Issuer Free Writing Prospectus

Filed Pursuant to Rule 433

Registration No. 333-256322

August 30, 2021

AMTD Digital Inc.

AMTD Digital Inc., or the Company, has filed a registration statement on Form F-1, including a prospectus, with the Securities and Exchange Commission, or the SEC, for the offering to which this free writing prospectus relates. Before you invest, you should read the prospectus in that registration statement and other documents the Company has filed with the SEC for more complete information about the Company and this offering. Investors should rely upon the prospectus and any relevant free writing prospectus for complete details of this offering. You may obtain these documents and other documents that the Company has filed for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the Company, any underwriter, or any dealer participating in this offering will arrange to send you the prospectus if you request it by contacting AMTD Global Markets Limited, at 23/F Nexxus Building, 41 Connaught Road Central, Hong Kong, Attention: ECM Department, by calling +852 3163-3288, or via email: ibd.project.genesis3@amtdglobalmarkets.com, Loop Capital Markets LLC, at 111 West Jackson Boulevard, Suite 1901, Chicago, IL 60604, U.S.A., Attention: ECM Department, by calling +1 (312) 913-4900, or via email: LoopECM@loopcapital.com, Maxim Group LLC, at 300 Park Avenue, 16th Floor, New York, NY 10022, U.S.A., Attention: Clifford A. Teller, by calling +1 (212) 895-3745, or via email: ecitarrella@maximgrp.com, or Livermore Holdings Limited, at Unit 1214A, 12/F, Tower II Cheung Sha Wan Plaza, 833 Cheung Sha Wan Road, Kowloon, Hong Kong, Attention: ECM Department, by calling +852 3704-9511, or via email: project@livermore.com.hk. You may also access the Company’s most recent prospectus dated August 30, 2021, which was included in Amendment No. 5 to the Company’s registration statement on Form F-1, as filed with the SEC via EDGAR on August 30, 2021, or Amendment No.  5, by visiting EDGAR on the SEC website at: https://www.sec.gov/Archives/edgar/data/0001809691/000119312521260412/d943653df1a.htm.

This free writing prospectus reflects the following amendments that were made in Amendment No. 5. A substantial part of the changes in Amendment No. 5 reflects the inclusion of the Company’s consolidated financial results for the fiscal year ended April 30, 2021. All references to page numbers are to page numbers in Amendment No. 5.

(1) Insert a new paragraph on the front cover of the prospectus to read as follows:

We face various legal and operational risks and uncertainties relating to our operations. We may be subject to complex and evolving PRC laws, regulations, and policies applicable to us. For example, we may face risks relating to the lack of PCAOB inspection on our auditor, which may cause us to be delisted from a U.S. stock exchange in the future. These risks, together with uncertainties in the PRC legal system and the interpretation and enforcement of PRC laws, regulations, and policies, could hinder our ability to offer or continue to offer the ADSs, result in a material adverse change to our business operations, and damage our reputation, which could cause the ADSs to significantly decline in value or become worthless.

 

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(2) Amend the sixth sentence of the bulleted paragraph under the in-line heading of “Digital Media, Content, and Marketing.” on page 3, page 78 and page 136, and the fifth sentence of the last paragraph under the heading of “Digital Media, Content, and Marketing” on page 152 to read as follows:

We also strategically acquired DigFin, which is not a significant subsidiary of ours, in July 2021, a journalism brand and a content agency established by Jamie DiBiasio, an award-winning financial journalist and author, whose stories analyze business models in digital finance, FinTech, and digital assets.

(3) Amend the last paragraph under the heading of “Overview” on page 4, page 79 and page 137 to read as follows:

We generate revenue primarily from fees and commissions from our digital financial services business and SpiderNet ecosystem solutions business during the fiscal years ended April 30, 2019, 2020, and 2021. We have achieved tremendous growth since the launch of our SpiderNet ecosystem solutions business in December 2017 as a result of the continued expansion and monetization of AMTD SpiderNet ecosystem. Our revenue increased significantly from HK$14.6 million for the fiscal year ended April 30, 2019 to HK$167.5 million for the fiscal year ended April 30, 2020, and to HK$195.8 million (US$25.2 million) for the fiscal year ended April 30, 2021. Our net profit increased significantly from HK$21.5 million for the fiscal year ended April 30, 2019 to HK$158.3 million for the fiscal year ended April 30, 2020, and to HK$171.6 million (US$ 22.1 million) for the fiscal year ended April 30, 2021. We continue to deepen and monetize our relationship with clients by cross-selling solutions that fill their unique needs.

(4) Replace the corporate structure diagram and its accompanying footnote appearing on page 7 and page 67 with the diagram and footnote as follows:

 

Note:

(1)

As of the date of this prospectus, AMTD Digital Holdings Pte. Ltd. holds 100% issued share capital of Singa Digital Pte. Ltd. Subject to certain regulatory approval, the execution of shareholders’ agreement and capital injection by all consortium partners, AMTD Digital Holdings Pte. Ltd.’s shareholding will become 35.2%.

 

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(5) Insert a new bulleted paragraph under the heading of “Risks Relating to Our Business and Industry” to be the third last bulleted paragraph on page 8 to read as follows:

 

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We may be subject to a variety of laws and other obligations, including those regarding cybersecurity and data protection, and failure to comply with any of them may result in proceedings against us by government authorities or others and harm our public image and reputation, which could materially and adversely affect our business, financial condition, and results of operations.

(6) Amend the second last bulleted paragraph on page 8 to read as follows:

 

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Our ADSs may be delisted under the Holding Foreign Companies Accountable Act if the Public Company Accounting Oversight Board, or the PCAOB, is unable to inspect auditors who are located in China. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment. Additionally, the inability of the PCAOB to conduct inspections deprives our investors with the benefits of such inspections. The work of our auditor as it relates to the China operations of itself and of any registrant that it serves is currently not inspected by the PCAOB.

(7) Insert a new bulleted paragraph under the heading of “Risks Relating to Our Business and Industry” to be the last bulleted paragraph on page 8 to read as follows:

 

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The PRC government has significant authority to regulate or intervene in the China operations of an offshore holding company at any time. A substantial extension of the PRC government’s oversight over our business operations or overseas listings may hinder our ability to offer or continue to offer the ADSs, result in a material adverse change to our business operations, and damage.

(8) Insert a new bulleted paragraph on page 9 to be the first bulleted paragraph to read as follows:

 

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Uncertainties arising from the legal system in China, including uncertainties regarding the interpretation and enforcement of PRC laws and quickly evolving regulations and rules, could hinder our ability to offer or continue to offer the ADSs, result in a material adverse change to our business operations, and damage our reputation, which would materially and adversely affect our financial condition and results of operations and cause the ADSs to significantly decline in value or become worthless.

(9) Amend the last paragraph on page 11 to read as follows:

Our reporting currency is Hong Kong dollars as most of our revenue is denominated in Hong Kong dollars. This prospectus contains translations of Hong Kong dollars into U.S. dollars solely for the convenience of the reader. The conversion of Hong Kong dollars into U.S. dollars are based on the exchange rates set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System. Unless otherwise noted, all translations from Hong Kong dollars to U.S. dollars and from U.S. dollars to Hong Kong dollars in this prospectus were made at a rate of HK$7.7664 to US$1.00, the noon buying rate in effect as of April 30, 2021. On August 20, 2021, the noon buying rate for Hong Kong dollars was HK$7.7897 to US$1.00.

(10) The section entitled “Summary Consolidated Financial Data” starting on page 14 is amended and replaced in its entirety to read as set forth on Exhibit A below.

(11) Amend the first paragraph of the risk factor under the heading of “We have a limited operating history and experience in our SpiderNet ecosystem solutions business, which makes it difficult to evaluate our business. We cannot assure you that the market for our services will develop as we expect or that we will be able to maintain the growth rate that we have experienced to date.” on page 18 to read as follows:

We commenced operations of our SpiderNet ecosystem solutions business in December 2017, primarily providing clients with exclusive paid membership access to the AMTD SpiderNet. Since then we have achieved rapid growth in terms of client base and revenue. For the fiscal years ended April 30, 2019, 2020, and 2021, our SpiderNet ecosystem solutions business accounted for 40.4%, 94.1%, and 94.0% of our total revenue, respectively. However, our limited operating history in our SpiderNet ecosystem solutions business may not be indicative of our future growth or financial results. There is no assurance that we will be able to maintain our historical growth rates in future periods. Our growth prospects should be considered in light of the risks and uncertainties that fast-growing companies with a limited operating history and experience in our industry may encounter, including, among others, risks and uncertainties regarding our ability to:

 

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(12) Amend the first sentence of the third paragraph of the risk factor under the heading of “We face additional risks as we offer new products and services, transact with a broader array of clients and counterparties, and expose ourselves to new geographical markets.” on page 19 to read as follows:

We completed the acquisition of PolicyPal in August 2020 and expect to complete the acquisition of CapBridge in the early part of 2022, subject to final negotiation of terms of the transaction, as well as MAS approval.

(13) Insert a new risk factor under the heading of “We may be subject to a variety of laws and other obligations, including those regarding cybersecurity and data protection, and failure to comply with any of them may result in proceedings against us by government authorities or others and harm our public image and reputation, which could materially and adversely affect our business, financial condition, and results of operations.” on page 22 to read as follows:

We may be subject to a variety of laws and other obligations covering extensive areas, including those relating to the collection, use, sharing, retention, security, and transfer of confidential and private information, such as personal information and other data. These laws apply not only to third-party transactions, but also to transfers of information within our organization. These laws continue to develop, and the governments in places where we operate may adopt other rules and restrictions that may be applicable to us in the future. Noncompliance could result in penalties or other significant legal liabilities.

On July 10, 2021, the CAC publicly issued the Measures for Cybersecurity Censorship (Revised Draft for Comments) aiming to, upon its enactment, replace the existing Measures for Cybersecurity Censorship. The draft measures extend the scope of cybersecurity review to data processing operators engaging in data processing activities that affect or may affect national security, including overseas listings. Currently, the period for public comment on the draft measures has ended, and the draft measures’ implementation provisions and anticipated adoption or effective date remain substantially uncertain. If the enacted version of the draft measures mandates clearance of cybersecurity review and other specific actions to be completed by companies operating in Hong Kong like us, we face uncertainties as to whether such clearance can be timely obtained, or at all. Although we have not engaged in any material operations in China, we face uncertainty as to whether we would be subject to cybersecurity review in the future. Cybersecurity review could result in disruption in our operations, negative publicity with respect to our company, and diversion of our managerial and financial resources. Furthermore, if we were found to be in violation of applicable laws and regulations in China during such review, we could be subject to government sanctions. Therefore, potential cybersecurity review, if applicable to us, could materially and adversely affect our business, financial condition, and results of operations.

 

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In addition, the PRC Data Security Law, which was promulgated by the Standing Committee of the National People’s Congress on June 10, 2021 and will take effect on September 1, 2021, requires data collection to be conducted in a legitimate and proper manner, and stipulates that, for the purpose of data protection, data processing activities must be conducted based on data classification and hierarchical protection system for data security. Furthermore, the recently issued Opinions on Strictly Cracking Down Illegal Securities Activities in Accordance with the Law require (i) speeding up the revision of the provisions on strengthening the confidentiality and archives management relating to overseas issuance and listing of securities and (ii) improving the laws and regulations relating to data security, cross-border data flow, and management of confidential information. As there remain uncertainties regarding the further interpretation and implementation of those laws and regulations, if they are deemed to be applicable to companies operating in Hong Kong like us, we cannot assure you that we will be compliant with such new regulations in all respects, and we may be ordered to rectify and terminate any actions that are deemed illegal by the government authorities and become subject to fines and other sanctions, which may materially and adversely affect our business, financial condition, and results of operations.

(14) Transpose the risk factor under the heading of “Our ADSs may be delisted under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect auditors who are located in China. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment. Additionally, the inability of the PCAOB to conduct inspections deprives our investors with the benefits of such inspections. The work of our auditor as it relates to the China operations of itself and of any registrant that it serves is currently not inspected by the PCAOB.” onto page 23 and amend such risk factor to read as follows:

The Holding Foreign Companies Accountable Act, or the HFCA Act, was enacted on December 18, 2020. Pursuant to the HFCA Act, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC must prohibit our shares or ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States.

Our auditor, the independent registered public accounting firm that issues the audit report included elsewhere in this prospectus, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. Since our auditor is located in Greater China, with operations in and who performs audit operations of registrants in China, a jurisdiction where the PCAOB has been unable to conduct inspections without the approval of the PRC authorities, the work of our auditor as it relates to those operations is currently not inspected by the PCAOB.

On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCA Act. We will be required to comply with these rules if the SEC identifies us as having a “non-inspection” year under a process to be subsequently established by the SEC. The SEC is assessing how to implement other requirements of the HFCA Act, including the listing and trading prohibition requirements described above.

 

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On June 22, 2021, the United States Senate passed a bill which, if passed by the United States House of Representatives and signed into law, would reduce the number of consecutive non-inspection years required for triggering the prohibitions under the HFCA Act from three years to two.

The SEC may propose additional rules or guidance that could impact us if our auditor is not subject to PCAOB inspection. For example, on August 6, 2020, the President’s Working Group on Financial Markets, or the PWG, issued the Report on Protecting United States Investors from Significant Risks from Chinese Companies to the then President of the United States. This report recommended the SEC implement five recommendations to address companies from jurisdictions that do not provide the PCAOB with sufficient access to fulfil its statutory mandate. Some of the concepts of these recommendations were implemented with the enactment of the HFCA Act. However, some of the recommendations were more stringent than the HFCA Act. For example, if a company was not subject to PCAOB inspection, the report recommended that the transition period before a company would be delisted would end on January 1, 2022.

The SEC has announced that the SEC staff is preparing a consolidated proposal for the rules regarding the implementation of the HFCA Act and to address the recommendations in the PWG report. It is unclear when the SEC will complete its rulemaking and when such rules will become effective and what, if any, of the PWG recommendations will be adopted. The implications of this possible regulation in addition the requirements of the HFCA Act are uncertain. Such uncertainty could cause the market price of our ADSs to be materially and adversely affected, and our securities could be delisted or prohibited from being traded “over-the-counter” earlier than would be required by the HFCA Act. If our securities are unable to be listed on another securities exchange by then, such a delisting would substantially impair your ability to sell or purchase our ADSs when you wish to do so, and the risk and uncertainty associated with a potential delisting would have a negative impact on the price of the ADSs.

The PCAOB’s inability to conduct inspections in China prevents it from fully evaluating the audits and quality control procedures of our independent registered public accounting firm. As a result, we and investors in the ADSs are deprived of the benefits of such PCAOB inspections. The inability of the PCAOB to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of our independent registered public accounting firm’s audit procedures or quality control procedures as compared to auditors outside of China that are subject to the PCAOB inspections, which could cause investors and potential investors in our stock to lose confidence in the audit procedures of our auditor and reported financial information and the quality of our financial statements.

In May 2013, the PCAOB announced that it had entered into a Memorandum of Understanding on Enforcement Cooperation with the CSRC and the PRC Ministry of Finance, which establishes a cooperative framework between the parties for the production and exchange of audit documents relevant to investigations undertaken by the PCAOB in China or by the CSRC or the PRC Ministry of Finance in the United States. The PCAOB continues to be in discussions with the CSRC and the PRC Ministry of Finance to permit joint inspections in China of audit firms that are registered with the PCAOB and audit Chinese companies that trade on U.S. exchanges.

 

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(15) Insert a new risk factor under the heading of “The PRC government has significant authority to regulate or intervene in the China operations of an offshore holding company at any time . A substantial extension of the PRC government’s oversight over our business operations or overseas listings may hinder our ability to offer or continue to offer the ADSs, result in a material adverse change to our business operations, and damage our reputation, which could cause the ADSs to significantly decline in value or become worthless.” on page 24 to read as follows:

Our business, prospects, financial condition, and results of operations may be influenced to a significant degree by political, economic, and social conditions in China generally. The PRC government has significant authority to regulate or intervene in the China operations of an offshore holding company at any time, which, if extended to companies operating in Hong Kong like us, could result in a material adverse change to our operations and the value of the ADSs. The PRC government has recently indicated an intent to exert more oversight over overseas listings and foreign investment in China-based issuers. We cannot assure you that the oversight will not be extended to companies operating in Hong Kong like us and any such action may hinder our ability to offer or continue to offer the ADSs, result in a material adverse change to our business operations, and damage our reputation, which could cause the ADSs to significantly decline in value or become worthless. See also “—We may be subject to a variety of laws and other obligations, including those regarding cybersecurity and data protection, and failure to comply with any of them may result in proceedings against us by government authorities or others and harm our public image and reputation, which could materially and adversely affect our business, financial condition, and results of operations.”

(16) Insert a new risk factor under the heading of “Uncertainties arising from the legal system in China, including uncertainties regarding the interpretation and enforcement of PRC laws and quickly evolving regulations and rules, could hinder our ability to offer or continue to offer the ADSs, result in a material adverse change to our business operations, and damage our reputation, which would materially and adversely affect our financial condition and results of operations and cause the ADSs to significantly decline in value or become worthless.” on page 25 to read as follows:

We may be affected directly or indirectly by PRC laws and regulations. The legal system in China is a civil law system based on written statutes. Unlike common law systems, it is a system in which decided legal cases may be cited for reference but have less precedential value. The legal system in China evolves rapidly, and laws, regulations, and legal requirements are constantly changing and may change with little advance notice and their interpretation and enforcement involve uncertainties. These uncertainties could limit the legal protections available to you and us. In addition, we cannot predict the effect of future developments in the PRC legal system, particularly with regard to new economies, including the promulgation of new laws, changes to existing laws or the interpretation or enforcement thereof, or the preemption of local regulations by national laws. Furthermore, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all. As a result, we may not be aware of our potential violation of these policies and rules. In addition, any administrative and court proceedings in China may be protracted and result in substantial costs and diversion of resources and management attention.

 

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New laws and regulations may be enacted from time to time and substantial uncertainties exist regarding the interpretation and implementation of current and any future PRC laws and regulations applicable to our businesses. In particular, the PRC government authorities may continue to promulgate new laws, regulations, rules and guidelines governing new economy companies with respect to a wide range of issues, such as intellectual property, unfair competition and antitrust, privacy and data protection, and other matters. Compliance with these laws, regulations, rules, guidelines, and implementations may be costly, and any incompliance or associated inquiries, investigations, and other governmental actions may divert significant management time and attention and our financial resources, bring negative publicity, subject us to liabilities or administrative penalties, or materially and adversely affect our business, financial condition, results of operations, and the value of the ADSs.

(17) Amend the first sentence of the risk factor under the heading of “A significant portion of our income is contributed by a limited number of clients. If we cannot retain these clients for any reason or expand our client base, our income may decrease and our financial condition and results of operations may be materially and adversely affected.” on page 27 to read as follows:

For the fiscal years ended April 30, 2019, 2020, and 2021, the top five clients in terms of overall income contribution aggregately accounted for 56.6%, 78.0%, and 41.5 % of our total revenue, respectively.

(18) Amend the first paragraph of the risk factor under the heading of “Our results of operations may be materially affected by fluctuations in the fair value of our equity investments in our investee companies.” on page 30 to read as follows:

We have made equity investments in private companies and recognize changes in fair value on financial assets measured at FVTPL on our consolidated statement of profit or loss. For the fiscal years ended April 30, 2019, 2020, and 2021, changes in fair value on financial assets measured at FVTPL from our digital investments business and digital media, content, and marketing business accounted for 89.7%, 27.5%, and 41.0 % of our profit for the year, respectively. Fair value of our equity investments is subject to market fluctuations due to changes in the market prices of securities, interest rates, or other market factors, such as liquidity. While we may seek to hedge the market risk for some of these investments, an effective hedge may not be available, and if available, may not be fully effective. We measure their fair value based on an assessment of each underlying security, considering rounds of financing, third-party transactions, and market-based information, including comparable company transactions, trading multiples, and changes in market outlook.

 

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(19) Amend the risk factor under the heading of “We have identified a material weakness in our internal control over financial reporting, and if we fail to implement and maintain an effective system of internal control to remediate our material weakness over financial reporting, we may be unable to accurately report our results of operations, meet our reporting obligations, or prevent fraud.” on page 38 and page 39 to read as follows:

Prior to this offering, we have been a private company with limited accounting personnel and other resources with which to address our internal control. Our management has not completed an assessment of the effectiveness of our internal control over financial reporting and our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting. In the course of auditing our consolidated financial statements as of and for the years ended April 30, 2019, 2020 and 2021, we and our independent registered public accounting firm identified a material weakness in our internal control over financial reporting as well as other control deficiencies as of April 30, 2019, 2020 and 2021, in accordance with the standards established by the U.S. Public Company Accounting Oversight Board. As defined in the standards established by the U.S. Public Company Accounting Oversight Board, a “material weakness” is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

The material weakness identified is relating to lack of internal audit function to monitor, evaluate and communicate internal control deficiencies. We plan to implement a number of measures to address the material weakness that has been identified. For a discussion of these measures, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Internal Control Over Financial Reporting.” We cannot assure you, however, that these measures may fully address the material weakness in our internal control over financial reporting or that we may not identify additional material weaknesses or significant deficiencies in the future.

Upon completion of this offering, we will become a public company in the United States subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act, or Section 404, will require that we include a report from management on the effectiveness of our internal control over financial reporting in our annual report on Form 20-F beginning with our annual report for the fiscal year ending April 30, 2023. In addition, once we cease to be an “emerging growth company” as such term is defined in the JOBS Act, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our internal control or the level at which our control is documented, designed, operated, or reviewed, or if it interprets the relevant requirements differently from us. In addition, after we become a public company, our reporting obligations may place a significant strain on our management, operational, and financial resources and systems for the foreseeable future. We may be unable to timely complete our evaluation testing and any required remediation.

 

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During the course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404, we may identify other weaknesses and deficiencies in our internal control over financial reporting. In addition, if we fail to maintain adequate system of internal control over financial reporting, as these standards are modified, supplemented, or amended from time to time, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404. If we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information. This could in turn limit our access to capital markets, harm our results of operations, and lead to a decline in the trading price of our ADSs. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal sanctions. We may also be required to restate our financial statements from prior periods.

(20) Amend the first paragraph of the risk factor under the heading of “Any failure to protect our intellectual property could harm our business and competitive position.” on page 39 to read as follows:

We maintain a number of registered domain names. As of the date of this prospectus, we had one trademark registered in Hong Kong an two trademarks registered in Singapore. We may in the future acquire new intellectual property such as trademarks, copyrights, domain names, and know-how. We will rely on a combination of intellectual property laws and contractual arrangements to protect our intellectual property rights. It is possible that third parties may copy or otherwise obtain and use our trademarks without authorization or otherwise infringe on our rights. We may not be able to successfully pursue claims for infringement that interfere with our ability to use our trademarks, website, or other relevant intellectual property or have adverse impact on our brand. We cannot assure you that any of our intellectual property rights would not be challenged, invalidated, or circumvented, or such intellectual property will be sufficient to provide us with competitive advantages. In addition, other parties may misappropriate our intellectual property rights, which would cause us to suffer economic or reputational damages.

(21) Amend the risk factor under the heading of “Our agreements with our Controlling Shareholder or any of its controlling shareholders may be less favorable to us than similar agreements negotiated between unaffiliated third parties. In particular, our non-competition agreement with our Controlling Shareholder limits the scope of business that we are allowed to conduct.” on page 42 to read as follows:

In May 2021, we entered into a series of agreements with our Controlling Shareholder and the terms of such agreements may be less favorable to us than would be the case if they were negotiated with unaffiliated third parties. In particular, under the non-competition agreement that we entered into with our Controlling Shareholder, we agree during the non-competition period (which will end on the later of (1) two years after the first date when our Controlling Shareholder ceases to own in aggregate at least 20% of the voting power of our then outstanding securities and (2) the fifth anniversary of the completion of this offering) not to compete with our Controlling Shareholder in the businesses then conducted by our Controlling Shareholder, except that we may own non-controlling equity interest in any company competing with our Controlling Shareholder. Such contractual limitations significantly affect our ability to diversify our revenue sources and may materially and adversely impact our business and prospects should the growth of our businesses slow down. In addition, pursuant to our master transaction agreement that we entered into with our Controlling Shareholder, we agree to indemnify our Controlling Shareholder for liabilities arising from litigation and other contingencies related to our business and assumed these liabilities as part of our restructuring. The allocation of assets and liabilities between our Controlling Shareholder and our company may not reflect the allocation that would have been reached by two unaffiliated parties. Moreover, so long as our Controlling Shareholder continues to control us, we may not be able to bring a legal claim against our Controlling Shareholder or its controlling shareholders in the event of contractual breach, notwithstanding our contractual rights under the agreements described above and other intercompany agreements we may enter into from time to time.

 

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(22) Amend the risk factor under the heading of “Because our initial public offering price is substantially higher than our net tangible book value per share, you will experience immediate and substantial dilution.” on page 48 to read as follows:

If you purchase ADSs in this offering, you will pay more for your ADSs than the amount paid by existing shareholders for their ordinary shares on a per ADS or per share basis. As a result, you will experience immediate and substantial dilution of approximately US$4.97 per ADS or US$12.42 per share (assuming no exercise of outstanding options to acquire ordinary shares), representing the difference between (i) our as adjusted net tangible book value per ADS of US$2.53 as of April 30, 2021 after giving effect to this offering, and (ii) the assumed initial public offering price per share of US$7.50 per ADS (the midpoint of the estimated initial public offering price range set forth on the front cover page of this prospectus). In addition, you may experience further dilution to the extent that our ordinary shares are issued upon the exercise of share options. Substantially all of the ordinary shares issuable upon the exercise of currently outstanding share options will be issued at a purchase price on a per ADS or per share basis that is less than the initial public offering price per ADS in this offering. See “Dilution” for a more complete description of how the value of your investment in the ADSs will be diluted upon the completion of this offering.

(23) Amend the risk factor under the heading of “We have not determined a specific use for a portion of the net proceeds from this offering, and we may use these proceeds in ways with which you may not agree.” on page 53 to read as follows:

As of April 30, 2021, we had HK$416.4 million (US$53.6 million) in cash and cash equivalents. We expect our cash and cash equivalents immediately after the completion of this offering to be HK$1,258.9 million (US$162.1 million), based upon an assumed initial public offering price of US$7.50 per ADS, which is the midpoint of the estimated initial public offering price range set forth on the front cover page of this prospectus. We have not determined a specific use for a portion of the net proceeds of this offering, and our management will have considerable discretion in deciding how to apply these proceeds. You will not have the opportunity to assess whether the proceeds are being used appropriately before you make your investment decision. You must rely on the judgment of our management regarding the application of the net proceeds of this offering. We cannot assure you that the net proceeds will be used in a manner that will improve our results of operations or increase the ADS price, nor that these net proceeds will be placed only in investments that generate income or appreciate in value.

 

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(24) The section entitled “Capitalization” on page 59 is amended in its entirety to read as set forth on Exhibit B below.

(25) The section entitled “Dilution” starting on page 60 is amended in its entirety to read as set forth on Exhibit C below.

(26) Amend the fifth paragraph under the heading of “Digital Financial Services” on page 68 to read as follows:

Also in June 2020, we entered into a binding term sheet pursuant to which we expect to acquire 55% of CapBridge Financial Pte. Ltd.’s equity interest. We expect to complete the proposed acquisition in the early part of 2022. The completion of our proposed acquisition of CapBridge is subject to a number of conditions, including negotiation of terms of the transaction, MAS approval, and satisfaction of our closing obligations.

(27) Amend the first paragraph under the heading of on page 69 to read as follows:

The following table sets forth the name change history and licenses held by our company and subsidiaries (the proposed acquisition of CapBridge is subject to negotiation of terms of the transactions, MAS approval, and satisfaction of our closing conditions).

(28) Amend the first paragraph under the heading of “Our Relationship with the Controlling Shareholder and Other Group Companies” on page 73 to read as follows:

AMTD Digital is the core of the AMTD SpiderNet, and hence, we have created a shareholding structure where the interest of all AMTD Group companies’ interests are aligned with those of AMTD Digital, ensuring seamless cooperation between the group companies and that maximum synergies will be achieved. As of the date of this prospectus, AMTD Digital Inc. is effectively 72.2%-owned by our Controlling Shareholder and its subsidiaries in aggregate, with our Controlling Shareholder owning 29.4%, AMTD International owning 10.4%, AMTD Education Group, or AMTD Education, owning 16.2%, and AMTD Assets owning 16.2% of our equity interests.

(29) Amend the first paragraph under the heading of “Our ability to expand into new markets and offer new products and services” on page 80 to read as follows:

Digital financial services business is a highly regulated industry, and digital financial licenses are generally regulated separately across different product types and different regions. In order to provide one-stop crossregional digital financial services that meet the evolving needs of clients, it is important for us to obtain licenses from multiple regulatory regimes. We expanded our digital financial services operations in 2020 with the acquisition of PolicyPal, and plan to continue to expand through the proposed acquisition of CapBridge (currently subject to negotiation of terms of the transaction, as well as MAS approval), and the proposed establishment of Singa Bank and Applaud (currently subject to MAS approval). In the future, we may consider to apply for banking licenses in other ASEAN countries such as Malaysia, Vietnam, and Indonesia, as regulations allow, and may also consider to obtain financial licenses in other areas, such as digital insurance, digital assets exchange, and digital payment. If we are unable to expand into new markets, our future results of operations could be affected.

(30) Amend the last sentence under the heading of “Our future capabilities to provide insightful information to support our clients’ strategic decisions” on page 80 to read as follows:

Our SpiderNet ecosystem solutions income increased from HK$5.9 million for the fiscal year ended April 30, 2019 to HK$157.7 million for the fiscal year ended April 30, 2020, and to HK$184.1 million (US$23.7 million) for the fiscal year ended April 30, 2021.

(31) Amend the disclosures under the heading of “Our ability to attract, retain, and motivate talents” on page 81 to read as follows:

It is essential for us to attract, retain, and motivate talent because our businesses are human capital intensive. We believe that it is necessary and customary to invest in talents, arguably our most important assets, with attractive compensation packages, as we compete to attract, retain, and motivate qualified employees. Key members of our management are also shareholders of our company, ensuring that interests and incentives are aligned with our performance. Our staff costs for the fiscal years ended April 30, 2019, 2020, and 2021 were HK$9.2 million, HK$15.2 million, and HK$48.0 million (US$6.2 million), respectively, representing 63.0%, 9.1%, and 24.5% of our total revenue for the corresponding periods. Our staff costs have historically been comprised of cash-based and share-based compensation and benefits. Nevertheless, highly incentivized professionals and other talents could potentially enable us to achieve great business prospects and results of operations.

 

12

(32) Replace the table under the heading of “Results of Operation” and its accompanying footnote on page 83 with the table and footnote below:

 

		For the Fiscal Year Ended April 30,
		2019				2020				2021
		(in thousands)
		HK$				HK$				HK$				US$
Revenue			14,554				167,547				195,816				25,213
Employee benefits expense			(9,169	)			(15,168	)			(48,026	)			(6,184	)
Advertising and promotion expense			—	*			—	*			(2,547	)			(328	)
Premises and office expenses			(1,541	)			(4,737	)			(5,230	)			(673	)
Legal and professional fee			(2,650	)			(1,952	)			(6,850	)			(882	)
Depreciation and amortization			—				—				(4,896	)			(630	)
Other expenses			(672	)			(1,649	)			(3,323	)			(428	)
Changes in fair value on financial assets measured at FVTPL			19,319				43,592				70,291				9,051
Other income			252				—				1,323				170
Other gains and losses, net			2,058				(5,586	)			(306	)			(39	)
Profit before tax			22,151				182,047				196,252				25,270
Income tax expense			(607	)			(23,715	)			(24,611	)			(3,169	)
Profit for the year			21,544				158,332				171,641				22,101
Item that may be reclassified subsequently to profit or loss:
Exchange differences arising on translation of foreign operation			—				—				828				107
Other comprehensive income for the year			—				—				828				107
Total comprehensive income for the year			21,544				158,332				172,469				22,208

 

Note:

*	The advertising and promotion expenses for the fiscal years ended April 30, 2019 and 2020 were insignificant and included in other expenses.

(33) Replace the table under the heading of “Segment Information” and its accompanying footnote on page 84 with the table and footnote below:

 

		For the Fiscal Year Ended April 30,
		2019				2020				2021
		(in thousands)
		HK$				HK$				HK$				US$
Digital Financial Services
Segment revenue			8,671				9,869				11,721				1,509
Segment result			1,863				4,765				1,084				140
SpiderNet Ecosystem Solutions
Segment revenue			5,883				157,678				184,095				23,704
Segment result			1,945				140,134				144,276				18,577
Corporate (including digital investments business and digital media, content, and marketing business)
Changes in fair value on financial assets measured at FVTPL			19,319				43,592				70,291				9,051
Segment result			19,062				43,291				70,800				9,116
Total segment result			22,870				188,190				216,160				27,833

 

Note:

(1)	Segment result represents segment revenue and changes in fair value on financial assets measured at FVTPLs less direct cost attributable to the applicable segment.

(34) Insert a section under the heading of “Fiscal year ended April 30, 2021 Compared to Fiscal year ended April 30, 2020” on page 84 to read as set forth in Exhibit D below.

 

13

(35) Amend the first three paragraphs under the heading of “Liquidity and Capital Resources” on page 92 to read as follows:

Prior to this offering, our principal sources of liquidity to finance our operating and investing activities have been net cash provided from operating activities, funding from our Controlling Shareholder, and historical equity financing activities. As of April 30, 2021, we had HK$416.4 million (US$53.6 million) in cash and cash equivalents, out of which HK$306.4 million (US$39.5 million) was held in U.S. dollars, HK$90.9 million (US$11.7 million) was held in Hong Kong dollars, HK$19.1 million (US$2.4 million) was held in Singapore dollars. Our cash and cash equivalents primarily consist of cash on hand and general bank balances excluding fiduciary bank balances representing client’s cash, which are unrestricted for withdrawal or use.

Our total indebtedness was nil as of April 30, 2021.

Our net cash generated from operating activities for the fiscal years ended April 30, 2019, 2020, and 2021 was HK$24.6 million, HK$213.8 million, and HK$82.9 million (US$10.7 million), respectively. We believe that our current cash and cash equivalents and our anticipated cash flows from operations will be sufficient to meet our anticipated working capital requirements and capital expenditures at least for the next 12 months from the date of this prospectus. After this offering, we may decide to enhance our liquidity position or increase our cash reserve for future operations and investments through additional financing. The issuance and sale of additional equity would result in further dilution to our shareholders. The incurrence of indebtedness would result in an increase in fixed obligations and could result in operating covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.

(36) Replace the table under the heading of “Cashflow” on page 92 with the table below:

 

		For the Fiscal Year Ended April 30,
		2019				2020				2021
		(in thousands)
		HK$				HK$				HK$				US$
Summary Consolidated Cash Flows Data
Net cash generated from operating activities			24,556				213,755				82,901				10,674
Net cash (used in) from investing activities			(3,071,469	)			(674,500	)			128,167				16,503
Net cash from financing activities			2,682,623				651,191				7,894				1,016
Net (decrease)/increase in cash and cash equivalents			(364,290	)			190,446				218,962				28,193
Cash and cash equivalents at the beginning of the year			370,054				5,764				196,210				25,264
Effect of foreign exchange rate changes			—				—				1,248				161
Cash and cash equivalents at the end of the year			5,764				196,210				416,420				53,618

 

14

(37) Amend the first and the second paragraphs under the heading of “Operating Activities” on page 92 to read as follows:

Net cash generated from operating activities for the fiscal year ended April 30, 2021 was HK$82.9 million (US$10.7 million), which consists of our profit before tax of HK$196.3 million (US$25.3 million) as adjusted for non-cash items and the effects of changes in operating assets and liabilities. Adjustments for non-cash items included HK$70.3 million (US$9.1 million) of changes in fair value on financial assets measured at FVTPL in connection with our digital investments business and digital media, content, and marketing business included in the corporate segment, HK$4.9 million (US$0.6 million) of depreciation and amortization, and HK$0.9 million (US$0.1 million) of share-based payment. The principal items accounting for the changes in operating assets and liabilities were (i) HK$58.3 million (US$7.5 million) of increase in account receivables primarily attributable to the increase in SpiderNet ecosystem solutions income, (ii) HK$12.5 million (US$1.6 million) of decrease in prepayments and other receivables primarily attributable to the decrease in prepayment, (iii) HK$18.0 million (US$2.3 million) of decrease in other payables and accruals primarily attributable to the decrease in other payables, and (iv) HK$9.3 million (US$1.2 million) of increase in contract liabilities primarily attributable to the receipts in advance of SpiderNet ecosystem solutions income.

Net cash generated from operating activities for the fiscal year ended April 30, 2020 was HK$213.8 million, which consists of our profit before tax of HK$182.0 million as adjusted for non-cash items and the effects of changes in operating assets and liabilities. Adjustments for non-cash items included HK$43.6 million of changes in fair value on financial assets measured at FVTPL in connection with our digital investments business and HK$5.9 million of fair value change from derivative financial liability. The principal item accounting for the changes in operating assets and liabilities was HK$60.6 million of increase in contract liabilities primarily attributable to the receipts in advance of SpiderNet ecosystem solutions income.

(38) Amend the first and the second paragraphs under the heading of “Investing Activities” on page 93 to read as follows:

Net cash used in investing activities for the fiscal year ended April 30, 2021 was HK$128.2 million (US$16.5 million), which was attributable to (i) HK$77.8 million (US$10.0 million) of collection of proceeds from disposal of investments and HK$50.6 million (US$6.5 million) of payments for additions of financial assets at fair value through profit or loss, (ii) net cash inflow from acquisition of subsidiaries of HK$20.7 million (US$2.7 million), and (iii) HK$80.2 million (US$10.3 million) net cash inflow of movement in amounts due from group companies in connection with intra-group treasury fund allocation.

Net cash used in investing activities for the fiscal year ended April 30, 2020 was HK$674.5 million, which was attributable to (i) HK$318.1 million of proceeds from disposal of financial assets at fair value through profit or loss, and (ii) HK$1,008.2 million of movement in amounts due from group companies in connection with intra-group treasury fund allocation.

(39) Amend the first and the second paragraphs under the heading of “Financing Activities” on page 93 to read as follows:

Net cash from financing activities for the fiscal year ended April 30, 2021 was HK$7.9 million (US$1.0 million), which was attributable to (i) HK$27.1 million (US$3.5 million) through issuance of ordinary shares, and (ii) HK$19.2 million (US$2.5 million) net cash outflow of movement in amounts due to group companies in connection with intra-group treasury fund allocation.

 

15

Net cash from financing activities for the fiscal year ended April 30, 2020 was HK$651.2 million, which was attributable to (i) HK$987.8 million through ordinary shares issuance and exercise of warrants, and (ii) HK$316.6 million of movement in amounts due to group companies in connection with intra-group treasury fund allocation.

(40) Amend the disclosures under the heading of “Capital expenditure” on page 94 to read as follows:

Our capital expenditure was nil for the fiscal years ended April 30, 2019 and 2020, and HK$0.2 million (US$25.8 thousand) for the fiscal year ended April 30, 2021. We will make capital expenditure to meet the expected growth of our business. We intend to fund our future capital expenditure with our existing cash and bank balances.

(41) Amend the second paragraph under the heading of “Contractual obligations” on page 94 to read as follows:

In June 2020, we entered into a binding term sheet pursuant to which we expect to acquire 55% of CapBridge Financial Pte. Ltd.’s equity interest. We expect to complete the proposed acquisition in the early part of 2022. The completion of our proposed acquisition of CapBridge is subject to a number of conditions, including negotiation of terms of the transaction, MAS approval, and satisfaction of our closing obligation

(42) Amend the first, second, third, and fourth paragraphs under the heading of “Internal Control Over Financial Reporting” on page 99 to read as follows:

Prior to this offering, we have been a private company with limited accounting personnel and other resources with which to address our internal control. Our management has not completed an assessment of the effectiveness of our internal control and procedures over financial reporting and our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting. In the course of auditing our consolidated financial statements as of April 30, 2019, 2020, and 2021. For the fiscal years ended April 30, 2019, 2020, and 2021, we and our independent registered public accounting firm identified one material weakness in our internal control over financial reporting as of April 30, 2019, 2020, and 2021. As defined in the standards established by the U.S. Public Company Accounting Oversight Board, a “material weakness” is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our company’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

The material weakness identified is relating to lack of internal audit function to monitor, evaluate and communicate internal control deficiencies. Neither we nor our independent registered public accounting firm undertook a comprehensive assessment of our internal control under the Sarbanes-Oxley Act for purposes of identifying and reporting any weakness in our internal control over financial reporting. We and they are required to do so only after we become a public company. Had we performed a formal assessment of our internal control over financial reporting or had our independent registered public accounting firm performed an audit of our internal control over financial reporting, additional control deficiencies may have been identified.

 

16

To remediate our identified material weakness subsequent to April 30, 2019, 2020, and 2021, we plan to adopt measures to improve our internal control over financial reporting, including, among others: establishing an internal audit department with sufficient resources and experienced personnel to design, review and monitor internal control over financial reporting.

However, we cannot assure you that all these measures will be sufficient to remediate our material weakness in time, or at all. See “Risk Factors—Risks Relating to Our Business and Industry—We have identified a material weakness in our internal control over financial reporting, and if we fail implement and maintain a effective system of internal control to remediate our material weakness over financial reporting, we may be unable to accurately report our results of operations, meet our reporting obligations, or prevent fraud.”

(43) Amend the first paragraph under the heading of “Inflation” on page 100 to read as follows:

To date, inflation in Singapore and Hong Kong has not materially affected our results of operations. According to the Singapore Department of Statistics, the year-over-year percent changes in the consumer price index for April 30, 2019 was increase of 0.9%, for April 30, 2020 was decrease of 0.7%, and for April 30, 2021 was increase of 2.1%. According to the Census and Statistics Department of Hong Kong, the year-over-year percent changes in the consumer price index for April 30, 2019, 2020, and 2021 were increases of 2.9%, 1.9%, and 0.8%, respectively. Although we have not been materially affected by inflation in the past, we may be affected if Singapore or Hong Kong experiences higher rates of inflation in the future.

(44) Replace the diagram entitled “Key Players and Their Characteristics in Digital Banking Industry in Major Countries and Regions in Asia, as of December 2020” appearing on page 111 with the diagram below:

Key Players and Their Characteristics in Digital Banking Industry in Major Countries and Regions in Asia, as of December 2020

 

 

Source: China Insights Consultancy

(45) Amend the second paragraph under the heading of “Unique SpiderNet ecosystem solutions business offering valuable propositions to entrepreneurs and corporates” on page 140 to read as follows:

The ability of our SpiderNet ecosystem solutions services is rapidly gaining recognition amongst Asia’s corporate clients, especially clients in new economy sectors and investors, leading to rapid growth in our client base and revenue. For the fiscal year ended April 30, 2021, our SpiderNet ecosystem solutions business income was HK$184.1 million (US$23.7 million).

 

17

(46) Amend the first paragraph under the heading of “PolicyPal” on page 147 and page 148 to read as follows:

We have acquired a controlling interest in PolicyPal Pte. Ltd., a digital insurance technology platform for consumers and SME clients in Singapore via our fusion-in program in August 2020. The acquisition has been accounted for using the acquisition method and we have consolidated PolicyPal’s financial results into our financial statements since August 3, 2020, the date of acquisition. The amount of provisional goodwill arising as a result of the acquisition was HK$58.7 million. As part of our fusion-in approach, we invested in PolicyPal Pte. Ltd. with equity swap combined with cash investment and added PolicyPal into AMTD SpiderNet. BaoXianBaoBao Pte. Ltd. the wholly subsidiary of PolicyPal Pte. Ltd., is a registered insurance broker with respect to direct insurance and an exempt financial advisor in relation to advising on investment products that are life policies and arranging of life policies in Singapore, other than for reinsurance.

(47) Amend the second paragraph under the heading of “AFIN” on page 155 to read as follows:

AFIN launched the API Exchange (APIX) platform in 2018, the world’s first cross-border, open architecture platform for collaboration between FinTech and financing institutions in which participants can integrate and test solutions with each other via a cloud-based architecture. We will leverage the APIX platform launched by AFIN to deploy innovative digital solutions. APIX is built to facilitate collaboration between FinTech companies and financial institutions to design fintech solutions. APIX currently has over 60 financial institutions and over 600 FinTech companies registered on its platform. APIX facilitates financial institutions and FinTech companies to design and build prototypes collaboratively on its platform and experiment in different scenarios through APIs in a short period of time. This allows financial institutions to deploy innovative digital solutions quickly to underserved markets in ASEAN and other parts of the world.

(48) Replace the table following the heading of “Employee” on page 157 with the table below:

 

Function		Number of Employees				Percentage
Senior management			4				7.8%
Frontline staff			36				70.6%
Supporting staff			11				21.6%
Total			51				100.0%

(49) Amend the last paragraph under the heading of “Licensing Regime for Capital Markets Services Under the SFA” on page 167 to read as follows:

CapBridge Pte. Ltd., which we propose to acquire, holds a capital markets services license in respect of dealing in capital markets products that are securities and collective investment schemes. By virtue of its status as a capital markets services licensee, CapBridge Pte. Ltd. is also an exempt financial advisor and has notified the MAS in respect of advising on investment products that are securities and collective investment schemes, and issuing or promulgating analyses / reports on securities and collective investment schemes. The completion of our proposed acquisition of CapBridge is subject to negotiation of terms of the transaction and a number of conditions, including regulatory approvals from the MAS and satisfaction of our closing obligations.

(50) Amend the first paragraph under the heading of “Compensation of Directors and Executive Officers” on page 186 to read as follows:

For the fiscal year ended April 30, 2021, we incurred an aggregate of HK$6.1 million (US$0.8 million) in cash and benefits to our directors and executive officers.

(51) Amend the disclosures under the heading of “Transactions with Our Controlling Shareholder” on page 191 to read as follows:

Our Controlling Shareholder recharged premises costs, office utilities and office renovation, staff cost, and certain other operating expenses to us. For the fiscal year ended April 30, 2021, the total amount of recharge from our Controlling Shareholder for the aforementioned costs and expenses was HK$6.2 million (US$0.8 million).

We provided our Controlling Shareholder with insurance brokerage services. For the fiscal year ended April 30, 2021, the total amount of insurance brokerage commissions that we charged our Controlling Shareholder was HK$477.0 thousand (US$61.4 thousand).

 

18

In October 2020, we entered into an agreement with our Controlling Shareholder, pursuant to which we agree to provide SpiderNet ecosystem solutions services to support the management of its 10% investee company, Airstar Bank, for a fixed annual service fee of HK$12.8 million. In addition to the fixed annual service fee, we are entitled to receive 15% of all distributions, in any form, received by our Controlling Shareholder from Airstar Bank, including but not limited to cash or share dividends, regardless of whether on a regular or one-off basis. We are also entitled to receive 15% of any profit generated by our Controlling Shareholder from the disposal of any shares of Airstar Bank. However, we are not liable for any loss arising from the disposal of any shares of Airstar Bank by our Controlling Shareholder. This agreement with our Controlling Shareholder will remain effective until terminated by mutual agreement. For the fiscal year ended April 30, 2021, the total amount of SpiderNet ecosystem solutions services income that we charged our Controlling Shareholder was HK$7.5 million (US$1.0 million).

(52) Amend the disclosures under the heading of “Other Transactions with Related Parties and Non-controlling Shareholders” on page 191 to read as follows:

Treasury functions are conducted centrally under our Controlling Shareholder and intra-group treasury fund transfers were carried out among the entities within AMTD Group. The treasury function manages available funds at our Controlling Shareholder level and allocates the funds to various entities within AMTD Group for their operations. For the fiscal year ended April 30, 2021, the amount due from group companies in connection with intra-group treasury fund allocation was HK$2,138.7 million (US$275.4 million).

We provide our fellow subsidiary with insurance brokerage services. For the fiscal year ended April 30, 2021, the total amount of insurance brokerage commission that we charged our fellow subsidiary was HK$87.0 thousand (US$11.2 thousand).

We provide our non-controlling shareholders and a related party SpiderNet ecosystem solutions services. For the fiscal year ended April 30, 2021, the total amounts of service fees that we charged our non-controlling shareholders and a related party were HK$38.8 million (US$5.0 million) and HK$5.0 million (US$0.6 million), respectively.

(53) Amend the table under the section entitled “Expenses Related to the Offering” on page 235 to read as follows:

 

		Estimated Expenses
SEC Registration Fee		US$	16,461
FINRA Filing Fee			23,132
NYSE Application and Listing Fee			150,000
Printing and Engraving Expenses			138,000
Legal Fees and Expenses			2,360,000
Accounting Fees and Expenses			901,319
Miscellaneous			73,000
Total		US$	3,661,912

(54) Amend the first paragraph of the section entitled “Experts” on page 237 to read as follows:

The financial statements included in this prospectus have been audited by Deloitte Touche Tohmatsu, an independent registered public accounting firm, as stated in their report appearing herein (such report expresses an unqualified opinion on the financial statements and includes an emphasis of a matter paragraph noting that the financial statements may not necessarily be indicative of the conditions that would have existed or the results of operations and cashflows if AMTD Digital, Inc. had operated as a stand-alone group during the periods presented). Such financial statements are included in reliance upon the report of such firm given upon their \authority as experts in accounting and auditing.

(55) Disclosures on page F-1 through page F-57 are amended and repalced in their entirety to read as set forth on Exhibit E below.

(56) In addition to the foregoing, disclosures set forth elsewhere in the prospectus are generally updated to reflect the availability and addition of our consolidated financial results for the fiscal year ended April 30, 2021.

 

19

Exhibit A

Summary Consolidated Financial Data

The following summary consolidated statements of profit or loss and other comprehensive income data and summary consolidated cash flows data for the fiscal years ended April 30, 2019, 2020, and 2021 and summary consolidated statements of financial position data as of April 30, 2019, 2020, and 2021 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. You should read this “Summary Consolidated Financial Data” section together with our consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus. Our consolidated financial statements are prepared and presented in accordance with International Financial Reporting Standards, or IFRS, issued by the International Accounting Standard Board, or IASB. Our historical results of operations are not necessarily indicative of results of operations expected for future periods.

The following table presents our summary consolidated statement of profit or loss and other comprehensive income data for the periods indicated.

 

		For the Fiscal Year Ended April 30,
		2019								2020								2021
		HK$				%				HK$				%				HK$				US$				%
		(in thousands, except for percentages and per share data)
Summary Consolidated Statements of Profit or Loss and Other Comprehensive Income Data
Revenue from contracts with customers			14,554				100.0				167,547				100.0				195,816				25,213				100.0
Employee benefits expense			(9,169	)			(63.0	)			(15,168	)			(9.1	)			(48,026)				(6,184)				(24.5)
Advertising and promotion expense			—	*			—	*			—	*			—	*			(2,547)				(328)				(1.3)
Premises and office expenses			(1,541	)			(10.6	)			(4,737	)			(2.8	)			(5,230)				(673)				(2.7)
Legal and professional fee			(2,650	)			(18.2	)			(1,952	)			(1.2	)			(6,850)				(882)				(3.5)
Depreciation and amortization			—				—				—				—				(4,896)				(630)				(2.5)
Other expenses			(672	)			(4.6	)			(1,649	)			(1.0	)			(3,323)				(428)				(1.7)
Changes in fair value on financial assets measured at fair value through profit or loss (“FVTPL”)			19,319				132.7				43,592				26.0				70,291				9,051				35.9
Other income			252				1.7				—				—				1,323				170				0.7
Other gains and losses, net			2,058				14.1				(5,586	)			(3.3	)			(306)				(39)				(0.2)
Profit before tax			22,151				152.1				182,047				108.6				196,252				25,270				100.2
Income tax expense			(607	)			(4.1	)			(23,715	)			(14.1	)			(24,611)				(3,169)				(12.6)
Profit for the year			21,544				148.0				158,332				94.5				171,641				22,101				87.6

 

Note:

*	The advertising and promotion expenses for the fiscal years ended April 30, 2019 and 2020, are insignificant and included in other expenses.

 

20

		For the Fiscal Year Ended April 30,
		2019								2020								2021
		HK$				%				HK$				%				HK$				US$				%
		(in thousands, except for percentages and per share data)
Item that may be reclassified subsequently to profit or loss:
Exchange differences arising on translation of foreign operations			—				—				—				—				828				107				0.4
Other comprehensive income for the year			—				—				—				—				828				107				0.4
Total comprehensive income for the year			21,544				148.0				158,332				94.5				172,469				22,208				88.0
Profit (loss) for the year attributable to:
- Owners of the Company			17,601				120.9				151,362				90.3				177,865				22,902				90.8
- Non-controlling interests			3,943				27.1				6,970				4.2				(6,224	)			(801	)			(3.2	)
			21,544				148.0				158,332				94.5				171,641				22,101				87.6
Total comprehensive income (expense) for the year attributable to:
- Owners of the Company			17,601				120.9				151,362				90.3				178,315				22,960				91.0
- Non-controlling interests			3,943				27.1				6,970				4.2				(5,846	)			(752	)			(3.0	)
			21,544				148.0				158,332				94.5				172,469				22,208				88.0
Earnings per share
Basic			0.48								3.77								3.36				0.43
Diluted			N/A								3.77								3.36				0.43

After the completion of the restructuring in December 2019, AMTD Digital Inc. became the holding company of our digital financial services, SpiderNet ecosystem solutions, and digital investments businesses, which have been operated under the common control of our Controlling Shareholder.

The following table presents our summary consolidated statements of financial position data as of the dates indicated.

 

		As of April 30,
		2019				2020				2021
		HK$				HK$				HK$				US$
		(in thousands)
Summary Consolidated Statements of Financial Position Data
Total non-current assets			183,538				208,696				408,811				52,638
Total current assets			5,709,271				3,386,366				2,658,260				342,277
Total assets			5,892,809				3,595,062				3,067,071				394,915
Total non-current liabilities			—				25,276				38,062				4,901
Total current liabilities			5,770,695				2,295,632				135,787				17,484
Total liabilities			5,770,695				2,320,908				173,849				22,385
Equity attributable to owners of the Company			95,004				1,274,154				2,868,036				369,287
Non-controlling interests			27,110				—				25,186				3,243
Total equity			122,114				1,274,154				2,893,222				372,530
Total equity and liabilities			5,892,809				3,595,062				3,067,071				394,915

The following table presents our summary consolidated cash flows data for the periods indicated.

 

		For the Fiscal Year Ended April 30,
		2019				2020				2021
		HK$				HK$				HK$				US$
		(in thousands)
Summary Consolidated Cash Flows Data
Net cash generated from operating activities			24,556				213,755				82,901				10,674
Net cash (used in) from investing activities			(3,071,469	)			(674,500	)			128,167				16,503
Net cash from financing activities			2,682,623				651,191				7,894				1,016
Net (decrease)/increase in cash and cash equivalents			(364,290	)			190,446				218,962				28,193
Cash and cash equivalents at the beginning of the year			370,054				5,764				196,210				25,264
Effect of foreign exchange rate changes			—				—				1,248				161
Cash and cash equivalents at the end of the year			5,764				196,210				416,420				53,618

 

21

Exhibit B

Capitalization

The following table sets forth our capitalization as of April 30, 2021:

 

•

on an actual basis; and

 

•

on an as-adjusted basis to reflect the issuance and sale of 6,400,000 Class A ordinary shares in the form of ADSs by us in this offering at an assumed initial public offering price of US$7.50 per ADS, the midpoint of the estimated range of the initial public offering price shown on the front cover of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, assuming the underwriters do not exercise their option to purchase additional ADSs.

You should read the following table together with our consolidated financial statements and the related notes included elsewhere in this prospectus and the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

 

		As of April 30, 2021
		Actual								As Adjusted(1)
		HK$				US$				HK$				US$
		(in thousands)
Equity
Share capital			52				7				57				7
Reserves			2,867,984				369,281				3,710,469				477,759
Total Capitalization(2)			2,868,036				369,288				3,710,526				477,766

 

Notes:

(1)	The as adjusted information discussed above is illustrative only. Our total capitalization following the completion of this offering is subject to adjustment based on the actual initial public offering price and other terms of this offering determined at pricing.

(2)

A US$1.00 change in the assumed initial public offering price of US$7.50 per ADS in this offering, the mid-point of the estimated range of the initial public offering price shown on the cover page of this prospectus, would, in the case of an increase, increase and, in the case of a decrease, decrease total capitalization by US$14.9 million, assuming the number of ADSs offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

 

22

Exhibit C

Dilution

If you invest in the ADSs, your interest will be diluted to the extent of the difference between the initial public offering price per ADS and our net tangible book value per ADS after this offering. Dilution results from the fact that the initial public offering price per ordinary share is substantially in excess of the book value per ordinary share attributable to the existing shareholders for our presently outstanding ordinary shares.

Our net tangible book value as of April 30, 2021 was approximately US$359,772,353, or US$5.32 per ordinary share and US$2.13 per ADS as of the same date. Net tangible book value represents the amount of our total tangible assets, less the amount of our total consolidated liabilities. Dilution is determined by subtracting net tangible book value per ordinary share, after giving effect to the additional proceeds that we will receive from this offering, from the assumed initial public offering price of US$7.50 per ADS, which is the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus adjusted to reflect the ADS-to-ordinary share ratio, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. Because the Class A ordinary shares and Class B ordinary shares have the same dividend and other rights, except for voting and conversion rights, the dilution is presented based on all issued and outstanding ordinary shares, including Class A ordinary shares and Class B ordinary shares.

Without taking into account any other changes in such net tangible book value after April 30, 2021, other than to give effect to our issuance and sale of 16,000,000 ADSs in this offering at an assumed initial public offering price of US$7.50 per ADS, the midpoint of the estimated public offering price range, after deduction of underwriting discounts and commissions and estimated offering expenses payable by us (assuming the underwriters do not exercise their option to purchase additional ADSs), our as adjusted net tangible book value as of April 30, 2021 would have been US$468,251,232, or US$6.33 per outstanding ordinary share, including ordinary shares underlying our outstanding ADSs, and US$2.53 per ADS. This represents an immediate increase in net tangible book value of US$1.01 per ordinary share, or US$0.40 per ADS, to existing shareholders and an immediate dilution in net tangible book value of US$12.42 per ordinary share, or US$4.97 per ADS, to investors purchasing ADSs in this offering. The following table illustrates such dilution:

 

		Per Ordinary Share				Per ADS
Assumed initial public offering price		US$	18.75			US$	7.50
Net tangible book value as of April 30, 2021		US$	5.32			US$	2.13
As adjusted net tangible book value		US$	6.33			US$	2.53
Amount of dilution in net tangible book value to new investors in the offering		US$	12.42			US$	4.97

A US$1.00 change in the assumed initial public offering price of US$7.50 per ADS would, in the case of an increase, increase and, in the case of a decrease, decrease our as adjusted net tangible book value after giving effect to this offering by US$14.9 million, the as adjusted net tangible book value per ordinary share and per ADS after giving effect to this offering by US$0.20 per ordinary share and US$0.08 per ADS and the dilution in as adjusted net tangible book value per ordinary share and per ADS to new investors in this offering by US$2.30 per ordinary share and US$0.92 per ADS, assuming no change to the number of ADSs offered by us as set forth on the cover page of the prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

The following table summarizes, on a as adjusted basis as of April 30, 2021, the differences between existing shareholders and the new investors with respect to the number of ordinary shares (in the form of ADS or ordinary shares) purchased from us, the total consideration paid, and the average price per ordinary share and per ADS paid before deducting underwriting discounts and commissions and estimated offering expenses. The total number of ordinary shares does not include Class A ordinary shares underlying the ADSs issuable upon the exercise of the option granted to the underwriters to purchase additional ADSs.

 

		Ordinary Shares Purchased								Total Consideration								Average Price Per Ordinary Share				Average Price Per ADS
		Number				Percent				Amount				Percent
Existing shareholders			67,618,142				91.4	%		US$	326,718,557				73.1	%		US$	4.83			US$	1.93
New investors			6,400,000				8.6	%		US$	120,000,000				26.9	%		US$	18.75			US$	7.50
Total			74,018,142				100.0	%		US$	446,718,557				100.0	%

The pro forma as adjusted information discussed above is illustrative only. Our net tangible book value following the completion of this offering is subject to adjustment based on the actual initial public offering price of the ADSs and other terms of this offering determined at pricing.

 

23

Exhibit D

Fiscal Year Ended April 30, 2021 Compared to Fiscal Year Ended April 30, 2020

Digital financial services segment

The segment revenue of the digital financial services segment increased from HK$9.9 million for the fiscal year ended April 30, 2020 to HK$11.7 million (US$1.5 million) for the fiscal year ended April 30, 2021. The segment profit decreased from HK$4.8 million for the fiscal year ended April 30, 2020 to HK$1.1 million (US$0.1 million) for the fiscal year ended April 30, 2021, primarily due to the increase in employee benefits expense and depreciation and amortization expense incurred and offset by the increase in revenue in the fiscal year ended April 30, 2021.

SpiderNet ecosystem solutions segment

The segment revenue of the SpiderNet ecosystem solutions segment increased from HK$157.7 million for the fiscal year ended April 30, 2020 to HK$184.1 million (US$23.7 million) for the fiscal year ended April 30, 2021 and the segment profit increased from HK$140.1 million for the fiscal year ended April 30, 2020 to HK$144.3 million (US$18.6 million) for the fiscal year ended April 30, 2021, primarily due to our expansion of the SpiderNet ecosystem solutions business by increasing the number of customers and offset by the increase in employee benefits expense incurred in the fiscal year ended April 30, 2021.

Corporate

The segment profit of corporate segment, which mainly consisted of changes in fair value on financial assets measured at FVTPL from our investments in innovative companies, was HK$70.3 million (US$9.1 million) for the fiscal year ended April 30, 2021, compared to HK$43.6 million for the fiscal year ended April 30, 2020, primarily due to the increase in the fair value of our investments portfolio driven by the business growth of the investees as of April 30, 2021.

For reconciliation of segment revenue to consolidated revenue and reconciliation of segment results to consolidated profit before tax, see note 7 to our consolidated financial statements for the fiscal year ended April 30, 2020 and 2021 included elsewhere in this prospectus.

Fiscal Year Ended April 30, 2021 Compared to Fiscal Year Ended April 30, 2020

Revenue

Our revenue from contracts with customers increased from HK$167.5 million for the fiscal year ended April 30, 2020 to HK$195.8 million (US$25.2 million) for the fiscal year ended April 30, 2021, primarily due to the expansion of our SpiderNet ecosystem solutions business.

 

•

Digital financial services. Our commission income from the digital financial services segment increased from HK$9.9 million for the fiscal year ended April 30, 2020 to HK$11.7 million (US$1.5 million) for the fiscal year ended April 30, 2021, primarily due to the acquisition of PolicyPal during the fiscal year ended April 30, 2021.

 

•

SpiderNet ecosystem solutions. Our fee income from the SpiderNet ecosystem solutions segment increased from HK$157.7 million for the fiscal year ended April 30, 2020 to HK$184.1 million (US$23.7 million) for the fiscal year ended April 30, 2021, primarily due to our expansion of the SpiderNet ecosystem solutions business and a 72.7% increase in the number of customers in the fiscal year ended April 30, 2021.

The level of membership fee for joining the SpiderNet ecosystem solution services is a bilateral fixed fee negotiated individually and agreed-upon with each particular customer covering a defined period of time. The factors influencing the level of annual fee include the depth of cooperation and relationship, expected spectrum of services required, expected near term and long-term benefits from participating in the SpiderNet ecosystem, and the relative bargaining power of respective customers taking into consideration the reputation, stage of growth, future revenue potential from other services which can be rendered, and other factors.

The average contract sum of the membership contracts increased from HK$15.7 million for the fiscal year ended April 30, 2020 to HK$19.8 million (US$2.5 million) for the fiscal year ended April 30, 2021 mainly because the weighted average contract terms of membership increased from 20.1 months for the fiscal year ended April 30, 2020 to 24.3 months for the fiscal year ended April 30, 2021.

Changes in fair value on financial assets measured at FVTPL

Our changes in fair value on financial assets measured at FVTPL was HK$70.3 million (US$9.1 million) for the fiscal year ended April 30, 2021, compared to HK$43.6 million for the fiscal year ended April 30, 2020, primarily due to the increase in the fair value of our investments portfolio driven by the business growth and expansion of the investees as of April 30, 2021.

 

24

The table below shows the details of our investment portfolio as of April 30, 2020 and 2021 and corresponding investment gains or losses for the fiscal year ended April 30, 2020 and 2021.

 

Summary of investments
Name of investments		Purchase price				Carrying value								Corresponding investment gains (losses)								Key factors of fluctuation in gains (losses)
						As of April 30,								For the Year Ended April 30,
						2020				2021				2020				2021
						(HK$ in millions)
Investment A (artificial intelligence technology services)			19.6				22.7				—				(1.8	)			55.1			During the fiscal year ended April 30, 2020, the fair value decreased mainly due to the impact of market downturn caused by the COVID-19 on the investee’s performance. During the fiscal year ended April 30, 2021, the investment was disposed with realized gain of HK$55.1 million.
Investment B (content-driven lifestyle platform)			80.6				77.5				124.3				(1.0	)			44.5			The fair value of the investment decreased by HK$1.0 million during the year ended April 30, 2020 due to exchange rate fluctuation. During the fiscal year ended April 30, 2021, the fair value of the investment increased mainly due to the financial performance and business development of the investee.
Investment C (technology-enabled health-care solutions platform)			78.5				108.5				78.5				28.0				(30.0	)		During the fiscal year ended April 30, 2020, the fair value of the investment increased mainly due to the financial performance and business development of the investee. During the fiscal year ended April 30, 2021, the fair value decreased by reference to the recent transaction price of shares issuance of the investee.
Investment D (digital media platform)			1.6				—				1.6				—				—			The investment was acquired in April 2021. The fair value of the investment approximated its acquisition cost as of April 30, 2021.
Investment E (communication software)			7.8				—				—				8.3				—			The investment was fully disposed during the year ended April 30, 2020 with realized gain of HK$8.3 million.

 

25

Summary of investments
Name of investments		Purchase price				Carrying value								Corresponding investment gains (losses)								Key factors of fluctuation in gains (losses)
						As of April 30,								For the Year Ended April 30,
						2020				2021				2020				2021
						(HK$ in millions)
Investment F (digital financing solutions platform)			7.8				—				—				10.1				—			The investment was fully disposed during the year ended April 30, 2020 with realized gain of HK$10.1 million.
Investment G (card payment solutions)			6.2				—				6.2				—				—			The investment was acquired in November 2020. The fair value of the investment approximated its acquisition cost as of April 30, 2021 with reference to recent transaction price.
Investment H (cross-border payment platform)			2.2				—				2.2				—				—			The investment was acquired in December 2020. The fair value of the investment approximated acquisition cost as of April 30, 2021.
Investment I (digital format movie production)			59.8				—				60.9				—				1.1			The fair value of the investment increased by HK$1.1 million during the year ended April 30, 2021 by reference to the estimated box office performance.
Investment J (digital format movie production)			16.5				—				18.8				—				2.3			The fair value of the investment increased by HK$2.3 million during the year ended April 30, 2021 by reference to the estimated box office performance.
Investment K (digital format movie production)			4.2				—				1.5				—				(2.7)			The fair value of the investment decreased by HK$2.7 million during the year ended April 30, 2021 by reference to the estimated box office performance.
			284.8				208.7				294.0				43.6				70.3

Employee benefits expense

Our employee benefits expense increased by 215.8% from HK$15.2 million for the fiscal year ended April 30, 2020 to HK$48.0 million (US$6.2 million) for the fiscal year ended April 30, 2021, primarily due to an increase in staff cost, and number of staff in connection with our business growth.

Premises and office expenses

Our premises and office expenses increased by 10.6% from HK$4.7 million for the fiscal year ended April 30, 2020 to HK$5.2 million (US$0.7 million) for the fiscal year ended April 30, 2021 mainly due to our business expansion in the fiscal year ended April 30, 2021.

 

26

Legal and professional fee

Our legal and professional fee increased by 245.0% from HK$2.0 million for the fiscal year ended April 30, 2020 to HK$6.9 million (US$0.9 million) for the fiscal year ended April 30, 2021 mainly due to legal and professional fee incurred in preparation for our listing.

Depreciation and amortization

Our depreciation and amortization expenses increased significantly by 100.0% from nil for the fiscal year ended April 30, 2020 to HK$4.9 million (US$0.6 million) for the fiscal year ended April 30, 2021 mainly related to amortization of intangible asset acquired as part of the business acquisition that took place in the fiscal year ended April 30, 2021.

Advertising and promotion expense

Our advertising and promotion expense increased significantly to HK$2.5 million (US$0.3 million) for the fiscal year ended April 30, 2021 mainly due to the increase in promotion activities to cope with our business expansion in the fiscal year ended April 30, 2021.

Other expenses

Our other expenses increased significantly by 106.3% from HK$1.6 million for the fiscal year ended April 30, 2020 to HK$3.3 million (US$0.4 million) for the fiscal year ended April 30, 2021 mainly due to our business expansion in the fiscal year ended April 30, 2021.

Income tax expense

We incurred income tax expense of HK$23.7 million and HK$24.6 million (US$3.2 million) for the fiscal year ended April 30, 2020 and 2021, respectively. The increase in our income tax expense resulted from increase in assessable profits in the fiscal year ended April 30, 2021.

Profit for the year

As a result of the foregoing, our profit increased from HK$158.3 million for the fiscal year ended April 30, 2020 to HK$171.6 million (US$22.1 million) for the fiscal year ended April 30, 2021.

 

27

Exhibit E

AMTD DIGITAL INC.

INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

		PAGE(S)
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Statements of Profit or Loss and Other Comprehensive Income for the years ended April 30, 2019, 2020 and 2021		F-3
Consolidated Statements of Financial Positions as of April  30, 2019, 2020 and 2021		F-4
Consolidated Statements of Changes in Equity for the years ended April 30, 2019, 2020 and 2021		F-5
Consolidated Statements of Cash Flows for the years ended April  30, 2019, 2020 and 2021		F-6
Notes to the Consolidated Financial Statements		F-7

 

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of AMTD Digital Inc.:

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of financial positions of AMTD Digital Inc. and its subsidiaries (the “Company”) as of April 30, 2019, 2020 and 2021, the related consolidated statements of profit or loss and other comprehensive income, changes in equity and cash flows for each of the three years in the period ended April 30, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial positions of the Company as of April 30, 2019, 2020 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended April 30, 2021, in conformity with the International Financial Reporting Standards as issued by the International Accounting Standards Board.

Emphasis of a Matter

The accompanying consolidated financial statements were prepared to present the assets and liabilities and related results of operations and cash flows of the Company, and include expense allocations for certain corporate functions historically provided by AMTD Group Company Limited. These consolidated financial statements may not necessarily be indicative of the conditions that would have existed or the results of operations and cash flows if the Company had operated as a stand-alone group during the periods presented.

Basis for Opinion

The consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Deloitte Touche Tohmatsu

Certified Public Accountants

Hong Kong, China

August 30, 2021

We have served as the Company’s auditor since 2021.

 

F-2

AMTD DIGITAL INC.

CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

(All amounts in thousands of Hong Kong dollars (“HK$”), except for share and per share data)

 

						Year ended April 30,
		Notes				2019				2020				2021
						HK$				HK$				HK$
Revenue from contracts with customers			6				14,554				167,547				195,816
Employee benefits expense							(9,169	)			(15,168	)			(48,026	)
Advertising and promotion expense							—				—				(2,547	)
Premises and office expenses							(1,541	)			(4,737	)			(5,230	)
Legal and professional fee							(2,650	)			(1,952	)			(6,850	)
Depreciation and amortization							—				—				(4,896	)
Other expenses							(672	)			(1,649	)			(3,323	)
Changes in fair value on financial assets measured at fair value through profit or loss (“FVTPL”)			8				19,319				43,592				70,291
Other income			9				252				—				1,323
Other gains and losses, net			10				2,058				(5,586	)			(306	)
Profit before tax							22,151				182,047				196,252
Income tax expense			11				(607	)			(23,715	)			(24,611	)
Profit for the year			12				21,544				158,332				171,641
Item that may be reclassified subsequently to profit or loss:
Exchange differences arising on translation of foreign operations							—				—				828
Other comprehensive income for the year							—				—				828
Total comprehensive income for the year							21,544				158,332				172,469
Profit (loss) for the year attributable to:
- Owners of the Company							17,601				151,362				177,865
- Non-controlling interests							3,943				6,970				(6,224	)
							21,544				158,332				171,641
Total comprehensive income (expense) for the year attributable to:
- Owners of the Company							17,601				151,362				178,315
- Non-controlling interest							3,943				6,970				(5,846	)
							21,544				158,332				172,469
Earnings per share			13
- Basic (HK$)							0.48				3.77				3.36
- Diluted (HK$)							N/A				3.77				3.36

The accompanying notes are an integral part of the consolidated financial statements.

 

F-3

AMTD DIGITAL INC.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITIONS

(All amounts in thousands of HK$)

 

						As of April 30,
		Notes				2019				2020				2021
						HK$				HK$				HK$
ASSETS
Non-current assets:
Goodwill			15				—				—				58,675
Property, plant and equipment			17				—				—				156
Intangible asset			16				—				—				40,411
Prepayments and other receivables			19				—				—				15,617
Financial assets at FVTPL			18				183,538				208,696				293,952
Total non-current assets							183,538				208,696				408,811
Current assets:
Accounts receivable			19				17,089				11,064				69,421
Prepayments and other receivables			19				22,121				41,197				19,163
Amount due from immediate holding company			27				1,740,393				2,352,472				2,138,708
Amounts due from fellow subsidiaries			27				3,570,417				764,140				—
Financial assets at FVTPL			18				335,311				—				—
Income tax recoverable							1,161				—				—
Fiduciary bank balances							17,015				21,283				14,548
Cash and cash equivalents							5,764				196,210				416,420
Total current assets							5,709,271				3,386,366				2,658,260
Total assets							5,892,809				3,595,062				3,067,071
EQUITY AND LIABILITIES
Current liabilities:
Clients’ monies held on trust							3,181				10,045				9,111
Accounts payable			20				986				51				111
Other payables and accruals			20				20,228				374				38,866
Contract liabilities			21				367				35,722				39,121
Income tax payable							94				22,638				48,578
Amount due to immediate holding company			27				3,202,600				281,282				—
Amounts due to fellow subsidiaries			27				2,543,239				1,945,520				—
Total current liabilities							5,770,695				2,295,632				135,787
Non-current liabilities:
Contract liabilities			21				—				25,276				31,192
Deferred tax liability			22				—				—				6,870
Total non-current liabilities							—				25,276				38,062
Total liabilities							5,770,695				2,320,908				173,849
Capital and reserves:
Parent’s net investments							95,004				—				—
Share capital			23				—				38				52
Reserves							—				1,274,116				2,867,984
Equity attributable to owners of the Company							95,004				1,274,154				2,868,036
Non-controlling interests			24				27,110				—				25,186
Total equity							122,114				1,274,154				2,893,222
Total equity and liabilities							5,892,809				3,595,062				3,067,071

The accompanying notes are an integral part of the consolidated financial statements.

 

F-4