hmvod Limited - Capital/Financing Update 2020

THIS PROSPECTUS IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of the Prospectus Documents or as to the action to be taken, you should consult your stockbroker or other licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your Shares in hmvod Limited, you should at once hand the Prospectus Documents to the purchaser or transferee, or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

A copy of each of the Prospectus Documents, together with the documents specified in the paragraph headed “13. Documents delivered to the Registrar of Companies in Hong Kong” in Appendix III to this Prospectus, have been registered with the Registrar of Companies in Hong Kong as required by section 342C of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong). The Registrar of Companies in Hong Kong and the Securities and Futures Commission of Hong Kong take no responsibility for the contents of any of these documents referred to above.

Subject to the granting of the listing of, and permission to deal in, the Rights Shares in both nil-paid and fully-paid forms on the Stock Exchange as well as compliance with the stock admission requirements of HKSCC, the Rights Shares in both nil-paid and fully-paid forms will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from their respective commencement dates of dealings on the Stock Exchange or such other date as may be determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second settlement day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

It is the responsibility of the Shareholders, including the Overseas Shareholders, to observe the local legal and regulatory requirements applicable to them for taking up and onward sale (if applicable) of the Rights Shares in their nil-paid or fully-paid forms and to pay any taxes and duties required to be paid in such jurisdiction in connection with the taking up and onward sale of the Rights Shares in their nil-paid or fully-paid forms.

Dealings in the Shares and the Rights Shares in their nil-paid and fully-paid forms may be settled through CCASS established and operated by HKSCC and you should consult your licensed securities dealer or registered institution in securities, bank manager, solicitor, professional accountant or other professional adviser for details of those settlement arrangements and how such arrangements may affect your rights and interests.

Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents of the Prospectus Documents, 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 the Prospectus Documents.

hmvod Limited h m v o d 視頻有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8103)

RIGHTS ISSUE ON THE BASIS OF FIVE (5) RIGHTS SHARES FOR EVERY ONE (1) CONSOLIDATED SHARE HELD ON THE RECORD DATE

Financial adviser to the Company

==> picture [95 x 40] intentionally omitted <==

Underwriter to the Rights Issue

Capitalised terms used in this cover have the same meanings as those defined in this Prospectus.

It should be noted that the Consolidated Shares have been dealt in on an ex-rights basis from Friday, 28 August 2020. Dealings in the Rights Shares in their nil-paid form will take place from 9:00 a.m. on Thursday, 10 September 2020 to 4:00 p.m. on Thursday, 17 September 2020 (both days inclusive). If the conditions of the Rights Issue are not fulfilled or waived (as applicable) or the Underwriting Agreement is terminated by the Underwriter at or before 4:00 p.m. on Wednesday, 23 September 2020 (or such other time or date as may be agreed between the Company and the Underwriter in writing), the Rights Issue will not proceed. Any persons contemplating dealings in the Shares up to the date on which all the conditions of the Rights Issue are fulfilled or waived (as applicable) and the date on which the Underwriter’s right of termination of the Underwriting Agreement ceases, and/or dealings in the nil-paid Rights Shares, shall bear the risk that the Rights Issue may not become unconditional or may not proceed. Any Shareholders or other persons contemplating any dealings in the Shares and/or the nil-paid Rights Shares are recommended to consult their own professional advisers and exercise caution.

Shareholders and potential investors of the Company should note that the Rights Issue is conditional upon the Rights Issue having become unconditional and the Underwriter not having terminated or rescinded (as the case may be) the Underwriting Agreement in accordance with the terms thereof (a summary of which is set out in the section headed “Termination of the Underwriting Agreement” of this Prospectus). Accordingly, the Rights Issue may or may not proceed.

The latest date and time for acceptance of and payment for the Rights Shares is 4:00 p.m. on Tuesday, 22 September 2020. The procedures for acceptance and payment and/or transfer of the Rights Shares and application and payment for excess Rights Shares are set out on pages 30 to 34 of this Prospectus.

8 September 2020

CHARACTERISTICS OF GEM

GEM has been positioned as a market designed to accommodate small and mid-sized companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration.

Given that the companies listed on GEM are generally small and mid-sized companies, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board and no assurance is given that there will be a liquid market in the securities traded on GEM.

– i –

CONTENTS

	Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
EXPECTED TIMETABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
TERMINATION OF THE UNDERWRITING AGREEMENT . . . . . . . . . . . . . . . . . . . . . .	9
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
APPENDIX I – FINANCIAL INFORMATION OF THE GROUP . . . . . . . . . . . . . .	I-1
APPENDIX II – UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF THE GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-1
APPENDIX III – GENERAL INFORMATION OF THE GROUP. . . . . . . . . . . . . . . .	III-1

– ii –

DEFINITIONS

In this Prospectus, unless the context requires otherwise, the following expressions shall have the following meanings:

“2nd Supplemental Agreement” the 2nd supplement agreement dated 29 July 2020 entered into between the Company and the Underwriter in relation to the Underwriting Agreement
“acting in concert” has the same meaning ascribed thereto under the Takeovers Code
“Announcements” the announcements of the Company dated 19 May 2020, 28 May 2020, 26 June 2020, 16 July 2020, 24 July 2020, 30 July 2020 and 5 August 2020 relating to, among other things, the Share Consolidation, the Change in Board Lot Size and the Rights Issue
“associate(s)” has the same meaning ascribed thereto under the GEM Listing Rules
“Board” the board of Directors
“Business Day(s)” a day on which licensed banks in Hong Kong are generally open for business, other than a Saturday or a Sunday or a day on which a black rainstorm warning or tropical cyclone warning signal number 8 or above is issued in Hong Kong at any time between 9:00 a.m. and 12:00 noon and is not cancelled at or before 12:00 noon
“CCASS” the Central Clearing and Settlement System established and operated by HKSCC
“Change in Board Lot Size” the change in board lot size of the Shares and/or the Consolidated Shares for trading on the Stock Exchange from 2,000 Shares to 6,000 Consolidated Shares with effect from 27 August 2020

“Circular”

the circular of the Company dated 7 August 2020, in relation to, among other things, the Share Consolidation, the Change in Board Lot Size and the Rights Issue

“Company”

hmvod Limited, a company incorporated in the Cayman Islands with limited liability and the issued Shares of which are listed on GEM

“connected person(s)” has the meaning ascribed to it in the GEM Listing Rules

– 1 –

DEFINITIONS

“Consolidated Share(s)” ordinary share(s) of HK$0.01 each in the share capital of the Company immediately after the Share Consolidation becoming effective “Director(s)” the director(s) of the Company “EAF(s)” the excess application form(s) for use by the Qualifying Shareholders who wish to apply for excess Rights Shares, in such usual form as may be agreed between the Company and the Underwriter “EGM” the extraordinary general meeting of the Company held on 25 August 2020 at which, among other things, the Share Consolidation and the Rights Issue have been approved “GEM” GEM operated by the Stock Exchange “GEM Listing Rules” the Rules Governing the Listing of Securities on GEM “Group” the Company and its subsidiaries “HK$” Hong Kong dollar(s), the lawful currency of Hong Kong “HKSCC” Hong Kong Securities Clearing Company Limited “Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China “Independent Shareholder(s)” any Shareholder(s) other than any controlling shareholders and their associates or, where there are no controlling shareholders, the Directors (excluding the independent non-executive Directors) and the chief executive of the Company and their respective associates “Independent Third Party(ies)” third party(ies) independent of and not connected with the Company and any of its connected persons “Last Trading Day” 19 May 2020, being the date of the Underwriting Agreement “Latest Practicable Date” 3 September 2020, being the latest practicable date prior to printing of this Prospectus for the purpose of ascertaining certain information contained therein

– 2 –

DEFINITIONS

“Latest Time for Acceptance”
“Latest Time for Termination”
“Listing Committee”
“Non-Qualifying Shareholder(s)”
“Overseas Shareholder(s)”
“PAL(s)”
“Petition”
“Prospectus”
“Prospectus Documents”
“Prospectus Posting Date”
“Qualifying Shareholder(s)”
4:00 p.m. on Tuesday, 22 September 2020 or other time or date as may be agreed in writing between the Company and the Underwriter, being the latest time for acceptance of, and payment for, the Rights Shares and application and payment for excess Rights Shares
4:00 p.m. on Wednesday, 23 September 2020 or such other time or date as the Underwriter may agree in writing with the Company
has the meaning as defined in the GEM Listing Rules
those Overseas Shareholder(s) whom the Directors, after making enquiries, consider it necessary, or expedient not to offer the Rights Issue to such Shareholder(s) on account either of legal restrictions under the laws of the relevant place or the requirements of the relevant regulatory body or stock exchange in that place
Shareholder(s) whose name(s) appear(s) on the register of members of the Company at the close of business on the Record Date and whose registered address(es) as shown on such register at that time is (are) in (a) place(s) outside Hong Kong
the renounceable provisional allotment letter(s) to be issued to the Qualifying Shareholders in connection with the Rights Issue
the winding up petition issued by a petitioner against the Company on 13 January 2020 in the Winding Up Proceedings
this prospectus despatched to the Shareholders containing details of the Rights Issue
the Prospectus, the PAL and the EAF

Tuesday, 8 September 2020 or such other date as may be agreed in writing between the Underwriter and the Company, being the date of despatch of the Prospectus Documents to the Qualifying Shareholders and the Prospectus for information only to the Non-Qualifying Shareholders

Shareholder(s), other than the Non-Qualifying Shareholders, whose name(s) appear(s) on the register of members of the Company on the Record Date

– 3 –

DEFINITIONS

“Record Date”

Monday, 7 September 2020 or such other date as may be agreed between the Company and the Underwriter in writing for the determination of the entitlements under the Rights Issue

“Registrar” the branch share registrar and transfer office of the Company in Hong Kong, being Union Registrars Limited at Suites 3301–04, 33/F., Two Chinachem Exchange Square, 338 King’s Road, North Point, Hong Kong

“Rights Issue”

the issue of the Rights Shares on the basis of five (5) Rights Shares for every one (1) Consolidated Share held on the Record Date at the Subscription Price on the terms and subject to the conditions in the Underwriting Agreement

“Rights Share(s)” 71,128,435 Consolidated Shares to be allotted and issued pursuant to the Rights Issue

“SFO” the Securities and Futures Ordinance (Cap 571 of the laws of Hong Kong)

“Share(s)” the ordinary share(s) of HK$0.001 each in the share capital of the Company before the Share Consolidation becoming effective, or the Consolidated Share(s) as the case maybe “Share Consolidation” the consolidation of every ten (10) issued and unissued Shares of HK$0.001 each into one (1) Consolidated Share of HK$0.01 each, which has become effective on 27 August 2020

“Shareholder(s)” holder(s) of issued Share(s) or the Consolidated Share(s) as the case may be

“Stock Exchange” the Stock Exchange of Hong Kong Limited

“Subscription Price” HK$0.85 per Rights Share “Supplemental Agreement” the supplemental agreement dated 16 July 2020 entered into between the Company and the Underwriter in relation to the Underwriting Agreement

“Takeovers Code” the Hong Kong Code on Takeovers and Mergers

“Underwriter” Win Wind Securities Limited, a licensed corporation carrying out Type 1 (dealing in securities), Type 2 (dealing in futures contracts), Type 4 (advising on securities), and Type 9 (asset management) regulated activities under the SFO

– 4 –

DEFINITIONS

“Underwriting Agreement”
“Underwritten Shares”

“Untaken Share(s)”

“Winding-Up Proceeding”

“%”

the underwriting agreement dated 19 May 2020 (as amended by the Supplemental Agreement and the 2nd Supplemental Agreement) entered into between the Company and the Underwriter in respect of the Rights Issue

71,128,435 Rights Shares underwritten by the Underwriter pursuant to the terms of the Underwriting Agreement
any of the Underwritten Shares which have not been taken up by the Qualifying Shareholders or transferees of nil-paid Rights Shares or applicants under excess applications by the Latest Time for Acceptance

the winding-up proceedings in respect of the Petition in the High Court of Hong Kong under the action no. HCCW 16 of 2020

per cent.

– 5 –

EXPECTED TIMETABLE

The expected timetable for the Rights Issue set out below is for indicative purposes only and it has been prepared on the assumption that all the conditions of the Rights Issue will be fulfilled.

Event Time and Date
Original counter for trading in the Consolidated Shares in
board lots of 6,000 Consolidated Shares
(in the form of new share certificates) re-opens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:00 a.m. on
Thursday, 10 September 2020
Parallel trading in the Consolidated Shares
(in the form of both existing share certificates
and new share certificates) commences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:00 a.m. on
Thursday, 10 September 2020
Designated broker starts to stand in the market
to provide matching services for the sale and purchase of
odd lots of the Consolidated Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:00 a.m. on
Thursday, 10 September 2020
First day and time of dealings in nil-paid Rights Shares. . . . . . . . . . . . . . . . . . . . . . . . . . 9:00 a.m. on
Thursday, 10 September 2020
Latest time for splitting the PAL(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on
Monday, 14 September 2020
Last day and time of dealings in nil-paid Rights Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on
Thursday, 17 September 2020
Latest time for acceptance of and payment for the
Rights Shares and application for excess Rights Shares . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on
Tuesday, 22 September 2020
Latest time for termination of the Underwriting
Agreement and for the Rights Issue
to become unconditional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on
Wednesday, 23 September 2020
Announcement of the results of the Rights Issue . . . . . . . . . . . . . . . . . . . Tuesday, 29 September 2020
Despatch of share certificates for fully-paid Rights Shares. . . . . . . . . . Wednesday, 30 September 2020
Despatch of refund cheques for wholly or partially unsuccessful
applications for excess Rights Shares or if the Rights Issue is
terminated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wednesday, 30 September 2020

– 6 –

EXPECTED TIMETABLE

Event

Time and Date

Designated broker ceases to stand in the market to provide matching services for the sale and purchase of odd lots of the Consolidated Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:10 p.m. on Wednesday, 30 September 2020 Temporary counter for trading in board lots of 200 Consolidated Shares (in the form of existing share certificates) closes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:10 p.m. on Wednesday, 30 September 2020 Parallel trading in the Consolidated Shares (in the form of new and existing share certificates) ends. . . . . . . . . . . . . . . . . . . . . . . . 4:10 p.m. on Wednesday, 30 September 2020 Commencement of dealings in the fully-paid Rights Shares . . . . . . . . . . . . . . . . . . . . . . . 9:00 a.m. on Monday, 5 October 2020 Latest time for free exchange of existing share certificates for new share certificates for the Consolidated Shares . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Tuesday, 6 October 2020

All times and dates stated above refer to Hong Kong local times and dates. The expected timetable for the Rights Issue set out above and all dates and deadlines specified in this Prospectus are indicative only and may be varied. Any changes to the expected timetable will be announced in a separate announcement by the Company as and when appropriate.

– 7 –

EXPECTED TIMETABLE

EFFECT OF BAD WEATHER AND/OR EXTREME CONDITIONS ON THE LATEST TIME FOR ACCEPTANCE OF AND PAYMENT FOR THE RIGHTS SHARES AND FOR APPLICATION AND PAYMENT FOR EXCESS RIGHTS SHARES

The Latest Time for Acceptance of and payment for the Rights Shares and for application and payment for excess Rights Shares will not take place if:

typhoon signal No. 8 (or above);
“extreme conditions” caused by super typhoons as announced by the Government of the Hong Kong Special Administrative Region; or
a “black” rainstorm warning
(i) is/are in force in Hong Kong at any local time before 12:00 noon and no longer in force after 12:00 noon on the date of the Latest Time for Acceptance. Instead the Latest Time for Acceptance will be extended to 5:00 p.m. on the same Business Day; or
(ii) is/are in force in Hong Kong at any local time between 12:00 noon and 4:00 p.m. on the date of the Latest Time for Acceptance. Instead the Latest Time for Acceptance will be rescheduled to 4:00 p.m. on the following Business Day which does not have either of those warnings in force in Hong Kong at any time between 9:00 a.m. and 4:00 p.m.

If the Latest Time for Acceptance does not take place on the currently scheduled date, the dates mentioned in the “EXPECTED TIMETABLE” above may be affected. Announcement will be made by the Company in such event.

– 8 –

TERMINATION OF THE UNDERWRITING AGREEMENT

If at any time on or before the Latest Time for Termination:

(A) the Underwriter shall become aware of the fact that, or shall have reasonable cause to believe that any of the warranties in the Underwriting Agreement was untrue, inaccurate, misleading or breached, and in each case the same is (in the reasonable opinion of the Underwriter) material in the context of the Rights Issue; or
(B) there shall be:
(i) the introduction of any new regulation or any change in existing law or regulation (or the judicial interpretation thereof) or other occurrence of any nature whatsoever after the signing of Underwriting Agreement;
(ii) the occurrence of any local, national or international event or change (whether or not forming part of a series of events or changes occurring after the signing of the Underwriting Agreement or continuing after the signing of the Underwriting Agreement) of a political, military, financial, economic or other nature, or in the nature of any local, national or international outbreak or escalation of hostilities or armed conflict, or affecting local securities markets;
(iii) any material adverse change after the signing of the Underwriting Agreement in the business or in the financial or trading position of any member of the Group;
(iv) any act of God, war, riot, public disorder, civil commotion, fire, flood, explosion, epidemic, terrorism, strike or lock-out occurred after the signing of the Underwriting Agreement;
(v) after signing of the Underwriting Agreement, there occurs or comes into effect the imposition of any moratorium, suspension or material restriction on trading in the Shares generally on the Stock Exchange whether due to exceptional financial circumstances or otherwise;
(vi) there is, after signing of the Underwriting Agreement, any change or any development involving a prospective change in market conditions (including, without limitation, a change in fiscal or monetary policy or foreign exchange or currency markets, suspension or restriction of trading in securities, imposition of economic sanctions, on Hong Kong, the People’s Republic of China or other jurisdiction relevant to any member of the Group and a change in currency conditions for the purpose of this paragraph includes a change in the system under which the value of the Hong Kong currency is pegged with that of the currency of the United States of America) occurs; or
(vii) the circular and/or the Prospectus when published contain information (either as to business prospects or the condition of the Group or as to its compliance with any laws or the GEM Listing Rules or the Takeovers Code or any applicable regulations) which has not prior to the date hereof been publicly announced or published by the Company in compliance with the GEM Listing Rules,

– 9 –

TERMINATION OF THE UNDERWRITING AGREEMENT

which event or events is or are in the absolute opinion of the Underwriter:

(a) likely to have a material adverse effect on the business or financial or trading position or prospects of the Group as a whole; or
(b) likely to have a material adverse effect on the success of the Rights Issue or the level of the Rights Shares “taken up”; or
(c) make it inappropriate, inadvisable or inexpedient to proceed further with the Rights Issue,

then the Underwriter may, by notice in writing given to the Company on or before the Latest Time for Termination, rescind the Underwriting Agreement.

If the Underwriter terminates the Underwriting Agreement, the Rights Issue will not proceed. A further announcement would be made by the Company if the Underwriting Agreement is terminated by the Underwriter.

– 10 –

LETTER FROM THE BOARD

hmvod Limited h m v o d 視頻有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8103)

Executive Directors: Mr. Lau Kelly (Chief Executive Officer) Ms. Ho Chi Na Mr. Ho Alvin Tzuen Chung Ms. Sin Pui Ying

Registered office: Cricket Square Hutchins Drive P. O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

Independent Non-executive Directors: Mr. Ho Siu King, Stanley Mr. Hau Chi Kit Mr. Ma Stephen Tsz On

Head office and principal place of business in Hong Kong: Unit C, 8/F, D2 Place Two 15 Cheung Shun Street Cheung Sha Wan Kowloon, Hong Kong

8 September 2020

To the Shareholders

Dear Sir or Madam,

RIGHTS ISSUE ON THE BASIS OF FIVE (5) RIGHTS SHARES FOR EVERY ONE (1) CONSOLIDATED SHARE HELD ON THE RECORD DATE

INTRODUCTION

Reference is made to the Announcements and the Circular in relation to, among other things, the Rights Issue.

The Share Consolidation and the Rights Issue were approved by the Shareholders or the Independent Shareholders (as the case may be) at the EGM. The Share Consolidation became effective on 27 August 2020.

The purpose of this Prospectus is to provide you with further information of the Rights Issue including information on dealings in, transfer and acceptance of the Rights Shares and application for excess Rights Shares, and certain financial and other information of the Group.

– 11 –

LETTER FROM THE BOARD

RIGHTS ISSUE

Issue statistics

Basis of the Rights Issue : five (5) Rights Shares for every one (1) Consolidated Share held by the Qualifying Shareholders at the close of business on the Record Date Subscription Price : HK$0.85 per Rights Share Net price per Rights Share (i.e. : Approximately HK$0.80 per Rights Share Subscription Price less cost and expenses incurred in the Rights Issue)

Number of Consolidated Shares in : issue as at the Record Date and the Latest Practicable Date

14,225,687 Consolidated Shares

Number of Rights Shares to be issued : 71,128,435 Rights Shares pursuant to the Rights Issue

The aggregate nominal value of the Rights Shares will be HK$711,284.35.

Total number of Consolidated Shares : 85,354,122 Consolidated Shares in issue upon completion of the Rights Issue

Gross proceeds from the Rights Issue : Approximately HK$60.5 million before expenses Right of excess applications : Qualifying Shareholders may apply for Rights Shares in excess of their provisional allotment

The Company has no outstanding convertible bonds, options, derivatives, warrants, conversion rights or other similar rights entitling holders thereof to subscribe for or convert into or exchange for new Shares as at the Latest Practicable Date.

Assuming no further issue or repurchase of Consolidated Shares from the Latest Practicable Date to immediately prior to the completion of the Rights Issue, the 71,128,435 Rights Shares to be issued pursuant to the terms of the Rights Issue represent 500% of the total number of issued Consolidated Shares as at the Latest Practicable Date and approximately 83.3% of the total number of issued Consolidated Shares as enlarged by the issue of the Rights Shares.

– 12 –

LETTER FROM THE BOARD

Undertakings

The Company has undertaken in the Underwriting Agreement that the Company shall not issue new Shares under the general mandate and shall not grant new share options under the share option scheme from the date of the Underwriting Agreement up to and including the Record Date (both days inclusive).

As at the Latest Practicable Date, the Company has not received any information or irrevocable undertaking from any substantial Shareholder of their intention in relation to the Rights Shares to be provisionally allotted to them under the Rights Issue.

The Subscription Price

The Subscription Price of HK$0.85 per Rights Share is payable in full by a Qualifying Shareholder upon acceptance of the relevant provisional allotment of the Rights Shares under the Rights Issue, upon an application of excess Rights Shares, or when a transferee of the nil-paid Rights Shares subscribes for the Rights Shares.

The Subscription Price represents:

(i) a discount of approximately 64.0% to the theoretical closing price of HK$2.360 per Consolidated Share (after taking into account the effect of the Share Consolidation) based on the closing price of HK$0.236 per Share as quoted on the Stock Exchange on the Last Trading Day;
(ii) a discount of approximately 77.5% to the theoretical closing price of HK$3.780 per Consolidated Share (after taking into account the effect of the Share Consolidation) based on the average closing price of HK$0.378 per Share as quoted on the Stock Exchange for the five (5) consecutive trading days prior to and excluding the Last Trading Day;
(iii) a discount of approximately 73.8% to the theoretical closing price of approximately HK$3.240 per Consolidated Share (after taking into account the effect of the Share Consolidation) based on the average closing price of approximately HK$0.324 per Share as quoted on the Stock Exchange for the ten (10) consecutive trading days prior to and excluding the Last Trading Day;
(iv) a discount of approximately 22.9% to the theoretical ex-rights price of approximately HK$1.102 per Consolidated Share (after taking into account the effect of the Share Consolidation) based on the closing price of HK$0.236 per Share as quoted on the Stock Exchange on the Last Trading Day; and
(v) a premium of approximately 16.4% over the closing price of HK$0.73 per Consolidated Share as quoted on the Stock Exchange on the Latest Practicable Date.

– 13 –

LETTER FROM THE BOARD

The Subscription Price was determined after arm’s length negotiation between the Company and the Underwriter with reference to, among others, the market price of the Shares under the prevailing market conditions, the financial condition of the Company, the consecutive loss-making history of the Group over the past five years, and the reasons and benefits of Rights Issue as discussed in the section headed “REASONS FOR AND BENEFITS OF THE RIGHTS ISSUE AND USE OF PROCEEDS” in this Prospectus.

The Company has approached a total of four financial institutions to see if they were interested to support any fund-raising exercises of the Company without proposing any specific terms in the first place. However, except for the Underwriter, no positive feedbacks were received by the Company from the other three financial institutions. The Underwriter is the only available securities house who agrees to provide underwriting service for the Rights Issue at current fund-raising size on a fully-underwritten basis after considering the Company’s business scale, financial performance of the Group and recent market sentiment.

The subscription ratio and the Subscription Price were determined between the Company and the Underwriter after arm’s length negotiation. During the course of negotiation, based on the funding needs of the Group of around HK$60 million, prior to arriving at the current structure of the Rights Issue, the Company has proposed different structures of rights issue with lower subscription ratio and higher subscription prices (the “ Proposals ”). However, the Underwriter refused the Proposals. After further discussion, the Underwriter agreed with the terms of the Rights Issue, including the subscription basis of 5 Rights Shares for every 1 Consolidated Share and the Subscription Price of HK$0.85. After balancing the funding needs of the Company of around HK$60 million and request of the Underwriter for deeper discount in order for the Underwriter to provide underwriting service on a fully-written basis so as to provide the Group with the certainty of the required minimum level of fund for settlement of its matured indebtedness, the Company and the Underwriter agreed with the current structure of the Rights Issue. The Directors are of the view that the present terms and structure of the Rights Issue reflect the best commercial deal that the Company could negotiate with the Underwriter.

Taking into account that (i) the fund-raising size of the Rights Issue of HK$60.5 million is approximately 80.1% more than the market capitalization of approximately HK$33.6 million of the Company as at the date of the Underwriting Agreement, it is necessary to set the Subscription Price at relatively deep discount for inducing the Underwriter to provide underwriting service for the Rights Issue on a fully-underwritten basis and attracting all of the Qualifying Shareholders to participate in the Rights Issue; (ii) the discount of the Subscription Price gives each Qualifying Shareholder the option to maintain their respective shareholding in the Company at a relatively low price as compared to the prevailing market price, allowing them to have greater flexibility in determining the extent of their participation in the Rights Issue; and (iii) present subscription basis can avoid fractional Consolidated Shares and minimize the potential of odd lots problem, the Board considers that the terms of the Rights Issue, including the Subscription Price and the subscription basis are fair and reasonable and in the best interests of the Company and the Shareholders as a whole.

– 14 –

LETTER FROM THE BOARD

Status of the Rights Shares

The Rights Shares (when allotted, fully paid or credited as fully paid and issued) will rank pari passu in all respects among themselves and with the Consolidated Shares in issue on the date of allotment and issue of the Rights Shares. Holders of the fully paid Rights Shares will be entitled to receive all future dividends and distributions which may be declared, made or paid on or after the date of allotment and issue of the fully paid Rights Shares. Dealings in the Rights Shares in both their nil-paid and fully-paid forms will be subject to payment of stamp duty, Stock Exchange trading fee, transaction levy or any other applicable fees and charges in Hong Kong.

Qualifying Shareholders

The Rights Issue is only available to the Qualifying Shareholders. To qualify for the Rights Issue, a Shareholder must be registered as a member of the Company as at the close of business on the Record Date and not be a Non-Qualifying Shareholder. The Company will despatch the Prospectus Documents to the Qualifying Shareholders and despatch the Prospectus (without the PAL(s) and the EAF(s)) to the Non-Qualifying Shareholders for their information only.

Basis of provisional allotments

The Rights Shares will be allotted on the basis of five (5) Rights Shares for every one (1) Consolidated Share held by the Qualifying Shareholders as at the close of business on the Record Date.

Acceptance for all or any part of a Qualifying Shareholder’s provisional allotment should be made only by completing a PAL and lodging the same with a remittance for the Rights Shares being accepted with the Registrar by the Latest Time for Acceptance.

Rights of Overseas Shareholders

The Prospectus Documents to be issued in connection with the Rights Issue will not be registered or filed under the securities law of any jurisdiction other than Hong Kong. Overseas Shareholders may not be eligible to take part in the Rights Issue as explained below.

As at the Latest Practicable Date, there is one Overseas Shareholder with registered address located in the People’s Republic of China (the “ PRC ”) holding 10 Consolidated Shares. In compliance with Rule 17.41(1) of the GEM Listing Rules, the Directors have made enquiries regarding the feasibility of extending the Rights Issue to the Overseas Shareholder. Based on the advice provided by the legal adviser as to the laws of the PRC, as at the Latest Practicable Date, the laws of the PRC impose no restrictions on extending the Rights Issue to such Overseas Shareholder located in the PRC, and the Company is not required to obtain any approvals for the despatch of the Prospectus Documents to such Overseas Shareholder. Accordingly, there was no Non-Qualifying Shareholder as at the Latest Practicable Date.

– 15 –

LETTER FROM THE BOARD

Application for the excess Rights Shares

Qualifying Shareholders shall be entitled to apply, by way of excess application, for (i) the Rights Shares representing the entitlement of the Non-Qualifying Shareholders and which cannot be sold at a net premium; and (ii) any Rights Shares provisionally allotted but not validly accepted by the Qualifying Shareholders or transferees of nil-paid Rights Shares. Applications for the excess Rights Shares may be made by completing the EAF and lodging the same with a separate remittance for the excess Rights Shares being applied for with the Registrar by the Latest Time for Acceptance.

The Board will allocate the excess Rights Shares at its discretion, but on a fair and equitable basis as far as practicable on the following principles:

(i) no preference will be given to applications for topping-up odd-lot holdings to whole-lot holdings as the giving of such preference may potentially be abused by certain investors by splitting their Shares and thereby receiving more Rights Shares than they would receive if such preference is not given, which is an unintended and undesirable result; and
(ii) the excess Rights Shares will be allocated to the applicants on a pro rata basis based on the number of excess Rights Shares applied for by them. No reference will be made to Rights Shares subscribed through PALs, or the number of Shares held by the Qualifying Shareholders.

Any Rights Shares not accepted for by the Qualifying Shareholders or transferees of nil-paid Rights Shares and not taken by excess application will be taken up by the Underwriter pursuant to the terms and conditions of the Underwriting Agreement.

Beneficial owners of Consolidated Shares whose Consolidated Shares are held by a nominee company (including HKSCC Nominees Limited) should note that for the purpose of the Rights Issue, the Board will regard the nominee company as a single Shareholder according to the register of members of the Company. Accordingly, the beneficial owners of Consolidated Shares whose Consolidated Shares are registered in name of nominee companies should note that the aforesaid arrangement in relation to the allocation of the excess Rights Shares will not be extended to beneficial owners individually and are advised to consider whether they would like to arrange for registration of the relevant Consolidated Shares in the name of the beneficial owner(s) prior to the Record Date.

Certificates of the Rights Shares and refund cheques for the Rights Issue

Subject to fulfilment of the conditions of the Rights Issue, share certificates for the fully-paid Rights Shares are expected to be sent on or before Wednesday, 30 September 2020 to those entitled thereto by ordinary post, at their own risk, to their registered addresses. If the Underwriting Agreement is terminated or not becoming unconditional, refund cheques will be despatched on or before Wednesday, 30 September 2020 by ordinary post, at the respective Shareholders’ own risk, to their registered addresses. Refund cheques in respect of wholly or partially unsuccessful applications for excess Rights Shares (if any) are expected to be posted on or before Wednesday, 30 September 2020, by ordinary post to the applicants, at their own risk, to their registered addresses.

– 16 –

LETTER FROM THE BOARD

Fractional entitlement to the Rights Shares

On the basis of provisional allotment of five (5) Rights Shares for every one (1) Consolidated Share held by the Qualifying Shareholders on the Record Date, no fractional entitlement to the Rights Shares will arise under the Rights Issue.

Taxation

Shareholders are advised to consult their professional advisers if they are in any doubt as to the taxation implications of the receipt, purchase, holding, exercising, disposing of or dealing in, the nil-paid Rights Shares or the Rights Shares and, regarding the Non-Qualifying Shareholders, their receipt of the net proceeds, if any, from sale of the nil-paid Rights Shares on their behalf.

Application for listing

The Company has made an application to the Listing Committee of the Stock Exchange for the listing of, and the permission to deal in, the Rights Shares (in both nil-paid and fully-paid forms) to be issued and allotted pursuant to the Rights Issue. No part of the securities of the Company is listed or dealt in, and no listing of or permission to deal in any such securities is being or is proposed to be sought, on any other stock exchanges.

The board lot size of the nil-paid Rights Shares shall be the same as that of the fully-paid Rights Shares, i.e. 6,000 Consolidated Shares in one board lot.

Subject to the granting of the listing of, and the permission to deal in, the Rights Shares (in both their nil-paid and fully-paid forms) on the Stock Exchange as well as compliance with the stock admission requirements of HKSCC, the Rights Shares (in both their nil-paid and fully-paid forms) will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the respective commencement dates of dealings in the Rights Shares in their nil-paid and fully-paid forms on the Stock Exchange, or such other dates as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second trading day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time. Shareholders should seek advice from their licensed securities dealer(s) or other professional adviser(s) for details of those settlement arrangements and how such arrangements will affect their rights and interests.

– 17 –

LETTER FROM THE BOARD

THE UNDERWRITING ARRANGEMENT

The Rights Shares will be fully underwritten by the Underwriter in accordance with the terms of the Underwriting Agreement as described below.

Underwriting Agreement

Date : 19 May 2020 (after trading hours)

Issuer : The Company Underwriter : Win Wind Securities Limited

The Underwriter is a licensed corporation carrying out Type 1 (dealing in securities), Type 2 (dealing in futures contracts), Type 4 (advising on securities), and Type 9 (asset management) regulated activities under the SFO and its ordinary course of business includes underwriting of securities. The Underwriter confirmed that it has complied with Rule 10.24A(1) of the GEM Listing Rules.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, as at the Latest Practicable Date, the Underwriter and its associates do not hold any Shares, and the Underwriter and its ultimate beneficial owners are Independent Third Parties.

Number of Rights Shares : 71,128,435 Rights Shares underwritten by the Underwriter

Underwriting Commission : 3% of the aggregate Subscription Price in respect of the Underwritten Shares

The terms of the Underwriting Agreement (including the commission rate) were determined after arm’s length negotiation between the Company and the Underwriter by reference to the financial position of the Group, the size of the Rights Issue, the current and expected market condition and the prevailing market rate. The Directors (including the independent non-executive Directors) consider the entering into of the Underwriting Agreement with the Underwriter and the terms of the Underwriting Agreement (including the underwriting commission) are fair and reasonable and in the interest of the Company and the Shareholders as a whole.

– 18 –

LETTER FROM THE BOARD

Subject to the fulfilment of the conditions (or any waiver, as the case may be, by the Underwriter) contained in the Underwriting Agreement and provided that the Underwriting Agreement is not terminated prior to the Latest Time for Termination in accordance with the terms thereof, the Underwriter has agreed to subscribe or procure the subscription for all Underwritten Shares that are not otherwise taken up.

Conditions of the Rights Issue

The Rights Issue is conditional upon the following conditions being fulfilled or waived (as appropriate):

(1) the passing of necessary resolution(s) at the EGM to approve the Rights Issue by the Independent Shareholders;
(2) the Share Consolidation becoming effective;
(3) the Listing Committee of the Stock Exchange granting or agreeing to grant (subject to allotment) and not having withdrawn or revoked the listing of and permission to deal in the Rights Shares (in their nil-paid and fully-paid forms);
(4) the delivery to the Stock Exchange for authorization and the registration with the Registrar of Companies in Hong Kong respectively each of the Prospectus Documents (and all other documents required to be attached thereto) and otherwise in compliance with the GEM Listing Rules and the Companies (Winding Up and Miscellaneous Provision) Ordinance not later than the Prospectus Posting Date;
(5) the posting of the Prospectus Documents to the Qualifying Shareholders by no later than the Prospectus Posting Date;
(6) the obligations of the Underwriter becoming unconditional and that the Underwriting Agreement is not terminated in accordance with its terms;
(7) compliance with and performance of all undertakings and obligations of the Company under the Underwriting Agreement and the representations and warranties given by the Company under the Underwriting Agreement remaining true, correct and not misleading in all material respects; and
(8) either the Petition having been dismissed or withdrawn in the Winding Up Proceedings or, alternatively, a validation order (the “ Validation Order ” ) having been granted by the High Court on substantially the terms that (a) any transfer of Shares/Consolidated Shares (including any Rights Shares in their nil-paid and fully-paid forms) between the date of presentation of the Petition and the date of judgment on the Petition; and (b) the allotment and issuance of the Rights Shares pursuant to the Rights Issue, shall not be void pursuant to section 182 of the Companies (Winding-Up and Miscellaneous Provisions) Ordinance, Cap.32 of the Laws of Hong Kong.

The conditions precedent, save and except paragraph (7) above which can only be waived by the Underwriter, are incapable of being waived.

– 19 –

LETTER FROM THE BOARD

As at the Latest Practicable Date, conditions (1), (2) and (8) were satisfied and conditions (4) and (5) above are expected to have been fulfilled on the Prospectus Posting Date. As regards condition no.(8) above, the Company has filed the application of the Validation Order to the High Court on 29 July 2020. On 31 July 2020, the Company received a letter from the High Court setting out the observations of the hearing judge of the said application that (i) the Validation Order appears to be uncontroversial given that the assets of the Company would not be diminished; (ii) subject to the comments of the petitioner in the Winding Up Proceedings, the judge is minded to grant the Validation Order; and (iii) the said petitioner and the Company be invited to lodge their consent summons with the court. On 3 August 2020, the said petitioner has consented to the Validation Order application by signing the consent summons with the Company and the consent summons has been filed to the court for the court’s approval.

The court has granted the Validation Order on 4 August 2020. In the circumstances, condition no.(8) has been satisfied.

The Company shall use all reasonable endeavours to procure the fulfilment of the conditions precedent set out in paragraph (3) to (5) by the Latest Time for Acceptance. If the conditions precedent set out in the above paragraphs are not satisfied (or, if applicable, waived by the Underwriter) by the Latest Time for Acceptance and/or the condition set out in paragraph (7) does not remain fulfilled (unless waived by the Underwriter under the terms of the Underwriting Agreement) up to the Latest Time for Termination, the Underwriting Agreement shall terminate (save in respect of the surviving provisions in relation to fees and expenses, indemnity, notices and governing law) and no party hereto will have any claim against any other party for cost, damages, compensation or otherwise (save in respect of any rights or obligations which may have accrued under the Underwriting Agreement prior to such termination), and the Rights Issue will not proceed.

REASONS FOR AND BENEFITS OF THE RIGHTS ISSUE AND USE OF PROCEEDS

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 gross proceeds of the Rights Issue will be approximately HK$60.5 million and the estimated net proceeds of the Rights Issue, after deducting the related expense, will be approximately HK$57.1 million. The Company intends to apply the net proceeds from the Rights Issue as follows:

(i) approximately HK$50.9 million for the repayment of the outstanding principal amount, interests and charges of the Group’s overdue loans (the “ Overdue Loans ”) which had been expired by over 10 months; and
(ii) approximately HK$6.2 million for partial repayment of overdue bond payables (the “ Overdue Bond ”) and other accrued expenses of the Group.

– 20 –

LETTER FROM THE BOARD

Details of the Overdue Loans and the Overdue Bond (collectively, the “ Matured Indebtedness ”) are set out below:

Creditors Nature of the debts Overdue Loans A Overdue Loans B Overdue Loans *Sub-total* Overdue Bond C Overdue Bond Total:	Outstanding principal amount Maturity date Interest rate (HK$’000) (p.a.) 35,000 26 September 2019 12% 5,000 8 May 2019 15% *40,000* 9,800 14 September 2019 6.25% 49,800	Outstanding accrued interest and charges as at 31 July 2020 (HK$’000) 8,826 2,024 *10,850* 539 11,389	Total outstanding amount as at 31 July 2020 (HK$’000) 43,826 7,024
			*50,850* 10,339
			61,189

As at 31 July 2020, the Matured Indebtedness with aggregate outstanding amount of approximately HK$61.2 million had already been expired for over 10 months. As such, the Group has an imminent need of funding to cope with the Matured Indebtedness.

For the Overdue Loans, the Company has been negotiating with the Creditor A and the Creditor B since May 2019 for loan extension based on existing terms. In February 2020, the Creditor A and the Creditor B indicated that they were unwilling to extend the maturity date and would like the Overdue Loans to be settled by cash in due course and request for prompt settlement.

In respect of the Overdue Bond, the Company has been negotiating with the Creditor C since November 2019. During the negotiation, the Creditor C verbally agreed with the settlement by a combination of cash and loan capitalization (the “ Overdue Bond Proposal ”). On 13 January 2020, the Company was served with a sealed copy of the Petition issued by the Creditor C in the Winding-Up Proceedings under which petitioned that the Company be wound up by the court. Details of the Petition are set out in the paragraph headed “2. Statement of Indebtedness – Litigation – (a) Winding up petition from bondholder” in appendix I to this Prospectus. In February 2020, the Group and the Creditor C verbally reached the preliminary terms for the Overdue Bond Proposal, which would render a funding requirement of the Group of around HK$6 million to HK$8 million for the cash settlement under the Overdue Bond Proposal. Subsequent to February 2020, ongoing negotiations are being carried out between the Company and Creditor C and the Board considers that the Company is making positive progress in the negotiation. The Company and Creditor C have agreed in principle for the key arrangement under the Overdue Bond Proposal such as the ratio of cash settlement portion. The

– 21 –

LETTER FROM THE BOARD

Company and Creditor C have preliminary agreed that not more than 60% of the outstanding principal amount of the Overdue Bond will be settled by cash. Accordingly, around HK$6 million of the net proceeds of the Rights Issue will be allocated for the cash settlement of the Overdue Bond.

On 24 July 2020, the Company and the Creditor C signed a binding broad terms of settlement setting out the principal terms of settlement as agreed by the parties.

On 10 August 2020, the Company and the Creditor C executed the definitive settlement agreement (the “ Settlement Agreement ”) under which the parties agree, amongst other things:

(i) The Company shall pay HK$563,835.62 being the interest accrued on the Overdue 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 Overdue 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 new Shares of the Company to the Creditor C (the “ New Shares ”) within 90 days from the date of Settlement Agreement subject to the following conditions precedents (the “ Allotment Conditions ”):
(a) The New 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 New Shares;
(c) The issue price of the New 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.
(iv) If the Allotment Conditions cannot be fulfilled, the outstanding indebtedness shall be repaid within 1 month from the date of default of the Allotment Conditions;
(v) In the event that the aggregate market value of the New 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 value of HK$3,920,000 to the Creditor C, subject to a lock-up period of 6 months after the date of issuance of new shares;
(vi) Upon payment of the Interest Payment, the Creditor C shall agree to adjourn the hearing of the Petition on 26 August 2020 to October 2020 or thereafter; and
(vii) Upon payment of the Interest payment and the Principal Payments, the Creditor C shall take all necessary steps to withdraw the Petition.

– 22 –

LETTER FROM THE BOARD

The Company has duly paid the Interest Payment to the Creditor C on 14 August 2020. By a consent summons executed on 20 August 2020, the Company and the Creditor C has jointly applied to the High Court to adjourn the Petition hearing scheduled on 26 August 2020 to October or thereafter. On 25 August 2020, the High Court has notified the parties that the parties are excused from attending the Petition hearing on 26 August 2020 and it will pronounce the adjournment at the hearing. The Petition hearing is adjourned to 21 October 2020.

The Directors are aware that the Group has other outstanding interest-bearing loans (the “ Other Outstanding Loans ”), of which the Loan D and the Loan G bear higher interest rate as compared to the Matured Indebtedness. However, the Directors are of the view that there is no immediate need to repay the Other Outstanding Loans (except the Loan G) and the Group has sufficient financial resources to repay the Loan G (as discussed below). The details of the terms of the Other Outstanding Loans as at 31 July 2020 are set out as below:

Loans	D	E	F		G
Outstanding principal	14,000	10,005	527		1,500
amount (HK$’000)
Maturity date	26 June 2023	15 July 2022	16 July 2022	9 September 2020
	(Note)
Interest rate (p.a.)	8%	4.85%	4.85%		24%
Agreement date	27 June 2018	16 July 2015	17 July 2015	9	June 2020

Note: The Loan D was initially repayable on 26 May 2019 and the maturity date of the Loan D was subsequently extended for another 13 months to 26 June 2020 and further extended to 26 June 2023.

At the time of proposing the Rights Issue and accessing the funding needs of the Company, it is the Group’s intention to extend the Loan D, which would become mature on 26 June 2020, rather than repaying it. In early March 2020, the Group has commenced the negotiation with the creditor of the Loan D (the “ Creditor D ”) for extension or renewal for a term of around one year. In early July 2020, the Creditor D has agreed by written notice, which is legally binding, to extend the maturity date of the Loan D to 26 June 2023. For the Loan E and the Loan F, they are not yet matured until July 2022. As such, the Directors consider that there is no urgency for the Group to settle the Other Outstanding Loans.

The Group intends to repay the Loan G with its internal resources and/or the revolving credit facilities (the “ Facilities ”) of HK$15,000,000 obtained in early July 2020 at an interest rate of 8% per annum for a term of two years after the drawdown date (the “ Loan G Settlement ”). As disclosed in the section headed “3. Working Capital” of appendix I to this Prospectus, the Directors are of the opinion that the Group has sufficient working capital (having considered the repayment of the Loan G) for at least the next 12 months from the date of this Prospectus.

As disclosed in the annual report of the Company for the year ended 31 March 2020 (the “ 2020 Annual Report ”), the Group recorded a consolidated loss of approximately HK$40.7 million for the year ended 31 March 2020 compared to loss of HK$36.4 million for the corresponding period of 2019. The bank balances and cash of the Group were approximately HK$1.5 million as at 31 March 2020. In addition, the Group recorded net current liabilities and net liabilities of approximately HK$153.9 million and HK$132.4 million respectively as at 31 March 2020.

– 23 –

LETTER FROM THE BOARD

In view of the current challenging financial position of the Group, it would constrain the business development of the Group. Besides, the annual finance cost of the Matured Indebtedness which amounts to approximately HK$5.6 million, has been becoming a heavy burden on the Group’s operation. As such, the Directors consider it is essential to trim down the debt level of the Group to relieve its financial burden.

By a combination of the Rights Issue and the Overdue Bond Proposal and after utilizing proceeds from the Rights Issue for full repayment of the Overdue Loans and partial repayment of the Overdue Bond (assuming the remaining portion will be settled by way of loan capitalization under the Overdue Bond Proposal), it will result in full settlement of the Overdue Loans and the Overdue Bond (the “Overdue Debts Full Settlement” ). Thereafter, the interest-bearing debts of the Group (the “ Interest-bearing Debts ”) will be reduced substantially by approximately 67.9% from approximately HK$90.1 million as at 31 July 2020 to approximately HK$28.9 million. Moreover, after the Overdue Debts Full Settlement and the Loan G Settlement, the Other Outstanding Loans (excluding Loan G), which will not incur immediate repayment obligation on the Group as they are not yet overdue, will be the only remaining Interest-bearing Debts. As estimated based on the interest rate of the Interest-bearing Debts, after the Overdue Debts Full Settlement and the Loan G Settlement, it will result in substantial interest saving as estimated annual interest will drop significantly by over 75% to approximately HK$1.6 million.

With the substantial improvement in the financial position of the Group upon completion of the Rights Issue, the Board considers that it will enable the Group to be in a better position to negotiate with the creditors for the settlement of the outstanding debts and will facilitate the possible debt arrangements (e.g. settlement of Loan E and Loan F, being long term debts, by way of loan capitalization) for further strengthening the financial position of the Group.

Fund-raising alternatives

The Board has considered various fund-raising alternatives before resolving to the Rights Issue, including but not limited to debt financing, placing of new shares and open offer.

It is the Group’s intention to obtain bank financing which incurs lower interest rate for re-financing the Matured Indebtedness. The Company has approached two principal banks of the Group in Hong Kong (the “ Principal Banks ”) for exploring the possibility of obtaining new banking facilities. However, given the volatile market conditions and the consecutive loss-making financial performance of the Group, the Principal Banks turned down (the “ Banks Rejection ”) the request of the Company for banking facilities at an early stage and there was no further negotiation of scale or terms between the Company and the Principal Banks.

The Directors consider that it would be difficult for the Company to obtain loans from other non-banking financial institution (the “ Non-Banking Fls ”) due to the Company lack of collateral acceptable to the Non-Banking FIs. Moreover, based on the past experience of the Directors, even for secured loan financing with acceptable collateral (such as property) from the Non-Banking FIs, it will still result in an expectedly high interest rate ranging from at least 12% to 18% per annum under prevailing market conditions. The Group is reluctant to obtain loan financing from the Non-Banking FIs which generally charge higher interest rates than banks. As such, after the Banks Rejection, the Company did not further approach the Non-Banking Fls.

– 24 –

LETTER FROM THE BOARD

The Directors have also considered utilizing the existing general mandate of 28,451,375 Shares. The Directors consider that by applying relevant net proceeds of placing for partial settlement of the Matured Indebtedness, it would reduce scale of the Rights Issue and lower the overall price discount and dilution effect in conducting fund-raising activities. During April 2020, the Company has approached three securities houses to explore if they were interested to support any fund-raising exercises of the Company without proposing any specific terms in the first place. However, in view of the existing weak financial position of the Group, low market capitalization of the Group, none of the securities house has any interest on any possible fund-raising activities.

The Board considers that the Rights Issue would be more favourable and attractive to the Shareholders than an open offer because it would allow Shareholders to have more flexibility in dealing with the Consolidated Shares and the nil-paid rights attaching thereto.

Subsequent to the entering into of the Underwriting Agreement, during early June 2020, the cash level of the Group has reached a minimal level, the Director considered that it is necessary for the Group to bring in additional cash inflow for the Group’s working capital to relieve the Group’s short term cash flow pressure on business operations. As there is at least two months for the Company to complete the Rights Issue and the Company has undertaken in the Underwriting Agreement that the Company shall not issue new Shares under the general mandate from the date of the Underwriting Agreement up to and including the Record Date (both days inclusive), the Board considered debt financing as a source for addressing the emergent liquidity needs of the Group. In this connection, in early June 2020, the Group obtained the Loan G to satisfy its immediate liquidity needs.

Despite the Loan G is obtained, it should be noted that it bears the highest interest rate among the Group’s existing indebtedness and it was short term in nature and the loan amount was only HK$1.5 million. The Loan G serves as an interim measure to provide short-term financing to meet the Group’s urgent and pressing general working capital needs for business operations at the cost of incurring high interest rate.

The Loan G has already been utilised for the general working capital of the Group, including but not limited to, salary expenses, rental expenses and legal and professional fees.

In early July 2020, the Group obtained the Facilities for the general working capital requirements of the Group. As at the Latest Practicable Date, the Facilities has not been drawn down. The Company expects to draw down the Facilities for general working capital as and when required after considering the availability and the costs of the then financing options for minimizing the Group’s funding costs.

– 25 –

LETTER FROM THE BOARD

Benefits of the Rights Issue

The Board is of the view that the Rights Issue represents an opportunity for the Company to strengthen its financial position after having considered that:

(i) tight cash position alongside with net current liabilities and net deficit position of the Group as at 31 March 2020;
(ii) the Rights Issue offers all the Qualifying Shareholders an equal opportunity to participate in the enlargement of the capital base of the Company and enables the Qualifying Shareholders to maintain their proportionate interests in the Company and continue to participate in the future development of the Company should they wish to do so;
(iii) the discount of the Subscription Price to the prevailing market price in order to enhance the attractiveness of the Rights Issue and it is the Company’s objective to encourage the participation of Qualifying Shareholders in the Rights Issue;
(iv) after considering other alternative fund-raising methods, it is prudent to finance the Group’s long-term growth by long-term financing, preferably in the form of equity which will not increase the Group’s finance costs. In addition, the Board believes that the Rights Issue will enable the Group to strengthen its capital base and enhance its financial position for future strategic investments as and when such opportunities arise; and
(v) to allow the Shareholders to have more flexibility in dealing with the Consolidated Shares and the nil-paid rights attaching thereto.

Therefore, the Board considered that raising funds by way of the Rights Issue is more cost effective and efficient.

Theoretical dilution effect

The Company has not conducted any rights issue, open offer and/or specific mandate placing within the 12-month period immediately preceding the Latest Practicable Date, or prior to such 12-month period where dealing in respect of the Shares issued pursuant thereto commenced within such 12-month period, nor has it issued any bonus securities, warrants or other convertible securities as part of such rights issue, open offers and/or specific mandate placings within such 12-month period.

The Rights Issue will result in a theoretical dilution effect (as defined under Rule 10.44A of the GEM Listing Rules) of over 25%, but in view of the following factors, the Board (including the independent non-executive Directors) considers that the terms and conditions of the Rights Issue and the Underwriting Agreement are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

– 26 –

LETTER FROM THE BOARD

(i) Financial difficulties of the Group

According to the 2020 Annual Report, (i) as at 31 March 2020, the Group recorded net current liabilities and net liabilities which amounted to approximately HK$153.9 million and HK$132.4 million respectively; (ii) the Group merely maintained bank balances and cash of approximately HK$1.5 million as at 31 March 2020, representing a drop of approximately 41.2% as compared to 31 March 2019; and (iii) among the Group’s total assets of approximately HK$39.9 million as at 31 March 2020, goodwill and intangible assets which accounted for over 78% of the Group’s total assets are not readily realizable into cash independently due to their intangible nature. Besides, as at 31 July 2020, the Matured Indebtedness amounted to approximately HK$61.2 million. With the current financial position of the Group, the Directors considered that the Group has imminent funding needs to cope with the Matured Indebtedness and it is necessary to conduct fund-raising activities to alleviate the financial burden. The Rights Issue will be a rescue plan for the Company in order to avoid a potential liquidation of the Company.

(ii) Going concern of the Group

The Company’s auditor issued a disclaimer of opinion on the consolidated financial statements of the Group for the year ended 31 March 2020 which stated the existence of multiple uncertainties cast significant doubt on the Group’s ability to continue as a going concern related to, among others, the Group had net current liabilities of approximately HK$153,927,000 and capital deficiency of approximately HK$132,404,000 as at 31 March 2020.

However, those Qualifying Shareholders who do not take up the Rights Shares to which they are entitled and Non-Qualifying Shareholder(s) should note that their shareholdings will be diluted.

– 27 –

LETTER FROM THE BOARD

EFFECTS ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

The following table sets out the possible changes in the shareholding structure of the Company arising from the Rights Issue which are for illustrative purpose only.

Set out below is the shareholding structure of the Company (i) as at the Latest Practicable Date; and (ii) immediately after completion of the Rights Issue, assuming no further issue or repurchase of Consolidated Shares up to completion of the Rights Issue save for the Rights Shares:

Public Shareholders Underwriter, sub-underwriter(s) and/or subscriber(s) procured by them_(Note 1)_ Other public Shareholders Total	As at the Latest Practicable Date No. of Consolidated Shares Approx. % – – 14,225,687 100.0 14,225,687 100.0	Immediately after completion of the Rights Issue Assuming all Shareholders take up their respective allotment of Rights Shares in full Assuming no Shareholders take up any of the Rights Shares and the Underwriter takes up the Rights Shares in full No. of Consolidated Shares Approx. % No. of Consolidated Shares Approx. % – – 71,128,435 83.3 85,354,122 100.0 14,225,687 16.7 85,354,122 100.0 85,354,122 100.0	Immediately after completion of the Rights Issue Assuming all Shareholders take up their respective allotment of Rights Shares in full Assuming no Shareholders take up any of the Rights Shares and the Underwriter takes up the Rights Shares in full No. of Consolidated Shares Approx. % No. of Consolidated Shares Approx. % – – 71,128,435 83.3 85,354,122 100.0 14,225,687 16.7 85,354,122 100.0 85,354,122 100.0
			100.0

Notes:

(1) Pursuant to the Underwriting Agreement, the Underwriter undertakes to the Company that in the event of it being called upon to subscribe for or procure subscribers for the Untaken Shares:
(i) it will not and shall procure that the sub-underwriter and subscribers procured by them, together with parties acting in concert (within the meaning of the Takeovers Code) with each of them, will not own 10% or more of the voting rights of the Company immediately after completion of the Rights Issue;
(ii) it will not, and will procure that the sub-underwriter and subscribers procured by them will not, together with any party acting in concert (within the meaning of the Takeovers Code) with it, hold 30.0% or more of the voting rights of the Company immediately upon completion of the Rights Issue; and
(iii) it shall and shall cause the sub-underwriter to procure subscribers independent of the Company and its connected persons to take up such number of Untaken Shares as necessary to ensure that the public float requirements under Rule 17.36 of the GEM Listing Rules are complied with.
(2) The percentage figures have been subject to rounding adjustments. Any discrepancies between totals and sums of amounts listed herein are due to rounding adjustments.

– 28 –

LETTER FROM THE BOARD

EQUITY FUND-RAISING ACTIVITIES OF THE COMPANY FOR THE PAST TWELVE MONTHS

The Company has not conducted any equity fund-raising activities in the past twelve months immediately preceding the Latest Practicable Date.

RISK FACTORS

In compliance with the GEM Listing Rules, the Company sets out below the risk factors of the Group for the Shareholders’ attention. The Directors believe that there are certain risks involved in the operations of the Group which includes, but is not limited to, the following:

Risk relating to professional services business

The professional services business is subject to rapidly changing technology and evolving industry standards. The existing cyber services and solutions of the Group may become obsolete due to the rapid technological change. If the Group is not able to make available upgrades of services or solutions to address the needs of the customers, the competitive position and profitability of the Group will be adversely affected. Furthermore, if the services of the Group does not meet the expectations of the customers, such as the solutions and services of the Group fail to detect or prevent intrusions or cyber-attacks for any reason, the reputation and business of the Group could be harmed.

Risk relating to OTT services business

The OTT services business depends on the ability to provide high quality media content in order to retain existing users and attract new users. To attract new users and retain existing users, the Group must continue to offer high-quality and diversified media content that meets the users’ fast changing appetite. If the Group fails to deliver suitable media content to cater for the needs of users, users may not find the OTT services attractive and may not subscribe for the OTT services. Besides, the ability to provide users with a high quality viewing experience depends on the continuous and reliable operation of the systems and proper functioning of the mobile apps and websites. Failure to do so may significantly impair user experience on mobile apps and websites of the Group, which could hurt the reputation of the Group and cause the users to switch to other platforms.

Risk relating to proprietary trading

The proprietary trading of the Group is directly affected by the inherent risks associated with the securities markets, such as market volatility, fluctuations in the trading volume and the credit capacity or perceived credit worthiness of the securities industry in the marketplace. The proprietary trading of the Group is also subject to general economic and political conditions, such as macro-economic and monetary policies, legislation and regulations affecting the financial and securities industries, upward and downward trends in the business and financial sectors, inflation, currency fluctuations, availability of short-term and long-term market funding sources, cost of funding and the level and volatility of interest rates.

Any sudden downturn in the securities markets may adversely affect the market sentiment in general which would in turn adversely affect the fair value of the investment portfolio of the Group and the performance of the proprietary trading of the Group.

– 29 –

LETTER FROM THE BOARD

WARNING OF THE RISKS OF DEALING IN THE SHARES AND NIL-PAID RIGHTS SHARES

The Rights Issue is conditional, inter alia, upon the fulfillment of the conditions set out under the section headed “Conditions of the Rights Issue” in the Letter from the Board of this Prospectus. In particular, the Rights Issue is subject to the Underwriter not terminating the Underwriting Agreement in accordance with the terms set out therein. Accordingly, the Rights Issue may or may not proceed.

The Shares have been dealt in on an ex-rights basis from Friday, 28 August 2020. Dealings in the Rights Shares in the nil-paid form are expected to take place from 9:00 a.m. on Thursday, 10 September 2020 to 4:00 p.m. on Thursday, 17 September 2020 (both days inclusive) while the conditions to which the Underwriting Agreement is subject to remain unfulfilled. If the conditions of the Rights Issue are not fulfilled or the Underwriting Agreement is terminated by the Underwriter prior to the Latest Time for Termination, the Rights Issue will not proceed. Any Shareholders or other persons contemplating buying or selling the Shares and/or nil-paid Rights Shares up to the date when all the conditions of the Rights Issue are fulfilled will bear the risk that the Rights Issue may not become unconditional or may not proceed. Any Shareholders or other persons contemplating any dealings in the Shares and/or nil-paid Rights Shares are recommended to consult their own professional advisers.

PROCEDURES FOR ACCEPTANCE AND PAYMENT AND TRANSFER

PAL – Acceptance, payment and transfer

The PAL is enclosed with this Prospectus which entitles the Qualifying Shareholder(s) to whom it is addressed to subscribe for the number of the Rights Shares shown thereon. If the Qualifying Shareholder(s) wish to take up the provisional allotment of Rights Shares as specified in the PAL in full, they must lodge the PAL in accordance with the instructions printed thereon, together with a remittance for the full amount payable on acceptance, with the Registrar, Union Registrars Limited at Suites 3301-04, 33/F., Two Chinachem Exchange Square, 338 King’s Road, North Point, Hong Kong, not later than 4:00 p.m. on Tuesday, 22 September 2020 (or such later time and/or date as mentioned in the paragraph headed “EFFECT OF BAD WEATHER AND/OR EXTREME CONDITIONS ON THE LATEST TIME FOR ACCEPTANCE OF AND PAYMENT FOR THE RIGHTS SHARES AND FOR APPLICATION AND PAYMENT FOR EXCESS RIGHTS SHARES” in the section headed “Expected Timetable” in this Prospectus). All remittances must be made in Hong Kong dollars by cheques which must be drawn on an account with, or by banker’s cashier orders which must be issued by, a licensed bank in Hong Kong and made payable to “ hmvod Limited – Rights Issue Account ” and crossed “ Account Payee Only ”.

– 30 –

LETTER FROM THE BOARD

It should be noted that unless the PAL duly completed, together with the appropriate remittance, has been lodged with the Registrar not later than 4:00 p.m. on Tuesday, 22 September 2020 (or such later time and/or date as mentioned in the paragraph headed “EFFECT OF BAD WEATHER AND/OR EXTREME CONDITIONS ON THE LATEST TIME FOR ACCEPTANCE OF AND PAYMENT FOR THE RIGHTS SHARES AND FOR APPLICATION AND PAYMENT FOR EXCESS RIGHTS SHARES” in the section headed “Expected Timetable” in this Prospectus), whether by the original allottee or any person in whose favour the rights have been validly transferred, that provisional allotment and all rights and entitlements thereunder will be deemed to have been declined and will be cancelled. The Company may, at its sole discretion, treat a PAL as valid and binding on the person(s) by whom or on whose behalf it is lodged even if the PAL is not completed in accordance with the relevant instructions.

If the Qualifying Shareholders wish to accept only part of provisional allotment or transfer part of their rights to subscribe for the Rights Shares provisionally allotted to them under the PAL or to transfer part or all of their rights to more than one person, the entire PAL must be surrendered and lodged for cancellation not later than 4:00 p.m. on Monday, 14 September 2020 to the Registrar, who will cancel the entire original PAL and issue new PALs in the denominations required which will be available for collection from the Registrar during normal business hours on the second Business Day after the surrender of the original PAL. It should be noted that Hong Kong stamp duty is payable in connection with the transfer of the rights to subscribe for the Rights Shares to the transferee(s) and the acceptance by the transferee(s) of such rights.

The PAL contains further information regarding the procedures to be followed for acceptance and/or transfer of the whole or part of the provisional allotment of the Rights Shares by the Qualifying Shareholders. All cheques or banker’s cashier orders will be presented for payment immediately following receipt and all interest (if any) earned on such monies will be retained for the benefit of the Company. Completion and return of the PAL with a cheque or a banker’s cashier order, whether by a Qualifying Shareholder or by any nominated transferees, will constitute a warranty by the applicant that the cheque or the banker’s cashier order will be honoured on first presentation. Without prejudice to the other rights of the Company in respect thereof, the Company reserves the right to reject any PAL in respect of which the cheque or banker’s cashier order is dishonoured on first presentation, and in that event the provisional allotment and all rights thereunder will be deemed to have been declined and will be cancelled.

Save as described under the paragraph headed “Rights of Overseas Shareholders” in this Prospectus, no action has been taken by the Company to permit the offering of the Rights Shares or the distribution of the Prospectus Documents in any territory outside Hong Kong. Accordingly, no person receiving the Prospectus Documents in any territory outside Hong Kong may treat it as an offer or invitation to apply for the Rights Shares or excess Rights Shares, unless in a territory where such an offer or invitation could lawfully be made without compliance with any registration or other legal and regulatory requirements thereof. It is the responsibility of anyone receiving the Prospectus Documents outside Hong Kong wishing to make an application for the Rights Shares to satisfy itself/himself/herself/themselves before subscribing for the allotted Rights Shares or excess Rights Shares, as to the full observance of the laws and regulations of all relevant jurisdictions, including the obtaining of any governmental or other consents, and to pay any taxes and duties required to be paid in any such jurisdiction in connection therewith.

– 31 –

LETTER FROM THE BOARD

Any acceptance of the offer of the Rights Shares by any person will be deemed to constitute a representation and warranty from such person to the Company that these local laws and requirements have been or will be fully complied with. For the avoidance of doubt, neither HKSCC nor HKSCC Nominees Limited will give, or be subject to, any of the above representation or warranty. If you are in doubt as to your position, you should consult your own professional advisers. No application for the Rights Shares will be accepted from the Non-Qualifying Shareholders. The Company reserves the right to refuse to accept any application for the Rights Shares where it believes that doing so would violate the applicable securities legislation or other laws and regulations of any jurisdiction. No receipt will be issued in respect of any application monies received.

If the Underwriter exercise the right to terminate its obligation under the Underwriting Agreement prior to the Latest Time for Termination and/or if any of the conditions of the Rights Issue are not fulfilled by the respective dates specified in the paragraph headed “Conditions of the Rights Issue” in this Prospectus, the remittance received in respect of acceptances of the Rights Shares will be returned to the Qualifying Shareholders or such other persons to whom the Rights Shares in the nil-paid form have been validly transferred without interest, by means of cheques to be despatched by ordinary post at the risk of such Qualifying Shareholders or such other persons to their registered addresses by the Registrar on or before Wednesday, 30 September 2020.

EAF – Application for excess Rights Shares

If a Qualifying Shareholder wishes to apply for any Rights Shares in addition to his/her/its provisional allotment, he/she/it must complete and sign the enclosed EAF in accordance with the instructions printed thereon and lodge the same with a separate remittance for the amount payable on application in respect of the excess Rights Shares being applied for with the Registrar, Union Registrars Limited at Suites 3301-04, 33/F., Two Chinachem Exchange Square, 338 King’s Road, North Point, Hong Kong not later than 4:00 p.m. on Tuesday, 22 September 2020 (or such later time and/or date as mentioned in the paragraph headed “EFFECT OF BAD WEATHER AND/OR EXTREME CONDITIONS ON THE LATEST TIME FOR ACCEPTANCE OF AND PAYMENT FOR THE RIGHTS SHARES AND FOR APPLICATION AND PAYMENT FOR EXCESS RIGHTS SHARES” in the section headed “Expected Timetable” in this Prospectus). All remittances must be made in Hong Kong dollars by cheques which must be drawn on an account with, or by banker’s cashier orders which must be issued by, a licensed bank in Hong Kong and made payable to “ hmvod Limited – Excess Application Account ” and crossed “ Account Payee Only ”.

It should be noted that unless the duly completed and signed EAF, together with the appropriate remittance, have been lodged with the Registrar by 4:00 p.m. on Tuesday, 22 September 2020 (or such later time and/or date as mentioned in the paragraph headed “EFFECT OF BAD WEATHER AND/OR EXTREME CONDITIONS ON THE LATEST TIME FOR ACCEPTANCE OF AND PAYMENT FOR THE RIGHTS SHARES AND FOR APPLICATION AND PAYMENT FOR EXCESS RIGHTS SHARES” in the section headed “Expected Timetable” in this Prospectus) by a Qualifying Shareholder, the EAF will be rejected. It should also be noted that the lodging of the EAF does not assure the Qualifying Shareholder of being allocated any Rights Shares in excess of those of his/her/its provisional allotments.

– 32 –

LETTER FROM THE BOARD

All cheques or banker’s cashier orders will be presented for payment immediately following receipt and all interest earned on such application monies (if any) will be retained for the benefit of the Company. Completion and return of the EAF together with a cheque or banker’s cashier order in payment for the excess Rights Shares applied for will constitute a warranty by the applicant that the cheque or banker’s cashier order will be honoured on first presentation. Without prejudice to its other rights of the Company in respect thereof, the Company reserves the right to reject any EAF in respect of which the accompanying cheque or banker’s cashier order is dishonoured on first presentation. No receipt will be issued in respect of any EAF or any application monies received. Qualifying Shareholder shall pay the exact amount payable upon application for the excess Rights Shares, and underpaid application will be rejected. In the event of overpaid application, a refund cheque will be made out to the Qualifying Shareholder only if the overpaid amount is HK$100 or above.

The Company will notify the relevant Qualifying Shareholders of any allotment of excess Rights Shares made to them by way of announcement. An announcement of results of acceptance of and excess applications for the Rights Issue will be published on Tuesday, 29 September 2020.

Where the number of excess Rights Shares applied for under one EAF is larger than the total number of Rights Shares being offered under the Rights Issue, being 71,128,435 Rights Shares, such application (other than from a nominee company) would be treated as invalid and be rejected. For the avoidance of doubt, this restriction will not be applied to all nominees companies including HKSCC Nominees Limited. If no excess Rights Shares are allotted to a Qualifying Shareholder, a refund cheque for the full amount in respect of the excess application will be posted to that Qualifying Shareholder by ordinary post by the Registrar at his/her/its own risk on or before Wednesday, 30 September 2020. If the number of excess Rights Shares allotted to a Qualifying Shareholder is less than that applied for, a refund cheque for the surplus application monies will also be posted to that Qualifying Shareholder by ordinary post by the Registrar at his/her/its own risk on or before Wednesday, 30 September 2020. One share certificate will be issued for all Rights Shares in fully-paid form accepted by each applicant, except HKSCC Nominees Limited.

Completion and return of the EAF will constitute a representation and warranty by the applicant to the Company that all registration, legal and regulatory requirements of all relevant jurisdictions other than Hong Kong, in connection with the EAF and any applications made for excess Rights Shares, have been, or will be, duly complied with. For the avoidance of doubt, neither HKSCC nor HKSCC Nominees Limited is subject to any of the representation and warranty.

Any application for the excess Rights Shares by any person will be deemed to constitute a representation and warranty from such person to the Company that these local laws and requirements have been or will be fully complied with. For the avoidance of doubt, neither HKSCC nor HKSCC Nominees Limited will give, or be subject to, any of the above representation or warranty. If you are in doubt as to your position, you should consult your own professional advisers. The Company reserves the right to refuse to accept any application for the excess Rights Shares where it believes that doing so would violate the applicable securities legislation or other laws and regulations of any jurisdiction.

The EAF is for use only by the Qualifying Shareholder(s) to whom it is addressed and is not transferable. All documents, including refund cheques (if any), will be despatched by ordinary post at the risk of the persons entitled thereto to their registered addresses by the Registrar.

– 33 –

LETTER FROM THE BOARD

If the Underwriter exercise the right to terminate its obligation under the Underwriting Agreement prior to the Latest Time for Termination and/or if any of the conditions of the Rights Issue are not fulfilled by the respective dates specified in the paragraph headed “Conditions of the Rights Issue” in this Prospectus, the remittance received in respect of relevant application for excess Rights Shares will be returned to the relevant persons without interest, by means of cheques to be despatched by ordinary post at the risk of such applicants to their registered addresses by the Registrar on or before Wednesday, 30 September 2020.

ADDITIONAL INFORMATION

Your attention is drawn to the information set out in the appendices to this Prospectus.

Yours faithfully, On behalf of the Board hmvod Limited Lau Kelly Executive Director

– 34 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. SUMMARY OF THE FINANCIAL INFORMATION OF THE GROUP

The financial information of the Group for each of the three financial years ended 31 March 2018, 2019 and 2020 and the three months ended 30 June 2020 were disclosed in the annual reports of the Company for the years ended 31 March 2018 (pages 43 to 113), 2019 (pages 33 to 109) and 2020 (pages 31 to 95) and in the first quarterly report of the Company for the three months ended 30 June 2020 (pages 2 to 9) respectively. The aforementioned financial information of the Group has been published on both the website of the Stock Exchange (www.hkex.com.hk) and the website of the Company (www.hmvod.com.hk). Please refer to the hyperlinks as stated below:

2018 annual report:

https://www1.hkexnews.hk/listedco/listconews/gem/2018/0702/gln20180702011.pdf

2019 annual report:

https://www1.hkexnews.hk/listedco/listconews/gem/2019/0628/gln20190628015.pdf

2020 annual report:

https://www1.hkexnews.hk/listedco/listconews/gem/2020/0630/2020063002674.pdf

2021 first quarterly report:

https://www1.hkexnews.hk/listedco/listconews/gem/2020/0812/2020081201464.pdf

2. STATEMENT OF INDEBTEDNESS

As at the close of business on 31 July 2020, being the latest practicable date for the purpose of preparing the statement of indebtedness prior to the printing of this Prospectus, the Group had the following outstanding indebtedness:

Unsecured borrowings Unsecured bonds	HK$’000 69,718 19,514
	89,232

Borrowings

As at 31 July 2020, the Group has aggregate unsecured credit facilities of approximately HK$93,500,000, of which HK$58,500,000 has been utilised. Included in the unutilised credit facilities are amounts of HK$20,000,000, which are not available to the Group until full repayment of the existing lines of credit.

– I-1 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Litigation

During the course of business, the Company has received petitions from bondholder and a professional firm concerned with the outstanding balances due by the Company. The Directors are of the opinion that the Group has taken steps to mitigate the impact of these claims, accordingly, the Directors do not anticipate that these claims will have any material adverse impact on the Group and no provisions have been made in respect thereof.

(a) Winding up petition from bondholder

On 14 September 2015, the Company issued a bond of HK$9,800,000 to an independent third party with coupon interest of 6% per annum and a maturity of 4 years from the date of issue. The effective interest rate for the bond is 12.41% per annum after considering the direct transaction costs.

On 8 November 2019, the bondholder served a statutory demand to the Company to request the settlement of principal of the bond with interest of approximately HK$9,894,000.

The Company commenced the negotiation with bondholder upon receipt of the statutory demand.

On 13 January 2020, the Company was served with a sealed copy of the Petition issued by the bondholder in the Winding-Up Proceedings under which petitioned that the Company be wound up by the court. The winding up petition hearing is adjourned to 26 August 2020.

In March 2020, the Company and the bondholder reached the preliminary terms for the settlement, which would render a funding requirement of the Company of around HK$6,000,000 to HK$8,000,000 for the cash settlement.

On 24 July 2020, the Company and the bondholder signed a binding broad terms of settlement setting out the principal terms of settlement as agreed by the parties.

On 10 August 2020, the Company and the bondholder executed the definitive settlement agreement (the “ Settlement Agreement ”) under which 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 new Shares of the Company to the bondholder (the “ New Shares ”) within 90 days from the date of Settlement Agreement subject to the following conditions precedents (the “ Allotment Conditions ”):

– I-2 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(a) The New 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 New Shares;
(c) The issue price of the New 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;
(iv) If the Allotment Conditions cannot be fulfilled, the outstanding indebtedness shall be repaid within 1 month from the date of default of the Allotment Conditions;
(v) In the event that the aggregate market value of the New 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;
(vi) Upon payment of the Interest Payment, the bondholder shall agree to adjourn the hearing of the Petition on 26 August 2020 to October 2020 or thereafter; and
(vii) Upon payment of the Interest payment and the Principal Payments, the bondholder shall take all necessary steps to withdraw the Petition.

The Company has duly paid the Interest Payment to the bondholder on 14 August 2020. By a consent summons executed on 20 August 2020, the Company and the bondholder has jointly applied to the High Court to adjourn the Petition hearing scheduled on 26 August 2020 to October or thereafter. On 25 August 2020, the High Court has notified the parties that the parties are excused from attending the Petition hearing on 26 August 2020 and it will pronounce the adjournment at the hearing. The Petition hearing is adjourned to 21 October 2020.

(b) Winding up petition from a professional firm

On 2 January 2020, the Company was served (i) a sealed copy of Amended Petition issued on 3 December 2019 and amended and re-filed on 2 January 2020 pursuant to section 178(1)(a) of the Companies (Winding up and Miscellaneous Provisions) Ordinance, and (ii) a true copy of the 2nd Affirmation of the authorised representative of the professional firm on 3 January 2020, in relation to the unsettled service fee payable by the Company.

On 7 January 2020, the Company has returned a letter along with the cheque of the outstanding service fee to the legal representative of the professional firm and on 20 January 2020, the professional firm has issued an official receipt of such outstanding service fee. The professional firm has agreed to withdraw the petition against the Company on the basis that the cost incurred by the professional firm in relation to the winding up petition to be settled by the Company and the Company has made such payment to the professional firm on 29 January 2020.

– I-3 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

In light of the general adjournment of court proceedings announced by the Hong Kong Judiciary in response to COVID-19, the scheduled hearing on 29 January 2020 in relation to the withdrawal of the winding up petition was adjourned. On 6 May 2020, both the solicitors of the Company and the professional firm have signed a consent summons and filed it with the court for withdrawal of the winding up petition issued by the professional firm. Pursuant to a sealed copy order made by High Court and filed on 28 July 2020, the High Court has granted leave to the petitioner to withdraw the winding-up petition.

Accordingly, the winding up petition has been withdrawn and shall have no further legal implication to the Company.

Save as aforesaid and apart from intra-group liabilities and normal trade and other payables in the ordinary course of the business, as at the close of business on 31 July 2020, the Group did not have other outstanding mortgages, charges, debentures or other loan capital, bank overdrafts or loans, term loans, debt securities, other similar indebtedness, hire purchase commitments, liabilities under acceptance or acceptance credits, guarantees or other material contingent liabilities.

3. WORKING CAPITAL

The Directors are of the opinion that, after taking into account (i) the Group’s present available financial resources of the Group; (ii) the net cash proceeds from the Rights Issue; (iii) the cash flows generated from the operating activities of the Group; (iv) the credit facilities available to the Group; and (v) the combination of the Rights Issue and the Overdue Bond Proposal will result in the Overdue Debts Full Settlement, the Group has sufficient working capital for its present requirements for at least 12 months from the date of this Prospectus in the absence of any unforeseen circumstances.

The Directors’ opinion is based on, among other things, the assumption that the successful implementation of the Overdue Bond Proposal and combining with the Rights Issue which will result in the Overdue Debts Full Settlement.

4. MATERIAL ADVERSE CHANGE

Save for the information disclosed in the profit warning announcement of the Company dated 10 August 2020, as at the Latest Practicable Date, the Directors are not aware of any material adverse change in the financial position or trading position of the Group since 31 March 2020, being the date to which the latest published audited financial statements of the Group was made up.

5. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

The Group recorded net current liabilities of approximately HK$153.9 million as at 31 March 2020. For the year ended 31 March 2020 (the “ FY2020 ”), the Group recorded a turnover and net loss of approximately HK$36.3 million and HK$40.7 million respectively. For the three months ended 30 June 2020 (the “ 1Q2021 ”), the Group recorded a turnover and net loss of approximately HK$7.8 million and HK$3.7 million respectively.

– I-4 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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. During middle of December 2019, the money lending business had been sold to the independent third party due to the uncertainties in Hong Kong which has been affected by the social movement since June 2019. The interest income in money lending business amounted to approximately HK$7,000 for the FY2020 (year ended 31 March 2019 (the “ FY2019 ”): approximately HK$60,000). The decrease in revenue was due to the general underlying uncertainties in Hong Kong which has been affected by the social movement since June 2019, and the unexpected forced majeure event of the continued and worsening situation derived from the recent coronavirus outbreak. During 1Q2021, the Group had already ceased its money lending operation.

The Group will continue to pursue development of the businesses of the Group with focus towards the OTT services as its core business, which accounted for over 90% and approximately 99.2% of the total revenue of the Group for FY2020 and 1Q2021 respectively.

For professional services, in view of the change of business environment, the Company has strategically broadened its professional services in cyber security services and solutions. The revenue from provision of professional services amounted to approximately HK$1.7 million for FY2020 (FY2019: approximately HK$3.6 million) and approximately HK$65,000 for 1Q2021 (three months ended 30 June 2019 (the “ 1Q2020 ”): approximately HK$0.6 million) respectively.

The Group intends to diversify the customer base by penetrating into the cyber security market in the South East Asia region and the Greater Bay Area. The Group will continue to keep abreast of the latest developments in the IT security industry and to explore new technique based on information collected from, including but not limited to, industry-related conferences, exhibitions, and the feedbacks from the existing and potential business partners and end users of the Group. Also, the Group intends to establish strategic alliances and enhance its connections with existing and new business partners which have well-established reputation in the IT security industry. Leverage on the business network of the business partners, the Group will be able to capture business opportunities.

OTT services is providing multi-media related services and content in Hong Kong via different platforms. In view of the growing penetration and expansion of multi-media segment, the Group is optimistic to such business segment. In addition, consumers are moving beyond traditional media, the multi-media platform is an option used by many companies to brand and market their products. As such, the multimedia platform is playing an increasingly vital role in business marketing strategy. Having considered that the OTT services is equipped with experience in the industry with diversified clientele and being specialized in the provision of OTT services of video-on-demand in Hong Kong and Taiwan via its own digital video rental platform. The revenue from provision of OTT services amounted to approximately HK$34.7 million for FY2020 ( FY2019: approximately HK$51.6 million). The decrease of segment revenue is primarily due to (i) drop of subscription as a result of the expiration of 24 month contracts (the “ Expired Contracts ”) of the subscribers on the video-on-demand platform; and (ii) restructuring of Hong Kong business.

– I-5 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The Group cooperates with various telecom providers (the “ Partners ”) to reach out to the broad customer base of the Partners to facilitate subscription of OTT services of the Group.

In the cooperation between the Group and the Partners, the Partners will procure their individual customers (the “ End Users ”) to subscribe for the OTT services of the Group. The Partners will enter into contacts with the End Users for subscription of the OTT services of the Group (generally for a term of 24 months) through the platform of the Partners (the “ Subscribers’ Contracts ”). The Group will provide OTT services to the End Users and share revenue at prescribed revenue sharing ratio with the Partners for total subscription fees for OTT services under Subscribers’ Contracts. The Expired Contracts referred to those expired Subscribers’ Contracts.

For FY2019 and FY2020, the revenue attributable to the Subscribers’ Contracts were approximately HK$30.9 million and HK$21.7 million respectively, which accounted for approximately 59.9% and 62.5% of the total segment revenue of the OTT services respectively. As at 31 March 2020, there are approximately 26,200 valid Subscribers’ Contracts, representing a decrease of approximately 60.6% as compared with that as at 31 March 2019. The Board considers that it is not uncommon to have expired Subscribers’ Contracts in conducting the OTT services.

For 1Q2021, the OTT services recorded segment revenue of approximately HK$7.7 million (1Q2020: approximately HK$9.9 million).

In order to expand the subscribers base of the Group, the Group has been soliciting and will continue to solicit co-operation with new telecom companies, mobile operators and TV broadcast companies in Macau and the PRC (the “ New Partners ”). The Group envisages to leverage on the customer base of the New Partners as a gateway for expanding its own customer base and promoting its brand recognition. Recently, the Group has entered into cooperation with 3 telecom companies in Hong Kong and a telecom company in Macau, each of them will perform marketing initiatives to promote the OTT services. Up to 15 June 2020, the aforesaid new Partners has acquired approximately 20,000 new subscribers for the Group. Following the launching of new 5G service plan (the “ Plan ”), which the public are looking forward to be launched, the Partners will promote the Plan and in the meantime they will procure those customers who join the Plan to subscribe for the OTT services. In addition, the Board considers that there will be another opportunity for the Partners and the Group to promote the OTT services to those customers who are interested in buying the new design of iPhone which is expected to be launched in the second half of 2020.

– I-6 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The Group will seek to deepen the market penetration through better content offerings and enhancement of subscriber experience. The Group will continue to strengthen and optimize the media content according to the tastes and preference of the subscriber in order to enrich their entertainment experience. Accordingly, the Group will continue to strengthen the relationship with existing content providers and form new business relationship with both domestic and international media content providers for improving and diversifying the media content. The Group is under negotiation with one of the largest film studio in Hollywood. The Board expects to commence the cooperation with the aforesaid film studio in fourth quarter of 2020 and after that the Group may have an addition of not less than 600 hours of Hollywood blockbuster movies annually for the OTT services. Besides, in view of the glasses-free 3D technology has aroused attention from the public, the Group intends to offer high resolution 3D movies and related ancillary equipment for facilitating the customers to watch 3D contents without wearing glasses, in order to accelerate the interest of the customers to subscribe for the OTT services.

For proprietary trading, the global market has been highly volatile in 2019. Although Asian market including Hong Kong has attracted capital inflow across the world, the market is still filled with a lot of uncertainties such as the trigger of trade war and the effect of contractionary monetary policy from US. The Group will adopt a prudent approach in identifying opportunities in securities investment which will create value and will be beneficial to the Group and Shareholders. The Group also maintains a risk management policy in which key risk factors such as government and politic risks, country risks, price risks, interest rate risks, currency risks and economic risks have been identified and will be closely monitored. The turnover in proprietary trading business recorded HK$Nil since FY2019.

– I-7 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

A. UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS OF THE GROUP ATTRIBUTABLE TO OWNERS OF THE COMPANY

The unaudited pro forma statement of adjusted consolidated net tangible assets of the Group (the “ Unaudited Pro Forma Financial Information ”) as at 31 March 2020 has been prepared by the directors of the Company in accordance with paragraph 7.31 of the GEM Listing Rules to illustrate the effect of the consolidation of every ten (10) issued and unissued existing shares of HK$0.001 each into one (1) consolidated share of HK$0.01 each and the proposed rights issue on the basis of five (5) rights shares for every one (1) consolidated share held on the record date at the subscription price of HK$0.85 per rights share on the consolidated net tangible assets of the Group attributable to owners of the Company as if the Rights Issue had taken place on 31 March 2020.

The Unaudited Pro Forma Financial Information is prepared for illustrative purposes only, and because of its hypothetical nature, it may not reflect a true picture of the consolidated net tangible assets of the Group attributable to owners of the Company immediately after the completion of the Rights Issue.

The Unaudited Pro Forma Financial Information is prepared based on the consolidated net tangible assets of the Group attributable to owners of the Company derived from the consolidated statement of financial position of the Group as at 31 March 2020, as extracted from the published annual report of the Company for the year ended 31 March 2020, after incorporating the adjustments described in the accompanying notes.

				Unaudited	Unaudited
				consolidated net	consolidated
				tangible	tangible
			Unaudited pro	liabilities per	liabilities per	Unaudited pro
			forma adjusted	share	share	forma adjusted
			consolidated net	attributable to	attributable to	consolidated net
			tangible	owners of the	owners of the	tangible
	Audited		liabilities of the	Company as at	Company as at	liabilities per
	consolidated net		Group	31 March 2020	31 March 2020	share
	tangible		attributable to	without taking	after taking into	attributable to
	liabilities of the		owners of the	into account of	account of the	owners of the
	Group		Company as at	the Share	Share	Company
	attributable to		31 March 2020	Consolidation	Consolidation	immediately
	owners of the	Estimated net	upon completion	and prior to the	but prior to the	after the
	Company as at	proceeds from	of the Rights	completion of the	completion of the	completion of the
	31 March 2020	the Rights Issue	Issue	Rights Issue	Rights Issue	Rights Issue
	HK$’000	HK$’000	HK$’000	HK$	HK$	HK$
	(Note 1)	(Note 2)		(Note 3)	(Note 4)	(Note 5)
Based on 71,128,435
rights shares at
subscription price of
HK$0.85 per rights
share to be issued	(153,961)	57,056	(96,905)	(1.08)	(10.82)	(1.14)

– II-1 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Notes:

The audited consolidated net tangible liabilities attributable to owners of the Company as at 31 March 2020 has been extracted from the published annual report of the Company for the year ended 31 March 2020, adjusted by intangible assets and goodwill of approximately HK$15,497,000 and HK$15,749,000 respectively.
The estimated net proceeds from the Rights Issue is approximately HK$57,056,000 are based on 71,128,435 rights shares to be issued at the subscription price of HK$0.85 per rights share and after deducting estimated related expenses directly attributable to the Rights Issue, of approximately HK$3,403,000.
The amount is calculated based on the unaudited consolidated net tangible liabilities of the Group per share attributable to the owners of the Company as at 31 March 2020 of HK$153,961,000 and 142,256,878 shares in issue as at 31 March 2020, without taking into account of the consolidation of every ten issued and unissued existing shares of par value of HK$0.001 each into one consolidated share (“ Consolidated Share(s) ”) of par value of HK$0.01 each (the “ Share Consolidation ”).
The amount is calculated based on the audited consolidated net tangible liabilities of the Group attributable to the owners of the Company as at 31 March 2020 of HK$153,961,000 and 14,225,687 Consolidated Shares.
The unaudited pro forma adjusted consolidated net tangible liabilities of the Group attributable to owners of the Company per share immediately after completion of the Rights Issue and Share Consolidation is calculated based on 85,354,122 shares which comprise of 14,225,687 Consolidated Shares and 71,128,435 rights shares expected to be issued on the completion of the Rights Issue as at 31 March 2020.
No adjustments have been made to the unaudited pro forma adjusted consolidated net tangible liabilities of the Group to reflect any trading results or other transactions of the Group entered into subsequent to 31 March 2020.

– II-2 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

B. INDEPENDENT REPORTING ACCOUNTANTS ASSURANCE REPORT ON THE COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following is the text of a report received from the Company’s reporting accountants, Elite Partners CPA Limited, Certified Public Accountants, Hong Kong, prepared for the sole purpose of inclusion in this prospectus, in respect of the Unaudited Pro Forma Financial Information of the Group.

==> picture [45 x 54] intentionally omitted <==

INDEPENDENT REPORTING ACCOUNTANTS ASSURANCE REPORT ON THE COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION

To the directors of hmvod Limited:

We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information of hmvod Limited (the “ Company ”) and its subsidiaries (collectively referred to as the “ Group ”) by the directors of the Company for illustrative purposes only. The unaudited pro forma financial information consists of the unaudited pro forma net tangible liabilities of the Group as at 31 March 2020, and related notes as set out in Section A of Appendix II to the Company’s prospectus dated 8 September 2020 (the “ Prospectus ”). The applicable criteria on the basis of which the directors have compiled the Unaudited Pro Forma Financial Information are described in Section A of Appendix II to the Prospectus.

The Unaudited Pro Forma Financial Information has been compiled by the directors to illustrate the impact of the proposed rights issue of 71,128,435 rights shares at HK$0.85 per rights share (the “ Rights Shares ”) on the basis of five (5) Rights Share for every one (1) consolidated share of the Company held on the rights issue record date (the “ Rights Issue ”) on the Group’s audited consolidated net tangible liabilities attributable to owners of the Company as at 31 March 2020 as if the Rights Issue had taken place on 31 March 2020. As part of this process, information about the Group’s financial position has been extracted by the directors from the Group’s audited consolidated financial statements for the year ended 31 March 2020, on which an annual report has been published.

Directors’ Responsibilities for the Unaudited Pro Forma Financial Information

The directors are responsible for compiling the Unaudited Pro Forma Financial Information in accordance with paragraph 7.31 of the Rules Governing the Listing of Securities on GEM of The Stock Exchange of Hong Kong Limited (“ GEM Listing Rules ”) and with reference to Accounting Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” (“ AG 7 ”) issued by the Hong Kong Institute of Certified Public Accounts (the “ HKICPA ”).

– II-3 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Our Independence and Quality Control

We have complied with the independence and other ethical requirements of the “Code of Ethics for Professional Accountants” issued by the HKICPA, which is founded on the fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.

The firm applies Hong Kong Standard on Quality Control 1 and accordingly maintain a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Reporting Accountants’ Responsibilities

Our responsibility is to express an opinion, as required by paragraph 7.31(7) of the GEM Listing Rules, on the Unaudited Pro Forma Financial Information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the Unaudited Pro Forma Financial Information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

We conducted our engagement in accordance with Hong Kong Standard on Assurance Engagements 3420 “Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus” issued by the HKICPA. This standard requires that the reporting accountants plan and perform procedures to obtain reasonable assurance about whether the directors have compiled the Unaudited Pro Forma Financial Information in accordance with paragraph 7.31 of the GEM Listing Rules and with reference to AG 7 issued by the HKICPA.

For purposes of this engagement, we are not responsible for updating or reissuing any reports or opinions on any historical financial information used in compiling the Unaudited Pro Forma Financial Information, nor have we, in the course of this engagement, performed an audit or review of the financial information used in compiling the Unaudited Pro Forma Financial Information.

The purpose of the Unaudited Pro Forma Financial Information included in the Prospectus is solely to illustrate the impact of a significant event or transaction on unadjusted financial information of the Group as if the event had occurred or the transaction had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the event or transaction at 31 March 2020 would have been as presented.

A reasonable assurance engagement to report on whether the Unaudited Pro Forma Financial Information has been properly compiled on the basis of the applicable criteria involves performing procedures to assess whether the applicable criteria used by the directors in the compilation of the Unaudited Pro Forma Financial Information provide a reasonable basis for presenting the significant effects directly attributable to the event or transaction, and to obtain sufficient appropriate evidence about whether:

The related unaudited pro forma adjustments give appropriate effect to those criteria; and

– II-4 –

APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

The Unaudited Pro Forma Financial Information reflects the proper application of those adjustments to the unadjusted financial information.

The procedures selected depend on the reporting accountants’ judgment, having regard to the reporting accountants’ understanding of the nature of the Group, the event or transaction in respect of which the Unaudited Pro Forma Financial Information has been compiled, and other relevant engagement circumstances.

The engagement also involves evaluating the overall presentation of the Unaudited Pro Forma Financial Information.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion

In our opinion:

(a) the Unaudited Pro Forma Financial Information has been properly compiled on the basis stated;
(b) such basis is consistent with the accounting policies of the Group; and
(c) the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 7.31(1) of the GEM Listing Rules.

Your faithfully,

Elite Partners CPA Limited

Certified Public Accountants

Hong Kong, 8 September 2020

– II-5 –

GENERAL INFORMATION OF THE GROUP

APPENDIX III

1. RESPONSIBILITY STATEMENT

This Prospectus, 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 Group. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this Prospectus 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 Prospectus misleading.

2. SHARE CAPITAL

The authorised and issued and fully paid share capital of the Company (i) as at the Latest Practicable Date; and (ii) immediately upon completion of the Rights Issue (assuming no further issue or repurchase of Consolidated Shares up to completion of the Rights Issue save for the Rights Shares) were as follows:

(i) As at the Latest Practicable Date

Authorised: HK$ 20,000,000,000 Consolidated Shares of HK$0.01 each 200,000,000.00 Issued and fully paid: 14,225,687 Consolidated Shares of HK$0.01 each 142,256.87

(ii) Immediately upon completion of the Rights Issue (assuming no further issue or repurchase of Consolidated Shares up to completion of the Rights Issue save for the Rights Shares)

Authorised: 20,000,000,000 Consolidated Shares of HK$0.01 each Issued and fully paid: 14,225,687 Consolidated Shares 71,128,435 Rights Shares to be allotted and issued under the Rights Issue 85,354,122 Consolidated Shares in issue immediately upon completion of the Rights Issue	HK$ 200,000,000.00

	142,256.87 711,284.35
	853,541.22

– III-1 –

GENERAL INFORMATION OF THE GROUP

APPENDIX III

All of the Shares and the Rights Shares in issue and to be issued (when fully paid) rank and will rank pari passu with each other in all respects, including, in particular, as to dividends, voting rights and return of capital. The Shares and the Rights Shares are or will be listed on the Stock Exchange. None of the securities of the Company is listed, or dealt in, on any other exchange, nor is any listing of or permission to deal in the securities of the Company being, or proposed to be, sought on any other stock exchange.

No part of the share capital or any other securities of the Company is listed or dealt in on any stock exchange other than the Stock Exchange and no application is being made or is currently proposed or sought for the Shares or the Rights Shares or any other securities of the Company to be listed or dealt in on any other stock exchange.

As at the Latest Practicable Date, the Company had no outstanding convertible securities, options or warrants in issue which confer any right to subscribe for, convert or exchange into Shares.

As at the Latest Practicable Date, none of the capital of any member of the Group was under option, or agreed conditionally or unconditionally to be put under option.

3. DISCLOSURE OF INTERESTS

(a) Interests of Directors and chief executive of the Company

As at the Latest Practicable Date, none of the Directors or chief executive of the Company and/or any of their respective associates had or was deemed to have any interest or short position in the Shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) (a) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO); or (b) which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein; or (c) which were required, pursuant to Rule 5.46 to 5.67 of the GEM Listing Rules, to be notified to the Company and the Stock Exchange.

– III-2 –

GENERAL INFORMATION OF THE GROUP

APPENDIX III

(b) Interests of substantial Shareholders and other person

Save as disclosed below, as at the Latest Practicable Date, so far as was known to the Directors and chief executive of the Company, no person (other than a Director or chief executive of the Company), had, or were deemed or taken to have interests or short positions in the Shares or underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO and required to be entered into the register maintained by the Company pursuant to Section 336 of the SFO, who were, directly or indirectly, interested in 5% or more of the number of any class of share carrying rights to vote in all circumstances at general meetings of any other member of the Group or had any option in respect of such capital:

Long positions in the Shares:

			Approximate
			percentage of
			total number
		Number of	of issued
Name of Substantial		Shares/underlying	Shares of the
Shareholders	Capacity	Shares held	Company
			(note 1)
Kingston Securities	Beneficial owner	30,000,000	35.1
Limited (note 2)
Galaxy Sky Investments	Interest in controlled	30,000,000	35.1
Limited (note 2)	corporation
Kingston Capital Asia	Interest in controlled	30,000,000	35.1
Limited (note 2)	corporation
Kingston Financial	Interest in controlled	30,000,000	35.1
Group Limited	corporation
(note 2)
Active Dynamic	Interest in controlled	30,000,000	35.1
Limited (note 2)	corporation
Chu Yuet Wah (note 2)	Interest in controlled	30,000,000	35.1
	corporation
Pacific Foundation	Beneficial owner	23,128,435	27.1
Securities Limited
(note 3)
VMS Securities Limited	Beneficial owner	8,000,000	9.4
(note 4)
VMS Financial Group	Interest in controlled	8,000,000	9.4
Limited (note 4)	corporation

– III-3 –

GENERAL INFORMATION OF THE GROUP

APPENDIX III

			Approximate
			percentage of
			total number
		Number of	of issued
Name of Substantial		Shares/underlying	Shares of the
Shareholders	Capacity	Shares held	Company
			(note 1)
VMS Securities	Interest in controlled	8,000,000	9.4
Holdings Limited	corporation
(note 4)
Fastlane Global	Interest in controlled	8,000,000	9.4
Investments Limited	corporation
(note 4)
VMS Holdings Limited	Interest in controlled	8,000,000	9.4
(note 4)	corporation
Master Competent	Interest in controlled	8,000,000	9.4
Limited (note 4)	corporation
Mak Siu Hang Viola	Interest in controlled	8,000,000	9.4
(note 4)	corporation
Get Nice Securities	Beneficial owner	8,000,000	9.4
Limited (note 5)
Get Nice Incorporated	Interest in controlled	8,000,000	9.4
(note 5)	corporation
Get Nice Financial	Interest in controlled	8,000,000	9.4
Group Limited	corporation
(note 5)
Get Nice Holdings	Interest in controlled	8,000,000	9.4
Limited (note 5)	corporation

Notes:

The percentage holding is calculated based on the expected issued share capital of the Company as consolidated under Share Consolidation and enlarged by the issue of Rights Shares under the Rights Issue comprising 85,354,122 Shares.
Based on the notices of disclosure of interest filed by each of Kingston Securities Limited, Galaxy Sky Investments Limited, Kingston Capital Asia Limited, Kingston Financial Group Limited, Active Dynamic Limited and Chu Yuet Wah on 10 June 2020 respectively, Kingston Securities Limited has deemed interest in 30,000,000 Shares by virtue of itself acting as a sub-underwriter agreeing to sub-underwrite the said shares in relation to the Rights Issue. Kingston Securities Limited is wholly-owned by Galaxy Sky Investments Limited, which is in turn wholly owned by Kingston Capital Asia Limited. Kingston Capital Asia Limited is wholly-owned by Kingston Financial Group Limited which is in turn 74.6% owned by Active Dynamic Limited. Active Dynamic Limited is wholly-owned by Chu Yuet Wah. Each of Galaxy Sky Investments Limited, Kingston Capital Asia Limited, Kingston Financial Group Limited, Active Dynamic Limited and Chu Yuet Wah is deemed to be interested 30,000,000 Shares held by Kingston Securities Limited.

– III-4 –

APPENDIX III

GENERAL INFORMATION OF THE GROUP

Based on the notice of disclosure of interest filed by Pacific Foundation Securities Limited on 1 September 2020, Pacific Foundation Securities Limited has deemed interest in 23,128,435 Shares by virtue of itself acting as a sub-underwriter agreeing to sub-underwrite the said shares in relation to the Rights Issue.
Based on the notices of disclosure of interest filed by each of VMS Securities Limited, VMS Financial Group Limited, VMS Securities Holdings Limited, Fastlane Global Investments Limited, VMS Holdings Limited, Master Competent Limited and Mak Siu Hang Viola on 11 June 2020 respectively, VMS Securities Limited has deemed interest in 8,000,000 Shares by virtue of itself acting as a sub-underwriter agreeing to sub-underwrite the said shares in relation to the Rights Issue. VMS Securities Limited is wholly-owned by VMS Financial Group Limited, which in turn is wholly-owned by VMS Securities Holdings Limited and in turn wholly owned by Fastlane Global Investments Limited. Fastlane Global Investments Limited is wholly owned by VMS Holdings Limited, which is owned as to 59.8% by Mak Siu Hang Viola and 32.2% by Master Competent Limited, which is wholly owned by Mak Siu Hang Viola. Each of VMS Financial Group Limited, VMS Securities Holdings Limited, Fastlane Global Investments Limited, VMS Holdings Limited, Master Competent Limited and Mak Siu Hang Viola is deemed to be interested 8,000,000 Shares held by VMS Securities Limited.
Based on the notices of disclosure of interest filed by each of Get Nice Securities Limited, Get Nice Incorporated, Get Nice Financial Group Limited and Get Nice Holdings Limited on 9 June 2020 respectively, Get Nice Securities Limited has deemed interest in 8,000,000 Shares by virtue of itself acting as a sub-underwriter agreeing to sub-underwrite the said shares in relation to the Rights Issue. Get Nice Securities Limited is wholly-owned by Get Nice Incorporated, which in turn is wholly owned by Get Nice Financial Group Limited. Get Nice Financial Group Limited is owned as to approximately 73.0% by Get Nice Holdings Limited which is listed on main board of the Stock Exchange (stock code: 64). Each of Get Nice Incorporated, Get Nice Financial Group Limited and Get Nice Holdings Limited is deemed to be interested 8,000,000 Shares held by Get Nice Securities Limited.

4. DIRECTORS’ INTERESTS IN ASSETS OR CONTRACTS OR ARRANGEMENTS SIGNIFICANT TO THE GROUP

As at the Latest Practicable Date:

(i) none of the Directors has or had any direct or indirect interest in any assets which have been acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group since 31 March 2020 (being the date to which the latest published audited accounts of the Group were made up); and
(ii) none of the Directors was materially interested, directly or indirectly, in any contract or arrangement entered into by any member of the Group which is subsisting as at the Latest Practicable Date and is significant in relation to the business of the Group.

5. LITIGATION

Save as the litigation discussed under the section headed “2. Statement of Indebtedness” in appendix I, as at the Latest Practicable Date, no member of the Group was engaged in any litigation, claim or arbitration of material importance and there was no litigation, claim or arbitration of material importance known to the Directors to be pending or threatened against any member of the Group.

6. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or was proposing to enter into any service contracts with the Company or any member of the Group (excluding contracts expiring or determinable by the Group within one year without payment of compensation (other than statutory compensation)).

– III-5 –

GENERAL INFORMATION OF THE GROUP

APPENDIX III

7. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors, controlling shareholder of the Company nor their respective close associates (as defined in the GEM Listing Rules) had any interest in a business, which competes or may compete, either directly or indirectly, with the business of the Group or any other conflict of interest which any such person has or may have with the Group which would be required to be disclosed pursuant to the GEM Listing Rules.

8. MATERIAL CONTRACTS

The following contracts (being contracts not enter into in the ordinary course of business of the Group) have been entered into by the Group within two years immediately preceding the date of this Prospectus and up to the Latest Practicable Date which are or may be material:

(a) the Underwriting Agreement;
(b) the Supplemental Agreement;
(c) the 2nd Supplemental Agreement; and
(d) the Settlement Agreement.

9. EXPERT AND CONSENT

The following is the qualification of the expert who has given opinion or advice contained in this Prospectus:

Name Qualification

Elite Partners CPA Limited (“ Elite ”) Certified Public Accountants

Elite has given and has not withdrawn its written consent to the issue of this Prospectus with the inclusion herein of its letter and report and references to its name in the form and context in which it appears. Elite confirmed that as at the Latest Practicable Date:

(i) it did not have any shareholding interest in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for any securities in any member of the Group; and
(ii) it was not interested, directly or indirectly, in any assets which have been acquired or disposed of by or leased to any member of the Group, or which are proposed to be acquired or disposed of by or leased to any member of the Group since 31 March 2020, being the date to which the latest published audited accounts of the Company were made up.

– III-6 –

GENERAL INFORMATION OF THE GROUP

APPENDIX III

10. EXPENSES

The expenses in connection with the Rights Issue, including financial advisory fees, independent financial adviser fees, underwriting commission, printing, registration, translation, legal and accountancy charges are estimated to be approximately HK$3.4 million, which are payable by the Company.

11. CORPORATE INFORMATION AND PARTIES INVOLVED IN THE RIGHTS ISSUE

Board of Directors

Executive Directors Mr. Lau Kelly (Chief Executive Officer) Ms. Ho Chi Na Mr. Ho Alvin Tzuen Chung Ms. Sin Pui Ying

Independent non-executive Directors Mr. Ho Siu King, Stanley Mr. Hau Chi Kit Mr. Ma Stephen Tsz On

Audit Committee

Mr. Ho Siu King, Stanley (Chairman) Mr. Hau Chi Kit Mr. Ma Stephen Tsz On Nomination Committee Mr. Ho Siu King, Stanley (Chairman) Mr. Hau Chi Kit Mr. Ma Stephen Tsz On

Remuneration Committee Mr. Ho Siu King, Stanley (Chairman) Mr. Hau Chi Kit Mr. Ma Stephen Tsz On Registered office Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands Principal place of business in Hong Kong Unit C, 8/F, D2 Place Two 15 Cheung Shun Street Cheung Sha Wan, Kowloon Hong Kong Authorised representatives Mr. Lau Kelly Mr. Wong King Hung

– III-7 –

GENERAL INFORMATION OF THE GROUP

APPENDIX III

Compliance officer

Mr. Lau Kelly Mr. Wong King Hung

Company secretary Mr. Wong King Hung Principal share registrar and transfer SMP Partners (Cayman) Limited office in the Cayman Islands Royal Bank House – 3rd Floor 24 Shedden Road P.O. Box 1586 George Town Grand Cayman KY1-1110 Cayman Islands Branch share registrar in Hong Kong Union Registrars Limited Suites 3301–04, 33/F. Two Chinachem Exchange Square 338 King’s Road, North Point Hong Kong Principal banker Hang Seng Bank Limited 83 Des Voeux Road Central Hong Kong Reporting accountants Elite Partners CPA Limited 10/F, 8 Observatory Road Tsim Sha Tsui, Kowloon Hong Kong Legal adviser to the Company Eric Yung & Co. Suite 2001, 20/F China United Centre, 28 Marble Road North Point, Hong Kong Financial adviser to the Company Akron Corporate Finance Limited 21A Harbour Commercial Building 122–124 Connaught Road Central Hong Kong Underwriter Win Wind Securities Limited 25/F, China United Centre 28 Marble Road North Point, Hong Kong

– III-8 –

GENERAL INFORMATION OF THE GROUP

APPENDIX III

12. PARTICULARS OF THE DIRECTORS AND SENIOR MANAGEMENT

(a) Profiles of the Directors and senior management

Executive Directors

Mr. Lau Kelly (“ Mr. Lau ”), aged 41, was appointed as executive Director on 31 December 2015 and appointed chief executive officer of the Company on 1 August 2016. Prior to joining the Group, Mr. Lau has worked with the Hong Kong Police Force for twelve years receiving commendations from Secretary of Civil Service and Secretary of Home Affairs for highly rated performances during his tenure. Mr. Lau has worked with Easy Finance Limited as Principal Consultant from 1 May 2011 to 31 October 2015 responsible for all regulatory and legal compliances.

Ms. Ho Chi Na (“ Ms. Ho ”), aged 41, was appointed as executive Director on 1 November 2017. Ms. Ho is a director of Anyplex Hong Kong Limited and Anyplex Taiwan Limited, subsidiaries of the Company. She has over 15 years of experience in TV and digital industry and was a Head of Pay TV department in Hong Kong Broadband Network Limited from 2009 to 2012. She then joined Anyplex Hong Kong Limited as general manager in 2012 and was promoted to CEO in 2016 with her tremendous contribution to OTT services growth. Ms. Ho received her bachelor’s degree in business administration from the City University of Hong Kong in 2001 and master degree in business administration from University of Hong Kong in 2013.

Mr. Ho Alvin Tzuen Chung (“ Mr. Ho ”), aged 54, was appointed as executive Director on 16 October 2019, is currently a director of Consortium Capital Co. Ltd. and several companies. Mr. Ho is one of the founder and GP of Hina-Consortium Beijing Fund, the fund is now evaluated at 5X return and is at matured stage. He was the non-executive Director for a US-based VC WI Harper. He also participated in many social duties; he was the investment advisor to Beijing Government, he was one of the founders of Beijing Huayuan Technology Association, as well as Secretary General of Mt. Jade Association Hong Kong. Mr. Ho was the director and chairman of FX Hotels Group Inc. (2724. TWO), a listed company in Taiwan from June 2012 to September 2017. Mr. Ho received his bachelor’s computer science degree from University of Southern California in 1985 and entered master program in computer science of University of Southern California in 1986.

Ms. Sin Pui Ying (“ Ms. Sin ”), aged 40, was appointed as executive Director on 21 April 2020. She is a practicing member of the Hong Kong Institute of Certified Public Accountants and holds a bachelor’s degree in Business Administration (Accounting and Finance) from the University of Hong Kong. She has over 18 years of experience in finance and accounting. Prior to joining the Company, she was responsible for accounting, internal audit, investment and corporate finance matters for several listed companies in Hong Kong. Ms. Sin is currently an executive director of KNK Holdings Limited (stock code: 8039), On Real International Holdings Limited (stock code: 8245) and Aurum Pacific (China) Group Limited (stock code: 8148), the shares of the companies are listed on the GEM. She is also an executive director of HongDa Financial Holding Limited (stock code: 1822), whose shares are listed on the Main Board of the Stock Exchange.

– III-9 –

GENERAL INFORMATION OF THE GROUP

APPENDIX III

Independent non-executive Directors

Mr. Ho Siu King, Stanley (“ Mr. SK Ho ”), aged 32, was appointed as an independent non-executive Director on 20 July 2018. He is currently a practicing barrister in Hong Kong. His areas of practice include civil and criminal law. Mr. SK Ho holds a Master of Laws degree from the London School of Economics and Political Science, and Bachelor of Laws and Bachelor of Engineering (Civil Engineering and Laws) degrees from the University of Hong Kong. Mr. SK Ho was an independent non-executive director of Chinese Food and Beverage Group Limited (stock code: 8272), a company listed on the GEM from 26 January 2017 to 19 February 2019 and Easy Repay Finance & Investment Limited (stock code: 8079), a company listed on the GEM from 1 July 2016 to 7 June 2020.

Mr. Hau Chi Kit (“ Mr. Hau ”), aged 48, was appointed as an independent non-executive Director on 4 March 2016. He is currently an independent non-executive director of Xinyang Maojian Group Limited (stock code: 362) and eForce Holdings Limited (stock code: 943), both being companies whose shares are listed on the Main Board of the Stock Exchange. He was an independent non-executive director of Code Agriculture (Holdings) Limited (now known as Farnova Group Holdings Limited) (stock code: 8153), whose shares are listed on the GEM, from 30 November 2016 to 18 July 2019. Mr. Hau was a barrister-at-law in private practice in Hong Kong from 2001 to 2008. Prior to becoming a barrister, Mr. Hau worked at the Securities and Futures Commission. Mr. Hau is a solicitor.

Mr. Ma Stephen Tsz On (“ Mr. Ma ”), aged 41, was appointed as an independent non-executive Director on 20 July 2018. He is currently a barrister-at-law at Wellington Chambers. He was admitted to practice law as a barrister in the High Court of Hong Kong in 2006. Mr. Ma is also an independent non-executive director of Chinese Food and Beverage Group Limited (Stock code: 8272), a company listed on the GEM. Mr. Ma holds a Postgraduate Certificate in Laws from The University of Hong Kong, a Graduate Diploma in Law from The Nottingham Trent University and a Bachelor’s degree in Business Administration from Simon Fraser University.

Company Secretary

Mr. Wong King Hung (“ Mr. Wong ”), aged 36, was appointed as a company secretary of the Company on 9 September 2019. He has over 10 years of experience in auditing, accounting and financial managing field. He is a member of Hong Kong Institute of Certified Public Accountants. In addition, he holds a degree of Bachelor of Business Administration in Accounting from the Open University of Hong Kong.

(b) Business address of the Directors, the senior management and authorised representatives

The business address of the Directors, the senior management and authorised representatives is the same as the Company’s head office and principal place of business in Hong Kong located at Unit C, 8/F, D2 Place Two, 15 Cheung Shun Street, Cheung Sha Wan, Kowloon, Hong Kong.

– III-10 –

GENERAL INFORMATION OF THE GROUP

APPENDIX III

13. DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES IN HONG KONG

A copy of each of the Prospectus Documents and the written consent referred to in the paragraph headed “Expert and Consent” in this appendix have been registered with the Registrar of Companies in Hong Kong pursuant to section 342C of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong).

14. BINDING EFFECT

The Prospectus Documents and all acceptances of any offer or application contained in such documents, are governed by and shall be construed in accordance with the laws of Hong Kong. When an acceptance or application is made in pursuance of any such documents, the relevant document(s) shall have the effect of rendering all persons concerned bound by the provisions (other than the penal provisions) of sections 44A and 44B of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong), so far as applicable.

15. AUDIT COMMITTEE

As at the Latest Practicable Date, the audit committee of the Board (the “ Audit Committee ”) comprised three independent non-executive Directors, namely, Mr. Ho Siu King, Stanley, Mr. Hau Chi Kit and Mr. Ma Stephen Tsz On. The Audit Committee is chaired by Mr. Ho Siu King, Stanley. The Audit Committee is responsible for monitoring and reviewing the risk management procedures and internal control system of the Group.

16. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be made available for inspection during normal business hours at the principal place of business of the Company in Hong Kong at Unit C, 8/F, D2 Place Two, 15 Cheung Shun Street, Cheung Sha Wan, Kowloon, Hong Kong during normal business hours on any Business Day during the period of 14 days from the date of this Prospectus:

(a) the memorandum of association and articles of association of the Company;
(b) the annual reports of the Company for the years ended 31 March 2018, 2019 and 2020 respectively;
(c) the first quarterly report of the Company for the three months ended 30 June 2020;
(d) the material contracts disclosed in the paragraph under the heading “Material Contracts” in this Appendix to this Prospectus;
(e) the accountants’ report on the unaudited pro forma financial information of the Group set out in Appendix II to this Prospectus;
(f) the written consent of the expert referred to in the section headed “Expert and Consent” in this Appendix;
(g) the Circular; and

– III-11 –

GENERAL INFORMATION OF THE GROUP

APPENDIX III

(h) the Prospectus Documents.

17. MISCELLANEOUS

(a) As at the Latest Practicable Date, there was no restriction affecting the remittance of profit or repatriation of capital of the Company into Hong Kong from outside Hong Kong.
(b) The English text of this Prospectus shall prevail over their respective Chinese text for the purpose of interpretation.

– III-12 –

AI assistant

hmvod Limited — Capital/Financing Update 2020

51270_rns_2020-09-08_385f78d2-aea6-4cb8-a0cd-f35e5f8c8ea3.pdf

hmvod Limited h m v o d 視頻有限公司

RIGHTS ISSUE ON THE BASIS OF FIVE (5) RIGHTS SHARES FOR EVERY ONE (1) CONSOLIDATED SHARE HELD ON THE RECORD DATE

Financial adviser to the Company

Underwriter to the Rights Issue

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

EXPECTED TIMETABLE

Event

Time and Date

EFFECT OF BAD WEATHER AND/OR EXTREME CONDITIONS ON THE LATEST TIME FOR ACCEPTANCE OF AND PAYMENT FOR THE RIGHTS SHARES AND FOR APPLICATION AND PAYMENT FOR EXCESS RIGHTS SHARES

hmvod Limited h m v o d 視頻有限公司

(Stock Code: 8103)

RIGHTS ISSUE ON THE BASIS OF FIVE (5) RIGHTS SHARES FOR EVERY ONE (1) CONSOLIDATED SHARE HELD ON THE RECORD DATE

INTRODUCTION

RIGHTS ISSUE

Issue statistics

Undertakings

The Subscription Price

LETTER FROM THE BOARD

Status of the Rights Shares

Qualifying Shareholders

Basis of provisional allotments

Rights of Overseas Shareholders

Application for the excess Rights Shares

Certificates of the Rights Shares and refund cheques for the Rights Issue

Fractional entitlement to the Rights Shares

Taxation

Application for listing

THE UNDERWRITING ARRANGEMENT

Underwriting Agreement

LETTER FROM THE BOARD

Conditions of the Rights Issue

LETTER FROM THE BOARD

REASONS FOR AND BENEFITS OF THE RIGHTS ISSUE AND USE OF PROCEEDS

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Fund-raising alternatives

LETTER FROM THE BOARD

Benefits of the Rights Issue

Theoretical dilution effect

(i) Financial difficulties of the Group

(ii) Going concern of the Group

EFFECTS ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

EQUITY FUND-RAISING ACTIVITIES OF THE COMPANY FOR THE PAST TWELVE MONTHS

RISK FACTORS

Risk relating to professional services business

Risk relating to OTT services business

Risk relating to proprietary trading

WARNING OF THE RISKS OF DEALING IN THE SHARES AND NIL-PAID RIGHTS SHARES

PROCEDURES FOR ACCEPTANCE AND PAYMENT AND TRANSFER

PAL – Acceptance, payment and transfer

LETTER FROM THE BOARD

LETTER FROM THE BOARD

EAF – Application for excess Rights Shares

LETTER FROM THE BOARD

LETTER FROM THE BOARD

ADDITIONAL INFORMATION

1. SUMMARY OF THE FINANCIAL INFORMATION OF THE GROUP

2020 annual report:

2021 first quarterly report:

2. STATEMENT OF INDEBTEDNESS

Borrowings

Litigation

(a) Winding up petition from bondholder

(b) Winding up petition from a professional firm

APPENDIX I

3. WORKING CAPITAL

4. MATERIAL ADVERSE CHANGE

5. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

APPENDIX I

APPENDIX I

APPENDIX I

hmvod Limited Capital/Financing Update 2020