Smartac China : CONTINUING CONNECTED TRANSACTIONS - DISTRIBUTION AGREEMENT

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SMARTAC INTERNATIONAL HOLDINGS LIMITED

環球智能控股有限公司

(formerly known as "Smartac Group China Holdings Limited 中國智能集團控股有限公司")

(Incorporated in the Cayman Islands with limited liability)

(STOCK CODE: 395)

CONTINUING CONNECTED TRANSACTIONS

DISTRIBUTION AGREEMENT

On 10 September 2020, Smartronic, an indirect non-wholly owned subsidiary of the Company, Nutronic Healthcare and Nutronic Biomedical entered into the Distribution Agreement, pursuant to which, (i) Nutronic Healthcare has conditionally agreed to grant the exclusive right to Smartronic to sell, market and distribute the Product Series within the PRC and Hong Kong; and (ii) Nutronic Biomedical has conditionally agreed to authorise and grant Smartronic the right to use the Nutronic Trademarks in relation to the Distribution Agreement, from 10 September 2020 to 31 December 2022.

As at the date of this announcement, Smartronic is held as to 51% by Forever Triumph, a wholly owned subsidiary of the Company, and as to 49% by Nutronic Biomedical. Nutronic Healthcare is a direct wholly-owned subsidiary of Nutronic Biomedical. By virtue of such 49% equity interest in Smartronic by Nutronic Biomedical, Nutronic Biomedical and Nutronic Healthcare are connected persons of the Company. Accordingly, the transactions contemplated under the Distribution Agreement constitute continuing connected transactions for the Company under Chapter 14A of the Listing Rules.

As the highest percentage ratio under the Listing Rules in respect of the relevant annual caps of the transactions contemplated under the Distribution Agreement exceeds 5% but are less than 25% and each of the annual cap is less than HK$10,000,000, the transactions contemplated under the Distribution Agreement are subject to the reporting and announcement requirements but is exempt from the circular (including independent financial advice) and shareholders' approval requirements under Chapter 14A of the Listing Rules.

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INTRODUCTION

On 10 September 2020, Smartronic, an indirect non-wholly owned subsidiary of the Company, Nutronic Healthcare and Nutronic Biomedical (the ''Parties'') entered into the Distribution Agreement, pursuant to which, (i) Nutronic Healthcare has conditionally agreed to grant the exclusive right to Smartronic to sell, market and distribute the Product Series within the PRC and Hong Kong; and (ii) Nutronic Biomedical has conditionally agreed to authorise and grant Smartronic the right to use the Nutronic Trademarks in relation to the Distribution Agreement, from 10 September 2020 to 31 December 2022.

PRINCIPAL TERMS OF THE DISTRIBUTION AGREEMENT

The principal terms of the Distribution Agreement are set out below:

Date:	10 September 2020 (after trading hours)
Parties:	(i)	Smartronic;
	(ii)	Nutronic Healthcare; and
	(iii) Nutronic Biomedical.
Term:	From 10 September 2020 to 31 December 2022 (the ''Term'').
Condition Precedent:	The Distribution Agreement shall be conditional upon having
	complied with the requirements of the Listing Rules and the Stock
	Exchange (including but not limited to publishing the relevant
	announcement and/or circular (if necessary) and having obtained
	the shareholders' approval (if necessary) in relation to the
	Distribution Agreement and the transactions contemplated
	thereunder).
Subject Matter:	Pursuant to the terms and condition of the Distribution Agreement:
	(i)	Nutronic Healthcare conditionally agreed to grant Smartronic
		(and Smartronic conditionally agreed to accept) the exclusive
		rights to market, distribute, offer for sale and sell the Product
		Series within the PRC and Hong Kong during the Term
		provided always that products of the Product Series shall be
		marketed, distributed, offered for sale and sold:

(a) through the cross-bordere-commerce platform(s) as regulated under the CBEC Laws and/or other (online, offline or otherwise) platform(s) and channel(s) as agreed by Nutronic Healthcare; and

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1. under the Nutronic Brands and Nutronic Trademarks and/ or such other brands and/or Trademarks as the Parties may agree in writing from time to time.

(collectively, the ''Distribution Rights'').

1. Smartronic shall not be entitled to sub-license the Distribution Rights save and except with the prior written consent of Nutronic Healthcare to any subsidiaries of Smartronic in sole connection with carrying out the provisions of the Distribution Agreement.
2. Nutronic Biomedical conditionally authorizes and grants Smartronic the right to use the Nutronic Trademarks within the Territory during the Term for the sole purpose of exercising the Distribution Rights pursuant to the terms of the Distribution Agreement. In this connection, Huakang is in the process of assigning of the Huakang Trademarks to Nutronic Biomedical upon the execution of the Distribution Agreement for the purpose of the above distributions or alternatively Nutronic Healthcare and Nutronic Biomedical shall procure Huakang to license such Huakang Trademarks to the Company for the purposes of performing the above distributions.

Pricing Basis: It is agreed that the Products' prices shall not be less favourable than the prices of the same Products offered by Nutronic Healthcare to third parties.

The Products shall be distributed by Smartronic on an exclusive basis within the PRC and Hong Kong.

The Products' prices shall be Nutronic Healthcare's aggregate costs comprising the purchase prices, import duties and other taxes, and transport, handling, packaging and other costs directly attributable to the acquisition of finished Products as well as any other costs in bringing the Products to their location(s) and condition(s) in supplying to Smartronic pursuant to the Distribution Agreement (''Costs'') plus a percentage of 5%.

Nutronic Healthcare shall be entitled to review the Costs on an annual basis and shall make adjustments on any increments on Costs accordingly.

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Payment Terms: Nutronic Healthcare shall invoice to Smartronic for each purchase order based on the following payment terms, which shall not be less favourable than those offered by Nutronic Healthcare to other third parties in respect of the Products:

1. Upon acceptance of each purchase order, Smartronic shall pay Nutronic Healthcare fifty percent (50%) of the total amount of the fees of the accepted purchase order (''Accepted Order''); and
2. Smartronic shall pay the remaining fifty percent (50%) of the total amount of fees of the Accepted Order to Nutronic Healthcare within 30 days from Smartronic's receipt of such delivery.

Annual Caps

The proposed annual caps for the transactions contemplated under the Distribution Agreement for the financial years ending 31 December 2020, 31 December 2021 and 31 December 2022:

For the year ending 31 December

2020 2021 2022

RMB RMB RMB

Proposed annual caps

3,900,000

6,400,000

6,400,000

The proposed annual caps were determined based on (i) minimum order quantities of the Products; and (ii) the projected growth in demand for the Products for the period from the date of the Distribution Agreement up to the year ended 31 December 2022. Shareholders are reminded that the above annual caps are best estimates made by the Company based on currently available information. If the total transaction amounts under the Distribution Agreement are expected to exceed the annual cap as set out in this announcement, the Company will re-comply with the relevant requirements in accordance with the Listing Rules such as by publication of a further announcement or to seek approval from Shareholders, if applicable.

REASONS FOR AND BENEFITS OF THE DISTRIBUTION AGREEMENT

As disclosed in the announcement jointly published by the Company and Huakang on 3 June 2020, Smartronic is a company incorporated in Hong Kong and is jointly held by Forever Triumph (a wholly-owned subsidiary of the Company) and Nutronic Biomedical as to 51% and 49% respectively. Forever Triumph, Nutronic Biomedical and Smartronic, entered into a shareholders' agreement in relation to Smartronic, for the purposes of (inter alia) commencing, developing, operating and otherwise engaging in the business of (inter alia) sales, marketing and distribution of the Product Series and other new products as may be agreed by Forever Triumph, Nutronic Biomedical and Smartronic from time to time through cross-border ecommerce platform(s) and/or other (online, offline or otherwise) platforms and channels in the PRC and Hong Kong.

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The Directors (including the independent non-executive directors) are of the view that the Distribution Agreement would enable the Group to expand its product portfolio in e- commerce business by sourcing high quality health products from Huakang Group in a timely and reliable manner, thereby supplementing the business strategy of the Group on e- commerce business and reducing the operation risks. The Directors (including the independent non-executive directors) expect that the transactions contemplated under the Distribution Agreement will bring new source of income to the Group.

The Directors (including the independent non-executive directors) are of the view that (i) the Distribution Agreement and the transactions contemplated thereunder are conducted in the ordinary and usual course of business of the Group; (ii) the terms of the Distribution Agreement has been negotiated on an arm's length basis and on normal commercial terms which are fair and reasonable in the interests of the Group and the shareholders of the Company as a whole.

Mr. Poon Lai Yin Michael, an independent non-executive Director, is also an executive director of Huakang and a director of both Nutronic Biomedical and Nutronic Healthcare. Dr. Cheng Faat Ting Gary, an independent non-executive Director, is also an independent non-executive director of HuaKang. They are deemed to have a material interest in the transactions contemplated under the Distribution Agreement and therefore they have abstained from voting on the board resolution(s) for approving the Distribution Agreement. Save as mentioned above, none of the Directors has material interest in the transactions and hence no other Director has abstained from voting on such board resolution.

INFORMATION ON THE GROUP, HUAKANG GROUP, NUTRONIC BIOMEDICAL AND NUTRONIC HEALTHCARE

The Group is principally engaged in providing (i) software sales and O2O consultation services; (ii) electronic payment solutions and services; and (iii) management, operation and market strategy of online shops and e-commerce platforms.

Both Nutronic Biomedical and Nutronic Healthcare are companies incorporated in Hong Kong with limited liability. Nutronic Healthcare is wholly-owned by Nutronic Biomedical, which is in turn wholly-owned by Huakang. Huakang is a company incorporated in the Cayman Islands with limited liability and the issued shares of which are listed on GEM (Stock Code: 8622). Huakang Group (including Nutronic Biomedical and Nutronic Healthcare) are principally engaged in research and development, manufacture, marketing and sale of biological reagents and auxiliary reproductive supplies and equipment in the PRC.

LISTING RULES IMPLICATIONS

As at the date of this announcement, Smartronic is held as to 51% by Forever Triumph, a wholly-owned subsidiary of the Company, and as to 49% by Nutronic Biomedical. Nutronic Healthcare is a direct wholly-owned subsidiary of Nutronic Biomedical. By virtue of such 49% equity interest in Smartronic by Nutronic Biomedical, Nutronic Biomedical and Nutronic Healthcare are connected persons of the Company. Accordingly, the transactions contemplated under the Distribution Agreement constitute continuing connected transactions for the Company under Chapter 14A of the Listing Rules.

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As the highest percentage ratio under the Listing Rules in respect of the relevant annual caps of the transactions contemplated under the Distribution Agreement exceeds 5% but are less than 25% and each of the annual cap is less than HK$10,000,000, the transactions contemplated under the Distribution Agreement are subject to the reporting and announcement requirements but is exempt from the circular (including independent financial advice) and shareholders' approval requirements under Chapter 14A of the Listing Rules.

DEFINITIONS

In this announcement, unless the context otherwise requires, the following terms shall have the following meanings:

''Authority''	any competent governmental administrative, supervisory,
	regulatory, judicial, determinative, disciplinary, enforcement
	or tax raising body, authority, agency, board, department,
	court or tribunal of any jurisdiction and whether
	supranational, national, regional or local
''Board''	the board of Directors of the Company
''CBEC Laws''	all applicable laws, statutes, rules, regulations, guidelines,
	policies, circulars, decrees, orders, judgments and/or
	ordinances in the PRC and Hong Kong of any Authorities,
	whether in effect as at the date of the Distribution
	Agreement or thereafter and in each case as amended or re-
	enacted, applicable to the sales, marketing, distribution and
	other related activities through the cross-bordere-commerce
	platforms as contemplated under the Distribution Agreement
''Company''	Smartac International Holdings Limited, a company
	incorporated in the Cayman Islands with limited liability
	and the issued shares of which are listed on the Main Board
	(Stock Code: 395)
''Director(s)''	the director(s) of the Company
''Distribution Agreement''	the conditional distribution agreement dated 10 September
	2020 entered into among Nutronic Healthcare, Nutronic
	Biomedical and Smartronic, in relation to, among others, the
	exclusive right granted by Nutronic Healthcare to the
	Company to sell, market and distribute Product Series
	within the PRC and Hong Kong through (inter alia) the
	cross-bordere-commerce platform(s) of the Company from
	10 September 2020 to 31 December 2022
''Forever Triumph''	Forever Triumph Holdings Limited, a company incorporated
	in British Virgin Islands and a direct wholly-owned
	subsidiary of the Company
''GEM''	GEM of The Stock Exchange

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''Group'' ''HK$'' ''Hong Kong''

''Huakang''

''Huakang Group''

''Huakang Trademarks''

''Listing Rules''

''Main Board''

''Nutronic Biomedical''

''Nutronic Brands''

''Nutronic Healthcare''

''Nutronic Trademarks''

''O2O''

the Company and its subsidiaries

Hong Kong dollar, the lawful currency of Hong Kong

the Hong Kong Special Administrative Region of the People's Republic of China

Huakang Biomedical Holdings Company Limited, a company incorporated in the Cayman Islands with limited liability and the issued shares of which are listed on GEM (Stock Code: 8622)

Huakang and its subsidiaries (including Nutronic Biomedical and Nutronic Healthcare)

certain intellectual property rights of certain Nutronic Trademarks owned by Huakang as at the date of the Distribution Agreement

the rules governing the listing of securities on the Stock Exchange

Main Board of The Stock Exchange

Nutronic Biomedical Group Limited, a company incorporated in Hong Kong with limited liability and is a direct wholly-owned subsidiary of Huakang

the Nutronic Trademarks and/or any other words, names, group of letters, symbols or combination thereof (and copyright and all copyrighted or copyrightable materials thereof) adopted and used to distinguish the Products from other products of the similar fields or types sold, produced or marketed by other persons

Nutronic Healthcare Company Limited, a company incorporated in Hong Kong with limited liability and is an indirect wholly-owned subsidiary of Huakang

all brand(s), trademark(s), trade name(s), service mark(s), service name(s), domain name(s), trade dress(es), logo(s), slogan(s) or other indicia of origin or ownership (including the goodwill and activities associated with each of the foregoing) (a) for which Huakang Group has sought or obtained registrations relating to the Product Series; and/or

1. under which Huakang Group has otherwise sold, marketed or distributed the said products

online to offline

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''PRC''	the People's Republic of China, for the purpose of this
	announcement, excludes Hong Kong, the Macau Special
	Administrative Region of the PRC and Taiwan
''Product(s)''	product(s) of the Product Series
''Product Series''	certain products series supplied by Nutronic Healthcare
	including but not limited to FertiCare series, ConcepCare
	series and NatalCare series, being male and female fertility
	supplements
''RMB''	Renminbi, the lawful currency of the PRC
''Shareholders''	Shareholders of the Company
''Smartronic''	Smartronic Limited, a company incorporated in Hong Kong
	and is jointly held by Forever Triumph and Nutronic
	Biomedical as to 51% and 49% respectively

''Stock Exchange'' ''Territory'' ''Trademarks''

The Stock Exchange of Hong Kong Limited

the PRC and Hong Kong

all brand(s), trademark(s), trade name(s), service mark(s), service name(s), domain name(s), trade dress(es), logo(s), slogan(s) or other indicia of origin or ownership (including the goodwill and activities associated with each of the foregoing)

''%''

per cent

By order of the Board

Smartac International Holdings Limited

Yang Xin Min

Chairman

Hong Kong, 10 September 2020

As at the date of this announcement, the Board comprises of (i) one executive Director, namely, Mr. Ho Chi Kin; (ii) one non-executive Director, namely Mr. Yang Xin Min (Chairman); and (iii) five independent non-executive Directors, namely Dr. Cheng Faat Ting Gary, Mr. Poon Lai Yin Michael, Mr. Tsui Francis King Chung, Mr. Tang Yat Ming Edward and Mr. Peng Bobo.

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