Hosa International : Announcements and Notices - (i) Clarification Announcement and (ii) Appointment of Independent Investigator

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

HOSA INTERNATIONAL LIMITED

浩沙國際有限公司

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 02200)

(i)CLARIFICATION ANNOUNCEMENT AND

(ii)APPOINTMENT OF INDEPENDENT INVESTIGATOR

The Company denies all the allegations made against the Company in the Report issued by Bonitas.

In view of the allegations made, the Company has established a Special Committee comprising all independent non-executive directors of the Company. The Special Committee has reviewed all the entities mentioned in the Report and nothing has come to the Special Committee's attention that any Focused Entities are undisclosed connected parties of the Company or that any transactions (if any) between the Group and the Focused Entities were made on non-arm's length terms.

Having reviewed (i) the Report issued by Bonitas, (ii) the internal review conducted by the Company; and (iii) the findings of the Special Committee, the Board is of the opinion that the allegations made against the Company in the Report are groundless, false or misleading.

The Company believes that Bonitas, serving its own purpose:

1.has unjustifiably and without basis made use of the trading data and attempt to misinterpret part of the data out of the entire trading records to confuse the shareholders and potential investors.

2.did not conduct thorough and proper research to its allegations, that the Company has already disclosed the relationship between the Group and the Three Distributors in the Prospectus.

- 1 -

3.has made allegations based on (a) third parties sharing the same surname as the chairman, or (b) alleged co-located at the same address as that of the Company, to make false allegations that certain suppliers are related parties of the Company.

4.intentionally used outdated and incorrect information from various websites to create confusions of alleged related parties, while the Company has already disclosed in its annual reports and prospectus of such relationship with the related parties.

The Board is assured of the integrity of the Company's financial reporting system.

The Board is of the view that Bonitas has a complete lack of professional understanding of the operating business model and background of the Company.

The Company strongly denies the allegations and urges Shareholders and potential investors of the Company to treat the Report and the allegations with caution and reserves the rights to take all appropriate actions, including commencement of legal proceedings, to protect its legitimate interest from any unfounded allegation against the Group.

Reference is made to the announcement of the Company dated 12 March 2019 regarding the appointment of the independent investigator. As at the date of this Announcement, the Independent Investigation is in progress and is expected to be completed on or before 30 June 2019. The Company will keep shareholders and public informed of the latest developments by making further announcement(s) as and when appropriate.

- 2 -

This announcement is made by Hosa International Limited. (the "Company", together with its subsidiaries, the "Group") pursuant to the Inside Information Provisions (as defined under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules"), under Part XIVA of the Securities and Futures Ordinance (Cap. 571, Law of Hong Kong) (the "SFO") and Rule 13.09 of the Listing Rules.

INTRODUCTION

Reference is made to the announcement (the "Announcement") of the Company dated 11 July 2018 on The Stock Exchange of Hong Kong Limited (the "Stock Exchange") relating to the 11 July Report (the "Report") issued by Bonitas Research ("Bonitas"). Unless otherwise defined herein, capitalised terms used in this announcement shall have the same meanings as those defined in the Announcement of the Company.

Further to the Announcement, this announcement is to deny and refute the allegations made against the Company in the Report issued by Bonitas.

Bonitas has disclosed that they are short sellers and long investors with bias in the Report and therefore may realize significant gains if the price of the Shares declines. The Board would like to emphasize that shareholders of the Company (the "Shareholders") and potential investors should exercise extreme caution in reading the Report and, if any, future reports that Bonitas may distribute.

The Board and the senior management of the Company had not been contacted nor interviewed by Bonitas to verify any information mentioned in the Report.

In view of the allegations made, the Company has established a special committee ("Special Committee") comprising all the independent non-executive directors of the Company. The Special Committee reviewed all the official records of the existing distributors together with the distribution agreements between them and the Company, and also all the suspected parties mentioned in the Report (the "Focused Entities") and nothing has come to Special Committee's attention that any Focused Entities are undisclosed connected parties of the Company or that any transactions between the Group and the Focused Entities (if any) were made on non-arm's length terms.

Having reviewed (i) the Report, (ii) the internal review conducted by the Company; and (iii) the findings of the Special Committee, the Board is of the opinion that the allegations made against the Company in the Report are groundless, false or misleading.

- 3 -

CLARIFICATIONS

1.Allegations relating to Intraday Trading Data Patterns Indicate Stock Manipulation

The Report alleged that the price appreciation and volume increase in the Company's stock since December 2017 is due to unusual gains posted in the final hour of trading and thought that the management of the Company has purposely executed a last hour manipulation scheme to prop up the Company's daily closing price to secure additional short-term financing and avoid margin calls on previously pledged shares which about 35.37% of the Company shares were pledged as collateral for financing agreements.

The Company believes that Bonitas, serving its own purpose, has unjustifiably and without basis made use of the trading data and attempt to misinterpret part of the data out of the entire trading records to confuse the shareholders and potential investors.

Having reviewed the change of the price of the Company's Shares described in the Report and made such enquiry as is reasonable in the circumstances, the Board strongly disagrees and denies such allegations and hereby clarifies that (1) all members of the Board confirmed that neither the Company nor any member of the Board has adopted any "last hour manipulation scheme" in relation to the Shares of the Company; (2) the Board is not aware of any reason for the share price movement of the Company or any information that needs to be disclosed under Part XIVA of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong); and (3) the controlling shareholders of the Company including Mr. Shi Hongliu (chairman), Mr. Shi Hongyan (executive director) (collectively the "Shi brothers"), Ho Born Investment Holdings Limited ("Ho Born") and Well Born Investment Holdings Limited ("Well Born") also confirmed that they did not and have no intention to attempt to affect the price of the Company's Shares to secure any financing or avoid any margin calls on previously pledged shares. Save and except the information disclosed in the announcement dated 10 July 2018 in relation to disposal of Shares by Ho Born and Well Born, it is not aware of any further information that needs to be disclosed.

The Board is of the view that the allegations made in the Report are based on artificial assumptions without supporting evidence and objective analysis.

- 4 -

2.Allegations relating to revenue fabrication using undisclosed related party distributors

The Report alleged that the Shi brothers have used the following undisclosed related parties to fabricate revenues and artificially inflate the Company's financial performance:

(collectively the "Three Distributors")

The Company believes that Bonitas, serving its own purpose, did not conduct thorough and proper research to draw its allegation that the Company has disclosed the relationship between the Group and the Three Distributors in the prospectus of the Company dated 6 December 2011 (the "Prospectus") which was issued 7 years ago.

As disclosed in the Prospectus, the Three Distributors were connected parties of the Group prior to the listing of the Company. In order to focus on the product development and production, the Group had underwent a corporate reorganization during its Pre IPO stage, the Company decided to streamline their management and sales network with the view to minimize the administration costs and to focusing on developing the distributorship business model. According to the Prospectus, Haosha Industry, a subsidiary of the Group, disposed of its equity interests in Beijing Yasha to Shi Fenglian in July 2010 and Guangzhou Yingchang to Mr. Xu Liangang and Shi Qingli in July 2010. Moreover, Mr. Shi Hongliu (chairman) and Mr. Shi Hongyan (executive director) and/or Mr. Xu Jinfeng also disposed of their equity interests in Shanghai Xingchi to independent third parties in July 2010. The Board also have investigated the background of the Three

- 5 -