................................................................................................................. 41
5.6 Lock-up ................................................................................................................... 41
5.7 Expenses .................................................................................................................. 41
5.8 Advisors ................................................................................................................... 42
5.9 Jurisdiction and choice of law ................................................................................. 42
5.10 Interest of Natural and Legal Persons involved in the Private Placement .............. 42
6 THE COMPANY AND ITS BUSINESS ........................................................................... 43
6.1 Principal Activities .................................................................................................. 43
6.1.1 Nature of Operations ................................................................................ 43
6.1.2 Products .................................................................................................... 44
6.1.3 Printed Electronics ................................................................................... 45
6.1.4 Significant New Products ......................................................................... 46
6.2 Principal Markets .................................................................................................... 46
6.2.1 Principal Markets by Product ................................................................... 46
6.2.2 Approach to market .................................................................................. 47
6.2.3 Product roadmap ...................................................................................... 48
6.2.4 Product Status Summary .......................................................................... 49
6.3 Competitors ............................................................................................................. 49
6.4 Technology .............................................................................................................. 50
6.5 History and Important Commercial Events ............................................................. 50
6.6 Intellectual Property Rights (IPR) ........................................................................... 53
6.6.1 Intellectual property portfolio .................................................................. 53
6.6.2 Research, Development and Intellectual Property Policies ..................... 55
6.7 Research and Development ..................................................................................... 56
6.8 Potentially Material Agreements Entered Outside the Course of Normal
Business ................................................................................................................... 57
6
7 FOUNDER, BOARD OF DIRECTORS, MANAGEMENT, EMPLOYEES .................... 59
7.1 Founder .................................................................................................................... 59
7.2 Board of Directors and management, other corporate committees ......................... 59
7.3 Conflicts of Interest ................................................................................................. 63
7.4 Remuneration and Benefits ..................................................................................... 63
7.5 Employees and consultants ..................................................................................... 65
7.6 Board Practices and Corporate Governance, committees ....................................... 66
7.7 Shareholdings and Subscription Rights of Board of Directors and
Management ............................................................................................................ 67
8 FINANCIAL INFORMATION .......................................................................................... 68
8.1 Financial report and auditor’s reports ..................................................................... 68
8.2 Historical Financial Information ............................................................................. 68
8.3 Investments .............................................................................................................. 77
8.3.1 Principal Historical Investments .............................................................. 77
8.3.2 Principal Investments in Progress ............................................................ 77
8.3.3 Future Investments ................................................................................... 78
8.4 Property, Plant and Equipment ................................................................................ 78
8.5 Financial Policies, Treasury .................................................................................... 79
8.6 Summary of Accounting Policies and Transition to IFRS ...................................... 79
8.7 Dividend Policy ....................................................................................................... 82
8.8 Significant Changes in Financial and Trading Position since 31 March 2015 ........ 82
9 CAPITAL RESOURCES .................................................................................................... 83
9.1 Cash Flow and Liquidity ......................................................................................... 83
9.2 Working Capital Statement ..................................................................................... 83
9.3 Capitalization and Indebtedness prior to the Private Placement ............................. 84
10 CORPORATE INFORMATION AND DESCRIPTION OF SHARE CAPITAL ............. 86
10.1 Company corporate registration .............................................................................. 86
10.2 Organizational and legal structure ........................................................................... 86
10.3 The Shares and the share capital ............................................................................. 87
10.4 Development of the share capital ............................................................................ 88
10.5 Board Authorization to issue Shares ....................................................................... 90
10.6 Subscription Rights, Warrants and Other Financial Instruments ............................ 91
10.7 Authority to Repurchase Shares .............................................................................. 93
10.8 Shareholder Structure .............................................................................................. 93
10.9 Articles of Association ............................................................................................ 94
11 SHAREHOLDER MATTERS AND COMPANY AND SECURITIES LAW .................. 95
11.1 Introduction ............................................................................................................. 95
11.2 Voting rights ............................................................................................................ 95
11.3 General meetings of shareholders ........................................................................... 96
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11.4 Additional issuances and preferential rights ........................................................... 96
11.5 Dividends ................................................................................................................. 96
11.6 Rights on liquidation ............................................................................................... 97
11.7 Competition filing connected to concentrations ...................................................... 97
11.8 Trading and settlement ............................................................................................ 98
11.9 Information, control and surveillance...................................................................... 99
11.10 Disclosure obligations ............................................................................................. 99
11.11 Notification and Publication Requirements........................................................... 100
11.12 Reports to Shareholders ......................................................................................... 100
11.13 The VPS and transfer of Shares ............................................................................ 100
11.14 Shareholder register – Norwegian law .................................................................. 101
11.15 Foreign investment in shares listed in Norway ..................................................... 101
11.16 Insider trading ........................................................................................................ 101
11.17 Mandatory offer requirement ................................................................................ 101
11.18 Public takeover bids .............................................................................................. 102
11.19 Compulsory acquisition ......................................................................................... 103
11.20 Foreign exchange controls ..................................................................................... 103
11.21 Restrictions on sale and transfer ............................................................................ 104
12 LEGAL MATTERS .......................................................................................................... 105
12.1 Legal and arbitration proceedings ......................................................................... 105
12.2 Related Party Transactions .................................................................................... 105
13 TAXATION ...................................................................................................................... 107
13.1 General .................................................................................................................. 107
13.2 Norwegian Shareholders ....................................................................................... 107
13.3 Non-Resident Shareholders ................................................................................... 108
13.4 Duties on the Transfer of Shares ........................................................................... 109
14 ADDITIONAL INFORMATION ..................................................................................... 110
14.1 Advisors ................................................................................................................. 110
14.2 Placement Agent .................................................................................................... 110
14.3 Auditors ................................................................................................................. 110
14.4 Expert Statements .................................................................................................. 110
14.5 Documents on Display .......................................................................................... 110
14.6 Incorporation by reference .................................................................................... 110
15 DEFINITIONS AND GLOSSARY OF TERMS .............................................................. 112

APPENDICES
Appendix 1: Articles of Association
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1 EXECUTIVE SUMMARY

Summaries are made up of disclosure requirements known as “Elements”. These elements
are numbered in Sections A – E (A.1 – E.7).

This Summary contains all the Elements required to be included in a Summary for this type of
securities and issuer. Because some Elements are not required to be addressed, there may be
gaps in the numbering sequence of the Elements.

Even though an Element may be required to be inserted in the Summary because of the type of
securities and issuer, it is possible that no relevant information can be given regarding the
Element. In this case a short description of the Element is included in the Summary with the
mention of “not applicable”.

1.1 SECTION A – INTRODUCTION AND WARNINGS

Element Description of Disclosure requirements
Element
A.1 Warnings This Summary should be read as an introduction to the
Prospectus.

Any decision to invest should be based on consideration
of the Prospectus as a whole by the investor.

Where a claim relating to the information contained in this
Prospectus is brought before a court, the plaintiff might
under the applicable national legislation of the Member
States, have to bear the costs of translating the Prospectus
before the legal proceedings are initiated.

Civil liability attaches only to those persons who have
tabled the Summary including any transactions thereof,
but only if the Summary is misleading, inaccurate or
inconsistent when read together with the other parts of this
Prospectus or it does not provide, when read together with
the other parts of the Prospectus, key information in order
to aid investors when considering whether to invest in
such securities.

A.2 Resale and final Not applicable. No resale will take place. No financial
placement by intermediaries will be used for the Private Placement.
financial
intermediaries

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1.2 SECTION B-ISSUER

Element Description of Disclosure requirements
Element
B.1 Legal and Commercial Thin Film Electronics ASA (“Thinfilm”)
Name
B.2 Domicile/Legal Thinfilm is a Norwegian public limited company incorporated
Form/Legislation/ under the PLCA. The Company was incorporated on 22 December
Country of 2005 with the name Thin Film NewCo ASA, which name was
Incorporation changed to Thin Film Electronics ASA on 11 May 2006.

Thinfilm has its registered address at Henrik Ibsens gate 100, 0255
Oslo, Norway. The postal address is P.O. Box 2911 Solli, NO-
0230 Oslo, Norway. The organisation number of Thinfilm is NO
889 186 232. The Company can be reached on telephone +47 23
27 51 59. The Company’s website is www.thinfilm.no
B.3 Key factors relating to Thinfilm is a global leader in the development and
current operations and commercialization of printed electronics and smart systems.
activities, main Thinfilm uses leading edge printed electronics technology to
categories of products produce products in ultra-high volumes and at relatively low unit
sold and principal costs. This unique combination of technology, scale, and
markets affordability presents a compelling alternative to traditional
electronic offerings. Today, Thinfilm is delivering on its mission
to make everyday objects just smart enough, expand the
boundaries of the Internet of Things, and help create a truly
connected world.

Thinfilm’s business model is based on the following products:

Products
Thinfilm products include:

• Thinfilm Memory™ - Rewritable memory labels
released to market commercially early in 2014;
technology licensed to Xerox Corporation in January
2015 for mass production and distribution.
• EAS - Electronic article surveillance tags in market
commercially; currently in global rollout with leading
global fast-fashion retailer (13 million units on order
for delivery by Q3 2015). Commercial go-to-market
partnership with Nedap Retail. Leading European
supplier of retail loss prevention solutions, with tags
sold under Nedap !Fast brand.
• NFC Barcode™ - Semi-printed RF (radio frequency)
tags that communicate a 128-bit unique item-level
identifier to NFC-enabled smart phones.
• NFC OpenSense™ – Semi-printed RF tags with
wireless communication functionality; can detect
both “factory sealed” and “open” states of product;
collaborating with Diageo (world’s largest spirits
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