Hoton Retail and Services, Inc.

September 10, 2020 ENFORCEMENT AND INVESTOR PROTECTION DEPARTMENT SEC ADVISORY Based on information gathered by the Commission, a number of individuals or group of persons representing HOTON RETAIL AND SERVICES, INCORPORATED ("HOTON"), are enticing the public to invest their money in said entity. According to their website hotonretail.com , "with the HOTON Franchise partnership program, a potential stakeholder will simply invest a certain amount of capital to any of the Hoton's retail store nationwide. In the long run, they will get returns on investment based on the store's income. The partnership program from Hoton is unique and is completely compatible for anyone who doesn't have a ridiculously large sum of money but still wants to invest in a legitimate business venture." As posted online, HOTON is enticing the public to become their business partner through the Hoton Franchise Partnership Program. The minimum amount of investment is Php100,000 which is equivalent to 1 unit and the maximum amount of investment is Php14,000,000 equivalent to 140 units. HOTON will manage and operate the store for the investors. The investors will then get a guaranteed monthly income and guaranteed return of capital. Investors are promised a guaranteed return of 1% per month or 12% per annum for 60 months, 40% per annum profit sharing (this will be divided into 140 units) and 100% capital guaranteed return to investors after the lapse of 5 years. The investment scheme is more particularly described as follows: Year PROJECTED RETURN Return (%) Guaranteed Income (P100,000 x 1%) Profit-Sharing (40% x P4.2M x 1 unit) Total 1 PHP12,000 PHP12,000 PHP24,000 24% 2 PHP12,000 PHP12,000 PHP24,000 24% 3 PHP12,000 PHP12,000 PHP24,000 24% 4 PHP12,000 PHP12,000 PHP24,000 24% 5 PHP12,000 PHP12,000 PHP24,000 24% 6 PHP0 PHP12,000 PHP12,000 12% 7 PHP0 PHP12,000 PHP12,000 12% 8 PHP0 PHP12,000 PHP12,000 12% 9 PHP0 PHP12,000 PHP12,000 12% 10 PHP0 PHP12,000 PHP12,000 12% NOTE: Assumptions: 1. Net Profit of P4.2 million per year or average P350,000 per month for HOTON Store 2. Invest P100,000 Records of the Commission show that while HOTON RETAIL AND SERVICES, INC. is registered with the Commission as a corporation with Company Registration No. CS201816275, however, such registration only grants juridical personality to the corporation but does not authorize it to issue, sell or offer for sale securities to the public nor undertake business activities requiring a secondary license from the Commission. Since, the aforementioned scheme offered by HOTON involves the offer and sale of securities to the public the SRC requires that these securities are duly registered with the Commission and that concerned entity or its agents have appropriate registration and/or license to sell such securities to the public pursuant to Sections 8 and 28 of the SRC. Hence, those who act as salesmen, brokers, dealers or agents or claim to act as such for the offering of Hoton's Franchising Partnership Program in convincing people to invest in the investment scheme being offered by HOTON including solicitations and recruitment through the internet may be prosecuted and held criminally liable under Section 28 of the SRC and penalized with a maximum fine of Five Million pesos (P5,000,000.00) or penalty of Twenty-one (21) years of imprisonment or both pursuant to Section 73 of the SRC. Further, for those who invite or recruit others to join or invest in such venture or offer investment contracts or securities to the public may incur criminal liability, or otherwise be sanctioned or penalized accordingly as held by the Supreme Court in the case of Securities and Exchange Commission vs. Oudine Santos (G.R. No. 195542, 19 March 2014). Violators are further warned that aside from the strict penalties imposed by the Commission for violations of the SRC, the Revised Corporation Code of the Philippines, and such other rules and regulations it enforces, the Bayanihan to Heal as One Act (Republic Act No. 11469) also punishes those participating in cyber incidents that make use or take advantage of the current crisis situation to prey on the public through scams, phishing, fraudulent emails, or other similar acts. Should you have any information regarding any investment solicitation by any individuals or groups of individuals on behalf of HOTON, please call the ENFORCEMENT AND INVESTOR PROTECTION DEPARTMENT (EIPD) at telephone number (02) 8818-5324, or send your report to the EIPD at epd@sec.gov.ph. You may also visit the EIPD office located at Ground Floor, North Wing Hall, Secretariat Building, PICC Complex, Pasay City. For the guidance of the public. Pasay City, September 10, 2020.