hmvod Limited — Capital/Financing Update 2020

Nov 4, 2020

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

This announcement appears for information purpose only and does not constitute an invitation or offer to acquire, purchase, or subscribe for any securities of the Company.

hmvod Limited hmvod 視頻有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8103)

PROPOSED ISSUE OF SETTLEMENT SHARES UNDER SPECIFIC MANDATE

THE PROPOSED ISSUE OF THE SETTLEMENT SHARES

Reference is made to the announcements of the Company dated 22 July 2020, 14 August 2020 and 22 October 2020 in relation to the Petition.

The Company entered into the Settlement Agreement with the Bondholder pursuant to which the Company agreed, amongst other things, to issue the Settlement Shares to the Bondholder in partial settlement of the outstanding principal amount of the Bond in sum of HK$3,920,000. The Settlement Shares will be issued at the Issue Price of HK$0.71 per Share.

The Settlement Shares will be allotted and issued pursuant to the Specific Mandate to be sought from the Shareholders at the EGM.

An application will be made by the Company to the Listing Committee for the listing of, and permission to deal in, the Settlement Shares.

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THE EGM

The EGM will be convened for the Shareholders to consider and, if thought fit, to approve the grant of the Specific Mandate. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, no Shareholder will be required to abstain from voting at the EGM.

A Circular containing, among other things, (i) further information on the Settlement Agreement and the proposed issue of Settlement Shares and (ii) a notice of the EGM and a form of proxy will be despatched to the Shareholders on or around 25 November 2020.

WARNING

The Shareholders and potential investors should be aware that the issue of the Settlement Shares is subject to the fulfilment of the Conditions, and consequently the allotment of the Settlement Shares may or may not proceed.

SHAREHOLDERS AND POTENTIAL INVESTORS ARE ADVISED TO EXERCISE CAUTION WHEN DEALING IN THE SHARES.

INTRODUCTION

Reference is made to the announcements of the Company dated 22 July 2020, 14 August 2020 and 22 October 2020 in relation to the Petition.

The Company entered into the Settlement Agreement with the Bondholder pursuant to which the Company agreed, amongst other things, to issue the Settlement Shares in settlement of part of outstanding principal amount of the Bond in sum of HK$3,920,000. The Settlement Shares will be issued at the Issue Price of HK$0.71 per Share.

The Settlement Shares will be allotted and issued pursuant to the Specific Mandate to be sought from the Shareholders at the EGM.

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The Settlement Agreement

Date: 10 August 2020

Parties: (i) the Company; and

• (ii) the Bondholder

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the Bondholder is an Independent Third Party.

Pursuant to the Settlement Agreement, the parties agree, amongst other things:[–]

• (i) The Company shall pay HK$563,835.62 being the interest accrued on the Bond from 15 September 2019 to the date of Settlement Agreement (the “ Interest Payment ”) within 5 days from the date of the Settlement Agreement;

• (ii) The Company shall pay 60% of the outstanding principal of the Bond (i.e. HK$5,880,000) by 3 monthly instalments of HK$1,960,000 (together with corresponding accrued interest) (the “ Principal Payments ”) and the 1st instalment shall be payable on or before 5 October 2020;

• (iii) The remaining 40% of the outstanding principal (i.e. HK$3,920,000) shall be settled by allotment of the Settlement Shares to the Bondholder within 90 days from the date of Settlement Agreement;

• (iv) If the Conditions cannot be fulfilled, the outstanding indebtedness shall be repaid within 1 month from the date of default of the Conditions;

• (v) In the event that the aggregate market value of the Settlement Shares drops to 30% of HK$3,920,000 within 1 year from the date of allotment, the Company shall issue such further new shares or repay cash to restore such shortfall of the market of HK$3,920,000 to the Bondholder, subject to a lock-up period of 6 months after the date of issuance of new shares; and

• (vi) Upon payment of the Interest payment and the Principal Payments, the Bondholder shall take all necessary steps to withdraw the Petition

The Company and the Bondholder entered into the Supplemental Agreement whereby the deadline for allotment of the Settlement Shares to the Bondholder shall be extended to 31 December 2020.

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The Issue Price

According to the Settlement Agreement, the Issue Price of the Settlement Shares shall be at a rate being the 5-day average closing price of the shares of the Company prior to the execution of the Settlement Agreement, i.e. HK$0.71 (after taken into account the effect of the Share Consolidation).

The Issue Price represents:[–]

• (i) a discount of approximately 6.58% of the theoretical closing price of HK$0.76 per Share (after taken into account of the Share Consolidation) based on the closing price of HK$0.076 per the then share of the Company as quoted on the Stock Exchange on the date of the Settlement Agreement, i.e. 10 August 2020;

• (ii) an equivalent to the theoretical closing price of HK$0.71 per Share (after taken into account of the Share Consolidation) based on the average closing price of HK$0.071 per the then share of the Company as quoted on the Stock Exchange for the five (5) consecutive trading days prior to and excluding the date of the Settlement Agreement;

• (iii) a discount of approximately 69.92% of the closing price of HK$2.36 per Share as quoted on the Stock Exchange on the date of this announcement.

The Issue Price was determined after arm’s length negotiations between the Company and the Bondholder with reference to, among other things, the then prevailing market price of the shares of the Company and the terms of the Settlement Agreement. The Directors consider that the Issue Price is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

The Settlement Shares

Pursuant to the Settlement Agreement, for settlement of the remaining outstanding principal of HK$3,920,000 of the Bond at the Issue Price of HK$0.71 per Settlement Share, the Company shall allot and issue 5,521,126 Settlement Shares to the Bondholder, representing (i) approximately 6.47% of the total number of Shares in issue as at the date of this announcement; and (ii) approximately 6.08% of the total number of shares of the Company in issue as enlarged by such allotment. The aggregate nominal value of these 5,521,126 Settlement Shares is HK$55,211.26.

The Settlement Shares, when allotted and issued, will rank pari passu in all respects among themselves and with the Shares in issue on the date of allotment and issue thereof.

The Settlement Shares will be allotted and issued pursuant to the Specific Mandate to be sought from the Shareholders at the EGM.

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Conditions Precedent

The issue and allotment of the Settlement Shares is subject to the Conditions, namely:[–]

• (a) The Settlement Shares shall be permissible investment asset classes as specified under the Capital Investment Entrant Scheme introduced by the HKSAR;

• (b) The obtaining of the approval from the Listing Committee of the Stock Exchange on the listing of and permission to deal in the Settlement Shares; and

• (c) The issue price of the Settlement Shares shall be at a rate being the 5-day average closing price of the Shares prior to the execution of the Settlement Agreement.

If the Conditions cannot be fulfilled on or before 31 December 2020, the outstanding indebtedness shall be repaid within 1 month from the date of default of the Conditions.

Application will be made by the Company to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Settlement Shares.

REASONS FOR THE ALLOTMENT OF SETTLEMENT SHARES

The Group principally engages in provision of professional services, over-the-top (“ OTT ”) services, and proprietary trading. The professional services segment involves cyber security services and solutions. The OTT services segment involves provision of multi-media related services and content to customers in Hong Kong and Taiwan via its own digital video rental platform.

The Bond has been overdue since its maturity date in September 2019. After a lengthy negotiation process, the Company and the Bondholder has eventually reached a settlement on terms of the Settlement Agreement under which, among other things, the principal amount of the Bond can be settled partially (60%) by cash and partially (40%) by the allotment of the Settlement Shares.

The Directors consider that the partial settlement of the principal of the Bond by the Settlement Shares can (i) relieve the Group from immediate repayment obligation of the corresponding outstanding principal amount of the Bond; (ii) improve the cash position of the Company by saving the cash outflow that would have been used for payment of the Bond but for the allotment of Settlement Shares; (iii) enlarge the Company’s shareholders’ base by introducing a new substantial shareholder.

Accordingly, the Directors consider that the terms of the allotment of the Settlement Shares and Settlement Agreements are fair and reasonable and the allotment of the Settlement Shares are in the interests of the Company and its Shareholders as a whole.

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INFORMATION OF THE BONDHOLDER

The Settlement Shares will be allotted to the Bondholder, who is an individual investor. To the best of the Directors’ knowledge, information and belief and having made all reasonable enquiries, the Bondholder is an Independent Third Party.

SHAREHOLDING STRUCTURE OF THE COMPANY

To the best of the Directors’ knowledge, information and belief after having made all reasonable enquiries, the shareholding structure of the Company (for illustration purpose only) as at (i) the date of this announcement; and (ii) after the allotment of the Settlement Shares are set out below (assume there being no other change in the share capital of the Company):

ShareholdersThe BondholderSubstantial shareholdersKingston Securities Limited (note (i))Lau Wang Chi Barry (note (ii))Leung LisaMu KejiaOther public shareholdersTotal	As at the date of thisannouncementImmediately after allotment ofthe Settlement SharesNo. of SharesApproximate %No. of Shares%––5,521,1266.088,004,0009.378,004,0008.8113,110,00015.3613,110,00014.438,500,0009.968,500,0009.354,900,0005.744,900,0005.3950,840,12259.5750,840,12255.9485,354,12210090,875,248100

Note: (i) Based on the notices of disclosure of interest filed by Chu Yuet Wah (“ Chu ”), Chu has a controlling interest in Kingston Securities Limited and is deemed to be interested in these shares held by Kingston Securities Limited

• (ii) Based on the notices of disclosure of interest filed by Lau Wang Chi Barry (“ Lau ”), Lau has a controlling interest in Surplus Gain Global Limited and is deemed to be interested in these shares held by Surplus Gain Global Limited

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FUND RAISING ACTIVITIES OF THE COMPANY IN THE 12 MONTHS IMMEDIATELY PRECEDING THE DATE OF THIS ANNOUNCEMENT

Save as disclosed below, the Company had not conducted any other equity fund raising activities in the past 12 months immediately preceding the date of this announcement:

Date of	Fund raising	Net proceeds	Proposed use of	Actual use of
announcement	activities	raised	the net proceeds	the net proceeds
		(Approximately)
19 May 2020,	Rights issue of	HK$58.6 million	(i) Approximately	Used as intended
30 July 2020,	71,128,435		HK$50.9
6 August 2020	rights shares at a		million for
(circular) and 8	price of HK$0.85		repayment of
September 2020	per rights share		the Group’s
(Prospectus)			outstanding
			loans which
			had been
			expired by over
			10 months;
			(ii) Approximately	Used as intended
			HK$7.7 million
			for partial
			repayment of
			the Bond and
			other accrued
			expenses of the
			Group

GENERAL

The issue and allotment of the Settlement Shares is subject to fulfillment of the Conditions and may or may not take place. Shareholders and potential investors are advised to exercise caution when dealing in the Shares.

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DEFINITIONS

In this announcement, unless the context otherwise requires, the following words and expressions shall have the following meanings ascribed to them respectively:

“Board”	the board of Directors
“Bond”	a 4-year 6.25% per annum bond with principal amount of
	HK$9,800,000 issued by the Company in the name of the
	Bondholder on 14 September 2015
“Bondholder”	Yu Yining, the registered holder of the Bond
“Business Day”	any day (excluding Saturday, Sunday or public holiday) on
	which banks generally are open for business in Hong Kong
“Company”	hmvod Limited, a company incorporated in the Cayman
	Islands with limited liability, the Shares of which are listed
	on GEM
“Conditions”	the conditions precedent to the issue and allotment of the
	Settlement Shares
“connected person(s)”	the meaning ascribed to it under the GEM Listing Rules
“Director(s)”	the director(s) of the Company
“EGM”	the extraordinary general meeting of the Company to be
	convened for the Shareholders to consider and, if thought fit,
	to approve the grant of the Specific Mandate
“GEM”	GEM operated by the Stock Exchange
“GEM Listing Rules”	the Rules Governing the Listing of Securities on the GEM
“Group”	the Company and its subsidiaries

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“Hong Kong” Hong Kong Special Administrative Region of the PRC “Independent Third Party” independent third party not connected with the Company or its connected persons “Issue Price” the issue price per Settlement Share, i.e. HK$0.71 “Listing Committee” The Listing Committee of the Stock Exchange “Petition” the winding up petition issued by the Bondholder against the Company on 13 January 2020 in the High Court of Hong Kong under the action no. HCCW 16/2020 “Settlement Agreement” The settlement agreement dated 10 August 2020 executed between the Company and the Bondholder in relation to the settlement of the Bond (as supplemented by the Supplemental Agreement) “Settlement Shares” 5,521,126 new Shares to be issued and allotted to the Bondholder pursuant to the Settlement Agreement

• “Share(s)” ordinary share(s) of HK$0.01 each in the share capital of the Company

• “Shareholder(s)” holder(s) of the Share(s)

• “Share Consolidation” the consolidation of every 10 shares to 1 consolidated share of the Company which has become effective on 27 August 2020

• “Specific Mandate” a specific mandate to be sought from the Shareholders at the EGM to allot and issue the Settlement Shares

• “Stock Exchange” The Stock Exchange of Hong Kong Limited

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“Supplemental Agreement”

the supplemental agreement to the Settlement Agreement dated 22 October 2020 and executed between the Company and the Bondholder

“HK$” “%”

Hong Kong dollar(s), the lawful currency of Hong Kong

per cent

By order of the Board hmvod Limited Lau Kelly Executive Director

Hong Kong, 4 November 2020

As at the date of this announcement, the Board comprises the following Directors:

Executive Directors: Independent non-executive Directors: Mr. Lau Kelly (Chief Executive Officer) Ms Yang Eugenia Ms. Ho Chi Na Mr. Hau Chi Kit Mr. Ho Alvin Tzuen Chung Mr. Ma Stephen Tsz On Ms. Sin Pui Ying

This announcement, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the GEM Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief, the information contained in this announcement is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this announcement misleading.

This announcement will remain on the “Latest Company Announcements” page of the GEM website at www.hkgem.com for at least 7 days from the date of its posting and be posted on the website of the Company at www.hmvod.com.hk.

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